The life sciences sector in the UK continues to be one of the most dynamic and rapidly evolving industries, attracting substantial investment and innovation.
With constant medical breakthroughs and advancements in biotechnology, pharmaceuticals, and healthcare technologies, the sector is pivotal for improving global health outcomes. For prospective investors and business buyers, now presents an opportune time to acquire a life sciences company in the UK.
How Big is the Life Sciences Market in the UK?
According to gov.uk, the UK’s life sciences sector stands on a robust foundation, with more than 6,800 businesses operating between 2021 and 2022, generating over £100 billion in revenue. Home to four of the world’s top 10 universities for life sciences and medicine, the UK, alongside the expertise of the NHS, has established itself as a global hub for innovation. This ecosystem offers extensive expertise across key subsectors.
There are numerous disciplines in the life sciences subsector including; MedTech (medical technology), pharmaceuticals research and development, genomics, diagnostics, and digital health (for instance telehealth).
Government Support and Incentives
The UK Government has prioritised life sciences as a key driver of economic growth, with healthcare being one of the five ‘pillars’ in Prime Minister Keir Starmer’s growth strategy, as he stated his wish to “speed up treatment, harness life sciences and technology, reduce preventable illnesses, and cut health inequalities.”
Initiatives such as the ‘Life Sciences Vision’ strategy aim to support innovation and make the country a global hub for health and biotech advancements. Generous tax incentives, such as the R&D Tax Credit and Patent Box scheme, further bring home the attractiveness of investing in this sector.
The UK is home to some of the world’s leading universities and research institutions, such as the University of Oxford, the University of Cambridge, and Imperial College London. These institutions foster cutting-edge research and cultivate a steady stream of highly skilled professionals, creating a fertile environment for life sciences companies to thrive. So much so, that Chancellor Rachel Reeves, announced last month that she would foster growth through the new ‘Oxford- Cambridge Growth Corridor’. This is in addition to the ‘UK Innovation Corridor’, between Cambridge and London.
The government has committed to invest £20 billion in R&D in 2024/2025 alone. This is a capital injection on significant orders of magnitude for the Life Sciences Innovative Manufacturing Fund and the Life Sciences Investment Programme.
Expanding Market Opportunities and Efficiencies
The demand for life sciences products and solutions is growing exponentially, driven by factors such as an aging population, the rise of chronic diseases, and the increasing adoption of personalised medicine. Furthermore, the COVID-19 pandemic highlighted the critical importance of rapid innovation in healthcare, leading to sustained investment in diagnostics, therapeutics, and vaccines.
Innovation and technological advancements are spearheading efficiencies in the sector. Emerging technologies such as artificial intelligence (AI), big data analytics, and gene editing tools like CRISPR are revolutionising the life sciences sector. UK-based companies are at the forefront of leveraging these technologies to develop novel treatments and improve patient outcomes, making them attractive acquisition targets.
Favourable Private Investment Climate
Venture capital firms and private equity investors are increasingly channelling resources into the UK’s life sciences sector. The UK life sciences sector raised £2.9 billion in equity finance in 2023, positioning it behind only the USA and China globally, and leading in Europe.
Despite global economic uncertainties, the UK remains a leading destination for investment in life sciences. The country’s strong intellectual property protection framework, transparent regulatory environment, and proximity to European markets make it a strategic location for business operations.
In addition, Brexit has given the UK the opportunity to establish its own regulatory framework, which can be more adaptive and responsive to the needs of life sciences businesses. This regulatory agility is expected to foster innovation and accelerate the time to market for new therapies and technologies.
Why Now, Why RDK?
For investors and business buyers, the UK’s life sciences sector presents a compelling opportunity. With strong government backing, access to top-tier talent, technological advancements, and a favourable investment climate, acquiring a life sciences company now can position buyers for substantial growth and success in a sector that is essential for the future of healthcare.
The life sciences sector in the UK is witnessing robust M&A activity as larger corporations seek to acquire innovative startups to expand their portfolios and stay competitive and gain from the 10.28% compound annual growth rate (CAGR) between 2024 and 2034. Savvy investors who act promptly are likely to reap the benefits of being part of this vibrant and transformative industry.
However, the purchase or sale of a life sciences corporation can be a more complex process, one that the experts at Redwoods Dowling Kerr are uniquely positioned to help with. This includes aspects such as calculating goodwill, the long-term projected value of a business with deep R&D expenditures and potential patent arrangements, amongst others.
As you consider an exciting new venture – or are looking to exit one – in the life sciences sector, Redwoods Dowling Kerr is on hand to provide industry-leading support. Get in touch with our expert team to find your ideal M&A opportunity.
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