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London as a test bed for innovative models of finance

Imperial College Digital Health

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Publication type: General

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The Greater London Authority’s Economic and Business Policy Unit has produced this discussion paper to stimulate debate around the levels of risk undertaken and carried by different parties in funding drug discovery and development. The aim is to position London as a test bed for innovative funding models that will lead to a step change in future investment.

Life sciences are a priority area for the Mayor of London, who in April 2014 launched MedCity. The MedCity vision is for London and the Greater South East to be a world leading, interconnected region for life science research, development and commercialisation – delivering health improvements and economic growth.

Whilst there has recently been a positive upswing, there remain structural problems in life sciences investment in the UK. There are particular challenges in accessing finance at certain stages of development, including taking promising late-stage research into clinical development, and for Phase 3 trials and beyond.

This paper identifies the need for action to encourage large pools of capital to fund sufficient opportunities in our life sciences sector, to enable some of those opportunities to become successful treatments for patients and to grow successful companies. The paper also calls for mechanisms to reduce the risk-return dynamic of drug discovery and development – which presents higher risks than other technology sectors – in order to encourage the provision of sufficient patient capital with a long-term horizon.

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