Scottish Enterprise chief Rhona Allison urges life science companies to claim share of £43bn EU funding

Published on Saturday 30 January 2010 14:24

LIFE science companies should look to Europe to help fill funding gaps, according to the Scottish Enterprise director in charge of growing the sector.

More than ?50 billion (43bn) is available under the European Union's seventh framework programme for research and technological development, and small and medium-sized businesses can claim back up to 75 per cent of their research and development costs through the scheme.

About 8bn is on offer directly to the life-science industry, with a further 2bn in related research areas.

Rhona Allison, SE's director of life sciences, said firms working in the field of regenerative medicine could also pursue a share of a 21 million pot unveiled by the UK government's Technology Strategy Board.

SE is working with Scottish firms to win a slice of the money, Allison said, while also guiding companies towards the larger European funds. She also revealed Scotland's life-science industry continued to grow last year after extra state funding helped counter a more than 20 per cent fall in equity funding.

The number of life science firms operating north of the Border rose from 620 to 630, while the number of people employed increased by 1,500 to 32,500, according to figures from the enterprise agency.

But Allison said equity investment fell from 22m in 2008 to 17m last year and that companies were still finding it hard to get the finance that they need to grow. Speaking ahead of Thursday's Scottish Enterprise life sciences dinner, Allison told Scotland on Sunday: "We've seen the sector grow in the past 12 months. It's not gone up dramatically but it's fantastic given the economic conditions that we're facing. But it's a challenging time and it's hard to get finance."

She said it was becoming harder to convince venture capitalists to pump money into new companies because investors were concentrating on supporting existing ventures.

The "venture capital gap" – the amount of funding that Scottish companies have traditionally found it hard to raise – had been shifted up to the 10m mark through initiatives such as SE's venture capital and co-investment funds, she added.

Allison said: "I'd like to say we've cracked that but we haven't cracked it yet.

"The co-investment and venture capital funds have made a difference and the funding gap is now at a higher point than it was, say, two years ago. Below that, we think there are now good sources of finance."

She said the Life Sciences Advisory Board – which brings together industry, academia and government to help the sector – had recruited Bill Blair, chief executive of Adamant Ventures and investment director at Scottish Widows, as an investment "champion" to help tackle the problem.

Graeme Boyle – director of Nexxus, the life sciences network that brings together industry, academics and the National Health Service to share ideas and improve skills – said more than 50 people had attended a recent event run by the network to consider how companies and universities could launch joint bids for some of the European cash.

He said: "The companies that are going out and looking for money at the moment seem to be finding it, but a lot of firms that aren't actively seeking money say they are put off by the gap that comes after business angel funding.

"It's a mixed picture across the sector."

Boyle also highlighted that new sources of money could become available to firms through the Office of Life Sciences, the recently formed arm of the UK government's Department of Business, Innovation and Skills.