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Shrinking pools of money, talent may bind biotechs after Brexit
[LONDON] The country that produced Dolly the cloned sheep, Viagra and the first IVF baby may find its scientific wings a little clipped when it leaves the European Union.
About 1 billion pounds (S$1.79 billion) in research funding may drain out of programs that seek to develop new medicines in coming years, according to analysts at Shore Capital Group Ltd. The UK gets more out of the EU's science budget than it contributes, leaving the national government to decide whether to fill the gap.
Just the referendum results are giving job candidates cold feet. King's College London, where the nursing school founded by Florence Nightingale now resides, and PsiOxus Therapeutics Ltd, a biotech based near Oxford that develops life-saving cancer treatments, say EU natives are more hesitant to accept offers than a month ago - and some are walking away.
That reaction risks depleting the pool of international researchers the UK has thrived on for decades, says Robert Lechler, who heads the country's Academy of Medical Sciences.
"This is the most serious threat and challenge to UK research in my lifetime," says Mr Lechler, who was knighted in 2012 for services to academic medicine.
At King's College, at least three senior appointments are in jeopardy because the recruits hail from other EU countries and question whether they still want to work in the UK, according to Mr Lechler, who is vice principal of health.
London's Francis Crick Institute, which aims to be Europe's largest science research centre in one building when completed, gets about one-third of its employees from the EU, says chief executive officer Paul Nurse.
"We are fantastically good at science and we have put it in jeopardy by this action," says Mr Nurse, a Nobel Prize winner.
At PsiOxus, half the staff is from outside Britain. One recruit from an EU country turned down a job offer right after the results of the vote were in, says chief executive officer John Beadle.
"One of the things we're most concerned about is access to talent," says Michael Kunst, a Munich-based partner with the private equity firm Bain & Co.
"That's going to be a major threat to UK-based companies, and it could be the real Achilles heel once the dust settles."
Financing is also at risk. Leaving the EU means that Britain would lose access to the bloc's Horizon 2020 program, which the UK biotech trade group has called "arguably the most relevant" to the industry. Horizon 2020 has a seven-year budget of 80 billion euros (S$119.2 billion) to drive economic growth and job creation.
For some of those programs, money is only the tip of the iceberg. The EU's Innovative Medicines Initiative - the world's biggest public-private partnership in biomedical science - brings together small and large companies, universities, regulators and patient groups.
Those efforts foster relationships that spawn collaborations and new ideas, and unless that continues "the future of science and innovation is in a tricky spot," says Sarah Main, director of the Campaign for Science and Engineering.
The UK has been the Innovative Medicines Initiative's biggest beneficiary, receiving almost half the total 160 million euros pledged so far - four times more than the next biggest recipient, France.
At least two dozen UK companies have participated in projects funded by the 3.3 billion-euro initiative, including Redx Pharma Plc, Ixico Plc and Heptares Therapeutics.
Some money will keep flowing in, thanks to private funds. Sander Slootweg, whose Forbion Capital Partners invests in UK- based Akarna Therapeutics, and Neil Woodford, a patron of biotechs including ReNeuron Group Plc, say they won't change their strategies in the wake of the vote.
"I'm not expecting investment into biotech to fall off a cliff," says PsiOxus's Mr Beadle. "If investment does slow down, it will be driven by macroeconomics."
The impact on Britain's economy is as unclear as the kind of trade relationship it will have with the EU after the divorce. The transition would be smooth if the UK joins the European Economic Area free-trade zone, like Norway.
EEA members have full access to Horizon 2020 funds and collaborations, but they must commit to the free movement of people - one of the sticking points for many Britons who voted to leave the EU.
Amid the uncertainty, executives say the focus should be on business, not politics.
"This is a global enterprise to find better treatments, better medicines for people," says Malcolm Weir, founder and CEO of Heptares, which is now owned by Japan's Sosei Group.
"The danger with a change like this is you get a bit of mud sticking to you, and we don't want that."