Ambitious biotechs need cash help

Published on Wednesday 28 October 2009 20:28

SCOTLAND'S life sciences sector will not meet ambitious growth expectations unless Scottish Enterprise (SE) is able to offer much larger grants of more than £5 million, policymakers will be warned today.

Industry experts will tell the Life Sciences Forum in Edinburgh that Scotland is failing to produce large-scale, profitable firms, due to a lack of venture capital investment.

Although seed funding is relatively easy to procure, start-up companies in Scotland struggle to attract sums of more than 5m, which is needed to commercialise their products and move research on to the next stage, experts will say.

The Scottish Government has named life sciences as one of the key industries of the future, yet it is estimated that it is still at least ten years away from being able to compete internationally.

Scott Johnstone, chief executive officer of Antoxis, the Aberdeen-based biotech firm, will urge Scottish Enterprise to replicate schemes in Ireland and Singapore, where government economic agencies offer millions in match-funding.

Johnstone, who is also a committee member of the BioIndustry Association (BIA) in Scotland, will say such schemes have succeeded in attracting the kind of venture capital investment Scotland is sorely lacking.

Speaking to The Scotsman ahead of today's forum organised by the BIA, Johnstone said: "If you look at the most successful market in the US, they have a vibrant venture capital market. We don't have venture capitalists that invest in biotech in Scotland, but the government could attract that investment if Scottish Enterprise takes a lead from other economic agencies around the world and puts in cornerstone funding."

Johnstone said that $1 billion (600m) is typically needed to develop a new drug and take it to market. Although Scottish business angels are very good at supporting early stage biotech firms, Johnstone said there are few options for firms which need cash injections over 5m.

Rhona Allison, director for life sciences at SE, who is also speaking today, admitted that Scotland does face challenges in attracting long-term and venture capital investors.

But she said larger sums are available through the Scottish Venture Fund.

Allison added: "One of the things that is often lost is life sciences are already contributing 3bn to the Scottish economy."

Philippa Montgomerie, a life sciences specialist at the law firm DLA Piper, said Scotland could also convert more of its academic research into commercial products through collaborations with large pharmaceutical companies.

US heavyweight Wyeth has agreed to invest at least 33m in a project with four Scottish universities, Scottish Enterprise and NHS Scotland to develop a range of personalised medicine. Montgomerie said Scotland should seek more of these agreements if it wants its vaunted life sciences sector to fulfil expectations.