Pharma deals are ‘vote of confidence’, says government

The government has said two deals to invest in the UK’s biotech industry illustrate confidence in its industrial strategy, which it published on Monday.

MSD, known as Merck in North America, will support a new research centre in London creating around 950 new posts. Germany’s Qiagen will expand its investment in a genomics and diagnostics campus in Manchester. Business Secretary Greg Clark said it represented “a huge vote of confidence” in the government’s approach.

People don’t make the investments of this scale that are for the long term if they don’t have the confidence that we are building in this country a very attractive base,

he said. The industrial strategy white paper outlines the government’s plans to support more research and development, encourage firms to embrace new technology and boost the economy.

It includes:

  • Sector deals – Partnerships between government, academia and business. Deals have been agreed in life sciences, artificial intelligence, automotive, construction sectors. More are expected in other sectors next year.
  • Industrial Strategy Challenge Fund – Another £725m on top of the £1bn announced in April. The first tranche was to support innovation in robotics and battery technology. The new money is for the construction and life sciences sectors
  • Research and Development (R&D) tax credit – As announced in the Budget, R&D tax credit will rise to 12%. The UK spends 1.7% of its economic output on R&D. The government has promised to raise that to 2.4%, in line with the average in other developed economies.

The industrial strategy comes just days after official forecasting body the Office for Budget Responsibility (OBR) announced an aggressive downgrade of its UK growth forecast. The OBR concluded that a slowdown in the growth of productivity – or the value that each worker produces – since the financial crisis will persist for several more years. MSD’s managing director in the UK and Ireland, Louise Houson, linked the company’s investment to the government’s approach to the economy:

This investment presents a major opportunity for us to work in collaboration with the UK government to build on the forward thinking and ambitious industrial strategy white paper being published.

Qiagen expects to sign a deal early next year to expand its presence in Manchester where it works on DNA-based diagnostics for personalised healthcare. The firm said it would add to its current staff of 270. The government said the investment had the potential to create 800 skilled job overall in the Manchester life sciences hub at Qiagen and other firms. The chief executive of Qiagen, Peer Schatz, said the involvement of the University of Manchester, the NHS Trust and the UK government were “essential” to the partnership they are investing in.

Mr Clark said the UK’s decision to leave the EU meant the strategy was “even more important” and he said political commitments to limit immigration would not hamper the development of research related industries. He said the government would “make it easier for more scientists to come and work in the UK”.