Select Committee on Health Minutes of Evidence

Annex 4



  The pharmaceuticals industry is one of the UK's strengths. Companies based in the UK maintain a significant presence in all the major markets of the world. Overall, one third of UK-based industry is UK-owned and a further one third is US-owned. The UK industry is very research intense. Key data for the industry is listed below:

Investment in UK R&D (2001) £3.04billion
Sales of UK manufactured pharmaceuticals (2001) £8.79billion
Gross Value Added (GVA) (2002)£20.4 billion
Total employment (2001)69,000

  The UK pharmaceuticals market itself is relatively small, with only a 3% share by value of the world market for prescription medicines, compared to nearly 40% for the US, but in terms of overall competitiveness, the UK is only second to the US and well ahead of its main European counterparts. One third of the people employed in the pharmaceuticals industry work in research. In addition, another 250,000 jobs are generated in related industries. Figure 2 illustrates the UK's significant share of the top prescription medicines.

Figure 2:


  In March 2000, the Pharmaceutical Industry Competitiveness Task Force was established with the following terms of reference:

    "To bring together the expertise and experience of the industry leaders in the UK with government policy makers to identify and report to the Prime Minister on the steps that may need to be taken to retain and strengthen the competitiveness of the UK business environment for the innovative pharmaceutical industry".

  Industry takes the view that the Task Force has provided an effective platform for dialogue between the Government and the pharmaceutical industry. A further report has been published updating key performance indicators for the industry. The overall conclusions of this report are that the pharmaceutical industry continues to make an important contribution to the UK economy aided by a strong basic scientific research infrastructure within the UK. With regard to medicines, the regulation process was found to be relatively rapid in the UK (but slower than the US) while uptake of new medicines remained slow in the UK compared to other countries.

  Pharmaceuticals are one of the UK's leading manufacturing sectors, bringing in a trade surplus of £2.9 billion in 2001. The figure below shows the world trade in pharmaceuticals in 2001.

Figure 3:



  Expenditure on research and development by industry within the chemicals and pharmaceuticals sectors and the biotechnology industry is several times larger than the most generous estimates of the relevant public and charitable research spending in these sectors. For example, the pharmaceuticals sector conducts some 73% of UK R&D expenditure in its own field, and around 40% of all industrial R&D expenditure in the UK, spending about £7 million each day.

  The UK pharmaceuticals sector and biotechnology industry has also been highlighted by the DTI R&D Scoreboard as having an especially high R&D intensity, 14.6% compared with 13.0% internationally, and 2.2% for UK industry overall. It is second only to the USA's industry in this respect.

  As part of its strategy of engagement with industry, EPSRC visits players across this sector on an ongoing basis to increase its understanding of their businesses and to make industry more aware of the opportunities for active interaction with EPSRC policy and activities. This is in addition to the strong relationships with many companies through community consultation and direct participation by industry in peer review and policy panels, research projects and training.

  The top 10 players in the UK pharmaceuticals industry in term of recorded R&D spend are GlaxoSmithKline, AstraZeneca, Pfizer, Shire Pharmaceuticals, Eli Lilly, Merial, Roche, Merck Sharp & Dohme, and Novartis. For global companies it is not always meaningful to disentangle UK from global expenditure, but GlaxoSmithKline is recorded by DTI as the largest investor in R&D in the UK, having a global spend of £2.65 billion in 2001, with AstraZeneca recorded at £1.9 billion. Pfizer is recorded by DTI as the sector's largest investor specifically in the UK in 2001, spending £373 million.


Business drivers:

  Considerable restructuring, including significant mergers and acquisitions, has taken place in recent years within the pharmaceuticals sector. Increasing competition, the cost of clinical trials and a shortage of new drugs reaching launch places companies under continuous pressure to develop new products in shorter timeframes.

Skills base:

  The provision of appropriately trained people in sufficient numbers is a key driver for the sector, both at masters and postgraduate level. There is a need for a broad knowledge base but there is also a need for trained people with specific expertise. Some knowledge gaps have been reported in analytical chemistry, chemoinformatics and bioinformatics.

Increasing demand for medicines:

  The ageing and increasingly wealthy population will require new treatments and innovative and more effective medicines. There is also an increased emphasis on maintaining and enhancing lifestyles as well as curing diseases. Along with this, moves towards personalised medicines are also likely to open up new opportunities.

Intellectual property:

  A number of companies have commented on difficulties in agreeing Intellectual Property Rights (IPR) with some universities. This includes commodity chemicals, fine chemicals and pharmaceuticals companies, who report that demands for unacceptable agreements from universities may be limiting collaboration.

University-academe collaboration:

  Many companies do not see Industrial CASE as a mechanism for training students but rather as a mechanism for maintaining links with university departments. It is also seen as a good route for getting exploratory research done. Difficulties have been reported by some companies in setting up normal CASE type conversions following the introduction of Doctoral Training Accounts (DTA). In some cases companies chose to fund students directly in research areas of interest to them, thus circumventing the above problems.


  The business climate in the UK (legal, regulatory, fiscal and social) will be increasingly important in the ability of the UK to attract new investment. Large international companies increasingly set their sights globally when seeking collaborations, with a preparedness to go overseas rather than compromise on IPR. The same global outlook applies when considering recruitment options. Some strong local and regional relationships do exist between industry and Higher Education Institutes (HEI), particularly for small and medium sized companies.

Research and technology:

  In many areas of scientific research, the focus is shifting from a wholly experimental approach to a combination of modelling and simulation with some experimental validation. Visualisation, imaging and informatics will change the style of work in the future within the chemicals, pharmaceuticals and biotechnology industries.


  It is widely recognised that the pharmaceuticals sector is large and diverse, with a history of interaction with EPSRC. Overall, EPSRC funding is divided into two funding streams, research and training. All research proposals received by EPSRC are classified according to the sector(s) that they would underpin, whether or not any industrial collaboration is proposed.

  For the purpose of this brief, data has been collated for proposals that underpin the pharmaceuticals and biotechnology sectors. In addition, EPSRC co-funds research projects that are led by other Research Councils that also underpins these sectors although this funding is excluded from to the figures quoted below.

  EPSRC interaction with companies in these sectors is not restricted to collaborative funding partnerships. EPSRC receives valuable input from industry in peer review and wider strategic consultations. All EPSRC data given in this brief is based on grants current on 1 April 2003. Interactions extend to, for example, the secondment of EPSRC staff to placements in pharmaceutical companies.

  As the current EPSRC grant portfolio is dynamic in nature, this only represents a snapshot of current EPSRC funding at a given point in time. The level of EPSRC funding relevant to the pharmaceuticals and biotechnology sectors is shown by programme area below. The total value of grants relevant to the pharmaceuticals and biotechnology sectors is £175 million.

Figure 5.3:

  EPSRC funding by programme area relevant to the pharmaceuticals & biotechnology sectors (The "Other" category contains various cross programme and cross council activities such as the Basic Technology programme).

  The figure below only shows the extent of EPSRC research collaboration relevant to the pharmaceuticals and biotechnology sectors for companies with 5 or more current collaborations. Three companies shown viz. AstraZeneca, GSK and Pfizer appear in the top 10 companies of the DTI pharmaceuticals and biotechnology R&D scoreboard for 2002. A number of the other companies appear in other DTI R&D scoreboards.

Figure 5.4:

  Current EPSRC collaborative activity with industry relevant to the pharmaceuticals and biotechnology sectors (An additional contribution of £750,000 was made by GSK towards the joint EPSRC/GSK call for proposals in combinatorial chemistry).

  EPSRC currently supports over 700 EPSRC funded grants underpinning the pharmaceuticals and biotechnology sectors distributed cross the UK academic sector. The figure below shows the academic institutions with current EPSRC grant support of £4 million or greater relevant to the pharmaceuticals and biotechnology sectors.

Figure 6.2:

  Academic institutions with major current EPSRC grant funding relevant to the pharmaceuticals and biotechnology sectors (University College London does not include funding provided to the Royal Institution)


  EPSRC is currently consolidated its support for industrial relevant collaborative training into University-based Collaborative Training Accounts (CTAs). CTAs combine several previously separate funding mechanisms and schemes within a single account with the purpose of putting collaborative postgraduate education and training on a more strategic footing. EPSRC supported CTAs will consolidate support for training activities relevant to the chemicals, pharmaceuticals and biotechnology sectors listed below.

Engineering Doctorate (EngD):

  The EngD is a four-year postgraduate award. It is a radical alternative to the traditional PhD and was designed to be better suited to the needs of industry. EPSRC allocates 10 studentships per annum to each EngD centre:

    —  UCL—The Bioprocess Leadership Programme—integration of bioprocess research with the generation of entrepreneurial skills through close linkage with the bioprocess industry.

    —  Birmingham—Formulation Engineering.

    —  UMIST—Engineering for Manufacture Process and Production.

Masters Training:

  EPSRC sponsors masters-level training, including continuing professional development activities, in a number of areas relevant to the Chemicals, Pharmaceuticals including analytical science, bioinformatics, chemical and biochemical/process engineering (including sustainability, clean technology and catalysis), physical and theoretical chemistry and bio-molecular science.

Industrial CASE:

  Through Industrial CASE, a number of studentships are allocated to companies. The companies can then choose the academic partner that hosts the CASE student. EPSRC allocated a total of 330 Industrial CASE awards in 2001, of which 59 were associated with the pharmaceuticals sector.


Innovative Manufacturing Research Centres (IMRC):

  A key element of EPSRC funded IMRCs are the provision of a focused and strategic approach to the support and organisation of manufacturing research within the UK. The Bioprocessing Centre at UCL is of direct relevance to this sector. The centre has been established through direct partnership with a group of leading companies in the field of biopharmaceutical research and will focus on novel ways of translating exciting discoveries in the life sciences to practical outcomes such as advanced medicines.

Faraday Partnerships:

  Faraday partnerships aim to promote improved interactions and networks between the UK science, engineering and technology base and industry, through the involvement of intermediate organisations. The Faraday Partnerships of direct relevance to this sector are CRYSTAL (Green Technology for the Chemical and Allied Industries), Insight (High Throughput Technologies for Product and Process Development) and Pro-Bio (UK Centre of Excellence for Biocatalysis).

Foresight Challenge, Foresight LINK and LINK awards:

  A number of projects relevant to the pharmaceuticals sector are supported under these schemes including the Institute of Applied Catalysis (iAc), the Centre for Process Analytics and Control Technology (CPACT), Lab-on-a-Chip and Micrograms to Multikilos.

Strategic Partnerships:

  EPSRC has recently engaged in a number of flexible funding partnerships with industry. The EPSRC/GSK Combichem Initiative was one of the first single company and EPSRC joint initiatives. An open call for proposals for research in combinatorial and solid phase chemistry was issued, with £1.5 million of funding being split equally between EPSRC and GSK. Discussions with key companies in the sector are on-going over the development of further strategic partnerships in a number of areas.


Interface with the Chemistry Leadership Council (CLC):

  The CLC was established on the recommendation of the DTI Chemicals Innovation and Growth Team (CIGT). The sector team has been engaged with the CLC and more extensively with its Innovation Task Force (ITF) that was charged by the CLC with the identification of research and innovation priorities. The Sector Team is working closely with the ITF in two main areas of common interest; the chemistry/chemical engineering interface and physical organic chemistry. EPSRC has also engaged with CLC and the ITF over the planned development of national and regional Chemicals Innovation Centres (CIC).

Intellectual Property Rights (IPR):

  The current EPSRC policy is to assign responsibility for the exploitation of intellectual property (and the returns from it) to universities. Consideration will be given to the "signposting" of model agreements and the provision of training to grantholders, where appropriate. The sector team will continue to gather industry views on the successful establishment of IPR arrangements with universities.

Industrial CASE:

  An internal review of Industrial CASE is currently taking place. One possible outcome may be an attempt to place some Industrial CASE studentships more strategically through sector-specific targeting. The sector team will continue to scope these ideas in sector discussions.


  Skill shortages have been reported in some areas such as analytical chemistry, chemo- and bio-informatics. However, there is also a greater emphasis from pharmaceuticals companies on the need for the provision of a sufficient number of suitably trained potential recruits compared to other sectors.

Structure of the Chemistry PhD:

  There has been some discussion recently on the structure of the chemistry PhD and the provision of appropriate postgraduate training. Concerns have been expressed by some pharmaceutical companies over the lack of breadth of knowledge and industrial awareness of some postgraduate applicants.

EPSRC Peer Review College:

  The sector team has helped to raise awareness of the recent college exercise amongst chemicals, pharmaceuticals and biotechnology companies. This has contributed to industrial membership of the new college and also greater industrial participation in peer review.

Strategic Partnerships:

  A key aim for the sector is to try to facilitate a number of "Blue chip" type strategic partnerships with industry, aligned to priority research areas within the Chemistry, Life Sciences Interface and Engineering programmes. Options for partnerships could include a joint call for proposals in key research areas, support for industrial research chairs, consortium proposals involving a range of companies or a major joint funded collaborative programme with a single company.

Future Discussions:

  Sector visits are planned to Roche, Elli Lilly and Evotec OAI in the pharmaceuticals sector and dialogue will also be maintained with the CIA, Association of the British Pharmaceutical Industry (ABPI) and RSC.


  The Attached analysis depicts current involvement and future targets for the sector team in interacting with pharmaceutical companies. The graphs are based on the six original objectives of EPSRC sector work and illustrate both differences in the level of current and projected engagement with companies across the sectors and also the relative success of achieving each objective within a given sector.

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