Why MedCity needs a cash injection
So there is a £10bn mega fund to go to MedCity London – Med what? No it’s not MediaCity, a place up north where the BBC is based, not Tech City in Shoreditch, not Rock City or Sport City either.
This is MedCity – the latest addition to the “city” naming franchise and this is all about developing new medicines.
MedCity was launched in April last year by the Mayor of London, Boris Johnson, to facilitate collaboration between hospitals, universities and businesses in the South East. The aim is to make this a hub for the “world's most powerful life sciences research”, that attracts investment to fund research into ground-breaking new drugs and treatment.
Some may hope that this will mirror Tech City, though in reality the structures of technology and medical research are too different to be able to draw close parallels. It is true there was a similar boom to the dot.com boom in biotech following the decoding of the human genome, and then many companies folded. What makes MedCity a much bigger challenge than Tech City is the high risk element.
For those who don’t know, it takes an average of around $2.5bn (but this can easily rise to $5bn) to develop a new drug, according to Joseph DiMasi of the Tufts Center for the Study of Drug Development, Boston, USA. MedCity say that it costs up to £15m to reach phase II clinical trial results (where the safety and tolerability of a drug is tested on humans with the target illness) and £20m to reach small phase III trial results (where a drug’s efficacy is tested on humans). Even bigger budgets are needed to carry out large scale phase III trials to compare a drug with existing therapies before an application for marketing approval can be made.
Furthermore, the pharmaceutical industry is heavily regulated. Marketing approval applications to the London-based European Medicines Agency (or the United States Food and Drug Administration) can and do get rejected, and the application has to be resubmitted, or sometimes shelved. Considering that the drug could fail at any point during the 10 or 15 years’ development, particularly at phase II (when the financial outlay has become significant), or be rejected by the approval agencies this is a very risky business.
So how can researchers and the industry attract enough money for such ventures?
That is why large scale collaboration between the best brains, the best facilities and the best pharmaceutical companies is needed to improve the chances of successfully bringing a drug from the lab to the market. There is a much greater need to foster risk-sharing between establishments in order to encourage a venture capitalist to invest in medical research.
And investment is needed by the lorry load when it comes to pharmaceuticals. While tech companies in London boasted a total 1.4bn of investments in 2014 this sort of money is small fry in the world of pharmaceuticals. The Mayor of London provided £4.1m towards the launch of MedCity, and there have been subsequent investments in healthcare in London from Pfizer, Merck, and other investors but more is needed in order to sustain drug and healthcare development industry that would benefit the UK.
Cue, Boris Johnson’s meeting last week between MedCity and various stakeholders to consider a £10bn investment into the project. Incidentally, it isn’t actually a city, or even a hip neighbourhood above a roundabout in London. For this enterprise to be viable it has to be much bigger than Shoreditch – more like Silicon Valley. Hence MedCity is a triangle encompassing London (King’s Health Partners, Imperial College Academic Health Science Centre, University College London Partners) University of Oxford and University of Cambridge.
So, the meeting on 25th June brought together experts from pharmaceutical companies including Eli Lilly and Pfizer, as well as commercial and investment companies including Imperial Innovations, Silicon Valley Bank, European Investment Bank and JP Morgan who explored options. One of these options was the possibility of establishing a ‘mega fund’ of up to £10bn created by a combination of debt and equity finance.
This is a step in the right direction for the UK life science industry, though the course of true medical innovation won’t be smooth, and at times it will be an uphill grind.
Like Boris Johnson says: “Capital is a key ingredient that grows those companies and brings therapies to market, and at the moment we simply don’t have enough of it. If we want to develop another GSK or AstraZeneca……..and if we want better therapies more quickly, this is an issue we have to address.”
Industry-academia collaborations have been shown to work as they have been successful in cities like Boston and San Francisco, and if this £10bn does come towards MedCity it could spell an upturn in the fortunes of medical research in the UK. Watch this space.