CA Magazine - Life Sciences Article

Colin Miller, head of technol-ogy and intellectualproperty, Biggart Baillie LLP,opened up the discussion.

He said: “In the past decade therehas been huge growth in the life sci-ences sector in Scotland, and nowthere are more than 600 organisa-tions employing more than 40,000people. With changed economiccircumstances, everyone has beenaffected in some way. What stepscan be taken to ensure that invest-ment in life sciences is maintainedand enhanced in difficult eco-nomic conditions? For example,

what new sources of finance couldbe found? And, could public sectorbodies work better together toimprove efficiency of service andeffectiveness of public spending?”

Rhona Allison is senior director,life sciences with Scottish Enterprise.She said: “In Scotland, we’ve got avery supportive public sector. Theapproach has been to work withoutside partners when it comes tofunding, which I think has workedwell. It’s not ‘soft’ governmentmoney, it’s helping to leverage inprivate money.

“The real challenge is how to get

VCs [venture capitalists] with muchdeeper pockets investing in life sciences. We don’t have, in Scotland,an active local VC that is routinelyfunding the sector. We have beenworking on that for some years, andwe are now selling the idea to VCsthat there are a lot of good opportu-nities in Scotland, good companiesready for investment.”

Derek Smith, business develop-ment partner, Clydesdale Bank, hasfunded a number of life sciencesbusinesses. He asked the panel:“Which stage of funding is the mostdifficult to obtain? Early stage or

follow-on funding?”“It’s the £5m-plus level, the VC-

level funding, that is the mostdifficult.” That was the answer fromScott Johnstone, director of theScottish Life Sciences Association.Johnstone is also CEO of Antoxis, anantioxidant specialist drug develop-ment company.

He added: “We’re lucky when itcomes to early stage fundingbecause, in Scotland, we have thebest angel network, or the best inEurope at least. But it’s hard for theangels to give up their stakes whenit comes to the next stage of funding,

Panel membersColin Miller Rhona Allison Dr Charlie Bavington Damien Bechelli Claire Brady David Bunton

Biggart Baillie LLP(Chair)

Scottish Enterprise GlycoMar Ltd Biggart Baillie LLP Edinburgh ResearchInnovation

Biopta Ltd

Findingfunding

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The life sciences sector is seen by many as one of the most promising inthe Scottish economy. CA Magazine and leading law firm Biggart BaillieLLP brought together a panel of business experts, funders and advisersinvolved with the sector to discuss its potential growth and internationalimpact and, as Robert Outram reports, their mood was upbeat

PHOTOGRAPHY BY MIKE WILKINSON

016-19 Round Table 20/1/11 16:25 6

and that’s a barrier.”Hugh Ilyine is an independent

consultant with the Scottish StemCell Network (Advisory Board) anda board member of DestiNAGenomics, which specialises inchemical sequencing and DNAanalysis. The problem for the angels,Ilyine added, is that the VCs canimpose their own conditions, unlessthe angels keep going back in forround after round of funding.”

He added: “Scottish Enterprisehas a unique model to encouragefunding, but in my view it does notask for enough back. The

Government should look for a returnon its investment, albeit in a delayedway... for future investment and tocreate a virtuous circle.”

Dr Claire Brady, IP licensingmanager with Edinburgh ResearchInnovation (Edinburgh University’stechnology transfer and commer-cialisation arm), pointed out thatuniversities, which are not-for-profit organisations, also apply forgovernment grants such as theProof of Concept Fund. They wouldnot be able to pay back at a com-mercial rate because R&D carrieswith it some risk of failure, which

should not be penalised.She added: “Everyone involved,

including investors, already wants a piece of the pie, so if theGovernment takes more, that willleave even less for VCs who arealready difficult enough to attract.”

Rhona Allison said: “The way wecan all benefit is to ensure that every-body gets a reasonable, appropriatereward. So if money is needed tomake an idea into commercial reality,we should be looking for ways toreward everyone who is puttingresources into that.”

“Is it part of the problem that

opportunities are individually toosmall for the VCs?” asked DavidBunton, CEO of human tissue spe-cialist business Biopta.

Neil McInnes, head of technology,Scotland with Grant Thornton,agreed that scale could be an advan-tage. He said: “If you can putcomplementary technologiestogether, you improve the chances ofgetting funding; and in some casesit is easier raising £5m-£6m than£2m. More collaboration betweencompanies would help,even if it does not involvemerging companies

DestiNA Genomics Ltd

Scottish Life SciencesAssociation

Grant Thornton Clydesdale Bank Johnston Carmichael CA Magazine

Hugh Ilyine Scott Johnstone Neil McInnes Derek Smith Brendan Waters Robert Outram

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Round table

together legally, butworking together throughpartnerships, joint ven-

tures and so on.”Brendan Waters, corporate finance

partner with Johnston Carmichael,commented: “Investors tend to seekearlier exits in Scotland, so compa-nies don’t get the chance to grow tobe true, global companies of scalebefore they are sold.”

Damien Bechelli, a partner withBiggart Baillie LLP, who regularlyadvises life science companies andstart-ups, added: “If we don’t havea local lead VC investor – which isoften the case – it can lock out someof the overseas funds who mightotherwise invest but want someoneon the ground, locally, who’s keepingan eye on the company.”

Claire Brady said: “A lot of spin-outs have fantastic business plansand they get the first round offunding, but can’t get the next. Sothey survive on generating cashfrom early products and consul-tancy; this distracts from their R&Dprogramme and the potential bigrewards.”

“There were three exits fromSE’s funds last year, all to overseasbuyers,” Brendan Waters noted,adding: “I think this can be a goodthing, but some were concerned thatit looks like ‘selling out Scotland’.”

Claire Brady asked: “Do we wantto build businesses in Scotland, orto have these five-year buyouts?”

Rhona Allison said: “They’re notmutually exclusive. A sale of aScottish business to a company likePfizer, for example, can be a positiveoutcome. If the acquirer is investing,creating jobs here and collaboratingwith local businesses, that is a goodreturn. I don’t think we should beoverly concerned about whether it isan indigenous company or not.

“The ‘stickability’ of jobs iswhat counts. It’s about keeping thefaith; this is a long-term plan.This is not an industry that bringsquick returns, though it is verylucrative in the medium to longerterm, so we need to show that weare achieving milestones alongthe way.”

Neil McInnes added: “Thesucessful sale of a Scottish busi-ness should not necessarily beconsidered as a negative, and

indeed it can help address thoseareas where the Scottish sector isdeficient, when experienced man-agers and the cash from the saleare available to be recycled intonew opportunities.”

Hugh Ilyine argued that, as partof the UK, Scotland cannot intro-duce the kind of tax breaksintroduced by Ireland to attractinward investment. He was positive,however, about the “phenomenal”range of IP talent among universi-ties in Scotland.

Ilyine added: “There needs to bea discretionary pot of money for pin-pointed investment, to test thepotential commercial value of ideas.”

“There is more of that kind ofmoney around than there ever was,although funding for translationresearch is still limited and compe-tition is high,” was the responsefrom Claire Brady. “The challenge,often, is getting the academics to

apply for it, because their maininterest, and purpose of employ-ment, is the funding they get forresearch papers, not in a shortproject that might only involve threemonths’ work, the purpose of whichisn’t core to their research expertise.”

“Stanford University [in PaloAlto, California] has the sameproblem; they have a pot of moneyfor short projects and typically it isnot all spent. This is not unique toScotland. It’s hard to employ staff fora three-month project, and youcould spend as much time applyingfor a £3m grant as for £30,000, oftenwith less bureaucracy to deal with.”

Damien Bechelli speculated:“Perhaps if there was more of aswitch away from that, there wouldbe an incentive to undertaker e s e a r c h t h a t c o u l d b e commercialised?”

Claire Brady said: “I would haveloved to see that message get

through eight or nine years ago.It’s coming through now, but thereis a danger of missing out on theunexpected brilliance and rewardsof pure research, if you go too fardown that road.”

Hugh Ilyine said that not everyoneis keen on applied science: “At onecompany, when I suggested wecould use stem cell technology inbeauty products, I was nearly frog-marched out of the building!”

Scott Johnstone argued that thepanel should not be too negative,pointing out that there are success-ful Scottish life sciences quotedcompanies, for example OmegaDiagnostics, and Axis-Shield.

These companies and others, hesaid, had not only built their ownbusiness but had been active inacquiring others.

Biopta’s David Bunton said: “Ourvision is also to go on the acquisitiontrail over the next two or threeyears.”

Biopta started as a spin out fromGlasgow Caledonian University andnow has a thriving research servicesbusiness. The company employsmore than 20 people.

Dr Charlie Bavington is chiefexecutive officer at GlycoMar, whichspecialises in the application ofmarine biology to human health and

“Do we want to buildbusinesses in Scotland, or tohave these five-year buyouts?”Claire Brady, Edinburgh Research Innovation

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personal care, and so far has expe-rienced both the start-up processand the acquisition of another business.

He said that diversification andacquisition, even if not part of theoriginal plan, could be a good thingfor the business.

As he put it: “It’s not a failure foryour business plan to be a bit messy.It’s a model which works for us.Some VCs may not like that, butthere are VCs out there who dounderstand. The power to survivealone is worth something.”

Rhona Allison stressed: “There ismore activity going on and ScottishEnterprise, and a number of compa-nies, are talking to VCs about howthey can invest in Scotland. Raisingawareness is working.

“A recent report showedScotland has the UK’s higheststart-up rate per capita in the lifesciences sector, and over 50 percent get funded as opposed to 36per cent elsewhere in the UK.”

Derek Smith commented: “Asbusinesses reach the level at whichthey are looking for VC funding,debt funding also plays a part.Maybe the life sciences communityhas found it harder, in the past, toaccess debt – it all depends on whatpart of the sector we’re talkingabout – but there are venture debtproducts, working capital productsout there that work well, alongsideequity investment.

“I think it helps to have manage-ment teams that know how toaccess that sort of funding, andhow to use it. That’s no different inany industry.”

Claire Brady said that the univer-sity sector is showing greaterenthusiasm for commercialisingtechnology. She said: “We havemore and more academics wantingto come forward and form compa-nies. Last year we had a recordnumber, many from students. Theappetite is there.”

Attitudes are different now, ScottJohnstone agreed: “The ‘culture offailure’ we used to talk about inScotland five or 10 years ago hascompletely changed.”

Colin Miller asked: “How closelyis the National Health Serviceworking with the life sciences sectorand with the universities, and could

this be improved?”Claire Brady said: “We work with

the NHS daily. Fundamentally, ourpriorities are different – research andteaching versus patient care – butthere is good collaboration happening.”

Brendan Waters pointed to thesuccess of SHIL (Scottish HealthcareInnovations Ltd), a company jointlyowned by NHS Scotland andScottish Enterprise, which has beeninvolved with successes like TouchBionics and Ambicare with the aimof helping to commercialise medicaltechnology and expertise. He said:“This is a fantastic story.”

Rhona Allison said: “Previously,we had competition rather thancollaboration, at least between theuniversities. One of the biggestdevelopments was Wyeth [a global

player in pharmaceuticals, now partof Pfizer] collaborating withScotland. From the point of view ofinternational corporates, they onlyneed one contract to work with thewhole of Scotland. Wyeth tried to dothis in other global locations, butthey could not it make it workthere. Here, they can work hand inhand with the healthcare providerand researcher.”

She added: “The Governmentrealises that there is a ‘health andwealth’ agenda for Scotland, in otherwords not just creating economicwealth but helping to tackle some ofthe country’s health problems.”

Allison highlighted the work ofLiSAB – the Life Science AdvisoryBoard – co-chaired by NicolaSturgeon and Dr John Brown, chair-man of Axis-Shield, CXR Biosciences

and the Roslin Foundation, withrepresentation from small and largecompanies, international and indige-nous companies. She said: “It’s notjust a talking shop. The CEOs whogive their time for this want to see anoutcome and some tremendouswork has been done.”

Hugh Ilyine added that theScottish Stem Cell Network alsocombines academia, industry andgovernment in one body. He said:“Around the world, in most placesyou don’t see that kind of connec-tivity. Scotland is a socially moreopen country than many others,and the standard of ethics here issecond to none.”

Summarising, Colin Miller said:“In Scotland we have a very support-ive public sector and the angelcommunity is stronger than in manyother countries, but we need to lookfor deep-pocketed investors, partic-ularly over the £5m mark. That’s amajor challenge. Another is attract-ing foreign investment and“stickability”, good investors whowill be in it for the long term.

“Scottish Enterprise has achieveda lot, but we recognise that this is along-term game.” ■


“In Scotland,we have a verysupportive public sector and theangel community is strong”Colin Miller,Biggart Baillie

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science

Anthony Harrington finds that whilethe challenges facing Scotland’s lifesciences sector are great, so is theindustry’s potential

The appliance of

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As a small country on theperiphery of Europe,Scotland has to workhard to keep its economy

moving forward. Key to this hasbeen the task of identifying andchampioning sectors where thecountry already has world-classstrengths. The life sciences sectorhas been one such focus for anumber of years, and while every-one in the sector would alwaysargue that more Governmentsupport would be an exceedinglygood thing, what has been achievedso far has been remarkable.

As Scott Johnstone, CEO of thelife sciences company Antoxis anddirector of the Scottish LifeSciences Association, observes,the sector currently employs morethan 33,000 people and contributessome £3bn to Scottish GDP.However, some in the sector arguethat while individual companiescontinue to do well, there is a sensethat the sector has hit somethingof a plateau in the last few years –and not just because of the reces-sion. There are however, somesubstantial initiatives goingforward, which should give thewhole sector some additionalimpetus in the medium term.

Not least of these is theEdinburgh BioQuarter, a $1.2bnpublic/private investment projectlocated alongside the new RoyalInfirmary. The 100-acre site con-tains a state-of-the-art teachinghospital and the University ofEdinburgh medical school. Thecompleted site will provide morethan 500,000 square feet of aca-demic research space and anadditional 900,000 square feet ofaccommodation for life sciencescompanies. It doesn’t lack forprestigious neighbours either,having the Roslin and MoredunResearch Inst i tutes , theEdinburgh Technopole and HeriotWatt Research Park nearby.

Partners involved in theEdinburgh BioQuarter includethe City of Edinburgh Council, theUniversity of Edinburgh, ScottishDevelopment International(which will be looking to attractinward investment from existingpharmaceuticals giants, forexample) and NHS Lothian. InJune 2010, work began on the£24m, three-storey “Bioincubator”building based in the EdinburghBioQuarter. The building, which isexpected to be ready in 2012,will provide a mix of office andlaboratory accommodation for arange of life sciences companies.

Johnstone says that he is veryoptimistic about the sector’sprospects. The steps that havebeen taken are all extremely posi-tive and the Life SciencesAssociation itself is thriving, hesays. “We were part of the UKBiotechnology Association, but wefelt that since key issues for thesector, such as health, aredevolved issues, it wasessential that Scotland


In the past decade we have seen

significant growth in the life sci-

ences sector in Scotland. There

are now more than 630 organ-

isations directly involved in life

sciences, employing more than

40,000 people.

However, they are facing

unprecedented challenges due

to the financial downturn. Life

science companies are struggling

to attract new finance and the

investment community has

become increasingly risk averse.

Many pharma companies are

tightening their belts and cutting

back on more of their R&D activ-

it ies . Anomalies in NHS

procurement have also created

their own problems for the sector.

However, recent legal devel-

opments suggest help is on the

way from both the UK govern-

ment and the European Union.

In November last year, the UK

Government launched a wide-

ranging review of the way UK

tax impacts on both intellectual

property and research & devel-

opment. The Government has

outlined further details of the

proposed UK “patent box” which

was f i rst announced in

December 2009. This will

provide favourable tax treat-

ment for income generated in

the UK from certain patents,

hopefully making the UK a more

attractive environment to invest

in life sciences. The consultation

period runs until 22 February.

There have also been encour-

aging developments from

Europe. As from 1 January

2011 new arrangements have

been put into place for filing

patents in Europe which will, in

certain circumstances, cut costs

for UK businesses. For example,

applicants no longer have to

supply the European Patent

Office with the results of

searches already carried out

by the UK Intellectual Property

Office (UKIPO).

Although the EU provides for a

Community Trade Mark and a

Community Design, there is still no

unitary EU Patent. This may

finally become law in 2012. If

adopted, there will be a new

patent covering all the member

states of the EU (currently, 27)

but without any translation

requirements, except that claims

will need to be translated into

two other official languages.

The adoption of a single EU

Patent will result in significant

benefits, including substan-

tially lower translation costs.

Currently, it is often more

expensive to obtain patent

protection in Europe than in

the US or Japan. ■

COLIN MILLER is a partnerwith Biggart Baillie,heading up the firm’s IPand Technology Group.

Colin Miller reviews legaldevelopments in the world oflife sciences and biotechnology

Life sciencesand the law

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Edinburgh BioQuarter



had its own association.When Government dealswith the sector, it is much

happier dealing with a single voiceand a single Scottish body than itwould be addressing a part of a UKbody,” he says.

Rhona Allison, senior directorfor life sciences and chemical sciences with Scottish Enterprise,argues that far from being flatlined on some plateau, the sectoris actually growing strongly.“Between 2000 and 2007, thesector saw a 50 per cent growth interms of revenue, and we antici-pate that revenues in the sectorwill double by 2020,” she says.

A very recent initiative, stillnot completely grasped byeveryone in the sector, is thework that has come out ofthe Life Sciences AdvisoryBoard (LiSAB), co -chaired by Dr JohnBrown and NicolaSturgeon. LiSAB provided extensive feed-back to the Scottishgovernment as to whatbarriers there are togrowth in the sector.

As Allison notes, LiSABhas done much to highlightwhat needs to be done totruly make Scotland a locationof choice for life sciences compa-nies. Key to this has been the workdone with the Scottish NHS, whichwas only finalised in September2010, and which provides a muchsmoother route for companies whowant to sell their product into thehealth service.

“What is important here isthat life sciences companies,whether they specialise in medicaldevices or drug development, canget input direct from clinicianswhich reflects the NHS Scotlandview. This will tell them what datathe NHS needs to make judge-ments about the viability ofparticular products,” Allison says.

In her view, the next piece of thepuzzle that Scotland really needs toput in place is to find a venturecapital company with deep pocketsthat is prepared to base in Scotlandand focus on the sector. “Scotlandhas been investing in the life sci-ences sector for many years and theCo-investment Fund and theVenture Fund have been extremelyhelpful for the sector, but we needventure capital and that is a real

challenge at present,” she says.Neil McInnes, associate director,

corporate finance, with GrantThornton, is a specialist in life sci-ences transactions. He argues thatit can be misleading to make gen-eralisations across the sector. “Lifesciences” is a portmanteau term,drawing together vastly differentkinds of enterprises. A companyspecialising in providing outsourcedclinical trials capabilities is a verydifferent operation from a bio sci-ences company pioneering a newdrug or a medical devices companydeveloping diagnostics kits or brainscanning equipment. “There are anumber of business models in thesector and these models are viewedvery differently by potentialfunders,” he notes.

“What we have seen quite a lot ofin the last 10 years is that big phar-maceutical companies – and somemid range ones as well – have cutback on some of their own home-grown R&D and are looking toleverage the efforts of smaller, earlystage companies,” McInnes says.

If the pharmaceuticals company

takes a stake in the new company,or signs a joint venture agreementat , say, just pr ior to the commencement of clinical trials,that takes much of the risk of theR&D, from the investorcompany’s perspective. It also,of course, derisks much of the restof the journey for the investeecompany, since it delivers apartner with the resources to takethe product to market if it turnsout to be successful.

However, McInnes argues thatthe danger for the Scottish life sciences sector is that it can be verytempting for companies to sell uptoo soon, and achieve only a smallfraction of their potential value.“They end up selling for a few tensof millions instead of a few hun-dreds of millions,” he says. At thesame time, this process of earlyselling can end up attenuating thelife sciences community inScotland by constantly “cropping”potential winners, flattening thegrowth curve of the whole sector.

One Scottish biotech that gotthings exactly right, McInnes says,

was Bio Envision, which raised agood deal of its funding in the USand floated on NASDAQ. Thecompany successfully developed achildhood leukaemia drug andbegan working with Genzyme,the second largest biotechcompany in the world. Once thedrug won approval, Genzymebought the whole company forsomething like $450m. “The ques-tion for other Scottish biotechs is,can they replicate this kind ofmodel?” he asks.

For McInnes, the recession hasdealt rather lightly with theScottish life sciences sector, largelybecause for companies who arestill at the pre-revenue stage, andare wholly driven by funding, thefall away in demand that charac-terises a recession is not an issue.Funding has always been difficultto come by, of course, and a reces-sion certainly does not makefunding any easier. However, heargues that Scottish life sciencescompanies have, of necessity, gotvery good at switching off some oftheir costs and running on a much

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“Touch Bionics is a prime example ofa Scottish life sciences company thathas successfully circumnavigated the

passage from a pure R&D company toone that is shipping products globally”

Stuart Mead, CEO, Touch Bionics

Spin-out success story TouchBionics has created iLimbs,which is marketed globally



lower cost base.One of the great early

successes for the EdinburghBioQuarter was the announce-ment by the drug developmentc o m p a n y T P P G l o b a lDevelopment that it was going tolocate its new headquarters in theBioQuarter. The company citedScotland’s highly ranked lifescience universities, strong skillsbase and a first-rate medical tech-nologies infrastructure as thebackground for its decision tolocate here.

Dr Sandy Allan is chief executiveoff icer at Scottish HealthInnovations (SHI), which wasoriginally set up by the ScottishGovernment and ScottishEnterprise to administer intellec-tual property licensed from theNHS in Scotland. The operationhas been grant funded until now,but in the wake of the comingpublic sector cuts, Allan is keen tofind new sources of funding. “Wehave quite a lot of product comingto the market shortly and we havesome licenses that are already outthere and are bringing in royal-ties,” he says. According to Allan,there is no shortage of good ideascoming through from the NHS,many of which have very goodcommercialisation potential.

“Since we first started, we havehad more than 1,000 ideas thatmerited consideration,” he adds.

In Allan’s view, SHI currentlyneeds about £3.5m in funding toget it from where it currentlystands, to the position where itwould be self-funding in future andhe is exploring a number of optionsto secure the required cash injec-tion. So what is the difference

between SHI and, say, the commer-cialisation departments ofScotland’s mainstream universi-ties. According to Allan, the majordifference is that SHI looks to addsubstantial value to the IP that it ispushing out to the market. Thisincreases the revenue share thatSHI can expect from that IP onceit is successfully “out there”.

It has some fantastically suc-cessful spin outs to its credit,including Touch Bionics, whichhas achieved worldwide acclaimfor its work on artificial hands.Touch Bionics began as a pro-gramme of work in the PrincessMargaret Rose Hospital inEdinburgh back in 1963, lookingat prosthetic solutions for chil-dren affected by thalidomide. Itwas spun out in 2003 under SHI’sguidance and with a SMARTaward from Scottish Enterprise.Further funding since then hascome from Archangel InformalInvestments and the Scottish Co-investment Fund.

The company now has threeproducts that look like beingworld-class successes, the i-LIMB-Hand, ProDigits and LIVINGSKIN. As the company’sCEO, Stuart Mead, pointed outrecently, Touch Bionics is a prime

example of a Scottish l i fe sciences company that has successfully circumnavigated thepassage from a pure R&Dcompany to one that is shippingproducts globally.

Colin Miller, the partnerresponsible for IP and life sciences at law firm Biggart Baillieadmits to some concern over thecurrent state of the sector.“Things have slowed down quitedramatically over the last fewyears and the recession certainly did not help,” he says.

Apart from a dearth of fundinggenerally, a number of Scottishlife sciences companies arefocused on contract R&D andthey are reliant on the big phar-maceutical companies such asPfizer and Johnson & Johnsonputting work their way. There hasbeen much less of that throughthe last few years as these firmstoo have responded to the globalrecession by trimming costs.Tightened NHS funding has alsocreated a real problem.

Douglas Anderson, founder ofthe retinal imaging company,Optos, which has long been hailedas one of Scotland’s most out-standing biotech companies, isinvolved with several start-up com-panies in the sector, one of whichhas just succeeded in raising £2min business angel funding.

However, to set against thissuccess, another of the compa-nies he is involved with, also in themedical devices sector, has beenignored or turned away again andagain in its search for funding. “Weare not even getting to the pointwhere a funder is prepared to dosome due diligence. So I am wellaware that funding can be very dif-ficult,” he says.

Anderson is another who feelsthat the sector in Scotland issomewhat bogged down atpresent and that it is difficult tosee where the next big growthspurt is likely to come from. Onthe research front,however, he feelsScotland remains world-

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Optos, which manufactures retinalimaging devices, has been hailed asone of Scotland’s most outstanding

healthcare technology companies



class. The weakness inthe sector continues tobe in its ability to exploit

good R&D and to take product tomarket. “We need a lot moreenergy to go into this,” he says.

Anderson blames, in part, theUK custom of academic tenure,which cuts across the grain ofentrepreneurial start ups. “There isjust not inherently the aspiration togo out there. People become academics as a career choice, not asa stepping stone to being the CEOof a biotechnology company. The US has a much more entrepreneurial spirit,” he says.

Anderson’s advice to any biotechearly stage company would be toignore the NHS as a potentialmarket. “People who focus on theNHS, and I am speaking about theNHS in England, rather thanScotland, find their enthusiasmand resources dissipated while theytry to secure that breakthrough. Itis much better to take your productto market in the US and when youhave a proven success, it becomesmuch easier to get the NHS to take

it seriously,” he says.PwC partner Martin Cowie

points out that Scotland hasmore than 15 per cent of the UKlife sciences market, which meansthat Scotland is punching wayabove its weight, but he adds thatlife sciences right around theworld is a challenging sector.

Cowie says: “Things were verydifferent five years ago, when thesector was seen as a highly attrac-tive investment target.

“Today, post the recession, VCfirms are very reluctant to getinto bed with life sciences compa-nies until they have a provenproduct, at which point thecompany will probably be on theradar of a big pharmaceuticalcompany anyway,” he says.

Cowie argues that one of the realgrowth areas for Scottish life sciences companies is to step inand provide R&D outsourced services to big pharmas.

“The big companies have set updevelopment funds and are lookingat investing in small companies todo R&D for them since it is a much

cheaper route to go down thansponsoring their own internalR&D,” he says.

One of the strengths of theScottish sector is the cross fertilisation between differentareas of expertise, such as engineering expertise, medicalexpertise and computingexpertise. “Collaboration provides an excellent wayforward for the sector andwe anticipate seeing somegreat innovation from suchcross specialist co-operation,”Cowie says.

For the sector in Scotland toreally mushroom, it will needprobably five or six companiesof the scale of pharmaceuticalbusiness ProStrakan or diagnos-tics specialist Axis-Shield, hesays. There is more than a littlecause to be optimistic that thisis achievable. Companies suchas Touch Bionics are alreadywell on their way. ■

ANTHONY HARRINGTON is afreelance business journalist.

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“Between 2000and 2007, thesector saw a 50per cent growthin terms ofrevenue, and we anticipatethat revenues inthe sector willdouble by 2020”Rhona Allison, senior director forlife sciences and chemical scienceswith Scottish Enterprise


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