Finance
Biosolutions are complex technologies that require years of research and development before they can be sold. This business model is supported by significant grant funding and private investment before a company can begin to turn a profit.
Supportive policies and stable pipelines of public funding are key to derisking private investment in the sector. BIA works across Government, research councils and directly with private investors to ensure that vital funding continues to flow into the sector.
Our recommendations
Provide ringfenced public funding for biosolutions through Innovate UK
The sector needs:
- A pipeline of public funding interventions, particularly grants, awards and challenge funds, across different stages of companies’ development.
- A clear path to funding available from proof of concept to scale-up.
- Clear timelines of funding available over multiple years, which may vary across different sector applications of biosolutions.
- Ringfenced Innovate UK funding for engineering biology application areas across sectors and not in competition for funding with other technologies.
- Private investors to be brought in early through investor partnerships linked to public funding programmes.
Ensure biosolutions SMEs benefit from the research-intensive R&D tax relief rate
Establish an engineering biology focused team within British Patient Capital (BPC)
Introduce financial and tax incentives to drive investment into and uptake of biosolutions
- Financial policy levers need to be deployed to increase investment into biosolutions, including attracting key investment from abroad, drive demand and create market pull.
- The government must continue to implement the Mansion House Reforms to unlock capital that is key to delivering long-term strength in the UK venture financing ecosystem that most engineering biology companies rely on.
- The Government should explore procurement levers, such as modelled on the US’ BioPreferred programme, and with both government as a guaranteed customer and providing purchase order financing.
- Tax incentives such as rebates for biosolutions and for the use of engineering biology-based products and processes can create market pull and encourage uptake of such products, and incentivises corporate investment. This includes tax credits for sustainable biomanufacturing.
Influencing snapshots
The BIA continues its work to ensure the HMRC's operation of R&D tax reliefs remain fit for purpose, representing the needs of the sector and pushing for improvements.
We submitted evidence to HMRC of current issues being faced by our membership on:
- HMRC inefficiency: delays in payments, inefficient enquiries, or ineffective/excessive questioning.
- R&D intensity criteria. A number of case studies that showed examples of companies that we would expect to qualify as R&D intensive under the new scheme introduced last year following pressure from BIA - with the accompanying higher level of relief - but did not qualify as such, for a variety of reasons.
On 7 May 2024, the BIA responded to the House of Lords Science and Technology Committee’s inquiry into engineering biology.
We focused our response on the impact of the UK's innovative engineering biology companies, and set out what policy shifts are needed to help them succeed.
Dr Martin Turner provided oral evidence to the Committee on 23 April. In his testimony, he covered:
- The need for more cost-accessible pilot and scale-up facilities.
- The importance of resourcing regulators appropriately.
- The need for regulators to adopt a pro-innovation, collaborative mindset so they can horizon scan and deliver more effective regulation.
- The importance of implementing the Mansion House Reforms to unlock critical capital and strengthen the UK's venture financing ecosystem.
The BIA has pushed for life sciences and engineering biology to receive greater investment from the newly launched National Wealth Fund (NWF), a government-backed economic development bank that will focus on funding projects to help meet the government’s growth and clean energy missions.
Through our submission to a Treasury Select Committee call for evidence on the fund, and directly providing oral evidence to the Committee, we outlined how the sector could play a fundamental role in meeting the fund’s objectives, including generating returns for the taxpayer and crowding in capital. Equally, the fund is well placed to address some of the sector-specific infrastructure gaps faced by the life sciences, and securing the fund’s commitment to the sector is an important step. Following this advocacy, BIA Chair Dan Mahony Chaired a life sciences roundtable with the NWF on 25 June to inform their strategic thinking for the sector.
