A survey of 75 pharmaceutical, life sciences and MedTech businesses, including SMEs in the UK, done by accountancy group MHA, has indicated R&D spending is being maintained and is set to rise this year, despite Brexit and the impact of COVID-19.
The majority of companies surveyed have either maintained their level of R&D spending since March 2020 (40%) or increased it (21%), with only 17% reporting a decrease. In addition, when asked to make a prediction for their R&D spend across the course of 2021, 38% thought R&D spending would increase while a similar percentage (35%) thought it would remain the same, while only 9.5% projected a decrease.
The survey provides an indication the recent trend of increased R&D spending in the UK has not been broken by the COVID-19 pandemic. According to the Office for National Statistics (ONS), R&D spending in the UK by businesses has been following an upward trend in recent years, with a 3.3% increase in 2019 (the last year from which data is available) from 2018.
The picture was reflected in the percentage of respondents saying funding opportunities have either increased or remained constant since March 2020 (59% on aggregate), despite the pandemic and Brexit. Indeed, 38% of businesses surveyed reported funding being more available since the start of the pandemic, with almost all of these attributing the opportunities to an increased demand for medical products and research in response to the pandemic.
However, more than 27% were unsure whether the level of funding would increase or decrease. Of those companies who had seen funding opportunities decrease (15%), only 20% attributed this to Brexit, with 50% saying the lack of funding was not related to Brexit.
Nearly 50% of respondents thought Brexit makes foreign investment in UK pharmaceutical, life sciences and MedTech companies less likely and of these an overwhelming 93% said this would be a long-term issue with effects felt for a decade or more. On the other hand, 39% of respondents said Brexit would either make no difference to foreign investment or make it more available.
Yogan Patel, partner and Head of the Pharma, Life Sciences and MedTech sectors at MHA, said: “Overall neither Brexit nor Covid-19 have significantly damaged the sector and a substantial minority of firms have seen a pandemic boost to their funding prospects. In addition, our survey suggests the trend of increasing R&D spending, reported by the ONS, is continuing unabated. Some credit for this should go to the UK’s system of R&D tax relief which is relatively well constructed. It is a more flexible system than other nations, such as France or the USA use, and encourages risk, providing scope for a project to change over the course of development.”
