Why biotechs have a huge role to play in the UK economy

If you know anyone who regularly trades, it’s likely that they’re aware of biotech and therapeutics stocks. During the last twelve months, they’ve been some of the strongest performing categories on the market, with many showing returns as high as 70%. But we’re not here to talk about trading. Instead, we’d like to share why we find biotech startups so interesting.

Let’s begin by understanding what biotech is. No meandering and complicated explanation here – it’s really rather simple. Biotech is the intersection of technology and biology. Or more specifically, the integration of natural sciences and engineering sciences to encourage growth through organisms and cells.

You could be forgiven for assuming this is purely around living beings as we know them, such as humans and animals. But actually, one popular example of biotechnology is brewing beer, or, baking bread. Whilst you won’t find BrewDog under the ‘biotech’ section of any trading platform, it’s important to understand that yeast is the magic ingredient here, and technically a living organism.

Biotech does still cover more traditional disciplines such as biochemistry and molecular biology, with scientists developing new medicines and therapies. It also covers agriculture, such as the development of genetically modified plants or the production of biofuels.

So what’s so great about biotech?

Unlike many industries, biotech has weathered several tumultuous economic periods in the last few years. With the need to understand viruses more important than ever before, this has shone a new light on biotech, with the industry receiving a more optimistic outlook than others such as transport or retail.

With a new focus on science and medicine, the industry is ripe for innovation. Several large-scale acquisitions and partnerships have proved the health and desirability in big firms with talented employees, coveted technologies or valued IP. There’s an abundance of startups too, with many new businesses coming to market with interesting and unusual takes on traditional processes.

One such example is Verve Therapeutics, an organisation that’s seen 3,600% growth over three years thanks to their safe and effective ways of editing adult genomes to protect people from coronary artery disease. Another one to watch is Forge Biologics, a gene therapy developer that has seen a staggering 7,300% growth since 2020.

And these organisations aren’t unicorns. The average share price for European and US biotechs increased by more than twice the rate of the somewhat reliable S&P 500, with Chinese biotech companies performing over six times better. It’s worth noting that biotech is also outperforming pharmaceuticals, a typically stable and prosperous industry here in the UK.

Have we missed the bubble?

We don’t think so. Across 2019 and 2020, biotech saw double-digit annual growth in fundraising from VCs and triple-digit growth in IPOs. With just a slight slump in light of recent market conditions, the industry remains strong and full of opportunity. With many executives expecting the innovation to continue long after the pandemic, we see biotech and therapeutics as critical not only for improving our lives, but supporting our economy.

There’s no shortage of UK biotech firms, all at different stages of their growth journey. Financing and funding plays a key role in the success of any business, but it’s especially important for startups who are in need of that initial investment.

We’re not strangers to helping business off the ground. Whether that’s understanding tax rules unique to your sector including R&D and patent box, raising funds or handling acquisitions. We understand the intricacies of biotechs, the need to have oversight of multiple P&Ls and the ability to withstand regular scrutiny, often at a moment’s notice. We’re a safe pair of hands, and we’re our happiest when we’re helping thriving businesses who do good, do better.

If you’re a biotech firm and you need a finance or accountancy partner who can help you navigate the various ins and outs of startup life, give us a call. We’d love to hear from you, and all about what you’re working on.