The UK’s drug industry is not what it used to be. The number of employees in the industry peaked in 2002 at about 84,000, before a sudden drop to 73,000 in 2003. Now, it employs only 63,000 people, with 24,000 devoted to R&D, according to the Association of the British Pharmaceutical Industry (ABPI). Pharma remains the UK industry with the highest investment in R&D, at about £4.1 billion ($5.2 billion) per year, but this fell 22% between 2011 and 2016.
The layoffs seem to have come to a halt, and Britain is seeking to future-proof its position as a hub for drug discovery. But in a survey released in January, the ABPI revealed that the pharma sector is struggling to find the young scientists it needs to fuel the next wave of biomedical innovation.
Although the number of UK undergraduates studying science, technology, engineering, and math in the country’s universities increased by 16% over the past decade, this is far below the growth of 52% seen in the European Union and 63% outside the EU. The UK, the ABPI says, is falling behind the rest of the world and needs to fill a growing science skills gap to retain its prominent position in drug discovery.
Its imminent exit from the EU isn’t helping. The British government is likely to introduce stricter migration rules and higher tuition fees for EU students, deterring overseas undergraduate and graduate students from coming to the UK. The ABPI’s survey—which included 25 industry giants, such as GlaxoSmithKline, Pfizer, and Merck & Co.—flagged Brexit as the most critical threat to job growth.
While big pharma adapts to its new, smaller size, UK contract research organizations (CROs) are going strong. These companies, which provide clients with drug-discovery services, including medicinal chemistry and absorption, distribution, metabolism, and excretion (ADME) studies, are also confronting the challenge of filling highly skilled scientific roles amid the worsening skills shortage. But for now, they say, they are growing explosively and recruiting to match it.
The success of CROs reflects a macrotrend in the UK drug-discovery landscape, according to Craig Johnstone, chief operating officer at the CRO Evotec. Johnstone’s career illustrates the changing face of the UK’s pharmaceutical industry. Like many of his senior colleagues at Evotec, he has a background in big pharma, with nearly 20 years at AstraZeneca under his belt. Now, he’s based at Evotec’s site in Toulouse, France, a former Sanofi research center.
The CRO’s other sites are also former drug company facilities: an AstraZeneca site in Alderley Park, England, a GSK research center in Verona, Italy, and an Eli Lilly and Company diabetes research center in Hamburg, Germany.
Since Johnstone joined Evotec in 2012, the CRO has grown from about 600 employees to an impressive 2,700, with about 700 of them situated in the UK. Over the past 3 years, the company has acquired the research organizations Aptuit and Cyprotex. And it recently struck a deal to buy Just Biotherapeutics (see page 10).
“That growth has a tailwind behind it, which we see across the industry,” Johnstone says.
The pharmaceutical business is moving away from a fully integrated model to a system that favors collaboration and outsourcing. When big pharma companies began lowering their R&D budgets and reducing overheads, they converted to a more flexible mechanism, Johnstone explains. UK CROs, with their experienced staff and established infrastructure, “are benefiting tremendously from this shift.”
Case in point is Sygnature Discovery, a CRO headquartered in Nottingham, England, on the site where ibuprofen was discovered in the early 1960s by the British firm Boots Laboratories. The company recently took investment from the private equity firm Phoenix Equity Partners and in the fall of 2018 opened a site in Cheshire, England, where it is now recruiting heavily.
In November, Sygnature also opened an office in Cambridge, Massachusetts, to be closer to its customers in North America, where 40% of its revenue comes from, says Andy Lindstrom, the CRO’s director of marketing. Last year, Sygnature recruited 60 people, bringing its head count to 315. They are a mix of industrial drug-discovery veterans and young graduates, adds Natalie Insley, Sygnature’s human resources operations manager.
Although the effect of Brexit on recruiting overseas talent is a concern, Sygnature has not seen a drop in the number of applications for the positions it needs to fill. “But we do need to keep thinking about how we can attract the high quality of people we need. We won’t lower the bar,” Insley says.
Tom Mander, chief operating officer at the Cambridge, England–based CRO Domainex, says the job market is indeed tightening. Domainex was on the Financial Times’ list of 1,000 fastest-growing companies in Europe last year and is recruiting steadily.
About 80% of its 50-plus scientists hold PhDs and have on average 10–12 years of industrial experience. After entering into a strategic alliance with the Swiss chemical services company SpiroChem recently, Domainex is now diving deeper into fragment drug discovery and plans to expand into new markets in the US, Australia, and Europe.
Besides a drop in applicants from other EU countries since the Brexit vote, the pressure on the job market is due to the sheer amount of expansion rippling through contract research and the biotech industry, Mander says. “There is more investment going into biotech right now, more service providers being created all the time, and more spin-outs from universities,” he says.
In this environment, CROs are proving themselves a brilliant training place for young chemistry graduates, says Jackie Macritchie, senior managing director of discovery at Charles River Laboratories. The US contracting giant has had a strong footing in the UK since acquiring the drug services division of Galapagos in 2014, which included Argenta and BioFocus and their sites in the UK and the Netherlands.
After tapping into the downsizing of big UK pharmaceutical makers by hiring laid-off, highly experienced chemists, Charles River is now staying close to universities for fresh talent, Macritchie says. It employs about 15,000 people globally and is continually recruiting in the UK and Europe.
CRO executives note that less-experienced recruits benefit from the range of skills they can learn at a CRO by working on a variety of projects at all stages of the drug-discovery process. Because different drug discovery disciplines are in the same laboratories, chemists are rubbing shoulders with bioscientists, pharmacokinetics experts, and computational chemists.
“You would never get that breadth of experience in a big pharma company in the space of time that you get it in a CRO,” Macritchie says. If the number of students earning chemistry degrees does go down and that pool of talent dries up, CROs will be hit hard. But for now, Macritchie says, CROs are undoubtedly filling the drug-discovery skills gap. “CROs are now playing a significant role in the UK and have a responsibility to train the next generation of drug scientists.”
Even much smaller firms are working on training graduate chemists. For example, CatSci, a 32-person-strong CRO in Cardiff, Wales, professes to have no concerns about its ability to find the necessary talent to grow.
Simon Tyler, CatSci’s chief operating officer, and his colleagues spun the company out from AstraZeneca in 2010 in response to the changes permeating the pharmaceutical sector. By 2021, CatSci will invest close to $2 million in three new labs dedicated to work on highly potent compounds, analytical chemistry, and material supply, Tyler says. This investment will go alongside about 16 more staff members.
Moving forward, the growth of the company will depend on making sure it attracts young chemists—“the bright minds of the future,” Tyler says. And he is positive that drug discovery is not going to bounce back to being dominated by large corporations alone.
“We see a huge interest, desire, and need to work with companies like us,” he notes. CROs have become invaluable by picking up where the internal capacity of a client ends, whether that’s a single chemist in a small organization or a team of experts at a pharma giant, Tyler explains.
Arcinova doesn’t match Charles River in size either. The 3-year-old firm is based at a site in Northumberland, England, that was formerly owned by Sanofi and bought by Covance in 2010. Its current team is a mix of staff drawn from the legacy Covance organization and new recruits.
Since forming in 2016, Arcinova has grown from 50 people to about 135. And it plans to continue growing at this rate, becoming 300 strong within the next 3 years, says Gareth Jenkins, Arcinova’s chief scientific officer. The majority of Arcinova’s 85 recruits are recent graduates, he says.
Jenkins sees the shift in the UK’s pharmaceutical industry as being driven partially by a movement toward drug-discovery projects that target smaller patient groups.
It is easier now for a small biotech company to gather funding and support a new drug all the way through clinical trials, he says. Suchs companies use outsourcing partners to deliver everything a big firm would have in-house. With industry reconfiguring itself to manufacturing products at a smaller scale, everything is moving toward adaptability, flexibility, and short manufacturing runs, Jenkins says.
Thanks to such trends, the UK is becoming a CRO powerhouse, with a higher density of such firms than anywhere else in Europe, Domainex’s Mander says.
Overseas firms are taking note of the action on the island. In 2017, for example, the Chinese CRO Pharmaron established a beachhead by acquiring a Merck & Co. site in Hoddesdon, England. As long as the government still invests in advanced, disease-tackling research, science-based CROs will want to be there, Jenkins says.
In the long term, CROs will help maintain the UK’s position in drug discovery, CatSci’s Tyler says. “With the decline of big pharma, the rise of the smaller biotech companies alongside the service providers ensures the UK stays at the forefront of pharmaceutical innovation. It’s an exciting time to be a chemical research and development company.”
Vanessa Zainzinger is a freelance writer based in England.