James Sheppard, managing director UK & Ireland at Kadans Science Partner, comments on the UK delaying re-joining the Horizon Europe programme, and the effect it could have on medical technology in the country.
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Horizon Europe, the EU’s key funding programme for research and innovation, is the gold star that the UK should still be aiming for. It is the world’s largest ever programme for multi-country collaborative R&D and opens the door for high-quality collaboration with the best researchers, innovators, and businesses worldwide. If the UK government really wants to make a ‘superpower’ status more than just a PR slogan we need a commitment to investing in the nation's infrastructure, attracting international talent, and fostering an environment conducive to growth.
Associate membership had been agreed as part of the withdrawal agreement when the UK formally left the EU, however, the European Union remains in the process of finalising this association. It has been months since ‘immediate’ work was supposed to have been done to secure a deal, time is running out to make the most of this seven-year programme which will end in 2027, and the medical technology sector is not immune to the impact this delay is having.
Historically, it is true that medtech has not quite benefited as much as other sectors in the life science industry from Horizon membership. The last year has seen Horizon focus much of their funding on digital matters, climate and energy, bioeconomy and food sectors, and the start-up and innovation sectors. Re-joining the Horizon programme, however, offers UK medtech innovators the chance to reset their relationship with Horizon, enabling them to raise more money for medical innovation, timely access to quality health interventions, better health outcomes for patients, and affordable healthcare. Horizon Europe as the potential to provide a truly invaluable source of funding, and therefore has a key role to play in the future of medtech.
One area of medtech that will benefit greatly from Horizon membership is AI. Advances in AI are going to be what support the future of the medtech industry, and generative AI is forecast to grow faster in the medtech industry than any other sector. In fact, according to Statista, in 2021 the AI in healthcare market was worth $11 billion worldwide. It has been predicted that the global healthcare AI market will be worth almost 188 billion U.S. dollars by 2030, increasing at a rate of 37% from 2022 to 2030.
AI can and will improve the medtech industry in a variety of ways, from making processes more efficient to helping companies to personalise their consumer interactions, unlocking new methods of innovation through unconventional creativity, to bettering access to enterprise data and knowledge. In the UK, the government has plans to open five centres dedicated to exploring the potential of AI in healthcare. They will be based in London, Glasgow, Leeds, Oxford, and Coventry, and will focus on a particular application of AI.
One example of AI already being used in the medtech industry is in Addenbrooke hospital in Cambridge. They are using Microsoft’s InnerEye system to automatically process scans for patients with prostate cancer. The system takes a scan image, outlines the prostate on the image, marks up tumours and reports back. This is speeding up prostate cancer treatment and is now being investigated for use on brain tumour patients. This ever-increasing use of AI is leading to a direct need for more funding, and the delay of the Horizon agreement is pumping the brakes on this.
Another barrier is that medtech firms have often found raising venture capital funds much more challenging than some other more popular sectors. Venture capitalists, which have for a long time been the lifeblood of medical technology companies, are beginning to grow cautious of the sector, due in large part to inflation. Investors are instead choosing to seek out more reliable industries that can offer quicker and less risky exits. Therapeutics, for example, have a much easier time with this process. Therefore, the medtech industry has relied more heavily on grant funding, particularly companies in their earliest stages. The delay in access to the next iteration of Horizon is only exacerbating this issue, causing more damage to the medtech industry, and potentially causing some smaller, start-up companies to fold.
Medtech is going to underpin the future of healthcare and bring technology and medicine even closer together. The use of technology will keep healthcare more manageable, more affordable, and more accessible in the future. Medtech companies are well-positioned to drive the future of healthcare forward not only in the UK, but across the globe, but most cannot do it alone.
Therefore, it is key that public sector bodies invest and nurture medtech. The UK health system is recognised around the world as being well-rounded, successful, and trustworthy, all of which helps to make the UK a major contender in the world of global healthcare. Ambitious researchers and innovators must be encouraged to continue this. Medtech has a key role to play in the long-term financial sustainability of the UK health and care system, and Horizon membership will help to ensure this is achieved.
From a real estate perspective, which is where my own experience lies as Kadans’ Managing Director, medtech firms generally either need office space or lower grade laboratory spaces. They will often take smaller space and look for highly flexible terms as they are much more cost conscious. Given they are also likely to be acquired, they don’t want to tie themselves into longer leases. Once again, this is an area that is of extreme cost to the medtech industry, and therefore requires a high level of consistent investment. Medical technology cannot develop if it does not have a place to do so. The fact is that key industry members have been left waiting for these spaces by the government’s delay in confirming a Horizon deal.
Medtech isn’t progressed in a week; it needs a multi-year financial commitment which this deal can, and must, provide.
