UK's biotech sector builds global life sciences status

The convergence of science and technology is reshaping the future of healthcare, and nowhere was this more evident than among the funders and investors, product innovators and regulators that gathered recently at the BioIndustry Association (BIA) TechBio UK conference in London.

The BIA conference showcased the latest developments and cutting edge technologies across the UK biotech sector including AI in drug discovery, data access and interpretation, and investment strategies for new companies – and highlighted many of the challenges the UK industry faces as it looks to secure its status as one of the leaders in the burgeoning international sector.

UK ambitions

The government has responded to this rapid development with ambitious plans to make the UK one of the top three life-sciences economies by 2025, backed by a £600 million investment in the Health Data Research Service and commitments to pro-innovation regulation.

Initiatives such as the BIA's TechBio Boost and Big Impact are working to strengthen the sector. But there are sector challenges, according to Jane Moore, managing director of the BIA, including a difficult financial environment and the need for more global talent visas.

There have been significant recent investments by technology companies in the UK, according to Chris Gibson, the chief executive of the AI drug discovery platform Recursion. He highlighted his pioneering company's journey from a point solution to a vertically integrated platform and the importance of building end-to-end platforms and efficiencies.

Although the sector faces challenges in the capital markets as well as media pressure around AI drug discovery, the Recursion co-founder emphasised the enormous potential of the sector and the three fundamental factors that must be present in order for biotech innovation to succeed: data, compute and people. These factors – particularly the sector's close knit global community – will be key to the sector's success, he argued.

AI in drug discovery

There are critical challenges for AI in drug discovery' particularly around assembling and using data for applications requiring high-quality, consistent data and supportive regulatory frameworks. AI holds out the potential to improve the probability of success in drug discovery. However, meeting regulatory standards remains testing, with the need for better data sharing agreements and international standards to facilitate collaboration across borders and institutions.

One area of focus and activity is the integration of data from different sources, which underscores the importance of having a clear strategy for data collection and management from the outset. AI has potential to improve the efficiency and cost-effectiveness of drug discovery, while acknowledging the need for more capital-efficient approaches to make these innovations sustainable and scalable.

Strategic considerations for fundraising

Companies considering their fundraising strategies will need to tailor their messaging when approaching different investor types. Tech investors often approach things differently than life science investors, requiring adjusted pitches and understanding of individual investor preferences. Building long-term relationships with investors through no-pressure meetings to build trust and to develop an understanding of each party's motivations and strategic goals is essential.

The capital challenge was considered significant but not insurmountable. The panel were optimistic that companies would be able to raise funds from global investors, particularly with those in the US looking to the UK for new opportunities. Emerging funds such as the British Growth Partnership Fund are also expected to provide potential  sources of capital within the UK. Biotech companies are already reported to have attracted around £1.25 billion in venture capital during the first half of 2025, with 70% of that going into larger deals.

There are ambitious goals for discovery deals although this can present significant challenges, particularly in securing them within desired timeframes. Increased interest from pharma companies in early-stage deals is making the timing and fit between partners increasingly important considerations.

Persistence and relationship building are essential elements of the licensing process. Investor conferences can play a crucial role in fostering connections and creating opportunities for partnerships, providing valuable platforms where companies can build the long-term relationships necessary for successful licensing arrangements.

Innovative diagnostics

Britain's most promising diagnostic companies are building their technologies in the home market, using NHS data, and then commercialising them in the US – an approach that highlights the barriers to commercial scaling in the UK. Recognising these challenges, the UK government is seeking to simplify the complex regulatory environment to make it easier for companies to scale their businesses within the domestic market.

It appears that data access in the early stages is not the issue. The real barrier emerges at adoption. Unlike drugs, where there is a right under the NHS Constitution (which establishes the principles and values of the NHS in England) to have legal access when recommended by the National Institute for Health and Care Excellence (NICE), diagnostics face fragmented and inconsistent uptake around the NHS, with no guarantee of reimbursement despite meeting well-applauded, high-bar metrics. One company that achieved NICE endorsement and strong evidence of a 50% increase in patients getting access to stroke treatment still faces no direct reimbursement pathway.

The US offers a different model: breakthrough device designation provides faster traction and unlocks guaranteed reimbursement from the moment of launch. American hospitals think about value creation as a simple equation – if a company reduces readmissions and identifies more patients, they provide data access in exchange for equity stakes, creating a powerful "flywheel" of endorsement and adoption.

It was noted that Germany has cracked this with a public-private mix that provides increased incentives for tech adoption, whilst the Nordics offer similarly promising models. 

Osborne Clarke comment

It is clear that the UK techbio industry is full of promise and opportunity. The UK possesses world-class research, access to invaluable health data and innovative companies pushing the boundaries of what's possible at the intersection of biology and technology.

However, system barriers including diagnostics reimbursement pathways, capital constraints, unlocking data and cybersecurity vulnerabilities could deter funders and hinder the successful commercialisation of new technologies.

This Insight draws on the discussions at the BIA's TechBio UK conference in London on 16 October, which was attended by Osborne Clarke's Emma Charlton, Matthew White and Paula Margolis.