Why investment is the key to our success

Mar 13 2007 By Mike Asher, The Journal

Cels ceo Mike Asher looks at the challenges that lie ahead for the healthcare and life sciences sector and suggests that securing private investment remains a key challenge.

To encourage more business start-ups and attract more companies to carry out research and development in the UK, research councils and other public funding organisations have an important role to play as adequate financial support is crucial in the early stages of a business's life cycle.

Where private companies may be reluctant to invest in science and healthcare research, public money grants support research at a time when risk is high and the returns uncertain.

So, how can we encourage the private sector to invest more in life sciences, earlier on? Investors have frequently viewed science as a potentially risky business, and especially so where a commercial return from innovation is a longer term proposition. To maintain our competitive edge globally, this wariness must be overcome.

One of North-East England's strengths is the availability of lower-risk, faster return alternative investment opportunities, in areas such as assistive technologies. Our ageing population is stimulating the development of practical and lower risk innovations which will enter the healthcare market in months rather than years, demonstrating that "science" does not always have to be high risk and low return.

New technologies can take 20 years to become a serious commercial success and this long term time horizon frequently does not fit well with the financial strategies of either Venture Capital organisations or indeed with institutional investors who cannot afford to wait a decade or more for a return on their investment. Clearly, some investors do decide that the long term investment is worth making but perhaps not enough.

Stem cell research is a high-risk area where the UK and significantly North-East England leads the world in terms of capability, and where long-term investment is needed to develop cutting edge research into commercial reality. We have seen success in the region recently with Reinnervate, a company targeting the growth of nerve cells to meet a host of medical applications and with ConoStem, a stem cell research company which profited from business planning assistance from CELS. These examples and others highlight the outstanding technical work being done in the region and also the need for risk capital to unlock the potential for whole new classes of treatments and therapies that were unimaginable only a few years ago.

One of CELS's key roles is to provide management consultancy and business support to academics and scientists with ideas that can revolutionise people's lives now, and in the longer-term. We help start-ups to assemble management teams to access funding and help secure investment from the private sector. We seek to find the right balance of risk versus reward to encourage investment into the healthcare and life sciences sector. Striking this balance will ultimately be crucial to our success, and to that of potentially thousands of world-class, scientific businesses in the region.