Lab crunch: British science has nowhere to go
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[June 20, 2023]
By Kate Holton
OXFORD, England (Reuters) - For Ros Deegan, the thrill of raising $100
million to expand a biotech firm among the dreaming spires of Oxford was
soon tempered: unable to find a bigger laboratory, she routinely had to
work at home.
Not far away in the rival academic centre of Cambridge, biochemist
Catherine Elton, persistently frustrated by similar real estate issues,
taught herself how to turn old offices into labs to keep expanding her
bioactive protein business.
The two businesswomen in Britain's fast-growing life sciences industry
are far from alone.
Property consultants Bidwells put demand for lab space in Cambridge at
1.19 million square feet (110,000 square metres) - but only 7,000 sq ft
are available. In Oxford, demand stands at 850,000 sq ft with just
25,000 ready to go.
The dearth of state-of-the-art labs in the cities is just one example of
how a lack of an overarching strategy for Britain's life sciences sector
is throttling the growth of some of the country's most promising
companies, according to Reuters interviews with 17 people with knowledge
of the challenges.
The industry figures, from biotech bosses, property developers, industry
sources to investors, all spoke of a growing frustration with the lack
of a coherent approach in Britain to everything from lab space to
funding, talent, suppliers, affordable homes, transport, water and
power.
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At a time of rapid innovation, when the United States and the European
Union are spending heavily to help businesses shift faster to newer
technologies in the next wave of industrial transformation, they say
that Britain risks falling behind.
"It's a huge barrier when you're trying to set a company up and you
can't actually find a lab for it," said Elton, founder of Qkine. She
said the latest office conversion took up more than 20% of her firm's
time in the year before it opened.
Deegan, meanwhile, counts herself lucky that OMass Therapeutics, the
drug discovery company she runs, only had to wait a year from raising
funds to moving to a larger site.
"I couldn't go to work because there just wasn't a place to sit. You'd
end up in the kitchen," the chief executive said.
'DEATH BY A THOUSAND CUTS'
Life sciences is meant to be one of Britain's most important sectors.
Generating 94 billion pounds ($118 billion) in 2021 and employing more
than 280,000 people, it enables the government to boast Britain is on
its way to becoming a "science superpower".
In biotech, Britain lags only the United States in activity, according
to consultants McKinsey, driven by the discoveries that come out of
colleges in Cambridge, London and Oxford, and aided by a centralised
health system for clinical trials.
That has led to an explosion in venture capital, with much of it coming
from the United States. But in the small cities home to ancient
universities - and strict planning laws - the delivery of new
infrastructure has failed to keep pace.
While developers say capacity is expected to improve in the coming
years, companies in Britain specialising in areas such as cell and gene
therapies, genomics and synthetic biology may be failing to reach their
full potential, many experts say.
Diarmuid O'Brien, head of Cambridge Enterprise which works to
commercialise research at the university, said the current environment
led to "death by a thousand cuts" as many spin-outs were sold to U.S.
companies, or moved across the Atlantic.
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Humira, for example, one of the world's bestselling drugs owned by U.S.
company AbbVie, was based on technology that emerged from Cambridge.
Illumina, a U.S. firm with a market value of $33 billion, has a DNA
sequencing approach also discovered at Cambridge at the heart of its
technology.
Prime Minister Rishi Sunak's government has acknowledged there's a real
estate problem and is looking to reform planning rules, asking local
authorities to take research and development needs into consideration
when assessing applications.
"Only last month we announced more than 100 million pounds to provide
world-class lab space to help unlock UK researchers' full potential," a
government spokesperson said, referring to funding designed to upgrade
infrastructure and equipment.
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Chemist Zoe Sheaf prepares carbon
suspension for bio catalytic hydrogenation at biotechnology research
company HydRegen, based at University of Oxford Begbroke Science
Park, in Kidlington near Oxford, Britain, June 16, 2023.
REUTERS/Toby Melville
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RECORD RENTS
The race to develop and retain new technologies is taking place
across the world, with Western governments such as France touting
cheap power and fast-track planning systems to attract
next-generation industries such as battery gigafactories.
Gordon Sanghera, who was determined to list his Oxford Nanopore
Technologies in Britain, told Reuters he often thought the country's
success was in spite of the support available, not because of it,
and Britain needed to realise it was in competition with others.
The lab shortage is not only driving up rents to record highs -
Bidwells says they rose 25% for purpose built lab space in Oxford in
2022 - but it also means access to laboratories can become a
defining issue in whether a company succeeds or not.
To meet its full potential, Britain's biotech industry says it needs
small companies to be able to access shared laboratory space on
decent rents with flexible leases, before they can move to
independent labs with the potential to expand.
Company founders also say they want to be as close to the heart of
academic centres as possible - rather than on more distant science
parks - so they can tap into the cluster effect that comes from
sharing experiences and contacts, take advantage of existing
transport links and recruit talent more easily.
Michael Chen moved to Cambridge from the United States in 2012 to do
a doctorate in chemistry. He later formed Nuclera with two PhD
colleagues to improve the accessibility of proteins for research and
drug discovery.
He said Cambridge offered a cheaper location for drug discovery than
the U.S. city of Boston, the world's leading hub, due to lower rents
and salaries, but a lack of growth capital and space meant it
struggled to scale up those businesses.
The fact many scientists spend time overseeing the refit of an old
building puts off executives who have raised funds and floated
spin-outs before, he said. "They'll just move to Boston and make
their life easier."
'NOT KEEPING PACE'
Laboratory developers say more space is in the works but the
challenge of building vast modern labs in densely built university
cities cannot be ignored.
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"They're fundamentally quite small cities, going through extremely
rapid rates of growth," said Artem Korolev, head of developer
Mission Street.
Anna Strongman agreed. She leads a joint venture between Oxford
University and Legal & General to build lab space and homes.
Strongman said the industry needed to address the impact new
projects would have on housing, traffic, power and school places to
keep the local community onside.
But to go further, with more homes and train lines, would require
greater government input.
"We are a country that doesn't have a growth solution, and there is
one in Oxford," she said. "There is amazing potential."
Pioneer Group, which provides funding and lab space in Britain, said
action was needed now to address the "crazy" demand. "If planning
takes years to come through, then the opportunity will potentially
have been lost," Executive Director Glenn Crocker said.
Alistair Cory, a director at Oxford's Begbroke Science Park,
welcomed the government's renewed focus on support for the life
sciences sector, saying a leadership vacuum in recent years had
resulted in glacial progress.
"We're not keeping pace with those who are accelerating faster
around us, whether that's North America, or parts of Europe, or
parts of Asia and particularly China," he said.
Back in Cambridge, Qkine's Elton is resigned to wrestling with
another real estate challenge in the near future.
"Every two years or so, if you're successful, you need to move, and
that's just disruptive," she said. "It affects the speed at which
you can grow."
($1 = 0.7994 pounds)
(Reporting by Kate Holton in London and Toby Melville in Oxford;
Editing by David Clarke)
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