A new report released by the UK BioIndustry Association (BIA) shows that the UK maintained its strong leadership position in European biotech funding last year and has the strongest pipeline in Europe for future drug development.

Building something great: UK’s Global Bioscience Cluster 2016 showed that the UK is in a strong position to close the gap on the leading life sciences clusters in Boston and San Francisco and maintain its lead in Europe, providing current momentum can be maintained.

Despite a challenging year of financial uncertainty with Brexit and the US election leading to markets cooling across the globe in 2016, UK companies worked harder than ever to secure the funding that they needed.In 2016 for UK biotech, there was robust investment from venture capital funds, seven IPO’s for UK listed companies and many companies returned for follow-on funding’s on the Alternative Investment Market (AIM).

Key findings:

UK has the strongest and most robust clinical pipeline in Europe: The number of drug products in clinical development (or in registration with regulators) is higher in the UK than anywhere else in Europe.

A total of £1.13bn was raised by UK-based biotech companies from private and public sources in 2016: £681 million in venture capital funding, £105m in IPO activity and £344 million from all other public financing.

Venture capital funding remains robust: There was a shift to later stage fundraises – £275m was raised in post-series B fundraises, up from £110m in 2015. There was also an increase in series-B funding, with £184m raised, up from £136m in 2015. With the shift to later-stage fundraises, there was a lower series-A haul of £208m after a buoyant 2015, when £538m was raised. £14m of seed funding was raised in 2016, following £11m the previous year, which bodes well for the future.

UK leads Europe in venture capital funding and is gaining on US clusters: UK companies received £680 million in venture capital in 2016, more than a third of the total venture capital raised in Europe and more than any other European country. That total puts the UK behind the US biotech clusters in San Francisco and Massachusetts but ahead of San Diego and well ahead of all other European countries.

More than half European venture capital money will be deployed outside EU post Brexit: The data also reveals that the combined venture capital of the UK and Switzerland is now 55% of the European total. If this trend continues it will mean that more than half of the biotech financing in Europe will be outside of the European Union post Brexit.

UK company IPOs: Despite this general market cooling, there were still some excellent results for UK biotech firms. Shield Therapeutics raised £32.5m on AIM in February and four other companies raised over £10m each in their IPOs, with all but one (Motif Bio) choosing to list on AIM.

AIM persists as a source of follow-on finance: Despite the downward shift in levels of finance from AIM, the number of financings through AIM for the biotechnology sector rose, from 130 (including 8 IPOs) in 2015 to 175 (including 7 IPOs) in 2016.

UK is better placed to realise the value of its science-base: Companies are owning their technology for longer which means that they are able to scale up. We are seeing a greater knitting together of the sector with more deals being done with UK firms.

BIA CEO Steve Bates, OBE said: "The UK continues to be the strongest performer in Europe and it continues to build towards becoming the third global biotech cluster. This is down to the excellent science produced by our entrepreneurial and resilient community that is staffed by great management teams with the capability to tackle the challenges of working in a global environment."

The report will be launched at the BIA’s CEO and Investor Forum on 24/25th May in Oxford, which brings together more than 100 biotech CEOs with key figures from the investor community. This is the first year that the BIA has worked with Informa to update the headline statistics on a quarterly basis to keep all members up to date on the financing landscape for UK biotech businesses.

Informa Pharma, Executive Editor, John Hodgson: "This report provides a snapshot of the competitive position of the UK’s collective endeavour in biotechnology in 2016. Over time, as Informa’s multi-year partnership the BIA progresses, serial snapshots of the same data parameters will provide a "stop-motion" profile of the UK’s evolving biotechnology profile."