Boom in start-ups and spin-outs drives growth for UK life sciences as investment almost doubles

• New report shows number of UK life science start-ups in 2016-20 increased by 24% on the previous reporting period to a total of 681, at almost double the rate of ten years ago.
• £20 billion worth of capital is looking to invest in UK life science real estate.
• Total investment in the UK life sciences sector reached a record £4.5 billion in 2021, nearly double the £2.8 billion invested in 2020 (BioIndustry Association). 

A joint report published by JLL and leading life sciences developer-operator We are Pioneer Group (Pioneer Group) has revealed a sharp uptick of 24% in the number of start-ups and spin-outs in the UK life sciences sector, boosted further by the development of the Oxford-AstraZeneca vaccine.

Data from the report shows traditional centres of research-led start-ups and spin-outs in London, Oxford and Cambridge continue to dominate, pulling further ahead of the rest of the UK despite the Government’s Levelling Up agenda. London, the South East, and the East of England, home to the Oxford-Cambridge Arc and the Golden Triangle, remains dominant and accounted for 83% of life sciences investment and all the growth in the number of start-ups.

Beyond London and the South East of England, regions with the strongest growth in start-ups were the West Midlands (c.100%), the South West (c.50%) and Northern Ireland (c.65%). The regional centres of Manchester, Birmingham, Edinburgh, Bristol and Glasgow were all in the top 10 cities for life science start-ups in the UK.

The life sciences sector has become a major part of the UK economy in recent years, now employing over 250,000 people. Data from the BioIndustry Association shows total investment in the life sciences sector reached a record £4.5 billion in 2021, nearly double the £2.8 billion invested in 2020.

The pharmaceutical and biotech sub-sector, which comprises companies developing new drugs and vaccines, has seen the greatest growth and comprises 56% of the increase in new life sciences start-ups. The sub-sector also secured 69% of total UK investment in life sciences start-ups. Investors are also increasingly supporting the formation of new companies using artificial intelligence to discover drugs or deliver healthcare more effectively, with the share of investment garnered by these businesses more than tripling compared to Pioneer Group’s last report.

The primary driver behind the growth in start-ups has been increased investment in risky early-stage life science companies, with the amount increasing nearly seven-fold over the past decade. A further reason has been the increase in available real estate space and the development of innovation clusters similar to those in Boston and Silicon Valley in the United States.

Start-ups and spin-outs that locate in this new form of science park can access support, funding and mentorship through accelerators and access to co-located organisations including universities, government research bodies and sources of investment.

The data collected for this report covers start-ups that were formed and investment that was raised in the period 2016-2020 and is compared to previous rolling five year periods. We Are Pioneer Group (as BioCity Group) has been collecting and analysing life science start-up data since 2005.

Dr Glenn Crocker MBE, Executive Director of Venture Capital Investments at We Are Pioneer Group, said: “The surge in the number of, and levels of investment in, new life science companies is very good news, because the start-ups of today are the billion-pound companies of five years’ time – and this ultimately represents an enormous opportunity to deliver life-changing technologies to patients.

“Understanding the pattern of start-up formation across the UK can provide a good indication of the potential growth of a life science cluster in a particular location.

“While the Golden Triangle continues to draw the majority of investment despite the government’s commitment to the Levelling Up agenda, there is cause for optimism. Key regional universities have increased the translation of life sciences research into commercial enterprises, which is having a positive impact on local cluster growth.”

Chris Walters, Head of UK Life Sciences, JLL said: “The UK is uniquely suited for success in life-sciences as it has a string of world-leading universities to complement the financial and digital might of London. This success story is however not London centric, with the number of new start ups being created across the UK being almost double the rate of ten years ago. This is excellent news for the industry as a whole, further underlining the importance of continued investment and support from the public sector in to the sector.”

Download your copy of the Life Science Start-Up Report 2022 here.