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Biotechnology Industry

11 am

Dr. Ian Gibson (Norwich, North) (Lab): Biotechnology, or what is sometimes called the biosciences, is one of the UK economy's fastest growing sectors and its future looks rather bright. There are 455 bioscience companies in the UK, and about 22,500 people are employed in the industry's different sub-sectors. The industry is growing fast and can grow even faster, but it will not grow as fast as it might without Government support, because it is in a most competitive environment. The US has the biggest and fastest growing industry, as well as being more experienced, but India, China and other countries are coming up fast on the rails.

In health care at the end of 2005, the industry carried out deals worth £750 million, thereby contributing significantly to the economy. Indeed, it is in health care that most of the biggest effects are felt and most of the biggest discoveries are made. Article after article on the subject has appeared in the Financial Times, and journalist Lisa Urquhart has highlighted many of the features of the biosciences movement in recent articles. She notes that the business is risky because research is lengthy and costly periods of development are required. There are dozens of failures in the field, as well as endless calls for refinancing.

On the other hand, the sector is beginning to produce some real winners. One example, of which I was not aware, concerns marine biotechnology. Many compounds are being discovered in this planet's deep realms, which have not been investigated before. We have tended to look up, not down, but we are now finding new substances, which have great effects on cancer, heart disease and so on. Biosensors, which can detect pollution, can also be developed from organisms in the marine environment. Things are therefore beginning to move, and we want to encourage such developments, as well as those in the conventional drug arena.

Gene therapy in its wider sense is also on the agenda again. It is not a matter simply of injecting viruses into people to eradicate faulty genes, but of suppressing gene activity and so on. Much activity is going on in that respect, and although we do not have the blockbuster yet, it is not far off. Animal biotechnology experiments are also being done. They include, for example, experiments to make racehorses run faster. If I had a business, I might breed racehorses, win the Derby and retire quite happy without telling anyone. So lots is going on in that respect, too.

There is also the field of gene diagnostics, which allows us to assess which illnesses people might develop at different stages in their lives, and who will respond to certain drugs, which greatly benefits the national health service drug budget. In addition, we have all heard of the anti-cancer drug Herceptin and tissue engineering, and those, too, are part of biotechnology. New bladders are also being grown for children. New bird flu vaccines are being produced—perhaps not fast enough, but production is certainly speeding up—in case we should be struck down by that disease, as has
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happened in other parts of the world. As Lisa Urquhart notes, biotechnology has been

At the same time, however, there are the other stories. There was the tragic stem cell research in South Korea, the impact of which reverberated around the world. As has been well documented, the professor involved was tempted to rig the data, confusing the public and perhaps himself. In this country, six volunteers involved in tests on an experimental monoclonal antibody suffered an adverse reaction last month. We await the report, and everybody has their ideas about what went wrong there.

Still, biotechnology-produced drugs have become the most rapidly growing segment of the drug industry not only in this country but in Europe. In the past year, 23 compounds have come out of Europe and 13 have come out of the USA—activity has accelerated greatly. As Lisa Urquhart notes,

and we should remember that that confidence was shattered by the unmentionable genetic modification. I promise never again to mention GM or to fall out with people in defence of GM crops—at least not until the next one appears. Despite that confidence, however, Lisa Urquhart notes that there is

In America, however, we see quite the opposite. Companies' market capitalisation passes the $1 billion mark, and that trend is growing. I shall explain shortly how that has occurred.

There is huge international interaction. I mentioned the US, Europe and the UK, but there are interactions between Indian and Chinese companies and between Indian and British companies. Indeed, in the past few years, Singapore has suddenly not only recruited some of our best scientific stars but populated the market with large sums of money and seen the value of biotechnology in health and other areas. Biotechnology is indeed a burgeoning field.

At this point, I want to digress a little to talk about this country. It is reasonable to ask why biotechnology is growing in some areas and some cities but not in others. I hope that hon. Members will forgive me for mentioning Norwich and Norfolk, because there are few biotechnology companies there, but there are massive research institutes, including the biggest plant research institute in Europe. There is also a university with a medical school, which the Government provided in 1998. Special science schools are developing, where young people study astronomy, information technology and so on. We also have a biomedical centre, a pharmacy school and creative centres, which the public and young people can visit to try out scientific experiments online. On paper, those higher education establishments are as good as any, but why are no companies coming out of that?

Recently, in Norwich, I attended a glittering BAFTA-type awards ceremony full of entrepreneurs—they were to the left, to the right and in the middle. Many of them were young and were involved in developing films, in the media and in graphic design. It was quite inspiring, and I did not know that so much was going on in that area,
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but where is the equivalent in science, technology and medicine? Where are the young people who are being encouraged to develop their ideas and come for their glittering prizes?

Is there perhaps a lack of ambition in Norwich? No, that is the football team—sorry, Delia. Do we need a champion or even a tsar? Do we need an organisation to overthrow what I sometimes think is the dominance of Cambridge on the east coast? We certainly need a regional development agency such as that in the north-west, which knows what a science city is. It sees the glittering possibilities offered by those involved in the sector—from the very young to the very old—and it makes them work together to develop science and technology to the highest level. We have six such science cities in this country, and such bodies would provide a focus for collaboration in the sciences, including astronomy, and I note that Colin Pillinger is coming to Norwich this week to talk to young people and, I hope, at a mass meeting.

We want to get young people into computing. Tim Berners-Lee has said that computational science is the coming thing and he has a vision of our being able to model structures. As hon. Members will know, our understanding of climate change is based on models and on predicting what might happen in the future.

There is a lot that we should be doing. At the same time, there are vast natural resources in places such as East Anglia, where people should go and see for themselves what nature is. Susan Greenfield has been talking in the other place about the effects on the brain of using computers to blog and so on, asking what has happened to reading books and going to see things for oneself. That is absolutely right: not enough people are going out to the broads to hire boats—not to ram other boats, but to sail peacefully up the broads, which are a national park, and see the wildlife there.

We also have rich birdlife in north Norfolk. We find that many young people, for whatever reason—the Field Studies Council not having the support and money, for instance—are not getting out there to see nature for themselves. They are reduced—not badly, I guess—to watching David Attenborough's "The Blue Planet" on television to see what life is really like. We have to get out of that and do something much more radical. We have to get young people out there to see nature and to interact with the world face to face.

Biotechnology is developing in certain parts of the UK. For example, an alternative, junior stock market is being set up that harnesses support from different parts of the world. It has alternative listings from the UK and the US, including those involving stem cell research. I declare an interest: I am on the Stem Cell Foundation, with Richard Branson, Richard Sykes and many others. We are involved in the stem cell initiative, to which the Chancellor has given huge sums to develop stem cell research and biotechnology in this country. I am also involved in the East Anglian initiative, in association with people at Cambridge.

There was a time when big pharma ruled the roost, but it has recently found it difficult to keep up with the research initiatives from smaller companies and individuals. Big pharma cannot keep up with the new ideas, such as the new molecules and proteins that are
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being produced to treat illnesses, and the genomic science advances, as highlighted by developments at the Sanger institute.

There is massive potential for new technology in what are called RNA interference molecules, which are molecules that can induce the inaction of a particular gene or activity in a cell. The gene is knocked out rather than replaced, as in the crudest gene therapy. I see from various journals that 40 to 50 patents involving such technology have been applied for. There is huge development, not only through the patents but in new companies using the technology to develop new cures and treatments.

Such research is exciting, but it is outside big pharma. Big pharma is quite a courageous group of individuals and organisations—it sees what is happening and is taking up a new position. It does not want contracts any more, but a relationship in which the work is outsourced to smaller companies. The boot is on the other foot, and such companies have become much more important in the past few years.

One way round that is to have a mega-merger. A little while ago there was a mega-merger of two companies in this country called Glaxo and SmithKline, into GlaxoSmithKline—it rolls off the tongue as if it were only one company, but it was two companies once. My hon. Friend the Member for Middlesbrough, South and East Cleveland (Dr. Kumar) spent some time investigating that merger. We were told that the company would play a star role and that lots of new discoveries would be made, but it sounds to me as though the merger might not have produced the new products that were promised at the time by Richard Sykes and Jan Leschly when they appeared before the Science and Technology Committee.

Dr. Ashok Kumar (Middlesbrough, South and East Cleveland) (Lab): My hon. Friend articulates his case passionately. However, GlaxoSmithKline is supporting a new centre for biotechnology in my constituency that is to be developed over the new few years as part of the Centre for Process Innovation, so perhaps he is being slightly unfair.

Dr. Gibson : I would never be unfair to GlaxoSmithKline. It is a subtle company—there has been a merger and smaller companies have been set up within the bigger company, because it recognises that sometimes initiative and innovation take place in that context. I have researched the centres that my hon. Friend mentioned, which are called research and development centres—nothing clever about the name—and GlaxoSmithKline has quite a few, because it sees that small is beautiful. That is the way to get innovation and people working together better. The bigger the organisation, the more bureaucracy there tends to be, with innovation not receiving the support that it needs.

Nowadays people tend to be loyal to the technology rather than to the company. That means that small really has become beautiful—that is the name of the game for small biotech companies. However, big pharma companies, with their experience, have something going for them. They are dominant in the development of clinical trials, they chaperone the smaller companies over the regulatory hurdles that they
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face and they help them to market their products, so mutually beneficial interaction is taking place. We need to examine how that is happening and to encourage it.

Many applications from biotech companies are going through fast in the United States—much more than from the big pharma companies. For all its benefits, big pharma faces the problem of losing its patents after 10 years. The replacement drugs are down to a trickle, because the research has not been developed fast enough. Big pharma is still cash rich from its drugs sales, while the US Job Creation Act 2004 gives it billions of dollars in tax breaks if it repatriates any earnings for the companies that invest in the USA.

Big, manic mergers are taking place. Pfizer has taken over Vicuron, for example. Therapeutic companies are being bought up by even smaller companies, such as Amgen, about which many hon. Members will have been lobbied. It is a biotechnology company based in Los Angeles that has taken over a smaller biotech company and thus become a middle-sized company. Companies do not have to be producing anything for such takeovers. Development can be part of the reason for the merger.

Big sums of money are involved in such takeovers, because people see the possibilities. For example, Novartis paid $5.5 billion for Gilead, a San Francisco company that makes Tenofovir, which is used to treat HIV, and Tamiflu, which is used for influenza and which has since been licensed to Roche. The interactions in the market do not follow the typical pattern, however. There are many failures, and many small biotech companies remain just that, in the Coca-Cola league rather than the premier league. However, they must not give up, because who knows what they might discover with the creativity of the people working for them.

It is not fair to compare the UK with the US. We are second in terms of biotechnology production and the amount invested. Much less money is invested in British companies. There are fewer clusters—I mentioned Norwich as an example of where there ought to be one, but there are many other examples where we have been trying for years to get that to happen, but it has not. We hold up Cambridge and Oxford as the star examples—I will not go into the details of how that happened, but it had less to do with Government intervention and more to do with Adnams ale and people meeting in a pub, becoming familiar and deciding to work together. If that is the way developments happen, we should promote it. We should ensure that the right people are together where they have their coffee or pint of Adnams, talking about developing this illustrious field.

If the goal is to develop new leading drugs, collaboration with a range of partners will be essential. Things will need to be set up so that innovation becomes the name of the game. Creative people can usually find each other—something that the Department of Trade and Industry ought to realise—and they do not need the airfare to LA or San Francisco. They will know that someone else is doing work in which they are interested, and they will get there to work with them. Once they get together and start the ball rolling, we must ensure that they are supported at the various stages.

Dr. Kumar : Does my hon. Friend not agree that in order for the climate that he articulates to be created, the
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organisational cluster needs to be in the ideal place to make it happen, and that we need to bring the universities, industry and the entrepreneurs together to ensure a successful future for the biotechnology industry?

Dr. Gibson : I thank my hon. Friend. In theory, that is what should happen, but I question whether it happens quickly enough and whether we have learned all that we need to learn. Simply talking together over coffee is not enough. Those who want to set up a business will need a lot of help, and I shall deal in a minute with tax credits and other methods of support.

The industry has not matured yet. It has quite a long way to go. For instance, we need to improve the financial environment for UK biosciences. Globally, we are second only to the USA, but we need a supportive funding environment to make it happen. In 2005, Paul Myners reported to the Government on pre-emption rights. What he said in the report summarises how small biotech companies work. He stated:

We have to be ambitious and want that to happen.

We need a cross-party understanding of the problems, and we must work together to make it happen. We also need research and development tax credits to remove restrictions on collecting money in order to develop the business from stage A to stages B, C and D in order to get the product on the market. We have to change that threshold. In the last Budget, the Chancellor recommended that companies with 500 or fewer staff should receive some support. That is a start, but the world is moving fast in this field, and we have to help.

Another problem that we have to face is the inability of the bioscience sector to take up new medicines in the UK as fast as elsewhere. A major pan-European report on access to cancer drugs published in October 2005 by the Karolinska institute suggested that the UK lagged behind in terms of access to cancer drugs. It is generally agreed that our processes and structures do not allow new products on to the market fast enough. We need to fast-track more innovative medicines, with funding to increase their uptake by the NHS. We have all seen the sorry sight of Herceptin not being provided for all in the UK who need it. I hope that the National Institute for Health and Clinical Excellence is listening. I am looking for some radical changes in the organisation's operations.

I turn to the question of animal extremism. Animal testing is needed to ensure the safety of drugs before they are used by people. That might be ironic given the six recent cases in London, but that does not deflect from the need for animal experiments as a preamble to the use of drugs in human beings.

We all know about the campaigns against Huntingdon Life Sciences. We all know that the groups that take such action are not huge: a few determined people have taken the issue across the Atlantic to New York and attacked shareholders in those companies that
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carry out animal experiments. They write letters, sound klaxon horns outside houses, use incendiary bombs and throw bricks through windows. That has decreased since Home Office Ministers made efforts to illegalise the processes under the Serious Organised Crime and Police Act 2005, but there are still cases of damage to private property.

People have a right to protest peacefully, and I am absolutely in favour of people marching if they think that animal experiments should be limited or completely stopped—a good argument can be made for that—but I deprecate the activities of the small group of people who carry out what could be called terrorist acts. That may be an extreme description, but that is how it seems to those who work in that industry and who are dedicated to producing drugs to improve peoples' lives.

Ironically—I hope that they hear this—some of those extremists must use drugs to cure their own problems. I am sure that aspirin has been useful to them, because they too must hear the noise of the klaxons when they sound them. I have every sympathy for them, and if they keep using the drugs that have been tested by the system, they will be okay, but they should cut it out and let us have a reasonable argument about the technologies that can be developed to test new compounds. I read that the United States is getting tough on such extremism too, and that three individuals are about to be sentenced or have just been sentenced to jail for their activities. We need more such action here, because the problem will not go away.

The Budget was good in highlighting the need for biotechnology to keep us in the world-class environment for health research and development and innovation. The Budget announced support for Sir John Pattison's stem cell initiative, of which we are a partner through the Stem Cell Foundation. Once new products are almost on the market, we hope that they will be supported in order to ensure that they are developed in this country rather than slipping to other countries for development. Funding worth £100 million has been announced—a further investment of £50 million.

I am not saying that stem cell research will cure Parkinson's or Alzheimer's, but I respect the right of clever people in this country who can do research, and who question what they are doing, to be able to carry it out peacefully. That includes finding out whether using embryonic or adult cells is the way forward for some treatments. There is a little chink of light in that area, particularly with cardiovascular diseases.

It is good that we have this industry, but we must recognise that part of the innovation process of getting a sustainable industry is training our young people in these methodologies. I know that many young people do not want to go into industry. They still live in that world where people do not want to get their hands dirty or take the filthy lucre. They would rather be GPs and take £250,000 a year, or lawyers and take £500,000. Nevertheless, those in this industry are well paid, and we should do all that we can to encourage them.

It is important that the process of training makes people feel fired up and keen to use their talents. That is why science, technology and engineering should be a major part of the curriculum for our young people. I note that, in a debate in the other place, someone said that the curriculum and the order in which things are
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taught has not changed for about 50 years. It can take a long time to recognise that today's world is so different from the world of those who developed the curricula. I hope that the Chancellor or whoever is developing sciences in this country—it seems to change each week—gets stuck in and helps to develop new technologies by bringing in young people.

The country needs to be steeped in science. Science and science-based innovation should be right at the top of the political agenda. We must rethink how we are to educate tomorrow's scientists, and involve the public in the debate, not make them feel anti-science. We should make them feel that it is useful, and not let them be thrown by silly arguments about GM or by what extremists say about animal experiments.

The Treasury is beginning to rethink the whole policy structure—from the last Budget, at least—including how science will be funded; having new research institutes and combining them; and how computer science, which develops almost daily with new ideas and model systems, should be used. Public-private partnerships need to be developed in a way that encourages innovation. We all talk about industry interacting with universities and higher education. Gosh, I have heard about that for almost a hundred years, but we have not found a way to make it work. Last night at a reception, I happened to meet some people who run small businesses, who said that universities do not understand how business works—but universities say that they do not like how business works, so we cannot blame either side. We must try to bang their heads together to make them work together. I do not mean that they should simply form small companies that offer advisory services: they should form companies that take basic, primaeval, blue skies discoveries and develop them into products.

It is time for us to stop simply paying lip service to all this. If we really believe in the future of biotechnology, which is a rosy and growing field, we have to back it up with good, solid training at all levels. The blame is not all on one side as far as universities and industry are concerned. It is time to cut the cackle and set up structures to make it really happen in this country.

There is no reason why we could not be No. 1 if we really wanted to be. We could produce double the number of companies that we are now producing. Every day—or every week, who knows?—someone makes a discovery that, if the right person saw it, could be exploited into something useful to make our lives better. It happens to be drugs at the moment. I think that the use of drugs in this country will increase as we better understand the molecular processes behind diseases and how we can handle them. That will be a growing area. Currently, we do not have the right structures to handle things at the rate at which they are coming on board. There is a bright future, but lots to do.

11.32 am

Willie Rennie (Dunfermline and West Fife) (LD): The UK bioindustry is one of the best examples in Europe of the exploitation of science ideas. The biotechnology industry is recognised as being one of the most advanced in the world, but it is vital that it should be recognised and maintained to sustain our lead in that field. Securing investment should encourage innovation and ensure that the UK economy will benefit as a result.
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Britain's entrepreneurial bioscience sector is a leader in Europe, accounting for 27 per cent. of all entrepreneurial bioscience companies in Europe. The UK also accounts for 93 per cent. of all publicly quoted bioscience companies in Europe, and has a combined market capitalisation of £5 billion. The industry is one of the fastest growing in the UK, with employment expanding at over 20 per cent. annually. Three quarters of biotechnology drugs in late-stage clinical trials in Europe are produced by British companies. Giants of British biotechnology, such as Celltech, dominate the continent. It is vital that investment and careful regulation should allow us to maintain our lead in this area.

Biotechnology is recognised as being part of the next wave of the knowledge economy. The market in Europe alone was expected to be worth more than $100 billion by 2005. More than 40,000 people are employed in the biotechnology industry, mostly in highly skilled jobs—the sort of jobs that we need for the developing UK economy. The bioindustry has the potential to provide employment for millions of people in the UK, making it one of the most important emerging markets for our generation.

I pay tribute to the Government's efforts, because they have made significant efforts on the science agenda, but, more importantly, I pay tribute to bioindustry leaders. They have gone through many difficult times to make the industry successful. Before the Government get too excited by my praise, I shall point out that the level of research and development in the UK is poor. We all recognise that. Compared with Organisation for Economic Co-operation and Development and European countries, we are well below the average for R and D. Pharmaceuticals and aerospace are the only exceptions in which we are doing well. Thankfully, however, the bioindustry is starting to pull things together.

There should be more effort to improve investment in R and D. The Government have made some progress in this area with R and D tax credits and the extension that the hon. Member for Norwich, North (Dr. Gibson) mentioned, and with the framework for science and innovation, which is also great progress. There is also progress with Bioscience 2015, which has led to two world-class bioprocessing centres, including one in Edinburgh, and the single budget for medical research of more than £1 billion a year. My Liberal Democrat colleagues and I want to ensure that none of that is just smoke and mirrors. Many expectations were raised through the science and innovation framework, but much of it has not yet been delivered. We need to ensure that it is delivered.

Some areas require further success. The science base in this country does well internationally. We produce many papers and do well in academic journals, but we need to do more to turn those ideas into businesses. That is where much of the transition work is required. With education, we often hear about the number of pupils taking up science, but there are great concerns on both sides of the border that not enough are taking up chemistry, biology and physics. If we are to sustain our economic success, we need pupils to come through the system.
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There also needs to be attitudinal change, which the hon. Gentleman mentioned. Many academics who I come across do not believe that it is for them to get involved in business. We need to change that and encourage them to make that transition and identify ideas that could be business opportunities.

Among public opinion, there is great concern about terrorists. As we progress with biotech advances, we should take the public with us so that they are not concerned about that progress.

I am greatly concerned that the financial pressures placed on universities mean that they often try to squeeze every last penny out of intellectual property. There needs to be a freer system in which they are encouraged to let IP go on in a more cost-effective way, so that we can encourage businesses to form clusters around universities rather than there being a squeeze for every last penny that IP is worth.

I turn to the situation north of the border, and my colleagues in the Scottish Executive, and encourage the Government to consider how the Executive are handling the progress of science there. Bringing together enterprise and higher education in one Department has meant that lessons have been learned on both sides of that divide about how to connect and address issues such as attitudinal change of academics. The Government should look at how the Scottish Executive is handling that.

The Scottish Higher Education Funding Council, which is now the Scottish Funding Council, works closely with Scottish Enterprise to provide joint funds on the proof of concept and in other areas to ensure that we have seamless government encouraging many scientists to create businesses. A new initiative that is helping to sustain many science departments in Scotland is pooling arrangements, whereby chemistry and physics departments are pooled. I know that people in many other disciplines are considering how they can work together to get the critical mass that is required to compete on the international stage. I hope that the Government will consider the efforts that are being made in Scotland to advance the cause of science.

It is right to recognise that progress has been made on the science agenda, but there is much more work to do in education and on ensuring that there is attitudinal change. It is also important to address the issue of public opinion. Finally, I hope that the Government will consider the efforts north of the border to make that advance.

11.40 am

Dr. Ashok Kumar (Middlesbrough, South and East Cleveland) (Lab): First, I congratulate my hon. Friend the Member for Norwich, North (Dr. Gibson) on securing the debate. He is a great and passionate advocate of science. For all the years that I have been on the Science and Technology Committee with him, as well as the different occasions when we have been colleagues, he has passionately championed science and technology. As Chairman of the Committee in the past, he has put science at the top of the political agenda. Everyone can recognise how passionately he articulated the case for biotechnology.

Only yesterday, I was saying to my hon. Friend that I would come in to the debate for a few minutes and maybe take part for a short while. I enjoyed his speech
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and I started out feeling highly optimistic, but halfway through a sort of gloom took over me. He said that everything was going in the wrong direction and we have not done enough. By the end, however, he had convinced me that the Government have made a great deal of progress and that we need to do a lot more. Overall, I can at least share that spirit with him.

My hon. Friend talked about trying to enthuse young people so that they take science and technology seriously. I agree. Some of the things that are going wrong at our universities, with chemistry and physics departments being closed, are certainly worrying. We need to enthuse our young people to go into science and technology so that we create entrepreneurs and a biotechnology industry and make it a great success.

My hon. Friend talked about the international and national perspective, and then went on to talk about Norwich. However, I want to talk about what the Government have done and how that has affected my area. I am proud of the Government, as they have done more to support science and technology than any previous Government in my lifetime. The science and technology budget has doubled since 1997. That is due to a step-by-step approach to ensure that we target the money in every sector, tackle problems for the long term and build a strong scientific base. That is to be commended. The Government have a tremendous record. I remember that pre-1997, science budgets were cut. Nowadays, they are increasing. It is a tremendous credit to the Government that that has happened.

I want also to acknowledge the influence of Government policy in the north-east and Tees valley. I want to talk about how biotechnology has affected the area and to say one or two things about where we will go from here, as well as some of the problems that I see. If we are to make progress—we have already achieved a great deal—I want the Minister to think about how we will deal with the problems, particularly in my area, because we should be thinking in the long term. I have talked to people in my area and they wanted me to pass on these matters to the Minister. I know that he cares passionately about the north-east.

In the north-east, 45 companies have biotechnology interests, with 3,832 employees and a turnover of £634 million. In addition, 23 of the companies actively engage in research and development and see that as a key business activity. The companies support 47 academic research projects, although 60 per cent. of those involve universities outside the north-east. I would love to see such activity within the north-east, but at the moment it is outside.

In Tees valley, the smaller chemical companies are working closely with larger chemical producers, and they are interacting with the Wilton research centre, which is one of the best European centres for research and development in the chemical industry. The chemical process industry, which is vital to the economy of the Tees valley and the north-east, provides direct employment for 12,000 people and indirectly employs 65,000 across the UK. Of course, the biotechnology industry and the Tees valley have tremendous opportunities.

As I mentioned in my intervention earlier, one of the great success stories has been the Centre for Process Innovation, which is part of the Wilton research centre.
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Recently, it was announced that a national industrial biotechnology centre would be built. That was tremendous news for us, to be the first in the north-east to lead with the centre for biotechnology. My hon. Friend the Member for Norwich, North mentioned the regional development agencies. Our RDA, One NorthEast, is certainly at the forefront and working in collaboration with GlaxoSmithKline to try to support the centre. I can see that offshoot of the research centre offering an opportunity to those who want to engage in research, develop new processes and try new products. They will certainly benefit.

I am delighted that the centre, which will be only a few miles from my constituency, will benefit the whole area. We are delighted and grateful for the support that the centre has received from the Government. In years to come, there will be many offshoots in the north-east, in the spirit articulated by my hon. Friend. A study conducted by the north-east process industry cluster predicted a 32 per cent. rise in employment over five years for existing north-east companies, certainly in the biotechnology sector. It predicted that some 1,200 new, high-skilled jobs could be created.

There is great concern about the skills requirement for our area. If we are to have a competent, successful biotechnology industry, we need to plan ahead. In the Tees valley and the north-east the issue has been raised over and over again that we need technicians. The Minister should discuss that with his colleagues in the Department for Education and Skills. We need biotechnicians, not graduates or advanced graduates—we have them, as my hon. Friend the Member for Norwich, North mentioned. Clever people—those with PhDs, research fellows and academics of a higher calibre—are not a problem. However, at technician level we are facing great difficulties. If we are to have a successful biotechnology industry, we need degree-level biotechnicians, and to deal with that we will need some sort of advanced modern apprenticeship.

Given that the centre will be ready in a few years' time and that there will be other offshoots of companies, there will be a massive haemorrhage of technicians at the required level. If we do not have the skills, what are we going to do? Will we start looking abroad? We need to plan ahead, and that is the view of the north-east process industry cluster and of One NorthEast. The Minister would find it useful to consult them.

Once the biotechnology industry makes further progress, will the Minister consider having the universities collaborate more strongly together and with the biotechnology industry? There is some collaboration at present, but as we hope to make progress there is room for further interaction between the universities.

In my area, we have a successful chemical industry and a successful research and development centre. The offshoot of that is that we now have an emerging biotechnology centre. There are great opportunities in respect of some of the ideas that my hon. Friend talked about, but it is essential that everything happens in parallel—such as the research work that needs to be carried out, and for which we have the skilled work force—in order for us to have the outcome of a successful economy.

The Government have given a lot of support—in my area, certainly. We have made much progress, but we need to plan ahead. Although I have one or two
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concerns, I commend the Government's efforts and the support that they have given to the chemical and pharmaceutical industries, along with—we hope, for the future—to the biotechnology industry.

We have a first-class Minister for Science and Innovation in Lord Sainsbury. He has visited my constituency and neighbouring areas on several occasions. I objected to his appointment, but he has proved to be an outstanding Science Minister. Over the years I have championed him because he has shown tremendous foresight and vision. I hope that the Minister will convey to him that I think he is doing a grand job. However, I also ask the Minister to take on board the points that I have made.

11.51 am

Lorely Burt (Solihull) (LD): I am grateful to the hon. Member for Norwich, North (Dr. Gibson) for securing this debate; it addresses an important issue. I also thank the other Members who have made valuable contributions to it.

Biotechnology is potentially one of the most exciting areas of wealth generation for our country for the foreseeable future. Although the people of the United Kingdom constitute 1 per cent. of the world population, we are responsible for 5 per cent. of the world's science and 12 per cent. of its scientific citations, and we are the second largest biotechnology country—behind only the United States of America. Biotechnology is also one of the fastest growing industries in the UK; growth is 16 to 17 per cent. compared with 7 to 8 per cent. in the pharmaceutical industry generally. As the pharmaceutical industries are certainly no slouches, that gives us an understanding of how fast the biotechnology industry is moving. There are 455 dedicated biotechnology businesses, and more than 22,000 people are employed in the industry.

It is an important area, but, in respect of many aspects of global competitiveness, the UK is suffering in comparison with countries such as China and India, which are developing fast on our heels. China has plans to increase its investment in biotechnology threefold in the next five years, and the increase for India will be fivefold. Therefore, we must move quickly. This industry must be supported properly by the Government.

Members have spoken about their local areas. In the west midlands only last week, 2,300 redundancies were announced as a result of the Peugeot factory closure. It is clear that areas such as Coventry need to reinvent themselves in respect of high value-added areas of industry in order to be able to avoid suffering the problems of mass redundancies and the misery that that generates. Marine biotechnology is a particularly fast-growing field in Coventry. I am looking forward to there being assistance through Government agencies for the development of the infrastructure to enable biotechnology to be developed in the west midlands.

I shall now speak briefly about the role of the Government. We want the industry to be as free as possible to develop itself, but there are issues that the Government cannot avoid some involvement in. The hon. Member for Norwich, North talked about
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Government investment, and my hon. Friend the Member for Dunfermline and West Fife (Willie Rennie) mentioned research and development tax credits. The bioscience for business knowledge transfer network was announced this year, which will promote industries working together. We are looking forward to hearing how that develops. There will be some small additional investment in that as well from the Government.

The need for skills has also been mentioned. In the UK, it seems that science has been a poor relation in many academic circles, but there are some superb centres of excellence in our universities, which have been referred to. We need to convey the excitement of the challenge that biotechnology and related sciences present for the future of the country. Only in that way will we generate the necessary enthusiasm among young people for them to want to commit to a career in these fields. I also take on board the point of the hon. Member for Middlesbrough, South and East Cleveland (Dr. Kumar) regarding biotechnicians; in that area, we need plenty of Indians, as well as chiefs.

With regard to the regulatory pathways, there has been some press criticism about the slowness of the food and drinks administration. That has held up our competitive advantage, particularly with the United States, which seems to get its act together a little more quickly in respect of regulatory pathways. Its pathways are, perhaps, a little smoother than ours in the United Kingdom.

One cannot talk about biotechnology without acknowledging that there are huge ethical issues that need to be addressed, such as stem cell research. We are hopeful that the solution to terrible afflictions such as Alzheimer's, Parkinson's and kidney failure can be found from stem cell research. There is also the controversy over the non-prescription of the Herceptin cancer drug. Anyone who has cancer and is in pain will appreciate the fundamental importance of the availability of potential life-saving treatments in those areas. I echo the comments of the hon. Member for Norwich, North about the National Institute for Health and Clinical Excellence, and its slowness sometimes in respect of being able to promote faster relief for people by the way that it operates and regulates the introduction of new drugs. There are also the issues of the potential for terrorist attacks, and the safety of the people who produce the various products.

The hon. Gentleman also referred to animal testing. Although that is clearly an emotive and difficult issue, the Government cannot duck their responsibility in respect of such areas to consider the ethical views of all members of the population. Sadly, we saw the result of faulty testing on people only the other week, when monoclonal antibody tests were done that wreaked havoc in the six volunteers.

The final ethical issues that I want to raise relate to GM. People in this country have been much less accepting of that particular technology than those elsewhere. There are also big concerns about terminator technologies and the ethical effects that they will have for small businesses and farms in poorer, less developed countries. The Government have an interesting furrow to plough in the field of technology. I echo the comments of the Labour Members who have spoken and of my hon. Friend the Member for Dunfermline and West Fife: we in this country need to facilitate the
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development of what is potentially the most exciting area of industrial development. That will keep us ahead of the game and will ensure that we keep a higher value added industry that we need if we are to compete in a world with many challenges.

12.1 pm

Mrs. Eleanor Laing (Epping Forest) (Con): I sincerely congratulate the hon. Member for Norwich, North (Dr. Gibson) on securing the debate and giving us an opportunity to examine and debate this very important subject, which is so often forgotten. That is partly because if one mentioned that we were to have a debate on biotechnology to anyone walking the corridors, the most common reaction would be, "What is biotechnology?" but in fact it is a science that permeates just about every area of life, including business and the economy. The hon. Gentleman highlighted all those points extremely well. It is a worthwhile exercise to bring the subject to the House to highlight what has to be done and how we ought to perceive this important industry.

I am particularly pleased to support the hon. Gentleman because he and I are exclusive members of a very unusual all-party group, namely the all-party St. Mirren supporters group. For the uninitiated, St. Mirren is the football club of Paisley and has, after many years, just been promoted to the premier league. We are not an official all-party group because there are not enough of us to create one. The subject might not appear entirely relevant, but it is, because it shows that the hon. Gentleman is prepared to go out on a limb on subjects to which other people are not paying attention. He is a trailblazer in bringing to our notice matters that ought to be dealt with but often are not, such as the success of St. Mirren and the biotechnology industry.

Normally, my hon. Friend the Member for Wealden (Charles Hendry) responds for the Opposition on debates of this kind, but unfortunately he has other duties this morning. It gives me great pleasure to stand in for him.

Why does biotechnology matter? Several hon. Members have explained that very well. It matters enormously, first because the UK is a world leader, being second only to the United States in the development of bioscience. If we analyse the industries involved, that is not at all surprising. Innovation often begins in the UK, where we have the academic and business climate to let it begin to grow, but when it flourishes, too often our regulatory or economic regimes force companies abroad. That is not happening in biotechnology, and I hope that by highlighting the subject and allowing the Minister to address it—at some length, I hope, for which reason I shall be brief—we can make progress in supporting the industry.

It is not generally recognised—although the hon. Member for Solihull (Lorely Burt) mentioned it—that 22,500 people are employed in biotechnology industries in the UK. The effect on the alternative investment market is significant. In 2005, the AIM—sometimes described as London's junior stock exchange, because the general public do not understand what AIM is—became the de facto global market for small bioscience companies, so biotechnology is important in not only industry and the academic world but the City, too. The fact that AIM is attracting listings from not only the UK
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but the US, continental Europe and beyond is important in bringing investment and wealth into the City of London.

I have a few questions for the Minister, one of which regards the pharmaceutical price regulation scheme. Sometimes, because of the way in which cross-product price modulation is set up, there can be a problem for smaller companies. As the hon. Member for Norwich, North, rightly said, it is, after all, in smaller companies that innovation occurs. They are the seedbeds of biotechnology growth. However, the way in which the PPRS is constructed can sometimes cause problems, because smaller companies typically launch only one or two products, rather than a range of products, and so cannot take advantage of cross-product price modulation in the way that larger companies can, so they do not benefit from the pharmaceutical price regulation scheme. I appreciate that that is a subject that the Minister may have to consider, but it is worthy of consideration, because it would be a great pity if, inadvertently, smaller companies were put at a competitive disadvantage compared with larger companies, when it is those smaller companies that we desperately need to encourage.

We all know, from the excellent speeches this morning and from general coverage of such issues, just how important the development of bioscience and biotechnology are to the provision of antibiotics, vaccines and other drugs that are so important in health policy and in developing a better health service. However, the issue goes wider than that. It applies to international development issues such as the eradication of hunger caused by failed crops, for example. One of the solutions to that problem—and I do not mean to make it sound simple—is the development of biotechnology to improve crops. Likewise, we have enormous problems with energy supply and its security, and effects on the environment. Again, it is research currently being undertaken by small biotechnology companies and by the academic sector that will provide some of the solutions to problems to do with energy and the environment. Biofuels certainly represent an important avenue for reducing our dependence on oil and thus improving the quality of our environment. We have an opportunity here to bring that much ignored and misunderstood fact to general attention.

As has been said, it is unfortunate that the media in general often talk about the development of bioscience because of the illegal extremist activities of some who purport to care about animal welfare. Surely there is a way to balance the animal welfare that we all want to see with the need to test drugs. The UK is a world leader on the issue. Is it not better that testing on animals should occur under strictly regulated conditions in Britain? Companies would otherwise be driven away and test in less regulated conditions, which could be very harmful to the animals.

It is a pity that the criminal extremists who have waged campaigns against companies such as Huntingdon Life Sciences have been the conduit through which the subject of bioscience has been brought to general recognition. That is unfortunate because there is so much that is positive to say about it.

What can we as a legislative body do to help nurture and enhance the biotechnology industry? I do not like to ask what the Government can do, because I do not
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believe that they should drive development and so on. However, it is the Government's role, on behalf of us all, to provide the necessary conditions in which this vital sector can flourish. I echo the words of the hon. Member for Middlesbrough, South and East Cleveland (Dr. Kumar), who talked about the importance of encouraging the study of science, not just among students at university but among technologically educated and qualified people at not only graduate but other levels.

Such people are vital. At present, 22,500 people are employed in the sector, and I hope that the number will increase markedly during the next decade. It will not do so if the education system does not produce enough people properly educated in the right basic subjects. The challenge for the Government is to ensure that we have not only enough graduates but enough apprentices.

The second challenge—the clash between public and private sector operations—has been identified by the CBI as a problem. I identify a parallel clash between the business and academic worlds; in the biotechnology sector almost more than in any other, it is vital that the public sector works with the private sector and that business works with the academic sector, but at present there is a lack of cohesion and understanding. I do not suggest—far from it—that the Government could put that right with a legislative programme, but if the Minister assured us that he was aware of the problem, that would be a step in the right direction. I ask not for Government intervention but that the Government ensure that the economic and regulatory regime within which the biotechnology industries, so precious to our future economy, operate, is the right one, and that there are conditions for research and development to grow, to allow this vital sector of our industry to flourish.

I conclude on that point, because I wish to ensure that the Minister has plenty of time to answer the important questions asked this morning.

12.15 pm

The Parliamentary Under-Secretary of State for Trade and Industry (Barry Gardiner) : It is always a great pleasure to serve under your chairmanship, Mr. Cummings. We have had a super debate. I always look forward to debates secured by my hon. Friend the Member for Norwich, North (Dr. Gibson). We always touch on Norwich City football team—that is an inevitable part of proceedings—but to get on to St. Mirren was quite remarkable. Here am I, an old Queen's Park supporter—my team still languishes in the Scottish second division, but we too have hopes and aspirations.

I ask you to forgive my rather croaky voice this morning, Mr. Cummings. I am sure that when I tell hon. Members that my eight-year-old's football team won the league cup on Sunday morning, they will appreciate why. I know that my hon. Friend, also, will forgive me for sounding rather more peculiar than usual.

Although there is debate on the exact timing of the birth of the bioscience industry, it is generally accepted that it started with the founding of Genentech in the US in 1976. Since then, the industry has grown from a lone start-up to a sector that generates revenues of $63 billion globally. That is phenomenal growth by anyone's standards.
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The industry is still dominated by the US, and the relatively younger companies in Europe and Asia have significant challenges as they try to catch up. However, the UK's biotechnology sector is the largest in Europe—globally, as has been said, it is second only to the US—so we have an excellent platform on which to build our strategic support for the sector.

Let me rehearse some of the basic facts, some of which have been mentioned. Biotechnology is recognised as the next wave of the knowledge economy. It represents one of the fastest-growing industries in the UK. Some 40 per cent. of all European public biotechnology companies are based here, and 43 per cent. of the biotechnology drugs in late-stage clinical trials in Europe are produced by British companies. Global sales of biotech drugs grew by 17 per cent. in 2005, giving sales of $53 billion. The sale of all pharma drugs grew by only 7 per cent., so the growth in sales of biotech drugs is astonishing.

There are approximately 455 dedicated bioscience companies in the UK, employing almost 22,500 people, and in 2003 they generated revenues of approximately £3.6 billion and spent £1.23 billion on research and development. The biotech industry has the potential to provide employment for millions of people in the European Union, making it one of the most important emerging sectors of our generation.

However, in this context it is also important to mention the pharmaceutical industry, a dynamic performer of key importance to the UK economy. As my hon. Friend the Member for Middlesbrough, South and East Cleveland (Dr. Kumar) said in relation to his constituency, it has helped the growth of the smaller bioscience companies and is increasingly benefiting from closer collaboration with them.

The pharma sector has an outstanding record of innovation, having discovered and developed a quarter of the world's top 100 medicines. Among the G7 economies, the productivity of drug discovery in the UK is second only to that of the US. The UK is home to two of the world's largest pharma companies, GSK and AstraZeneca, and all the leading global pharma companies have significant manufacturing and/or research and development facilities in the UK. They invest more than any other sector in R and D in the UK. The industry accounts for 0.6 per cent. of the UK's gross domestic product and generates the UK's biggest trade surplus.

The hon. Member for Solihull (Lorely Burt) said that the UK was not at the top of the European and global league for research and development, but she should realise that in the pharma and bioscience sectors, we are. The percentage of our GDP going into R and D is not at the top of the European league, but we are right at the top and the cutting edge of R and D in the pharma and bioscience sectors. Indeed, companies such as GSK and AstraZeneca make up more than 40 per cent. of the total UK spend on R and D in the private sector.

The UK is one of the world's largest exporters of pharmaceuticals by value. In 2005, exports and the trade surplus totalled £12.2 billion and £3.4 billion respectively. The sector employs 73,000 people across all business segments, approximately 27,000 of whom are engaged in research and development activities. It also generates another 250,000 jobs in related industries.
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Given the sector's enormous contribution to innovation, it is an essential partner in achieving the Government's targets under the 10-year science and innovation investment framework.

The bioscience and pharmaceutical industries are closely related and are interdependent. Many of the factors that make the UK a good environment for those industries are common to both: a strong science base; highly-skilled staff; sound regulation; and close dialogue with Government. Just as big pharma increasingly looks to biotech companies to fill gaps in its product pipeline, so they rely on licensing revenues to finance their activities and on the developing and marketing expertise of big pharma to bring their discoveries to market.

Dr. Gibson : Can the Minister explain why small biotech companies in the States, of which there were many—Gilead and so on—have become, in a sense, big companies without a merger? Why has that not happened in Britain?

Barry Gardiner : The short answer is no, I cannot do so off the top of my head. My hon. Friend raises an interesting question. I would take some time to establish a thesis as to why that has taken place, so I shall speak to my officials in the Department and write to him to develop our answer a wee bit further. There is an interesting difference between the two markets. I suspect—this is off the top of my head—that it has something to do with the more advanced venture capital structure of the US compared with ours in the UK.

A key role of the Department of Trade and Industry is to ensure that the voice of business is heard across Whitehall, that Departments take account of business needs in framing their policies, and that successful businesses are encouraged to grow in an increasingly competitive environment. We need, therefore, to be constantly in touch with industry. There has been a long history of collaboration between Government and industry.

I was particularly grateful to my hon. Friend the Member for Middlesbrough, South and East Cleveland for the way in which he spoke about my colleague Lord Sainsbury. He was right that Lord Sainsbury has been an exceptional Minister for Science and Innovation. In 2002, he and other Ministers met representatives from the BioIndustry Association, the UK's trade body for biotechnology. It was agreed that the time had come to take a more detailed look at some of the major issues affecting the sector.

As a result of Lord Sainsbury's initiative, the Government decided to set up the bioscience innovation and growth team, chaired by Sir David Cooksey. Its task was to identify any barriers that could significantly hold back the sector's growth in the UK and to make recommendations about how those obstacles could be overcome. Although it has formally finished, a great deal of joint industry-Government activity is continuing. Ministers still have regular contact with industry. That will lead to a mid-term review of the BIGT by 2007–08. Undoubtedly, the taskforce recommendations have helped to influence the shape of Government policy today. As a result, there have been
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many improvements in the areas of finance and investment, bioprocessing, the European market, and national health service-industry partnerships.

Dr. Gibson : Does the Minister concede that the idea of a science city will precipitate the development of small businesses, as it has in the six existing science cities? Will that be part of his remit, which he mentioned in terms of biotech innovation and development? Does he think that the science city concept will make such development occur better?

Barry Gardiner : My hon. Friend is pushing me for a clear commitment. I am unsure whether I would like to give him such a commitment. However, as he mentioned, anything that enables people to come together—whether that be around a pint of Adnams ale or whether we are talking about a science city concept—to work together and to develop innovative patterns of research and development and then push those through into products must be welcomed.

On finance, I am pleased with the outcome of the work that Paul Myners led on behalf of the Government to examine the issue of pre-emption rights, which, again, was raised in our debate. There is support for the greater flexibility of their application, which he recommended. Scott Dobie's reformed pre-emption group has been engaging industry and investors to agree new guidelines that will be published shortly. The next stage will be to monitor how they work in practice, but I am pleased with results so far from the constructive engagement of industry and investors. There has also been much dialogue with industry on research and development tax credits and their role in encouraging businesses to invest more in research and development.

On NHS-industry partnerships, the UK clinical research collaboration has been established. It is a partnership of Government, research organisations, NHS trusts and industry, united by the shared aim of establishing the UK's position as a world leader in clinical research by harnessing the power of the NHS.

EU better regulation was a priority for the UK presidency, and the Department of Trade and Industry is at the forefront of the Government's drive to improve the EU regulatory environment in this area.

I come to the central issue of skills, which was raised by several hon. Members. In November, the Association of the British Pharmaceutical Industry published a report entitled "Sustaining the Skills Pipeline in the pharmaceutical and biopharmaceutical industries", which set out concerns about the supply of suitably qualified graduates and technicians, and in particular the decline of in vivo practical skills. The report is excellent. Lord Sainsbury and Sir David King have responded by supporting some of the key recommendations, and the DTI is working with the ABPI to set up an in vivo taskforce.

We are also sympathetic to the view that there should be a science diploma for 14 to 19-year-olds. Again, that picks up on the themes of co-operation and joined-up thinking between the DTI and the Department for Education and Skills mentioned by hon. Members. The Government are determined that through that collaborative approach they will play their full part in ensuring that the pharmaceutical and biotechnology industries have a steady supply of the qualified graduates and technicians that they need.
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Partly because it has been topical, partly because hon. Members have raised the issue, and partly because I wanted to give the hon. Member for Solihull (Lorely Burt) the opportunity perhaps to correct a misapprehension that she may have shown in her remarks, I want to discuss the issue of the testing at Northwick Park. She said that there was "faulty testing". I want to scotch such an idea, because it is clear that, to date, the Medicines and Healthcare products Regulatory Agency has found no evidence to suggest that there was any problem with the manufacture of the new monoclonal antibody TGN 1412, nor did the MHRA find any problems with the administration of the clinical trial which are likely to have contributed to the serious adverse incidents that took place at Northwick Park.

The MHRA is still carrying out further tests to confirm those findings, but if they are confirmed, it would appear that there was something peculiar about the product and its mode of operation in human beings which led to the adverse incidents. That was not predicted in the pre-clinical research carried out on the drug, including the animal tests. I want to give the hon. Lady the opportunity to correct the record, if she so chooses.

Lorely Burt : I am grateful to the Minister for that further elucidation. I thank him for taking the trouble to explain things.

Barry Gardiner : We obviously have to work out how best to assess new types of drugs. The Government have therefore agreed to establish a group of leading international experts in the field to consider the risks associated with this new type of drug and how to make the transition from pre-clinical testing to trials in humans. Members are to be appointed from distinguished experts in the relevant fields of inquiry, including immunology, toxicology and clinical trialling.

Encouraging innovation and demand for new technologies is essential to ensuring that UK business remains competitive in the tough global marketplace. The technology strategy board is developing a national technology strategy to take a more strategic approach to Government support for new and emerging technologies. The TSB's first annual report sets out its views on strategy development and plans for future competitions. The collaborative research and development competitions have featured key technologies that have wide and pervasive applications in business, and the potential to achieve significant environmental and social benefits. A total of £370 million of DTI and Department for Environment, Food and Rural Affairs funding is available from 2005 to 2008.

Before I conclude, I should like to pick up on the question about the pharmaceutical price regulation scheme put by the hon. Member for Epping Forest (Mrs. Laing). That is the pricing agreement for the supply of drugs to the NHS—

John Cummings (in the Chair): Order. We must move to the next debate.
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