Skills shortage strains UK life science sector
Ambitions are soaring for the UK’s pharma and biotech industry on the back of record investment but can it be sustained in the absence of workers with critical STEM skills? MHA’s Yogan Patel looks at strategies for attracting and retaining talent.
In the space of a few months, an algorithm specialist went from assisting a friend with a couple of data problems in his life science enterprise to being a shareholder and partner in the business, despite little experience with the life sciences sector.
It was an enterprising solution but a rare hiring success story in the pharmaceutical and life science sector, where the wider industry grapples with an industry-wide absence of data skills and attracting candidates from other fields.
And the employment issue couldn’t come at a more inopportune time for the sector.
Last year saw record investment in the pharma and biotech sector in the UK, estimated to be a 60 per cent increase on the back of the country’s success in sequencing the COVID genome, developing vaccines, and expediting clinical trials.
The life science sector is expected to remain a growth industry across the coming decade, and the UK is well-positioned to play a key role in the increasing demand for personalised medicine.
In the recent 2021 Life Sciences Vision report, the UK government stated its aim to become a world leader in disease research, and accelerate the development of new treatments, medical technology and digital tools.
It is a fine ambition, but difficult to achieve without the right skills.
The industry has raised concerns that skills in STEM (science, technology, engineering and maths), including digital and AI skills, are in such high demand from other sectors, that it may be unable to achieve the full potential of the increased investment.
“A lot of small and medium enterprises view such things as a waste of time, but when you engage your staff, retention levels go up.” – Yogan Patel
In the 2022 Bridging the skills gap in the biopharmaceutical industry report by The Association of the British Pharmaceutical Industry (ABPI), 43% of pharma companies surveyed rated the lack of digital literacy skills a critical or major concern.
Retaining experienced staff was also cited as a challenge and neither issue is likely to resolve itself in the short term. The Science Industry Partnership projects the sector will need to fill 133,000 jobs by 2030, with around two thirds required for R&D and manufacturing roles.
Without attracting people with the right skills to this growing sector, it will become challenging for life science companies to continue to attract the funding necessary and allow the UK to become a power on par with its peers.
How can emerging companies attract the right people and keep the sector growing?
Retaining staff is a priority
Yogan Patel is the head of the Pharma, Life Science and Med-Tech sector at MHA, the UK network member of Baker Tilly International, and a member of the Finance and Tax Advisory Committee for the UK BioIndustry Association.
He says before organisations start thinking about how to attract new people to the industry, they must work to retain they key staff who already have the appropriate skills and experience.
“Retaining staff is much cheaper than going out and finding new people,” he says.
But it’s not easy. Impeding recruitment efforts are technology and finance companies, which are luring data and digital specialists with eye-watering salaries that the life sciences sector cannot match.
Appropriately rewarded staff for performance goes without saying, but when a life science company cannot compete on salary alone, what are the other levers to pull?
Mr Patel says business leaders need to think outside the box and consider programs such as the UK government’s Enterprise Management Incentive (EMI). This system enables companies to offer staff share options on attractive terms and is very tax efficient for both employees and employers.
“Where businesses cannot offer high salaries, options are very attractive,” Mr Patel says.
“People in this field are passionate about what they do. Alternatives such as options help make key employees feel like they are tied to the success of the products they’re working on.”
“My advice to SMEs is to stay positive and continue to develop your product and invest in R&D. For the right product or cure, the investment will be there.” – Yogan Patel
In making today’s workplace attractive, Mr Patel says wellbeing programs and social camaraderie, as well as flexible working conditions, are vital to grow a culture that supports retention.
“Management needs to think about roadshows to employees and staff engagement surveys, to demonstrate the greater purpose,” he says.
“A lot of small and medium enterprises view such things as a waste of time, but when you engage your staff, retention levels go up.”
Another element in successfully nurturing staff is helping them map out a career development plan, because engagement, says Mr Patel, plays a vital role in retention. Allowing key staff to visualize themselves in the business across the long term is critical to ambitious growth plans for both the employee and the business.
“The more global you are, the more opportunities you should be giving employees to go to other parts of the business,” he says.
“If they want to do a PhD or MBA, consider providing them with the support they need.
“Without that buy-in to the vision for the business, and that vision for their own career, other options will look more attractive.”
Keeping investment strong
While life science investment has soared in the last two years, the UK trails China and the US in financing inflows, highlighting the gap the government and industry need to cover that would allow it to be a truly global pharma power.
In the BioIndustry Association update for the first quarter of 2022, the UK ranked third in the world in venture capital financing, attracting £453 million to the sector, behind China (£553 million) and the US, the dominant leader netting over £3 billion in investment.
The same rankings were observed in 2021, despite the UK attracting a record amount of funding. Another challenge is the recent drop in investment flows to IPO and follow-on financing markets, with both close to drying up in the first quarter of 2022.
Mr Patel says the drop off was probably the result of rising inflation, interest rate rises and the possibility of recession spooking investors, particularly where companies are still in the development and growth phase where there is lack of or no profitability.
He said it underscored the sector’s tense dependency on investment for growth, with funding, in turn, to affect the ability to attract top talent.
“When you are facing fundraising challenges, you can lose staff and struggle to find replacements,” he says.
“Many SMEs are not aware of grant funding or are intimidated by the application process. We work with third parties specialising in grant applications with a success-basis fee structure so management in SMEs can get on with their jobs.”
“There are also favourable tax breaks for investors. Individual investors in UK trading companies can get income tax relief at 30 per cent if they hold the investment for three years, and they do not have to pay capital gains tax on the sale of the shares assuming all the conditions have been met during the three-year period.
“The government is tinkering with R&D tax credits, which will probably be expanded, and they are looking at ways to enable certain financial institutions and their funds, including pension funds, to invest directly in the sector.
“My advice to SMEs is to stay positive and continue to develop your product and invest in R&D. For the right product or cure, the investment will be there.”
An industry in need of a makeover
COVID-19 has not only changed the game for the UK’s life science sector but how employees view their own workplace, and their outlook on mental health. That means they are seeking more from work than just work.
Mr Patel admits the life science industry needs a facelift to present itself as a more attractive option for young graduates, in the same way that the tech sector was transformed more than a decade ago.
“When people think of pharma and life science, they think of someone dressed in a white coat standing in a laboratory,” he says.
“The truth is, it’s a lot more than that but it’s not being sold like that. The pandemic did indeed boost the pharma reputation and created some excitement, but this is a highly competitive market for talent.”
Mr Patel says continued government investment into the sector will be vital in sustaining confidence of the private sector, and he is confident that will be forthcoming. But he says organisations also need to change for the government and industry’s ambition to become a global hub to be realised.
“We have world-leading universities strong in biotech and engineering, we have diversity and inclusiveness, and we have a world-class medical regulator,” he says.
“But if you go to a pharma or life science company, you won’t see a broad spectrum of people. That needs to change. I believe the kind of talent the industry is seeking can be found in diverse populations.
“The visa system must adapt to attract more graduates, which I expect it will. Government and industry are committed to fixing the skills shortage. But it won’t happen overnight.”