The UK has a rich history of pharmaceutical discoveries, from penicillin to the Oxford/AstraZeneca COVID-19 Vaccine. According to the Office for Life Sciences, the UK boasts one of the highest global health research and development budgets, second only to the USA. The sector is not only important for improving our health and welfare, it also generates a vast amount of revenue for the UK economy – over £65 billion in 2022. In fact, the UK is among the top 10 global pharma markets (around 2.4% of the global industry).
But the sector isn’t without its challenges. Foreign investment has declined, and the UK struggles with a skills shortage in life sciences and digital skills, which are becoming increasingly important for pharma innovation.
In this article, we explore what’s driving pharmaceutical R&Dand how the industry can take advantage of government incentives like R&D Tax Credits.
Drivers for pharmaceutical R&D
The UK’s approach to public healthcare, where the private sector can closely collaborate with the NHS, creates an advantageous environment for pharmaceutical innovation, especially as a vast amount of patient data is readily available for research purposes.
Strong government backing is a given, as investing in life science helps to boost the UK’s overall economy, while also improving the health of our population by providing better treatments for NHS patients.
As such, there’s direct government funding and private investment – and sometimes a blend of both. For example, the Voluntary Scheme for Branded Medicine Pricing, Access and Growth (VPAG) provides £400m of “public-private” investment to boost clinical trials and improve medicines manufacturing in the UK. Another example is the Life Sciences Innovative Manufacturing Fund (LSIMF), which offers £520 million in capital grants for investment in manufacturing human medicines and medical technology. The UK also has a huge pool of home-grown talent. The QS World University Rankings list 29 UK universities among the best for pharmacy and pharmacology, and the Association of the British Pharmaceutical Industry (ABPI) reports that the number of apprenticeships within the UK pharmaceutical industry is at an all-time high. An ABPI survey has also shown that collaboration between the pharmaceutical industry and UK ABPI survey has also shown that collaboration between the pharmaceutical industry and UK academia continues to grow, helping to create favourable conditions for R&D advancement.
Finally, the UK’s regulators have been praised by the National Institute for Health and Care Research (NIHR) as “forward thinking” when it comes to clinical trials, as demonstrated by their agility during the COVID-19 pandemic.
Challenges and opportunities for pharmaceutical R&D
An analysis by the UK’s Office for Life Sciences suggests that pharmaceutical growth is being held back by a drop in foreign direct investment and a declining pool of graduates from natural sciences, mathematics, and statistics degrees. A separate study by the ABPI also identified skill shortages as a major problem, especially in skilled biological and clinical science workers.
The Office for Life Sciences report also suggested that the UK would benefit from deeper international collaboration, as the value of the UK’s pharmaceutical exports is currently lower than the previous 2017 peak.
Despite these issues, it’s still an exciting time for pharmaceutical R&D, with areas like bioinformatics and computational science holding the key to unlocking possible breakthroughs. While the need to gather and interpret data has always been a vital part of pharmaceutical breakthroughs, ‘big data’ analytics and predictive tools have helped to build better and more efficient models, speeding up the development of better and safer drugs. This trend is only going to accelerate with the rise of AI.
R&D Tax Credits are available for pharmaceutical R&D
As well as investing in the pharmaceutical sector, the government also aims to stimulate innovation through R&D Tax Credits. These credits can help to de-risk drug discovery and development by providing valuable tax relief on research and development costs like clinical trial volunteers and consumables including chemicals.
Pharma companies leveraging data science and artificial intelligence for analysing patient and drug trial-related datasets can especially benefit from R&D relief as software and data licenses, as well as mathematical advances, are eligible for relief. Designing a complex algorithms, programs and predictive models are all potentially eligible for relief.
Examples of eligible pharmaceutical R&D activities include:
- Synthesising new drugs
- Improving the safety of existing drugs
- Biological testing and toxicology studies
- Developing and implementing phase III clinical trials
- Designing an AI-powered programme to analyse molecular structures
- Writing an advanced mathematical model to identify drugs that can be repurposed
- Designing an AI model to predict protein structures
- Creating a unique method of detecting disease biomarkers
How Leyton can help
At Leyton UK, we have a team of health and pharma R&D specialists who are on hand to help with every step of the R&D Tax Credits claims process, from identifying qualifying activities to maximising your financial benefits.
Is your company investing in drug development? Speak to one of our consultants to find out how we can help.
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