Getting pieces in place for scale-up

Funding is one of the challenges that has to be met in the quest for growth, reports David Lee

The business environment underpins the life sciences ecosystem – and it has to be right if the industry is to meet its £8 billion turnover target by 2025. Fundamentally, that meant access to funding and to good people, said Ken Sutherland, president of Toshiba Medical Visualization Systems.

He described the £8bn target as “fantastically challenging”, but added: “We have to work at it – the Scottish Government, Scottish Enterprise, the Industry Leadership Group (ILG), all of us.

“We already employ 37,000 people, but we can employ tens of thousands more if we can reach the strategy target.”

Sutherland said the five pieces of the business environment jigsaw were: financial support; the talent pipeline; scaleable accommodation; a strong, workable regulatory system; and leadership.

He identified one real funding problem as helping small and medium-sized businesses (SMES) to scale up operations.

“I want to stop talking about SMES and talk about scale-ups,” he said.

“We need to create momentum and talk about wealth creation – we need to be able to grow big companies.

“It’s like a rocket ship – you have to reach escape velocity. Whether it’s pharma or medtech, it takes a long time to get to the end product, and you use up a lot of fuel.

“It’s relatively easy to get small amounts of money in Scotland, but to get large amounts, you have to go elsewhere.

“Nucana raised $115 million to grow their business here by showing how their business worked in the United States.”

Sutherland reflected on Paul Wheelhouse, the minister for business, innovation and energy, telling the conference about the Scottish Government’s support for life sciences: “The minister is keen to adjust and adapt policies to suit industry and we should take up that offer.”

Wheelhouse recognised the funding gap identified by Sutherland: “We understand the need to create a supportive business environment – to support business growth and ambition and offer more targeted assistance.

“There is a gap in risk capital for innovative and tech-based companies and we are extending the range of equity finance available, as well as advice and support from the Scottish Investment Bank.

“Scottish Enterprise is spending more on supporting R&D. We have to attract investment into our economy and our businesses – and continue to attract people.”

In The Scotsman Conference’s discussion groups on the business environment, there was a sense of a “disconnect” between life sciences companies and funders and a frustration when funding was refused.

Julia Brown of Scottish Enterprise responded later, saying: “When a grant application is rejected it’s not necessarily unreasonable. The quality of propositions could be a bit better.”

Scott Johnstone of the Scottish Lifesciences Association agreed the quality could improve and said firms had to be realistic about what investors wanted: “If you want to hold on to your company, you’d better have a really good proposition. Leading the discussions on the business environment at the conference were main: Julia Brown, left, Anna Dominiczak and Scott Johnstone; and Ken Sutherland, above.

“You can get funding in Scotland, but you need to hit the right targets and refine your message.”

Sutherland urged the life sciences sector to embrace the “crazy leaders” who could juggle everything and take risks.

“We need to excite them about life sciences and this journey,” he said.

“They need the talent pipeline – it can be hard to grow from five to 25 people, but if you want to grow from 50 to 500, that’s an awful lot of new recruits, with a real mix of skills needed.”

Sutherland said some life sciences businesses also needed “sophisticated environments” in which to operate and we had to be able to provide those, working with government and private sector developers.

“What will businesses which do not yet exist need as premises?” he asked.

Of the five pieces of the jigsaw,