Life sciences businesses often highlight a lack of talent or problems in accessing funding as barriers to growth, but for Scott Johnstone all the challenges come back to the same word: regulation.
Johnstone, chief executive of the Scottish Lifesciences Association (SLA), explains: “If you want to get a drug or a medical device to market, you have – quite rightly – to go through regulatory processes to show that it is safe, that it meets quality standards and that it has a purpose. In recent years, we have made that process much more challenging in the European Union for medical device and diagnostic companies.”
The main problem, says Johnstone, is the difficulty in getting a notified body to carry out the relevant checks on your business. “There used to be 58 notified bodies in Europe and now there are five,” he says. “There were six in the UK and now there is just one, the BSI [previously the British Standards Institute]. From 2020, if you are a medical device company and do not have a notified body, you won’t be able to sell newly developed products in the UK/EU.”
Johnstone says the need for increasing sectoral experience in the assessors will lead to real capacity challenges – making it hard to get a notified body to regulate in the first place and adding delays across the industry if you do get one.
“There are not as many new-starts as there should be; the significant challenges of getting over the regulatory line is putting people off. The regulatory framework is tough and there is more coming down the line for diagnostic companies.”
Johnstone reiterates the SLA’s long-held position that Scotland needs more students coming out of university with regulatory and quality skills: “For a life sciences business, getting a good biological sciences graduate to do lab work is not a major problem; it’s much harder to get someone with strong regulatory skills.
“Firms are using head-hunters in that area and they end up pinching expertise from other life sciences businesses; for the sector, it’s robbing Peter to pay Paul. However, more students with those regulatory skills are starting to come through; the newer universities in particular are very receptive – Robert Gordon, Napier, Glasgow Caledonian and Stirling, as well as Heriot-Watt.”
Johnstone also links funding challenges back to regulation: “There are increasing amounts of money wanting to invest in life sciences. We are a positive sector to invest in because we save lives.
“We have seen a degree of investment, mainly from angel investors sitting on cash reserves, but there is still a lot of money out there. Some are holding back on investment because they won’t invest in a company if it looks like it might struggle with regulatory approvals.
“With life sciences businesses themselves, they have had to spend money on Brexit contingency planning, on the basis of different possible outcomes. They can’t invest on the basis of the UK potentially having its own regulatory system just yet.”
While Johnstone thinks the life sciences sector has largely coped well with the Brexit threat, he would like to have seen more discussion about the opportunities as well as the challenges.
“Nobody has been talking about the opportunity presented for life sciences by a new trade deal with the United States,” he said. “It’s the biggest market for life sciences products developed here and could be the biggest shot in the arm that life sciences has ever had – but politicians just want to talk about chlorinated chicken.”
Johnstone has been a cheerleader for developing life sciences trade links between Scotland and the US, especially Indiana and Kentucky, where there are strong life sciences clusters. An American delegation was due to arrive in Scotland as this supplement went to print, following a visit by a group of Scottish businesses to the US earlier in the year.
“This is a long-term strategy because these connections are vital; the US is the largest market for life sciences products and it makes so much sense to engage,” says Johnstone, citing the opportunities with products like Airglove, created by serial Scottish entrepreneur Gio Benedetti, which warms up a patient’s arm to allow access to a vein much more easily and quickly than existing methods provide.
He also mentions Cellexus, a Dundee-based biotech business, which has partnered with a company in Indiana and is now manufacturing in the US as well as the UK.
“Some companies are doing well, and if you have a track record, you are much more likely to attract a wider range of investment interest,” says Johnstone.
To tackle some of the specific regulatory challenges around medicines, the SLA set up a Qualified Persons group two years ago, with more than 70 people expressing an interest in getting involved.
“That’s how the SLA works,” says Johnstone. “We have 130 members and we are run by special interest groups that reflect what our members want.
“It’s a flat, bottom-up structure, and my role as CEO is to make introductions and connections that will help members solve problems and become more successful, whether that is with banks, funders, regulators, the NHS or other members. I’m spending a great deal of time trying to solve the regulatory challenges.”
To illustrate this, Johnstone is heading to London on the day after our interview to meet the UK government’s Office for Life Sciences to talk about the regulatory challenges.
“Put simply, we are making it difficult to bring really important, life-saving products to market in the UK due to regulatory skills issues,” he says.
“You are causing people to look overseas because it’s possible there. If we can unblock the regulatory skills issue, we can unlock funding but also create a lot more jobs. If firms
are regulated in a more efficient way, they will need more people – more engineers, more biological scientists. Delivering more regulated products is the key to unlocking growth in terms of talent, investment and NHS purchasing. We need to do simple things to make Scotland a great place to do life sciences.”
Slow ahead in the public/private exchange
Scott Johnstone says the relationship between the life sciences industry and the NHS in Scotland is improving – but still has a long way to go.
Health Innovation Partnerships are working, he says, but the procurement processes of the NHS make quick progress challenging.
“It should be simple because the economy and healthcare are both devolved to Scotland and there are great benefits to be delivered by taking innovative life sciences products into the NHS,” he says.
“However, there is still a degree of suspicion of the private sector. The politicians get it, but progress is slow because procurement in the NHS is slow – and obviously has to consider value for money.
“There is light at the end of the tunnel – but it’s a long tunnel.”
This article first appeared in The Scotsman’s Life Sciences 2019 supplement. A digital version can be found here.