The new Patent Box tax break, active from 1 April, has been welcomed by the pharmaceutical and biotechnology industries as a boost to innovation.

By setting a corporation tax rate of 10% on profits earned from patents and supplementary protection certificates, the Patent Box is expected to strengthen life science R&D in the UK.

The tax break, which extends to royalty and milestone payments, comes together with the introduction of a special 10% rate of R&D tax credits.

The special 10% tax rate is a major cut from the current corporation tax rate of 23%, which falls to 21% in 2015. It will be phased in over four years, with 60% available this year.

The Patent Box was developed by the Office for Life Sciences under the previous government as a way to strengthen the UK’s ‘knowledge economy’.

HM Treasury estimates that it will save UK businesses £1bn in tax, differentially rewarding innovation and encouraging investment in the UK’s R&D base.

Leading UK pharma company GSK, which was involved in the Treasury working group that advised on the policy, has since invested in a new £350m manufacturing facility in Cumbria.

Paul Belsman, National Head of Tax at accountancy consultant RSM Tenon, commented: “Combined with the research and developments tax credits system, this should provide strong fiscal incentive for companies and arguably attract inbound investment into the UK.”

The BioIndustry Association, which represents the UK biotechnology industry, has welcomed the opportunities within the Patent Box.

Steve Bates, CEO of the BIA, said the Patent Box would combine with “the improvements to R&D tax credits and reduction in corporation tax, the Government’s Strategy for UK Life Sciences and programmes such as the Biomedical Catalyst” to establish the UK as “a globally competitive location for life science companies”.

The Government’s new strategy to support growth in the life sciences and innovation in healthcare aims to have industry working ‘hand-in-glove’ with the NHS to change care pathways and transform service delivery. Is this the new deal that the pharma industry has been waiting for – or just a sweetener for the medicine of NHS spending cuts?

The Government’s new strategy for the UK life sciences was presented by Prime Minister David Cameron to an audience of leaders from pharma and other life science sectors. Cameron announced measures to support early-stage research, make more NHS patient data available for clinical trials and improve the implementation of NICE guidance. He stated: “The endgame is for the NHS to be working hand-in-glove with industry as the fastest adopter of new ideas in the world.”

The background to the new strategy is complex. It builds on the ‘blueprint’ published in 2009 by the Office for Life Sciences, a ‘virtual department’ launched by the previous Government. The dissolution of the OLS and the abolition of the Regional Development Agencies had left a gap in the life science innovation landscape which the new strategy aims to fill.

In addition, the strategy is a response to calls from the Work Foundation and other expert sources for more investment in the ‘knowledge-based industries’ – and to a growing recognition of the clinical and commercial potential of ‘stratified medicine’: personalised drugs and companion diagnostics based on the new technology of genetic profiling.

Finally, the strategy seeks to improve the confidence of life science companies in the UK market at a time of upheaval and hardship. NHS spending will be subject to unprecedented constraints, and the envisaged growth of private healthcare will not rapidly counter the impact of this on the market for medical products. By promising a better commercial environment for life science companies in the UK, the Government hopes to stop the industry taking its business elsewhere.

From research to market
In December 2011, the Government published two closely related strategy documents: Strategy for UK Life Sciences and Innovation Health and Wealth: Accelerating adoption and diffusion in the NHS. The two documents came from different departments (the BIS and the DH respectively) and will be implemented through separate arrangements, but are two sides of the same coin.

The Strategy document speaks of the need to place the UK at the forefront of global medical R&D. Key measures announced include:

• In early 2012, MHRA will consult on proposals for a new Early Access Scheme to ease the route to market for ‘breakthrough therapies’.
• The Government will invest £180m in a new Biomedical Catalyst Fund to support early-stage research and a further £130m specifically to support R&D in stratified medicine.
• Pending consultation, the NHS constitution will be amended to allow companies conducting “approved research” to use anonymised NHS patient data, and to approach patients who may be eligible to participate in clinical trials.

The document notes that the UK life science industry (pharmaceuticals, biotechnology and medical technology) “is growing faster than the economy as a whole and is a key source of high-skill, high-tech jobs”. However, it comments that the time and cost of developing new treatments are increasing rapidly, and that the industry’s reliance on huge research establishments is not sustainable as products and their markets become more specialised.

Life science companies, the document promises, “will be able to operate in a streamlined regulatory framework, enabling quick entry to the market for new discoveries and innovations”. The Government will “nurture innovation through the translational funding gap,” and more generally will work to build “a life sciences ecosystem” that integrates the academic, industry and clinical sectors.  

Investments in clinical research infrastructure include the establishment of a new Cell Therapy Technology Innovation Centre in London; a new technical hub for bioinformatics in Cambridge; a number of academic health science networks across the country; and a national NIHR ‘Bioresource’ that builds on the existing facilities.

The £130m investment in stratified medicine by the Medical Research Council will consist of: £60m over three years to investigate disease mechanisms, particularly for chronic diseases; 60m over the next four years to support collaborations between academia, industry and clinicians to develop targeted treatments; and £10m to support work with AstraZeneca, who have made 22 compounds available to academic researchers.

The £180m Biomedical Catalyst Fund, invested by the MRC and the Technology Strategy Board, is intended to “nurture innovative technologies from the academic or commercial sector through to companies with products or technology platforms”. The document refers to the ‘open innovation’ model, whereby companies engage with partners in a wider R&D environment.

The Government will introduce a new Seed Enterprise Investment Scheme in 2012 offering 50% income tax relief on investments in small early-stage companies. In 2013, it will introduce an above the line R&D tax credit to attract large-scale investment in innovation.

The proposed new Early Access Scheme for ‘breakthrough’ drugs would typically be “available for drugs prior to authorisation but at the end of Phase III trials”, but could be extended to an earlier stage in some cases. The scheme would give patients access to drugs (and ensure reimbursement) where “there is a high unmet clinical need”, the likely benefits outweigh the known risks, the product is cost-effective for the NHS, and “the UK economy” will benefit.

In general, the measures outlined in the Strategy document shift the goalposts for the pharma industry only slightly, but could make a significant difference to some companies and R&D initiatives. They will promote the development of stratified and personalised medicine – and while the additional funding is very limited, the various measures could add up to a change in the innovation climate.

Changing patient pathways
The Strategy document argues that to facilitate innovation, the NHS needs to be “the ‘pull’ behind the industry ‘push’ for new therapeutic innovations”. The Innovation document expands on that statement, detailing measures to improve patient access to significant new therapies. It places more overt emphasis on medical devices than on drugs, but has major implications for the pharmaceutical sector.

The foreword by Sir David Nicholson, NHS Chief Executive, calls for a “commitment to innovation” in the NHS. He lists several opportunities open to the NHS to pioneer new treatments, including the “revolution in genome sequencing to monitor cancer and deliver personalised treatments; and to transform the detection, diagnosis and treatment of infectious diseases”.

The document states the economic case for innovation, both within healthcare (as a means of delivering care more cheaply and effectively) and in a wider context (by creating business growth and export opportunities). It emphasises the concept of the ‘value proposition’, whereby price is based on the value delivered by the product in use, including any changes it enables in the care pathway.

A number of priorities are identified for improving the climate for innovation in the NHS: reducing variation, compliance with NICE guidance, incentives, investment, procurement and adoption of ‘high impact innovations’. The document sums these up by saying: “We need an entirely new relationship with industry based on partnership, not just transactions.”

For the pharma industry, the most important changes outlined relate to NICE appraisals. The Government plans to:

• Introduce a NICE Compliance Regime to ensure rapid and consistent implementation of NICE guidance.
• Require that NICE technology appraisal recommendations are incorporated into relevant local NHS formularies in a planned way.
• Establish a NICE Implementation Collaborative, including industry representatives, to support prompt implementation of NICE guidance by helping NHS organisations to develop solutions and helping companies to optimise their value proposition to the NHS.

The Government will develop the tariff further in the direction of payment for outcomes. It will double its investment in the Small Business Research Initiative, and improve the protection of intellectual property. The NHS Confederation will work with the ABPI and the ABHI to establish an Innovation Pipeline Project that will drive “the adoption and diffusion of proven technologies in areas of high clinical need”. Finally, the new Clinical Commissioning Groups (CCGs) will have “a legal duty to promote innovation”.
The document concludes that having “a single model for driving transformation and change” will “avoid the problems of fragmentation and duplication that have previously beset the system”. Despite the impressive measures that precede it, this statement may give industry pause for thought. In an increasingly fragmented and diverse NHS, with Foundation Trusts competing for business and CCGs facing severe budgetary pressures, how can a single model for the adoption of innovation be either defined or enforced?

Deal or no deal?
Much of the Government’s life science strategy is aimed at emerging SMEs in the biotech and medtech sectors, rather than pharma companies (which tend to be larger and better-established). However, as drugs become more specialised and targeted, the dividing lines will blur – and what benefits a small biotech firm may benefit a pharmaceutical partner or parent company. Open innovation is the key to personalised medicine, and expertise is increasingly transferable between sectors.

The measures outlined in the Strategy document have less for the pharma industry than might at first appear, but the reverse is true of the Innovation document. In combination, they represent a significant initiative for the industry. There are opportunities for pharma companies in the stimulus offered to stratified medicine; in the emphasis on the value proposition and the patient pathway; in the prospect of early patient access to certain drugs; and in the more effective implementation of NICE guidance. The sharing of NHS clinical data with companies, which dominated press coverage of the new strategy, will also be of value.

What neither document explains is how the strategy will play out in a health system where private health providers play an increasingly major role, both in providing NHS care and in providing alternatives to what the funding-starved NHS can afford. A few days after launching the life science strategy, the Government passed legislation allowing NHS hospitals to allocate 49% of their beds to private patients. The new health providers may be crucial in determining whether the strategy is truly a new deal for industry or just a bribe.

A new UK life science strategy launched by Prime Minister David Cameron aims to create a more favourable environment for industry in which the NHS and life science companies work ‘hand-in-glove’.

The strategy includes measures to improve the implementation of NICE guidance, funding to support early-stage research and plans to make more NHS patient data available for clinical trials.

Industry response has been enthusiastic, with the ABPI and the BIA welcoming the support given to medical research and start-up companies.

However, the plans to ‘open up’ patient data to the private sector have been widely criticised, with the Government accused of undermining patient confidentiality.

Cameron stated that the UK life science industries, which already generate £50 billion a year, can use the expertise of British universities and the rich data resources of the NHS to develop world-leading therapies.

But to achieve this, he argued, the NHS needs to share more patient data with industry and to implement innovative treatments more quickly. “The endgame is for the NHS to be working hand-in-glove with industry as the fastest adopter of new ideas in the world,” he said.

Measures to improve the implementation of NICE guidance include: automatic inclusion on formulary for recommended treatments; formation of a NICE Implementation Collaborative to support uptake; and publication of an ‘innovation scorecard’ to assess the success of guidance in practice.

Stephen Whitehead, Chief Executive of the Association of the British Pharmaceutical Industry, commented that the new proposals “will contribute towards patients receiving better treatments more quickly and build the UK’s attractiveness as a leading hub for medical and health research.

“Specifically, we welcome the introduction of a NICE compliance regime to reduce variation of medicines uptake, increase compliance with NICE technology appraisals, and ensure rapid and consistent implementation throughout the NHS,” he said.

Cameron also announced a new £180 million ‘catalyst fund’ to assist start-up companies in taking innovative medical ideas to the point where they are able to attract private investment.

Glyn Edwards, interim Chief Executive of the BioIndustry Association, praised this measure: “The BIA is very pleased to see the Prime Minister commit to a £180 million BioMedical Catalyst Fund; we look forward to seeing the details of this initiative, and how it will work to support innovative SMEs facing the ‘valley of death’ funding gap.”

However, Dr Glenn Crocker, Chief Executive of life science incubator BioCity Nottingham, noted that the funding would not stretch very far unless it was targeted specifically at early-stage trials.

A more controversial aspect of the strategy is the plan to make GP patient records available to private firms. The data would be anonymised, but the BMA has expressed concern that “large commercial companies” may be able to “search through records and identify patients in order to contact them”.

The Government’s new strategy for life sciences is closely allied to its plans for increased private sector involvement in the NHS – but also, for the first time, includes steps to improve the climate for life science SMEs and for medical innovation in the UK.

The Government needs to do more to support life sciences in the UK and create an environment where the industry can flourish, a new survey has found.

RSA’s The UK Life Sciences Leaders’ Survey 2011 revealed worries over the NHS reforms, medicine pricing and reimbursement, employment issues and the cost of research amongst its leaders.

Nick Stephens, CEO of RSA, says the Government “urgently needs to do more to ensure that education, regulation, access to medicines and the NHS research base align to support the industry’s continued contribution to the UK economy”.

The report is the second annual survey of industry bosses. Last year the general feeling was of optimism with leaders believing the recently elected coalition Government would improve the business environment.

But twelve months later the mood has changed with results finding leaders claim the UK is not competing effectively globally, creating opportunities for early phase/smaller companies or making the most of its unique selling points: the NHS and skills in innovation and discovery.

Leaders also raised concerns about the increasing cost of working in the UK, the implication of R&D as a result of the NHS reforms, the regulatory burden on operations and the process from development to market. They also advised that fiscal and tax incentives should be given to SMEs to help their growth and the UK compete globally.

Worries were also raised about the introduction of value-based pricing. However, in contrast, health technology assessments were broadly welcomed as a means of enhancing value and meeting therapeutic requirements, the report found.

During the tough economic environment, the survey found that leaders would focus on innovation, creating flexible organisations and processes, and refocusing research and development to weather the current storm.

In a perfect world, leaders revealed they would investing in R&D and make the healthcare sector, regulatory and commercial environment work closer together to achieve better outcomes for patients and the pharmaceutical industry.

Stephen Whitehead, CEO, ABPI, says the survey shows more support is needed for biopharmaceutical companies in the ever-changing NHS. “There is much that the Government has done to support the industry, particularly through the Growth Review and the Office for Life Sciences,” he said. “But we need to build on this as part of a continuing relationship with NHS and Government to explore how unnecessary bureaucracy can be eliminated from the healthcare system so that new treatments can reach patients as quickly as possible.”

A medical device that helps to prevent wrong-route injections has won the Medical and Life Sciences Award at the first ever Made in Wales Awards in Cardiff.

The Hall Lock system (pictured) from Flexicare Medical, developed in partnership with clinicians at Cardiff University, is a series of connectors designed to reduce the risk of potentially lethal misconnections.

The system was developed in response to the increasing number of fatalities due to wrong-route injections of intravenous drugs and anaesthetics.

The cross-sectional shapes of the Hall Lock connectors are not compatible with each other or with a standard luer connector, presenting a mechanical obstacle to misconnection.

Hash Poormand, Flexicare’s Business Development Director, commented: “The Hall Lock System is a truly Welsh idea inspired by Cardiff University Hospital and designed by Flexicare in Wales.

“We are proud to be at the forefront of shaping the future of patient safety. This award recognises that innovation can be taken from concept to market with all the expertise required right in the heart of Wales.”

In a keynote speech at the Made in Wales Awards, Cheryl Gillan, Secretary of State for Wales, said: “The innovation recognised at the awards today is inspiring and I want to congratulate each and every winner: they are first-class examples of how Wales can contribute to new technologies and private sector growth.

“SMEs in Wales have a critical role to play in supporting the economy in Wales and I am clear that the UK Government is here to provide support to help companies succeed.”

Based in Mountain Ash, Flexicare Medical manufactures medical devices across a range of product areas including anaesthesia, critical care, breathing systems, suction, resuscitation, continence care and colostomy.

The ruling by a European court banning patents on inventions derived from stem cell research has been described as ‘devastating’ for biotech researchers and life science companies that depend on their findings.

The Court of Justice of the EU has ruled that inventions requiring the use of human embryos (at whatever stage of development) as base material are excluded from patentability, even if the patent does not itself refer to such use.

The ruling could see an end to UK investment in stem cell research and life science companies that rely on it, including medtech companies developing diagnostics and therapies relating to this area of biotechnology.

The regenerative properties of stem cells from human embryos is a key discovery of the biotech sector, and the new ruling excludes Europe from what has been hailed as the medical breakthrough of the new century.

Researchers have predicted that stem cell research could deliver effective therapies for degenerative diseases such as Alzheimer’s.

“This is a devastating decision that will stop stem cell therapies’ use in medicine,” said Pete Coffey, a researcher at UCL. “The potential to treat disabling and life-threatening diseases using stem cells will not be realised in Europe.”

Patent attorney Dr. Richard Gibbs, Associate at Marks & Clerk, noted: “This decision may do serious damage to stem cell research and technology in Europe. Those with existing patents will be uncertain of their enforceability; those intending to apply may need to reconsider their options.

“The potential for successful commercialisation is the major pre-requisite for attracting much-needed funding and investment in the arena of stem cell technology, and this decision significantly impacts that potential.”

Religious campaigners against stem cell research have praised the ruling as a victory for their view that individual life begins at conception.

In the US, the current administration has overturned the previous ban on stem cell research – but if a future government restores the ban, a medical breakthrough at the heart of a new life science industry sector could be lost to the Western world.

Nanotechnology holds the key to a new generation of medical devices and diagnostics. Mike Fisher of the Nanotechnology KTN looks at how miniaturisation is changing the face of healthcare.

Over the past decade there has been significant interest in the promise that micro and nanotechnology holds for life sciences.

An estimated 40% of US nanotechnology venture capital is being allocated to life science start-ups – and over 2008 and 2009, according to a study carried out by Lux Research, healthcare and the life sciences saw an increase in investment of 42%, while other areas such as manufacturing and materials saw a decline.

Europe has a number of leading biotechnology companies, as well as world-renowned R&D facilities. Traditionally the emphasis of these companies has been exclusively on biotechnology – but more recently the lines between biotechnology and the electronics industries have become blurred, creating a new and exciting field of new applications and markets using techniques acquired in the semiconductor world.

The electronics industry has been transformed by the strategy that ‘smaller is better’, and using these same techniques and applying them in medical and pharmaceutical contexts has opened exciting new market opportunities. The next level of miniaturisation, into nanoscale dimensions, is a booming area of R&D with significant funding being invested worldwide.

Mobile diagnostics

Using miniaturisation, medical diagnosis equipment can now be used outside of the lab: in doctor’s surgeries, remotely, and even on mobile phones. The applications are endless.

Imagine a world where all you need is your smart phone to detect any disease through blood analysis, without the need for costly and lengthy analysis in the lab. That could be real in five or ten years’ time.

Ten years ago the ‘lab-on-chip’ was a concept without a viable market entry point, but now point-of-care diagnostic systems are starting to show clear benefits in disease detection and cancer therapy.

By using these applications to analyse samples of blood, interstitial fluid, urine and saliva, medics are able to use minimally invasive techniques to obtain quick results that are easily collected, with minimal stress and discomfort to patients.

Using miniaturisation in diagnosis means that the size and cost of equipment can be reduced dramatically. Sensors can be made available at the point of care, in many cases providing a diagnosis while the patient is with the doctor. Providing early diagnosis means that the right treatment can be given early, avoiding complications caused by delays.

Micro and nano diagnostic devices can also provide closed-loop systems that continuously monitor patients and respond immediately to physiological changes. This is particularly important in the intensive care unit, where simple parameters such as oxygen levels can be critical.

In the future, as medical systems become fully integrated with semiconductor technology, we can expect lab-on-chip devices that measure information on disease markers, cell count or DNA-RNA from a very small quantity of blood or other biological fluid sampled by pain-free needles, and ways to receive and transmit real-time information from sensors located inside the human body.

With applications such as point-of-care diagnostics already emerging with huge benefits to patients, there is no doubt that the next generation of healthcare technology will be enabled by the use of miniaturisation.

Taking a simple and effective concept from the semiconductor world has already delivered a dramatic effect on medical diagnostics and is now moving into drug discovery, creating new and exciting applications across a wide variety of markets.

Chain reaction

Getting these applications to market has been hindered by a lack of potential investors and early adopters willing to take a leap of faith. However, there are now a significant number of international companies developing these new application technologies, as they have begun to see the clinical effectiveness offered by nanotechnology and miniaturisation.

The current interest in the use of miniaturisation in the life sciences has been driven by the many advances this new concept promises. Individuals, companies and funding bodies are looking for ways to invest in this newly commercialised technology. To ensure success, nano-companies need to secure support from venture capitalists and other funding bodies, which can be difficult in the current economic climate.

However, despite the advanced developments in miniaturisation in the life sciences, the industry is still relatively new and there are a number of gaps in the supply chain that prohibit products from getting to market in an effective manner. It is crucial with any new technology to ensure that all parts of the supply chain interact and keep each other informed of developments and capabilities.

One of the Nanotechnology KTN’s main remits is to analyse this supply chain, determine where the gaps are and encourage companies to recognise the commercial gains that can be reaped from bridging them.

Connecting members of the supply chain with one another means that academics, research specialists, industrial practitioners and funding sources can meet to discuss ideas and business opportunities, thus ensuring the developments in this application of nanotechnology continue.

Clearly, many of the applications in these new markets are novel and as a result have yet to be fully developed and become economically viable. In the quest to make these technologies and applications available to a wider market, clinical efficacy and value to the healthcare payer are ultimately the deciding factors.

Increasingly, products need to be cost-effective – and the materials used to produce each device represent a significant part of the cost. It can be expected that as the use of miniaturisation in life sciences becomes more widespread, the associated costs will reduce and the applications will expand much more widely.

Given the economic benefits it promises, it is inevitable that the use of miniaturisation in the life sciences will continue to be adopted and supported.

Mike Fisher, PhD, is Theme Manager – Life Sciences & Healthcare at the Nanotechnology Knowledge Transfer Network (KTN).

The current Life Sciences Business Advisor to the UK Government, Chris Brinsmead, has joined Proteus Biomedical Europe as its new Chairman.

Mr Brinsmead will develop the organisation in Europe and use his wealth of experience in guiding the commercial launch of Proteus’s first product, Helius.

Andrew Thompson, CEO, Proteus, says the company is pleased somebody with as “distinguished a career” as the new Chairman has assumed such an “important leadership role”.

Prior to his role within the Coalition Government, the former Chairman and President of AstraZeneca UK, was appointed as a Business Ambassador to promote UK life science abroad. He also served as the President of the ABPI.

Helius provides assurance and peace of mind to individuals struggling with complex medication regimens and health issues, the company says.

“I believe that Proteus is developing a potential game changer for the way in which consumers take their medicines, understand their chronic conditions and manage their health and wellness,” said Mr Brinsmead.

“With the launch of Helius, first in the UK and then across Europe, we will be building the foundation for a new kind of twenty-first century medical business—one that is as shaped, personalized and embraced by consumers as are the mobile phones, social media sites and other digital products that increasingly populate and define our daily lives.”

Valeant Pharmaceuticals has bought cold remedy manufacturer Afexa Life Sciences in a deal worth 76million Canadian dollars.

Afexa, based in Edmonton, Alberta, sells Cold-FX and Coldsore-FXT, totalling annual revenue of approximately C$40million.

Michael Pearson, Chairman and CEO of Valeant, said that the combination of both companies’ products “will provide the critical mass we need in the OTC market and should provide Valeant Canada with another platform for growth”.

Valeant stated that Afexa's board unanimously approved the deal and recommended that the company's shareholders tender their shares, who will receive C$0.71 per share in cash.

Canada-based Valeant is a manufacturer and marketer of a range of pharmaceutical products primarily in the areas of neurology, dermatology and branded generics.

Thermo Fisher Scientific, a leading global supplier of products to support medical and other life sciences, has acquired Phadia, a leading specialist supplier of blood tests to diagnose and monitor allergies and autoimmune diseases.

Phadia, which has 1,500 employees worldwide, will become part of Thermo Fisher’s Specialty Diagnostics business.

The acquisition is expected to add $190 million to Thermo Fisher’s 2011 revenue results.

Marc N. Casper, President and CEO of Thermo Fisher, commented that the acquisition of Phadia “significantly enhances our presence in high-growth specialty diagnostics markets by adding leading allergy and autoimmunity diagnostic tests.”

He added: “We look forward to working together to expand our depth of capabilities for our customers who are focused on improving healthcare through better diagnostics.”

Based in Sweden, Phadia develops, manufactures and markets blood test systems to support the clinical diagnosis and monitoring of allergy, asthma and autoimmune disease. It supplies more than 70% of allergy laboratory tests worldwide.

Based in the USA, Thermo Fisher Scientific is a world leader in serving life science within healthcare companies, hospitals, clinics and research institutions.