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The Impact of the Disinvestment by Astrazeneca at Alderley Park, Cheshire Final Report Contents The i mpact of the disinvestment by AstraZeneca at Alderley Park, Cheshire Volume 2: Future Market Demand Assessment Final Report Commercial in Confidence 11 February 2014 The impact of the disinvestment by AstraZeneca at Alderley Park, Cheshire Final Report Contents Executive Summary .................................................................................................................. i 1. Introduction .......................................................................................................................... 1 2. Setting the Scene ................................................................................................................. 5 3. Thinking & Planning for Demand ..................................................................................... 30 4. Projection 1 – An Initial Perspective on Demand ........................................................... 43 5. Qualitative Perspectives on Demand – the General View ............................................. 53 6. Qualitative Perspectives on Demand – the particular case of HE and Research Institutes ................................................................................................................................. 72 7. Projection 2 - A Revised Perspective on Demand .......................................................... 78 8. The Story of Existing and Pipeline Supply ...................................................................... 81 9. A Forward View of Economic Impact ............................................................................... 89 10. Conclusions and Recommendations ............................................................................. 93 Annex A: Stakeholder Consultation ................................................................................... A-1 Annex B: Key Assumptions in the Demand Model .......................................................... B-1 Annex C: Lessons from elsewhere .................................................................................... C-1 Annex D: Summary of the physical offer at Alderley Park (Mereside Zone) ................. D-1 Annex E: Key maps from the Witty Review ....................................................................... E-1 Contact: Luke Delahunty Tel: 0161 475 2106 email: [email protected] Approved by: Simon Pringle Date: 11 February 2014 Director www.sqw.co.uk The impact of the disinvestment by AstraZeneca at Alderley Park, Cheshire Final Report Executive Summary 1. In March 2013, AstraZeneca announced its intention to relocate its R&D functions from its current site at Alderley Park in Cheshire East to a new site in Cambridge by 2016. Alderley Park currently supports around 3,000 staff, and is AstraZeneca’s largest R&D facility globally. Under these plans, R&D activity will no longer be carried out at Alderley Park, with around 1,600 roles relocated to Cambridge. Around 700 non-R&D AstraZeneca roles are expected to remain at the site. 2. Cheshire East Council, on behalf of the Alderley Park Task Force, commissioned SQW Ltd (SQW), supported by Bionow, to undertake a study into the effects of AstraZeneca’s relocation decision. The study involved two complementary work strands: an Economic Impact Assessment (reported separately) and a Market Demand Assessment. This Executive Summary focus on the latter of these studies. Study Findings Context Sector Trends . 3. The Life Sciences sector is projected to grow significantly over the coming years. The market prospects for the sector generally in OECD countries are highly positive for the future. This is an encouraging general backdrop for the repurposing of activity at Alderley Park. 4. Outside the OECD, the position is more disruptive with radical changes in demand anticipated in the BRIC economies and, most notably, those in Asia. This is leading to consequential shifts in the ‘geography’ of Life Science R&D, clinical trials and manufacturing. It is also stimulating major investments in new translational medicine capability in new geographies, to serve new, growth markets. A key challenge for the industry is to find sustainable value in Europe. 5. The expiry of patents on many pharmaceuticals companies’ main products is a key factor, leading to the growth of the generic pharmaceuticals market. In many countries, cost-cutting pressures on healthcare regimes are driving increasing demand for cheaper alternatives. 6. In response, the industry is making substantial efforts to change business models, which include investing more in developing ‘niche buster’ therapies. There are moves for greater involvement by Small and Medium-sized Enterprises (SMEs) through the growth of ‘open innovation’. In so doing, there are severe challenges for SMEs in the UK in securing risk investment for innovation. Policy Drivers 7. At EU and UK levels, the policy landscape for the Life Sciences is supportive. Life Science is a key focus for the Horizon 2020 programme, with its emphasis on seeking to build European leadership in key enabling technologies, and their combination. The Strategy for UK Life i The impact of the disinvestment by AstraZeneca at Alderley Park, Cheshire Final Report Sciences, and the Technology Strategy Board’s initiatives, define a clear agenda for developing the UK’s capacity and capability within the Life Science arena. 8. The NHS, as the largest integrated national health system in the world, offers major potential for Life Science companies, through the unrivalled size of its patient database, as a value- creator and an engine of economic growth, and because of the trend towards increased private sector involvement. 9. With appropriate focus and targeting, there is a real opportunity for Alderley Park to align and link with these emerging policy agendas. In so doing, this would put the facility at the centre of the government’s thinking and plans for the sector’s future growth and development. Qualitative messages for demand at Alderley Park – general 10. Interviews with more than 60 senior and expert stakeholders to take views on the likely demand for a Human Health Science-focused facility at Alderley Park reveal the following: • Alderley Park is perceived as an opportunity of national significance, and there is wide support for its development: There is a significant supply of (generally, lower quality) bioscience space currently available across the North, but most sites are experiencing high occupancy levels. The pipeline of proposed future space is significant The landing of one or two significant ‘rain-maker’ investments at Alderley Park is viewed as being important in terms of triggering wider momentum, and providing comfort to hesitant firms who may be considering the facility Retention of both an active AstraZeneca R&D presence on-site, and the technical skills to operate the existing specialist science facilities, will be powerful and distinguishing components in a rebirthed site’s success. • Creating a complementary, yet differentiated, offer at the regional/Northern level will be key: There is a strong call for the site to be seen as a strategic play for the North of England’s economic and scientific well-being, not simply a property scheme A strategic decision needs be taken as to whether Alderley Park should position itself in the UK’s Premier League of Life Science players, or whether it should be leading a First Division effort The lack of a shared vision and strategy for growing the North West’s Life Science base is a major issue. Without this, there is limited clarity as to where Alderley Park will fit in. • Whilst being opportunistic and flexible, a facility at Alderley Park should have a core differentiating focus. The Task Force’s proposal that this be around Human Health Science is broadly endorsed. Within this space Alderley Park should target companies and organisations, including health charities, engaged in drug discovery and development R&D, as well as support services and associated product areas ii The impact of the disinvestment by AstraZeneca at Alderley Park, Cheshire Final Report • Several niche target sub-sectors are identified for focus within the overarching Human Health Science umbrella. These include the following, which might be progressed through the creation of formal centres of excellence: In terms of general sectoral trends : molecular diagnostics; companion diagnostics; stratified (personalised) medicine; clinical trials; biologics; and synthetic biology Reflecting Alderley Park’s specialist facilities and services : in-vivo activities; cytotoxic activities; pilot manufacturing; radio-labelling; high-throughput screening; high-end mass spectrometry; and compound management/storage. • Demand is expected from: Start-up businesses developed by former AstraZeneca employees (supported through the BioHub model), as well as a modest number of spin-outs from local universities and NHS Trusts SMEs in Human Health Science currently located across the UK, but primarily from within the North West and neighbouring areas Inward investors looking to access UK (including NHS) and European markets To a lesser extent, the research councils, universities, NHS and health charities, looking to establish R&D ‘projects’ or centres at Alderley Park. • The quality of the Alderley Park offer is identified as being key: It is a facility of quality, sophistication, and scale. This, together with its specialist equipment, makes it a very significant asset for the Life Science sector in the North of England Given its excellence,
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