Pharma deals are 'vote of confidence', says government

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A scientist at the Francis Crick Institute one of the UK's leading research centres

The government has said two deals to invest in the UK's biotech industry illustrate confidence in its industrial strategy, which it published on Monday.

MSD, known as Merck in North America, will support a new research centre in London creating around 950 new posts.

Germany's Qiagen will expand its investment in a genomics and diagnostics campus in Manchester.

Business Secretary Greg Clark said it represented "a huge vote of confidence" in the government's approach.

"People don't make the investments of this scale that are for the long term if they don't have the confidence that we are building in this country a very attractive base," he said.

The industrial strategy white paper outlines the government's plans to support more research and development, encourage firms to embrace new technology and boost the economy.

It includes:

  • Sector deals - Partnerships between government, academia and business. Deals have been agreed in life sciences, artificial intelligence, automotive, construction sectors. More are expected in other sectors next year.
  • Industrial Strategy Challenge Fund - Another £725m on top of the £1bn announced in April. The first tranche was to support innovation in robotics and battery technology. The new money is for the construction and life sciences sectors
  • Research and Development (R&D) tax credit - As announced in the Budget, R&D tax credit will rise to 12%. The UK spends 1.7% of its economic output on R&D. The government has promised to raise that to 2.4%, in line with the average in other developed economies.

The industrial strategy comes just days after official forecasting body the Office for Budget Responsibility (OBR) announced an aggressive downgrade of its UK growth forecast.

The OBR concluded that a slowdown in the growth of productivity - or the value that each worker produces - since the financial crisis will persist for several more years.

MSD's managing director in the UK and Ireland, Louise Houson, linked the company's investment to the government's approach to the economy: "This investment presents a major opportunity for us to work in collaboration with the UK government to build on the forward thinking and ambitious industrial strategy white paper being published."

Qiagen expects to sign a deal early next year to expand its presence in Manchester where it works on DNA-based diagnostics for personalised healthcare. The firm said it would add to its current staff of 270.

The government said the investment had the potential to create 800 skilled job overall in the Manchester life sciences hub at Qiagen and other firms.

The chief executive of Qiagen, Peer Schatz, said the involvement of the University of Manchester, the NHS Trust and the UK government were "essential" to the partnership they are investing in.

Mr Clark said the UK's decision to leave the EU meant the strategy was "even more important" and he said political commitments to limit immigration would not hamper the development of research related industries. He said the government would "make it easier for more scientists to come and work in the UK".

Analysis: Simon Jack, BBC business editor

Image source, PA

Here's the idiot's guide to how it's supposed to work.

Pick an industry that the UK is already good at and needs investment.

Chuck in a bit of government money, cluster the right institutions around it, commit to provide the skills base and give them somewhere to try their new stuff.

That could mean faster trials for drugs in the NHS or using public roads to test driverless cars.

Hey presto - private investment ensues.

Some will see this as another example of government's dodgy track record in "picking winners" - the government insists it is backing excellence.

Of course, all of these new initiatives are being born under the star sign of Brexit which makes them children of uncertainty.

'Time for consistency'

Carolyn Fairbairn, director-general of the Confederation of British Industry, welcomed the industrial strategy, saying it showed the government "has its eye firmly on the horizon, not just the next few yards".

But she added: "Today's announcement must be the beginning of a strategic race, not a tactical sprint. And it needs to last. This is a time for consistency and determination, not perpetual change with the political winds."

She commended the creation of an independent council to monitor progress.

However Rebecca Long-Bailey MP, Labour's shadow secretary for business, said the white paper contained "re-announced policies and old spending commitments", and failed to provide certainty.

"What detail there is concentrates on a few elite industries in which Britain already has an advantage, and will do nothing to help the millions of people who work in low productivity and low wage sectors such as retail, hospitality and social care, or those based outside the "Golden Triangle" made up by London, Oxford and Cambridge."

Extra funding

The government has already pledged to invest an additional £80bn in R&D over the next decade.

The white paper lists some of the government's previously announced pledges to improve productivity including technical education and training, investment in electric vehicle infrastructure and faster broadband.

It also outlined four global trends which it believes the UK needs to take advantage of.

These are:

  • artificial intelligence and the data revolution
  • clean energy and low carbon technologies
  • innovations to support an ageing population
  • future mobility such as driverless cars and drone-delivered goods

The government describes these as "grand challenges" and is inviting business, academia and civil society to work with the government to tackle them.

"More decisions about our economic future will be in our own hands and it is vital that we take them," Mr Clark said.

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