Invest 2035: Why investing in life sciences is crucial for Government

On 14 October 2024, the UK government launched a consultation on Invest 2035: The UK’s Modern Industrial Strategy, a proposed 10-year economic plan aiming to deliver the stability businesses need to invest in the high-growth sectors and drive long-term economic growth.

The consultation closed on 25 November 2024 and the final industrial strategy will be published in spring 2025, alongside the multi-year spending review.

LCP Health Analytics provided responses focused on the life sciences sector and the opportunity for growth we see there. Based on our expertise, our insights fall into these main themes: improving the clinical trial environment, driving not only access but also uptake of new medicines; encouraging investment in research and development (R&D); and improving the health data infrastructure.

Why should the government focus on the life sciences sector?

The life sciences industry is a major competitive strength for the UK, contributing £43.4bn to the economy and supporting 646,000 jobs annually. Innovation within life sciences offers major opportunities to address ongoing health challenges, such as obesity, which has far-reaching implications for both public health and the economy. Our recent work highlighted the economic benefits of preventing health-related work absences, showing that improving population health can lead to substantial savings for the Treasury, while fostering a more productive and healthier society.

Improving innovation in healthcare

The healthcare sector is a complex landscape, with rightly threshold to market entry. In particular, the ability to conduct clinical trials is an essential driver of innovation but an area where the UK has been falling behind. 

Specific barriers include bespoke processes contributing to slow trial set-up times, despite national costing steps and templates aiming to standardise the process. Furthermore, when it comes to approvals for clinical trials, regulatory under-resourcing leads to delays, undermining trial timelines and discouraging global companies from selecting the UK for clinical research. Critical changes, as highlighted by the review last year by former health minister Lord James O’Shaughnessy, need to be made quickly to address these challenges associated with how clinical trials are conducted and regulated in the UK.

The successful adoption of innovative medicines is essential for translating research and development into meaningful impact. Initiatives like the Cancer Drugs Fund and the Innovative Medicines Fund demonstrate strategies that enable early patient access to cutting-edge treatments while collecting data to inform ongoing developments. These initiatives not only improve patient outcomes but also incentivise investment from life sciences companies seeking to introduce novel health technologies to the UK market. To ensure maximum impact, the government should continue to support these funds while monitoring the adoption of treatments across the health system, and utilise tools such as the NICE Innovation Scorecard to address regional disparities and variation in uptake across the country.

Beyond pharmaceuticals, policies around healthcare-related artificial intelligence (AI) are essential to addressing some of the significant challenges faced by the NHS. As we have previously highlighted, AI has the potential to significantly reduce NHS waiting times by automating logistics (e.g. hospital bed allocation and management of appointments and resources), thereby allowing healthcare professionals to focus on patient care. Cutting waiting lists is a key priority of the government, as set up by the Prime Minister last week in his ‘six pledges’. However, without strategic oversight to ensure the benefits of AI adoption in healthcare are equitably distributed across the country, the adoption of AI has the potential to exacerbate inequalities in healthcare access and outcomes. The UK’s current sector-specific approach to AI regulation offers flexibility but creates a fragmented and ambiguous framework for developers and providers.

In contrast, the EU has introduced the EU AI Act, a horizontal legislation that classifies healthcare AI as ‘high risk’, requiring third-part conformity assessments and adherence to strict regulatory obligations before market entry. The EU AI Act also promotes innovation through initiatives like ‘regulatory sandboxes’, which allow AI to be tested in controlled environments. The UK can learn from this approach to refine its own policies for AI in healthcare. Aligning with international standards not only facilitate the commercialisation of UK-developed AI solutions in global markets but also reinforce the nation’s position as a leader in AI-driven healthcare innovation.

Turning innovation into economic success

The UK is a recognised global leader in the R&D conducted in life sciences. However, it does fall behind in turning ground-breaking R&D and innovation into economic successes. The Life Sciences Industrial Strategy update indicated that a key issue affecting the scaling of innovative UK companies stemmed from lack of long-term investment.

The Life Sciences fund, removing challenges for pension funds to invest in high-risk high-growth companies, and providing tax relief are amongst solutions outlined in the strategy report to continue to bring in investment and drive innovation. The UK does have a target to invest around 2.4% of its gross domestic product into the healthcare sector by 2027, and continuing to work towards this target is essential for this growth-driving sector.

To support the Industrial Strategy and drive innovation in the UK, the government could adopt a framework that combines a mix of fiscal policies. R&D tax incentives, targeted research grants and public research funding are recognised as the most cost-effective fiscal incentives to boost innovation. While tax incentives, such as tax credits or deductions on labour taxes, offer equal support to all private R&D activities and are less expensive to administer, they also require companies to have sufficient internal funding. Therefore, targeted grants directed toward start-ups and SMEs could provide crucial support during the early stages of innovation and strengthen the wider ecosystem.

Unlocking the value of data

In today's data-driven world, the sharing and accessibility of data plays a crucial role in informing policy, enhancing research, and delivering valuable public services. In the life sciences industry, the UK is a reservoir of data due to the NHS. However, significant barriers persist across governmental and institutional landscapes which impact how data can be used to improve patient outcomes.

To support the delivery of the Industrial Strategy, the UK government must prioritise measures that improve data standardisation, integration and transparency.

Integration of recognised geographic coding systems, such as Office for National Statistics and Organisation Data Service codes, and using population-weighted mapping would enhance the ability to track demographic changes over time and space. This standardisation would allow for the identification of health inequalities, which could be addressed by targeted policy interventions. For example, LCP Health Analytics’ collaboration with Pfizer and Shine Cancer Support has identified that black women and women living in the most deprived communities have significant inequalities across the whole breast cancer pathway in England and Scotland. Similar granular data was not accessible for Wales and Northern Ireland at the time of analysis, highlighting how standardisation and publication of data across nations is important to allow comparable analyses.

The government should consider the implementation of a centralised Application Programming Interface (API) that aggregates data from various sectors. This would streamline access to diverse datasets, reduce duplication and lower costs associated with hosting multiple APIs. Likewise, the government should strive for improved data transparency across organisations. It is important that the datasets being created and published are harmonised and made research ready so that innovative life sciences and AI companies, within regulatory boundaries, can leverage this resource to develop technological solutions and innovations.

To ensure the UK can continue to be a leader in life sciences, drive economic growth, improve patient outcomes and stay globally competitive, it is crucial that we address the challenges outlined in this blog.

You can read our full consultation responses here.

Thanks to the LCP consultation authors, Francisco Olivenca, Sreenidhi Venkatesh, and Maisie Borrows.