Genesis 2023: The UK life sciences ecosystem under the microscope

Last week, Claire Smith and Harry Woodcock from Bristows’ life sciences transactional team attended Genesis 2023, an annual conference hosted by One Nucleus in London. The conference’s aim was to address key trends in bio-innovation, from developments in life sciences and technology research, through to their translation into new diagnostics, tools and treatments. The event provided a great opportunity to discuss current topics, learn about new developments and grapple with the challenges facing the UK life sciences industry.

Certain themes that were discussed during the conference seem appropriate to highlight:

M&A and Partnering is Key. Bristol-Myers Squibb exemplify how effective externally developed products can be in the pharmaceutical industry. All 5 of its best selling products – forming 80.9% of its total sales - were developed externally or in partnering deals with others, including Eliquis, which is one of the best selling drugs of the last decade.¹ Pharma companies with acquisitive natures have been reaping the rewards: this also highlights the key role that smaller biotech companies play in this industry. Well‑managed integration was flagged as one of the key ingredients of a successful M&A deal, with many failed mergers pointing towards a lack of integration as the source of their troubles.

We have seen some substantial M&A deals close over the last 12 months: Pfizer’s huge $43 billion acquisition of Seagen to access its antibody drug conjugate assets and platform stood out as the biggest of the year; Biogen and Bristol-Myers Squibb both bolstered their rare disease and oncology portfolios, respectively, with their purchases of Reata Pharmaceuticals and Mirati Therapeutics; and Merck acquired Prometheus Biosciences to boost its immunology pipeline.

Outsource or Bring In-house? Balancing these two options for development can be a dilemma. There are a number of questions that need to be considered, including the following: how core is the activity to the business, as more peripheral activities might be more appropriate to outsource; how long will you need to outsource for, as short-term requirements might lend themselves to outsourcing, but be aware that lead times may be long depending on the service; and will developing these skills in-house actually add any value to your business, as if you don’t need these skills, outsourcing might be a better option.

Outsourcing can be a boon to smaller biotechs, but the risks need to be weighed up carefully. Retaining control over the activities that are most important for your pipeline is key, but knowing when to outsource can save money and crucial time for businesses.

Cautious Optimism. This year has been relatively tough, and the panels didn’t shy away from this fact. One startling figure was that there have only been 27 IPOs this year, a figure which pales in comparison to the 134 and 106 in 2021 and 2022, respectively. Despite the tough year, all of the sessions told a relatively positive story of the sector. In fact one of the panellists suggested that there are around 20 biotech companies lined up for IPOs in January 2024. The Mansion House Compact is another source of positivity for the sector: this is an initiative under which a number of large UK pension providers have agreed to invest 5% of their pots into the unlisted sector. This could unlock up to £50 billion of investment for the most innovative companies in the UK between now and 2030. Biotechs could benefit enormously from this shift, as although the sector has good yields, the long time horizon for profits (relative to SaaS and climate businesses, for example) can deter certain investors: that is less likely to be an issue for pensions funds trying to diversify their holdings.

Overall the message of the conference was that, even with the more challenging investment environment over the last year, there’s still no shortage of innovation happening in UK life sciences, from treating metabolic disease to rejuvenating ageing patients. Those companies with innovative technology underpinned by quality science and data will surely be best placed to secure funding for products in the coming year; however, only the companies with great science and quality teams will truly flourish. The forecasted interest rate cuts during the second half of next year are also poised to have an enormous effect on the life science sector, so now certainly is an exciting time to be in the industry. 
 

[1] BioWorld, Cortellis Deals Intelligence