UK Scientists Lead the Way in Technological Innovation

During this time, the UK presents itself as a pioneer in technology trends.

In November, the government plans to convene hundreds of international financiers and executives to promote investment opportunities in British companies, including those working on nuclear fusion and deep technology. That same month, Prime Minister Rishi Sunak hosted the AI Safety Summit, an event aimed at positioning the nation as a global leader in critical technology.

It’s a hard sell. A sluggish economy, tepid capital markets and the lingering effects of Brexit have left the UK with few technology companies that can credibly compete globally. Sunak is mainly inviting leaders from Silicon Valley to the upcoming artificial intelligence summit.

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Yet there is one area where the UK has the potential to make a big impact. A number of start-ups working in fields such as drug discovery, genomics and medical devices have taken advantage of Britain’s world-renowned universities and NHS to deliver impressive technological breakthroughs – and some commercial success. The Bloomberg Technology Summit, held in London on Tuesday, will feature some of these biotech and healthcare players in a series of discussions about Britain’s global role in technology’s most pressing issues.

“The UK is a very attractive place for life sciences,” said Simon Dingemans, a senior adviser at Carlyle Group and former chief financial officer of GSK Plc. He mentioned the concentration of research institutes, government support and various investment instruments. “That’s why the industry is so vibrant,” he said.

Last year, Dingemans became chairman of Genomics Plc. An Oxford-based biotech company that analyzes human genetic disease risk. Genomics has deals with several pharmaceutical and insurance companies, including MassMutual, and achieved “significant revenue” this year for the first time, according to CEO Peter Donnelly. He said his company, which has raised $82 million, is preparing another round of funding.

Tech startup funding is falling in the UK, just like everywhere else. Private equity investors invested £7.9 billion ($9.6 billion) in the country in the first half of this year, a 58% drop from 2022 and below the combined total of the US and Europe, according to a recent report by data firm PitchBook.

But recent investment in UK healthcare services and equipment has proved “the most sustainable” compared to other sectors, according to PitchBook. McKinsey’s 2021 report shows that the UK has far more biotech startups, venture capital deals and IPOs in the biotech sector than the rest of Europe. According to the study, Great Britain is the world leader in industry publications in relation to gross domestic product.

For entrepreneurs, the UK’s academic centers are key to attracting continued investment and scientific talent. “It’s probably the best place to be,” said Tim Guilliams, a biochemist whose drug development company Healx Ltd. was born at Cambridge University. One of its main competitors is Isomorphic Labs, a spin-off of Google’s DeepMind – itself born out of a British university.

Less prestigious schools also have startups. Cerca Magnetics, a company that makes brain-scanning helmets for children, was born out of research at the University of Nottingham, with researchers providing a “constant IP pipeline” to the startup, CEO David Woolger says. While the academic and public healthcare infrastructure is a clear boon for startups, it has its limits. British universities have been criticized for taking too much capital from start-ups, potentially stifling growth opportunities. Woolger said Nottingham owns 25 percent of Cerca, for example, but is in talks to reduce its stake.

And many health care startups depend on selling to the National Health Service, an institution facing a deepening crisis and a checkered history of introducing new technology. “It’s a significant asset because it’s a cradle-to-grave, single-payer system,” said Dingemans. “But it’s very difficult to get there.”

Even if a startup could contact the NHS, that’s not always a ticket to success. British telehealth provider Babylon Health declared bankruptcy earlier this year, despite an extensive NHS partnership. Many companies that cut contracts with the NHS still need to pursue commercial contracts in the United States to grow, said Irina Haivas, a London-based partner at Atomico, a private equity firm that backs Healx and other bioscience startups.

Biotech companies don’t see as much of this pressure because they are less dependent on selling directly to local healthcare providers. Yet these startups typically have much longer time frames for clinical trials and business deals in addition to the difficult lab work.

Still, the investors who fund them are drawn to the potential for outsized returns if these startups break into pharmaceuticals, pharmaceuticals and healthcare — all major global markets. “In the short term, they are clearly more difficult to build,” Haivas said. “But they have more of an unprotected side if you build them.”

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