As major pharmas pull away from the U.K. and the U.S. risks ceding its lead through a national brain drain, the U.K. must create a new, more robust model for innovation.
For decades, the narrative in life sciences has been simple: the U.S. is the promised land for biotech talent, while the U.K. is a promising, yet trailing, counterpart. This framing has been justified. With its deep pools of capital, aggressive risk appetite and experienced talent, the U.S. has historically been viewed as the gold standard for scaling biotech ventures. However, we’re currently in a complicated position, with U.S. dynamics changing and the U.K. struggling to keep its biotech giants at home.
The challenge is becoming increasingly visible. Recently, four of the sector’s biggest names, Sanofi, Eli Lilly, Merck and AstraZeneca, announced they are pausing or reconsidering major U.K. projects. Eli Lilly has put its planned U.K. Gateway Labs incubator on hold, while U.K.-based AstraZeneca has paused a £200 million ($271 million) expansion of its Cambridge research site. These decisions, which follow similar moves from other major pharmaceutical companies, highlight a persistent scalability gap.
Across the pond, IPOs are largely absent—save for one that recently broke a seven month stalemate and another hopeful following in its footsteps—the investment climate is generally more cautious and the U.S. is turning away from cutting edge technologies such as mRNA. This has created a peculiar opportunity to shift this dynamic. The U.S. system, while still powerful, will increasingly struggle to effectively cultivate new talent and ideas.
To put things into perspective, the U.S. turmoil has led to a national brain drain, whereby the country is losing local talent due to funding cuts and political pressure on science. We’re seeing a significant increase in U.S.-based scientists seeking opportunities abroad, with a 32% increase in job applications and a 35% increase in job board browsing for foreign positions.
On the other hand, the U.K.'s academic excellence has made it a world-class engine for innovation. With institutions like Oxford, Cambridge and Imperial consistently ranking among the best, and powerful data assets like the U.K. Biobank, the U.K. is a hotbed of novel research and a wellspring of scientific talent.
The biggest opportunity for the U.K. is not to simply bridge this gap by mirroring the American approach but to lead the way with a new, more robust model.
This involves going beyond securing brilliant minds and ideas; we need to establish the structured pathways needed to transform them into global-scale companies. It all begins with a different way of thinking about innovation itself.
A Tale of Two Ecosystems
The U.S. biotech ecosystem is driven by a fundamentally different investment philosophy, one with a higher appetite for risk and endless commercial hunger. U.S. investors tend to make larger investments and move more quickly through due diligence. This enables companies to raise significant capital early, providing the fuel needed for rapid scaling and faster commercialization. This is particularly true for those working on ideas outside the norm, and talent taking bold risks outside of academia.
The U.K.'s strength, by contrast, is its deep-rooted academic excellence. Recent developments, such as the creation of the Advanced Agency for Research and Invention—ARPA-E and DARPA style—now increase our capacity for groundbreaking R&D. We are generating more brilliant ideas than ever before and arguably taking the lead in Europe, with the U.K. receiving 41% of all European venture capital invested into biotech in 2023.
The fundamental challenge isn’t a lack of genius; it’s a failure to provide a structured pathway that transforms those brilliant concepts into global-scale companies. This scalability gap is particularly pronounced in biotech, a sector caught in a vicious cycle of needing more data to secure more funding and more funding to generate more data.
De-risking the Future of UK Biotech
The U.K. is uniquely positioned to de-risk the future of biotech but only by fundamentally shifting its approach to innovation. This requires moving beyond the traditional, high-risk model of building a company around a single academic discovery and hoping for commercial success.
Instead, the focus must pivot to a problem-first approach. By working backward from a patient’s need, we can build ventures around a set of strategic, de-risked ideas. This new approach integrates the entire development process from the beginning, covering everything from reimbursement and trial strategy to regulatory and manufacturing requirements. This helps to prevent future problems and ensures a stronger and more scalable plan for the product’s future.
This new model, which removes the reliance on a single, high-risk discovery, opens up a much wider range of commercial opportunities. By redefining the very way we create biotech ventures, the U.K. can gain the benefits of the next generation of life-saving therapies from an ecosystem built on robust science and a strategic, creative approach to commercialization.
But that’s not all we need, in addition to the challenges of scaling, the UK’s venture capital ecosystem is grappling with a significant funding gap post-Brexit. Many funds that previously relied on the European Investment Fund (EIF) for capital no longer have access to this critical source. This raises a question about whether a similar-scale funding source can be created or if access to the EIF can be re-established. While institutions like the British Business Bank (BBB) have increased their activity, they have not yet fully compensated for the loss of EIF funding. Addressing this capital deficit is vital for ensuring the continued growth and competitiveness of the U.K.'s startup landscape.
While the U.K. has effectively used tax incentives such as the Enterprise Investment Scheme and Seed Enterprise Investment Scheme to spur early-stage investment, the nation faces a more complex challenge in addressing the persistent hurdles of scaling up businesses. This calls for a holistic approach that fortifies the entire investment ecosystem, from its earliest stages all the way to public markets.
For instance, a notable policy shift now permits U.K. pension funds to invest in venture capital, but this has not yet unlocked the capital needed to bridge the gap between policy and practice. To complete the funding picture, there must be a greater focus on making the U.K. stock market a more attractive listing venue for capital-intensive sectors like biotechnology. This is a key step to make sure that the U.K.'s most promising companies can grow and achieve their full potential at home.
Setting the UK Up for Success
The U.K.'s biotech ecosystem stands at a critical juncture. While its academic prowess and innovative spirit are undeniable, the challenge lies in bridging the gap between groundbreaking research and global commercial success. The current cautious investment climate in the U.S., coupled with the U.K.'s unique strengths, creates a powerful opportunity to redefine the biotech landscape. The decisions by Eli Lilly, AstraZeneca and others underscore the urgency of this moment. By moving away from the traditional, single-discovery model and adopting a strategic, problem-first approach, the U.K. can de-risk ventures and build a more resilient and scalable industry.
The future of U.K. biotech isn’t about simply mimicking the American model; it’s about building a complementary force, one that leverages its unique data assets and pioneering research to create lasting, globally competitive companies. To achieve this, the U.K. must address the critical gaps in its funding ecosystem and cultivate a domestic environment where brilliant ideas and top talent not only thrive, but are systematically built to last.
