Britain’s life sciences sector — once touted as a global engine of innovation — now finds itself sounding the alarm. Over 200 chief executives of biotech companies across the UK have jointly warned the government that the industry is in the “worst funding drought in history” and urged Chancellor Rachel Reeves not to raise taxes or business rates on “innovative companies and R&D facilities.”
Their letter comes amid mounting concern that the UK risks falling behind in a critical global race for scientific innovation, commercialisation and scale-up.
A Growth Engine Running Out of Steam
Life sciences (which includes biotech, pharmaceuticals, diagnostics and medical-tech) has been one of the UK government’s eight priority sectors under its modern industrial strategy. The ambition was to harness world-class university research in Cambridge, Oxford, London and Edinburgh and convert it into commercial success, exports and high-value jobs.
Yet, according to the UK BioIndustry Association (UK BIA) and other bodies, the pipeline of companies advancing from “lab to scale” is drying up. Long-running issues include:
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A shortage of late-stage funding: while seed-stage capital remains available, many firms struggle to raise Series B/C rounds or build manufacturing capability in the UK.
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High business rates and tax burdens: With rising national insurance contributions, business rates and other overheads, the cost base for labs and manufacturing has increased.
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Talent retention and competition: Many high-skilled researchers and executives are being lured to the U.S. or Germany where funding and scale-up incentives are larger.
Industry leaders said that more than 100 labs could face a sharp escalation in business rates (potentially £50 million or more) in the coming year — adding urgency to their plea.
The Scale-Up Gap: From Unicorns to Mid-Size Stand-outs
The UK has produced biotech stars such as Oxford Nanopore Technologies, Alchemab Therapeutics and Redx Pharma — firms founded in the UK and addressing major global health and science challenges. But few have yet grown into the kind of scale-outs seen in the U.S. (e.g., Moderna, Ginkgo Bioworks).
UK life-science investment as a share of GDP remains below international peers and manufacturing capacity is limited. Some analysts argue that the UK risks remaining a “research hub” without becoming a “manufacture and scale hub.”
This limits the long-term industrial impact and jeopardises high-value job growth in regions beyond London and Cambridge. The economic cost is already emerging: slower commercialisation means missed exports, fewer high-wage jobs and diminished global competitiveness.
Government Strategy vs Reality
The government’s policy has emphasised tax incentives (via R&D tax credits), direct funding and infrastructure (innovation zones, translational hubs). The £20 billion UK Life Sciences Vision remains in place. But many industry leaders argue that policy is mis-timed or insufficient to address the current freeze.
Their joint letter cautioned that rising costs and a flatlining investment environment “threaten growth and retention of talent”. They urged the Treasury to reconsider plans for business-rate increases and to expand British Business Bank and Innovate UK funding mechanisms.
Strategic Importance & Regional Impacts
The life sciences sector offers more than innovation bragging rights. It is a regional growth engine: hubs such as the Cambridge-Milton Keynes-Oxford corridor and the Northern clusters around Manchester and Sheffield rely on the sector for high-skill jobs and inward investment.
If biotech growth stalls, the ripple effects could widen regional inequality — a concern for the “levelling up” agenda. In addition, the private-sector demand for specialist lab space, manufacturing plants and supporting services is at risk.
Global Competition Intensifies
Internationally, the UK is facing fierce competition in life sciences. The U.S. offers deep capital markets, expansive manufacturing incentives and strong regulatory frameworks; Germany has targeted biotech investment with industrial policy; China is rapidly scaling its biotech capabilities and linking research and manufacturing.
In that context, two key risks emerge for Britain:
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Capital outflow — promising firms may relocate or list abroad if UK funding and incentives are lacking.
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Innovation drain — researchers and executives may leave for more favourable ecosystems.
What Needs to Change?
Industry leaders and economists suggest several urgent actions:
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Freeze-or-reduce business rates for labs and R&D facilities, coupled with targeted tax reliefs.
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Increase late-stage funding availability, including scale-up capital and manufacturing support, via the British Business Bank or new funds.
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Strengthen talent attraction and retention, including faster visa routes for scientists and executives, plus dedicated training programmes.
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Promote manufacturing and translation, ensuring that research breakthroughs lead to UK-based production rather than overseas exits.
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Encourage regional spread, ensuring biotech investment flows beyond the South East to underserved regions.
The Stakes for Britain’s Economy
Failing to act would cost more than individual companies. The life sciences sector has been identified by the government as a key driver of UK economic growth, job creation and exports. If the sector remains stuck in research rather than scale-up, the UK risks falling behind in a globally booming industry that underpins future healthcare, green tech and advanced manufacturing.
Britain’s biotech bosses are ringing alarm bells — not about momentary market fluctuations but about systemic structural risk. For an economy still seeking its growth engine post-Brexit and post-pandemic, the life sciences sector remains one of the few bets that can deliver high-value jobs, exports and innovation. The government’s response in the upcoming budget could define Britain’s competitive position in global biotech. In the words of one chief executive: “We’re at the tipping point between global leadership and gradual marginalisation.”
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