Industry leader shares thoughts on UK healthcare sector for the year ahead

• private companies should take the Alternative Investment Market (AIM) more seriously and see it as a stepping stone
  
• the findings on pre-emptive rights from the Myners report will be critical to public companies
  
• companies and investors would benefit from pan-European biotech funds and exchange

At the 8th Annual Healthcare Dinner, which was hosted by Cambridge Consultants at the end of last month, the keynote speaker, Dr. John Brown, identified the three biggest issues facing the UK healthcare industry in 2005 and highlighted methods for maintaining investment momentum. In his speech he called for private companies to use AIM as a stepping stone; the relaxation of the pre-emption rights following the Myners report; and the need for pan-European biotech funds, to increase the number of specialist investors available.

"For private companies a £40 to £50 million glass ceiling seems to exist when it comes to funding. If you are in this position and there is no IPO opportunity on the main markets, the business is going to stall and the momentum, that management has built, is going to be for nothing. In the last half of 2004 we saw an increase in the number of companies who listed on AIM, and in my opinion AIM could become the route of choice after VC funding this year. More funds now accept AIM stocks and fund managers see less of a difference between an AIM stock and that on the main market" said Dr. Brown, who sits on the board of several public and private UK companies. He added, "For public companies, who are at phase III trials or in a similar position with regards to capital requirements, the findings from the Myners report into pre-emption rights is vitally important. In the public arena the BIA (BioIndustry Association) is pushing hard to get the rules modified so that you can raise 20% of equity a year, instead of just 5% and, like the majority of the industry, I look forward to a positive outcome."

He continued, "One of the biggest changes that I would like to see is the development of pan-European biotech funds. The reason that the NASDAQ is so successful is that there is a big pool of investors out there, a real mix of specialists who know what they are doing and momentum investors, who are interested in the sector. We don’t have a big enough pool of specialists in the UK to support a vibrant biotech sector and therefore we are disadvantaged when it comes to competing with our US counterparts. Switzerland is a hive of activity at the moment and pan-European funds would allow many more investors to participate and international companies to take advantage. I’m also interested to see the outcome from the BIA’s push for a pan-European biotech exchange."

The Healthcare Dinner, which is held in Cambridge every year, provides an opportunity for business leaders from drug discovery, pharmaceutical, device development and investment communities to discuss issues affecting the industry. Each year a prominent figure is asked to speak about the year ahead and identify the major issues that they see companies facing. This year Dr. John Brown, independent non-executive director and chairman of Scottish Biomedical was invited. Dr. Brown sits on the Advisory Board of the Life Sciences ITI in Scotland, and is a member of the DTI Technology Strategy Board and the DTI Biotechnology Leadership council. He is also chairman of BIA Scotland and until December 2003, he was Chief Executive of the FTSE250 biotech company Acambis plc.