Recommendations from Imperial College London to improve UK’s competitiveness in critical industries

Imperial College London has published new recommendations to boost the UK’s competitiveness across Biopharmaceuticals, Medtech and Telecommunications.

The ‘Sectoral Systems of Innovation and the UK’s Competitiveness’ reports, published today, assess the value-added per capita of each sector and how they compare internationally.

The reports, authored by academic experts from Imperial College London, identify technological solutions and policy recommendations for government and industry to make the sectors more innovative and increase their value added.

The UK is faced with a dramatic slowdown in its rate of economic growth which is largely due to the declining rate of innovation and competitiveness of key sectors of the economy.

This problem is common across G7 countries, and many are responding with a more active industrial policy to help drive economic growth. Notably, the US Administration’s CHIPS and Science Act and Inflation Reduction Act are designed to bolster US competitiveness and national security in key sectors such as renewable energy and semiconductors.

Policymakers are increasingly interested in sector-based policies to solve the UK’s own productivity problem. This kind of targeted support in areas such as R&D, skills and finance requires a clear understanding of what is going on in specific industries and what is needed to increase their value added per capita.

Over the past year, joint teams from Imperial College London’s Faculty of Engineering and Business School have looked in detail at the competitiveness of the UK’s Biopharmaceuticals, Medical Technology and Telecommunications sectors.

Common themes across all three sector reports are the need to:

• Create more innovative, collaborative and flexible regulatory environments that can align with key markets such as the EU and US where beneficial;
• Anticipate the opportunities and challenges posed by rapid advances in digital technologies;
• Raise innovation productivity through targeted policy interventions and, where appropriate, the adoption of new business models.

David Sainsbury, Lord Sainsbury of Turville, former Minister of Science and Innovation (1998-2006) said: “These Imperial reports on three key industries should form a central input to a government wishing to develop a growth strategy for the country because they show how these industries could increase their global competitiveness and value added per capita.”

Professor Francisco Veloso, Dean of Imperial College Business School, said: “If the UK is to compete on a global stage, turbocharging key industries like Biopharmaceuticals, Medtech and Telecommunications needs to be a priority. That means targeted policy and support. These Imperial College London reports provide crucial insights into the needs, challenges and opportunities of these important sectors and the scope for industry, academia and government to work together to boost their productivity and drive economic growth.”

The launch of the reports follows the Inaugural Innovation and Growth Conference 2023 earlier this year, which brought together policymakers, academics and industry representatives to discuss how to increase UK productivity and competitiveness.

Telecommunications

The economic impact of the telecoms sector in the UK is larger than in other OECD countries, contributing £38 billion to the UK economy (Gross Value Added). Due to its deep impact on the performance of other sectors, such as healthcare, manufacturing and entertainment, the sector needs to be viewed holistically as part of the digital sector at large.

The report, authored by Dr Marika Iivari, Professor Chris Tucci & Professor Eric Yeatman, highlights the significant potential for growth and competitiveness through the adoption of 5G and future 6G networks.

It identifies three key principles: the establishment of new telecommunications innovation ecosystems, embracing convergence of the digital domain, and leveraging the role of data, platforms, and analytics beyond the telecoms sector.

The report recommends establishing a national 6G Programme in the UK for industry-academia collaboration, similar to those launched by the likes of China, EU, Japan and South Korea, to enable it to compete on a global stage.

It also urges the development of an agile and open regulatory environment that anticipates future needs, helping to both drive innovation, support business needs, and protect consumer interests.

Recommendations include considering the economic, social, and environmental impacts of telecom activities, and protecting user privacy, security, and safety should be a priority, as well as safeguarding national and digital sovereignty.

Medtech

The MedTech sector plays a crucial role, developing life-saving and life-improving technologies that are relied upon by the NHS and healthcare systems around the world.

The Imperial report, by Professor James Moore Jr and Yunus Kutlu, says that the MedTech sector shows promising growth. Despite being primarily formed of SMEs, the sector contributes £13.5B to the UK economy (GVA), with a GVA/employee of £100k. Sector GVA had a 19% compound annual growth rate between 2016-2020. The sector is fed by a strong contribution from university spinouts.

The report also highlights missed opportunities that could further enhance the sector's performance.

Of particular concern is the uncertainty surrounding the UK's post-Brexit medical device regulation, including challenges associated with EU regulatory practices and expertise for processing regulatory applications.

The report’s recommendations include improving the regulatory environment by finalizing the post-Brexit transition for the Medicines and Healthcare products Regulatory Agency (the UK’s regulatory body) and clarifying the fast-tracked route of devices approved by the US, EU, and Japan.

The report urges policymakers to find ways to encourage NHS adoption of innovative MedTech devices, including by working with NHS staff to identify and address unmet clinical needs.

Recommendations also include greater MedTech specific funding, the establishment of courses that include regulatory training in relevant technology areas, and the improvement of technology transfer policies and procedures so that university spinouts are well set up for success.

Biopharmaceuticals

The UK has a strong and longstanding reputation for the life sciences, two world-leading pharma companies, and many small start-ups and new players. The biopharma sector contributes a GVA of around £15 billion annually to the UK economy and 400,000 jobs. The sector has a 3.36% compound annual growth rate (CAGR) since 2016. However, there are concerns about sustaining the sector's global competitiveness.

Pharmaceutical companies around the world are experiencing pressures associated with the declining productivity of drug R&D, tightening regulations, and downward price pressure by health systems and governments seeking better value for money. But several homegrown challenges also threaten to derail the UK’s ambitions in this sector. These include a decrease in clinical trials conducted in the NHS, which raises concerns about the attractiveness of the UK for launching new drugs, regulatory divergence between the UK and other major markets, slower access to newly approved medicines compared to some other countries, and the erosion of the drugs manufacturing sector.

Despite a strong research base and an emerging data science sector targeting pharma R&D, the UK has not been successful in growing large UK biopharma companies - the sector is dominated by small and medium-sized enterprises (SMEs) that are frequently acquired by companies from the USA or elsewhere before they scale-up.

To address these challenges and enhance the sector's future ability to create strong and dynamic biopharma companies, policymakers should focus on regulatory clarity and harmonization, particularly with the European Union, NHS procurement practices, fostering the emerging data science sector, and considering how a high-value drugs manufacturing sector can be supported.

The report also calls for policymakers to improve financial support for the scale-up of promising small companies or risk early technologies and IP being sold prematurely to foreign companies.

Overall, the goal for government must be an integrated national life sciences R&D ecosystem which supports drug discovery, early clinical development, and uptake into healthcare, reducing R&D development cycles and costs, and ultimately producing more attractive investment opportunities.