Shiraz or Fuller’s Best? 
Posted by Carlos on Sep 28, 2011

Earlier this month, Keith Powell posed an interesting question:

 The economies of California and the UK are similar, as are the university networks. Why then, does California boast the most successful biotechnology companies and the UK no significant success?

Dr. Powell is in a unique position to compare California and the London/Oxford/Cambridge triangle. He is currently the Chairman of Cambridge, UK-based Domainex, a leading drug discovery company. Previously, Powell spent many years in California as the head of the chemistry business at Maxygen. Having lived and worked in both regions offers him a unique comparative perspective.

So why is it that there is “no significant success” in the UK? Powell offers the following reasons:

  • Lack of local venture capital ready to serve the needs of entrepreneurs coming out of the universities.
  • Lack of experienced managers, having learned their craft at companies such as Genentech and Biogen-Idec. Successful UK companies are quickly acquired and shut down, instead of continuing to grow, mature, and develop experienced managers and financiers.
  • A lack of inexpensive laboratory & office space.
As companies such as Pfizer exit the UK and enter Ireland, we wonder if tax policy may also play a role in the development of the London/Oxford/Cambridge biotech cluster…a subject that was briefly discussed in a recent post.
However, it is not as simple as “lower taxes.” In fact, there are no easy answers. In fact, many regions are attempting to stimulate local/regional growth by stimulating biotech investment and company formation (usually by leveraging a local university). Many regions have tried to “force” this growth (usually through changes in tax policy)…with limited success.
Perhaps this is the lesson to be learned, namely, that biotech cluster growth cannot be legislated, not even through tax-friendly policies. It’s clearly not an infrastructure issue. Nor is it a lack of brainpower. It’s more of a collective entrepreneurial experience that is found in abundance in California (and Boston/Cambridge) which is very difficult to mimic. No legislator in Sacramento or Boston made the decision to create biotech clusters in their regions. They just evolved naturally.
For a good overview of the situation in the UK, we recommend OBN’s BioCluster report.
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