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UK advances industrial strategy

, November 27, 2017, 0 Comments

uk-industrial-strategy-marketexpress-inUK business minister Greg Clark has announced a big investment in a London research facility by MSD, a global biomedical company, in the framework of the British government’s new industrial strategy.

Britain’s Austin Mini-like industrial economy — which has been smaller and slower than the government would prefer — is painting on racing stripes. It appears that the British government’s determination to foster increased investment and growth in four key industries is beginning to bear fruit.

On Monday in London, multinational pharmaceutical company MSD, known in the United States as Merck & Co., said it would open a state-of-the-art “life sciences discovery” research facility in London by 2020, with a focus on early-stage bioscience innovations.

“This new London location will enable us to build on our proud legacy of invention and be an important contributor to the vibrant and rapidly growing London life sciences community while providing access for more collaborations within the European life science ecosystem,” said Roger M. Perlmutter, president of MSD Research Laboratories.
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Biotechnology is among the four key sectors the UK’s new industrial strategy will focus on.

MSD said it intended to create 150 new research roles, and move around 800 existing jobs to the capital. The company is evaluating possible locations for the new facility in the London area.

MSD views Britain as a world-leader in science, although a spokeswoman said Brexit raised “some very real concerns” for the supply chain, drug regulation and the ability to attract talent to Britain.

It’s an additional sign that Britain remains a player in biotechnology. Last year, a high-profile deal was announced between British pharma company GlaxoSmithKline and Google’s parent company Alphabet to create a new company called Galvani Bioelectronics, headquartered in UK, to develop ‘bioelectronic medicines’ in particular, tiny electronic implants.

The business ministry said it had also secured a major investment from Germany-based diagnostics company Qiagen. Qiagen said its planned to develop a genomics and diagnostics campus in Manchester, northern England, that could potentially create as many as 800 jobs.

While the Financial Times estimated the value of the two investments at more than 1 billion pounds ($1.3 billion, €1.11 billion), MSD said it was too early to give an investment figure, and Qiagen also gave no number.
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The role of genomics in medical molecular diagnostics, a specialty of Qiagen, is expected to grow relentlessly in coming years. Qiagen was founded in 1984 by a team of scientists from Heinrich Heine University, Dusseldorf, Germany

The UK’s new industrial strategy

The announcements were made in the context of a push by the British government to foster new investments in the tangible goods and services producing economy — as distinct from the London financial sector. Life sciences is one of four sectors being targeted by the government, alongside construction, artificial intelligence, and the automotive industry. Each sector will be supported with a “Sector Deal,” meant to set up long-term strategic partnerships between government and the private sector.

In January, UK Prime Minister Theresa May a released a “Green Paper” entitled “Building our Industrial Strategy.” The document has been the basis for consultations with stakeholders since then.

On Monday, following the announcements by MSD and Qiagen, Business Secretary Greg Clark, presented the output of the consultations. Among other measures, Clark said the government will invest 745 million pounds in new innovation programs. The funding will be in addition to a previously announced 1 billion pound investment in Industrial Strategy Challenge Fund projects, including 246 million pounds in next-generation battery technology and 86 million in robotics technology development hubs.
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Fostering advances in battery technology established as one of the foci of the UK’s new technology push. In the meantime, competitors aren’t sitting idle. Here, a graphic of Tesla’s huge Gigafactory battery factory in Nevada, USA

The government will also increase the size of an infrastructure fund, the National Productivity Investment Fund, to 31 billion pounds, to support investments in transport, housing, and digital infrastructure.

Grand Challenges

The new Industrial Strategy has been built around four Grand Challenges, global trends the government expects will shape the future. The four challenges are: artificial intelligence, clean growth, an ageing society, and the future of mobility.

Recently, the government announced a 400 billion pound investment in electric vehicle battery recharging infrastructure to foster the adoption of electric vehicles in Britain, and said it would create a regulatory environment supporting the use of self-driving vehicles on British roads by 2021.

Breaking faith with Thatcherite dogma

The phrase “industrial strategy,” redolent as it is of central planning, was anathema for decades in Britain. It has been taboo ever since Margaret Thatcher took power in May 1979 and shifted the country sharply onto a laissez-faire economic agenda, deregulating the financial sector and privatizing the railways and other infrastructure.

But British productivity has been in a long-term doldrums, despite the comparatively light-touch regulation of British industry. Part of the reason, the current government believes, may be a lack of sectorally targetted investment and strategic engagement on the part of government. Countries like South Korea, Japan, Taiwan, and China having demonstrated that governments can successfully foster the growth of major industrial sectors starting virtually from scratch.

Now, under Prime Minister May, it seems even the British Conservative party has decided to break faith with Thatcher’s dogmatic hostility to a government role in fostering industrial development.