122.  A number of other issues emerged that could be considered to impact on the success of the UK's commercial biotechnology sector but which do not fall under the company finance and development issues discussed above.

Skills

123.  A particular complaint that we heard related to the range of skills displayed by those working in the biotechnology sector. The problem is not with the scientific training but a concern that some of the more 'practical' skills appear to be in short supply.

124.  As noted earlier, witnesses expressed concern on several occasions that the standards of management within the biotechnology sector were poor —

"a real constraint [on the growth of biotechnology] is in terms of experienced management to take the companies on."[96]

"I think on the whole that the management of the UK biotech companies has not been as good as certainly some of the people I meet and we do most of the US investing. A lot of people I meet running the American biotech companies are of the highest quality both as scientists and as managers. I am sorry to say that I have not, even on the relative size of the economy basis, met as many outstanding managers in the UK sector".[97]

125.  Despite these comments, this is not a complaint that is peculiar to the UK — we heard it made about biotechnology companies in Germany and the United States too. It is perhaps inevitable in a sector dominated by scientists who have moved out of laboratories and into board rooms without any experience of business and sometimes without any management training: "As an academic you have not got a clue what is going on. You have been cocooned in a university like this and shielded from the real world. It is very, very difficult; it is cut-throat and it is real".[98] Fund managers said that they looked for a management team drawn from large pharmaceutical firms or the financial sector.[99] As yet it may be that the majority of biotechnology companies are too small to attract such people in large numbers, and as the sector in the UK matures presumably the calibre of management it can attract will improve. But if the quality of management is hindering the development of the sector, it is a matter that requires attention.

126.  An academic scientist who had founded a biotechnology company told us that he had received advice on aspects of starting and running a company from a variety of sources, including the DTI and also at a series of seminars run by a Cambridge-based consultancy. Companies would also normally receive support from their venture capital investors who would usually appoint a non-executive director to the company board.

127.  A gradual improvement can be expected as the sector matures but it would not seem sensible to leave this entirely to chance. Whilst the advice given by venture capitalists is clearly useful and the government already has a programme of general advice and training for those running SMEs, biotechnology companies face starker problems than firms in many other sectors and it would be desirable for more extensive management training to be available.

128.  We recommend that the Government and the BIA, perhaps together with the biotechnology specialists in the RDAs, look into ways to provide some systematic training in management. Given that so many companies are spun out of universities, they could also clearly play a role in this. Biotechnology is a high risk industry and some failures are inevitable. However, with better quality management these failures can be kept to a minimum.

129.  Another area of concern was the lack of suitably skilled technicians. Whilst the image of the biotechnology industry may be of highly qualified staff with doctorates, conducting cutting edge research, the reality is that there is a considerable amount of work that does not require academic expertise of doctoral standard so much as good quality technical skills. We heard concern expressed about the shortage of suitably qualified people to perform such roles. Biomanufacturing, in particular, is an area which has substantial needs for technician-grade staff: "One of the key constraints on [biomanufacturing] is skills".[100] The shortage of technicians is, of course, a reflection of the UK's wider shortage of intermediate level skills that we noted in our Third Report of Session 2001-02.[101]

130.  Again this would appear to be an area where the Department for Education and Skills should be working with bodies such as the BIA, the RDAs and the LSCs to ensure the adequacy of training provision. We heard that Scottish Enterprise was working with local colleges with a view to increasing the provision of technician training. We applaud this and would encourage other regions to consider similar initiatives.

Biomanufacturing

131.  At the moment the UK, in common with the rest of Europe, has a limited biomanufacturing capacity to complement its R&D capacity. One witness went so far as to say that, without biomanufacturing capacity on an adequate scale, the UK ran the risk of losing much of the value of its research.[102] But the lack of manufacturing was also acknowledged more widely.[103]

132.  Manufacturing may lack some of the glamour associated with R&D work but it is central to the process — biomanufacturing is, at the moment at least, less concerned with producing final products for market than with producing materials for further R&D, methods of drug delivery and tools for drug production. There is also a need for small quantities of finished products for trials purposes.

133.  With this in mind, it seems to be advantageous to have manufacturing capacity located in reasonable proximity to where the research is taking place. It appears that much of the less sophisticated manufacturing is being attracted abroad to places such as Ireland and Puerto Rico where there is a generous public subsidy for it. But with the boundaries between biomanufacturing and R&D so blurred, there is clear advantage to co-location.[104]

134.  As discussed above, we have heard that there is an inadequate supply of skilled staff. We also heard that, in some areas at least, a shortage of suitable, affordable accommodation could cause difficulties.[105] However, the core of the problem seems to be a matter of economics — there is a small demand for most of the manufactured product, which is nonetheless costly to produce. The infrastructure requirements are also quite expensive.[106] All this makes investment in this area a risky prospect, and one witness noted: "Venture companies do not like doing it…it is not a sector that one really likes to get into".[107] There is investment taking place in this area — we were told of a £70 million investment in a leading edge plant being established in the North East by Avecia for instance.[108] And it may be that as the sector matures it becomes a more commercially appealing prospect. While raising the lack of manufacturing capacity as a concern, our witnesses did not suggest what should be done. It may anyway be too early to tell whether the lack of biomanufacturing will significantly limit the growth of the biotechnology industry in the UK, and also whether there is a market failure that the Government may need to address. Whilst much pharmaceutical manufacturing has moved abroad, this is not yet the case with biomanufacturing. The UK has the potential to retain it. Government and the RDAs should ensure that there are no obstacles to the establishment and retention of adequate biomanufacturing capacity accessible to the major R&D centres.

Trials

135.  Before a drug can reach market the hurdle of clinical trials must be cleared. Most drugs will fail these trials and only a handful will make it to market. Trials are also a test of a company's financial endurance — they seem to occur at a stage of company development where venture funds are drying up. But with the high failure rate associated with the early stages of the trials process, biotechnology firms have little appeal for other sources of capital at this stage

136.  We took little evidence specifically on the trials process; however certain issues did arise from our wider investigations. We heard anecdotal evidence that companies are being pressured by their venture capital investors into entering products under development for clinical trials too soon; the venture capitalists' exit possibilities will be improved if the companies in which they invest have at least succeeded in the first stage of clinical trials. However, premature trialling is clearly detrimental to the company's research and to its finances and is a matter of concern if it is occurring on a significant scale.

137.  We also heard, again anecdotally, that the interface between those involved in research and those involved in trials is not as smooth as it should be. Trials are expensive though the costs are not transparent, and they are frequently not completed to the agreed timetable. It was suggested to us that the NHS could be a considerable asset as a conductor of trials. However, at the moment the need for companies to negotiate terms for trials separately with each hospital trust creates difficulties; the system is currently too fragmented to allow the potential benefits of a National Health Service to be realised at the moment.

138.  Having not inquired into the matter systematically we do not feel able to do any more here than air some of the concerns that were expressed to us. Ultimately, whilst it clearly imperative that drugs are subjected to thorough trials, a long and drawn out process merely diverts resources away from more innovative aspects of R&D. Anything that can be done to smooth the process, without reducing necessary protection, should be welcomed.

Animal Rights Activism

139.  A serious concern of those involved in the UK biotechnology sector is the activities of some of the more extreme elements of the animal rights movement. Though these have been particularly heavily concentrated on Huntingdon Life Sciences, where staff and even investors have been targeted, the perception is that this is a wider problem for biotechnology firms throughout the UK as a whole. This has the potential to frighten off foreign biotechnology companies who might be considering the UK as a location, foreign investors from becoming involved here, and even young people from pursuing a career in bioscience.[109]

140.  Last year there was tightening of company legislation designed to give some greater protection to directors under threat of attack. Before advocating further measures we would like to judge the effectiveness of the recent measures. We recommend a wider review of company law to see whether investors in vulnerable companies could be similarly protected. We support moves to make a more concerted attempt to explain the necessity of animal experimentation in drug development and to raise awareness of its benefits.[110]

97   Q 684 (IMA) Back

98   Q 468 (Dr Dean); see also Q 268 (Pantherix) Back

99   Q 670 (IMA) Back

100   Q 197 (Scottish Enterprise) Back

101   Trade and Industry Committee, Third Report of 2001-02, The Competitiveness and Productivity of UK Manufacturing Industry, HC 597 Back

102   Qq 148-164 (Professor Dunnill); see also Appendix 3 Back

103   Eg Qq 197 (Scottish Enterprise); 395 (Dr Solomon) Back

104   Q 659 (Lord Sainsbury) Back

105   Q 396 (Dr Solomon) Back

106   Q 148 (Professor Dunnill) Back

107   Ibid. Back

108   Q 663 (DTI) Back

109   Eg Qq 100 (BIA), 403 (Dr Solomon), and 517 (ABPI) Back

110   Q 102 (BIA) Back