INDUSTRY LEADER SHARES THOUGHTS ON UK HEALTHCARE SECTOR FOR THE YEAR AHEAD
02 February 2005 - Cambridge Consultants

'For private companies a £40 to £50 million glass ceiling seems to exist when it comes to funding. If you are in this position and there is no IPO opportunity on the main markets, the business is going to stall and the momentum, that management has built, is going to be for nothing. In the last half of 2004 we saw an increase in the number of companies who listed on AIM, and in my opinion AIM could become the route of choice after VC funding this year. More funds now accept AIM stocks and fund managers see less of a difference between an AIM stock and that on the main market' said Dr. Brown, who sits on the board of several public and private UK companies. He added, 'For public companies, who are at phase III trials or in a similar position with regards to capital requirements, the findings from the Myners report into pre-emption rights is vitally important. In the public arena the BioIndustry Association is pushing hard to get the rules modified so that you can raise 20% of equity a year, instead of just 5% and, like the majority of the industry, I look forward to a positive outcome.'

He continued, 'One of the biggest changes that I would like to see is the development of pan-European biotech funds. The reason that the NASDAQ is so successful is that there is a big pool of investors out there, a real mix of specialists who know what they are doing and momentum investors, who are interested in the sector. We don't have a big enough pool of specialists in the UK to support a vibrant biotech sector and therefore we are disadvantaged when it comes to competing with our US counterparts. Switzerland is a hive of activity at the moment and pan-European funds would allow many more investors to participate and international companies to take advantage. I'm also interested to see the outcome from the BIA's push for a pan-European biotech exchange.'

The Healthcare Dinner, which is held in Cambridge every year, provides an opportunity for business leaders from drug discovery, pharmaceutical, device development and investment communities to discuss issues affecting the industry. Each year a prominent figure is asked to speak about the year ahead and identify the major issues that they see companies facing. This year Dr. John Brown, independent non-executive director and chairman of Scottish Biomedical was invited. Dr. Brown sits on the Advisory Board of the Life Sciences ITI in Scotland, and is a member of the DTI Technology Strategy Board and the DTI Biotechnology Leadership council. He is also chairman of BIA Scotland and until December 2003, he was Chief Executive of the FTSE250 biotech company Acambis plc.

Dr. Monika Green, head of Consulting at Cambridge Consultants added, '2004 was a difficult year for healthcare companies who wanted to IPO. With the exception of Ark Therapeutics, for who we wrote an independent Expert's Report, we have seen little activity in this area. With capital so important in the healthcare and biotech industry it is important for both public and private companies to identify all routes available to them. The UK is struggling against US competition for one main reason – continued investment is so difficult to come by. If things are not changed I see much of the UK talent moving to the US, which is not good for the sector.'

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