Capital raised by UK life science firms reaches £5.6 billion

Oxford Biomedica, based in the city
Oxford Biomedica
Last year saw £5.6 billion of venture capital raised by life science companies headquartered in the UK, 120 per cent higher than 2020, according to Savills latest Life Sciences: Trends & Outlook report.
The UK has strengthened its position on the international science funding stage, with Oxford, London and Cambridge all featuring in the top 25 cities globally.
 
Whilst the London-Oxford-Cambridge cluster continues to dominate in terms of capital raised, the West Midlands, along with the North West, have seen a larger quantum of venture capital investment in the past three years, amounting to nearly £600 million combined, more than double the preceding three-year period total. This tallies with research undertaken by Savills, in conjunction with Beauhurst, the database of the UK’s fastest growing businesses, which has recorded the number of high growth life science companies per UK local authority, as of March 2022. The results include more than 40 businesses in Manchester and Cheshire East, over 110 across Cambridge and South Cambridgeshire, 47 in Oxford and almost 100 in London.
 
Steve Lang, head of life science research at Savills, said: “The UK is racing up the venture capital rankings, which have historically been dominated by the US and Asia, with London, Oxford and Cambridge combined just above the San Francisco total, which is currently third in the top 25 global cities in terms of capital raised by life science companies in 2021. The money that continues to pour into the sector has led to a considerable number of real estate transactions, particularly for laboratory space. However, it is important to note the growing focus on human health, which will require different types of real estate including manufacturing and production facilities.”
 
Alongside Beauhurst, Savills has identified key growth areas within the science sector including AI drug discovery, vaccines, HealthTech, microbiome-based therapies, immunotherapy and cell and gene therapy. At present, there are more than 1,010 active high growth UK life science companies, with a headcount of more than 23,900 who will all require further grow-on lab and R&D space following successful future funding rounds.
 
Already in 2022, a number of large science-related schemes are currently under offer and nearing completion. This includes the proposed  £350 million development of the Guy’s & St Thomas’ Foundation Snowsfields site in London Bridge by Oxford Properties and Reef Group and the sale of the circa £400 million GSK life science campus in Stevenage. Savills has seen enormous appetite from real estate investors, with in excess of £12 billion of live capital chasing UK science led opportunities. Overall, the firm has recorded circa £1.9 billion of real estate transactions since the beginning of 2021 in the core UK markets.
 
Savills has also seen the strengthening of occupier demand in 2022, with 800,000 sq ft of live requirements currently focused on London alone. A large proportion is from early stage biotechs, which suggests demand in the medium to long-term will increase significantly as big pharma and service providers look to relocate to capitalise on the proximity of new and expanding companies. In the more established markets of Oxford and Cambridge, combined there is currently as much as 3 million sq ft of unsatisfied demand.
 
Tom Mellows, head of UK science at Savills, adds: “It is exciting to see the significant VC investment into UK companies now feeding through into growing occupational demand, which in turn is attracting investor interest and underpinning further development. The UK is now an established international hotspot, with the country accounting for a significant proportion of the global life science R&D market, relative to its size. What’s more, the policy to drive a levelling-up agenda to grow the sector is a credible plan to help complement more mature markets in the South East and Eastern regions.”