UK Risks Underestimating Life Sciences Investment Potential
Life sciences investment UK is at a crucial crossroads. As the government relies on the Green Book framework to guide funding for manufacturing innovation, many experts question whether the true value of advanced life sciences manufacturing is being fully recognized. How does the current appraisal process risk undervaluing this strategic sector, and what reforms can better support national competitiveness and health security?
Summary: Unlocking the True Potential of Life Sciences Investment in the UK
The UK risks undervaluing life sciences investment by focusing too narrowly on short-term, quantifiable outputs—especially under the current HM Treasury Green Book framework. This can mean missed opportunities for economic uplift, public health resilience, and long-term growth. Reforming how the Life Sciences Innovative Manufacturing Fund (LSIMF) is evaluated is essential if the UK aims to attract global investment and remain a leader in health sector innovation.
Discover a detailed exploration of these risks and recommended solutions in this Green Book analysis from ABPI.
Key Insights: Strategic Gaps and Global Lessons
- Beyond Jobs: Long-Term Value Matters
The Green Book-driven appraisal system emphasizes near-term, easily monetizable benefits such as job creation. This approach often overlooks productivity gains, export growth, health system resilience, and supply chain agglomeration—factors vital to a robust life sciences sector. - Missing Out on Broader Benefits
Under-recognized “spillover” effects, like regional economic uplift and ecosystem competitiveness, can lead to lost opportunities for innovation and advanced manufacturing growth across the UK. - Learning from International Leaders
Countries like Australia and key EU states use points-based frameworks that explicitly weigh strategic alignment and long-term impacts alongside immediate financial gains. - Actionable Reform Recommendations
- Expand evaluation criteria to include qualitative and regionally transformative impacts.
- Strengthen transparency and predictability in LSIMF processes.
- Apply proportional review standards—simplify application steps for smaller projects and focus scrutiny on large-scale, high-impact proposals.
For further context, related concepts include economic spillover, advanced manufacturing competitiveness, supply chain resilience, and life sciences innovation policy.
Background: The Green Book’s Role in Valuing UK Life Sciences
What Is the Green Book and Why Does It Matter?
The HM Treasury’s Green Book dictates how the UK government appraises public sector investments. It prioritizes cost-benefit analysis, often putting short-term “value for money” over wider strategic impacts. Even the Green Book’s 2025 review cited these shortcomings, noting a lack of robust methods to account for place-based and transformational benefits—central to life sciences investment UK.
The LSIMF: Unlocking Innovation and Growth
The Life Sciences Innovative Manufacturing Fund (LSIMF) aims to drive domestic manufacturing of medicines, diagnostics, and health devices. With up to £520 million in funding, it has already leveraged significant private capital—£64.2 million in grants activated over £850 million in investment in 2024, supporting over 500 skilled jobs. However, grant decisions often still hinge on the limited criteria of the Green Book.
Global Best Practices: More Than Financial Metrics
International models—such as Australia’s Modern Manufacturing Initiative and the EU4Health program—use more holistic, multi-criteria evaluations that balance financial, strategic, and ecosystem factors. Transparent reporting and clear, points-based logic encourage higher-value applications and broader participation.
The Economic Impact: Life Sciences as an Anchor Sector
The UK’s life sciences manufacturing sector generated £16.4 billion in gross value added (GVA) in 2019, enabled £26.1 billion in exports (2023), and supports over 115,000 high-skilled jobs nationwide. These investments fuel broad economic multipliers and enhance the nation’s ability to weather future health crises—benefits rarely captured in standard evaluation models.
RECOMMENDATIONS: Making Life Sciences Investment UK Strategic and Sustainable
- Broaden What Counts as “Value”
Move beyond the benefit-cost ratio to measure ecosystem development, health resilience, and export growth. - Foster Transparency and Predictability
Publicly share award criteria and outcomes to build trust and motivate industry participation. - Align with Global Standards
Implement points-based, multi-factor appraisal frameworks to match leading international practice. - Prioritize Health and Economic Security
Explicitly weight factors like supply chain flexibility, regional “levelling up,” and pandemic preparedness.
FAQ: Key Questions on Life Sciences Investment UK
How does the Green Book framework affect UK life sciences investment?
The Green Book’s narrow focus on short-term monetizable outcomes—such as job numbers—means vital benefits like export capacity, productivity growth, and health resilience are not adequately valued. As a result, the UK may see reduced investment and diminished competitiveness.
What changes are needed to capture the full impact of innovative manufacturing?
A broader evaluation system should balance quantitative and qualitative impacts, increase transparency, and make the application process more proportionate to project size. This would encourage investment into projects with broader strategic value, not just those with clear financials.
How do other countries support advanced life sciences manufacturing?
International leaders like Australia and several EU nations use points-based systems that specifically value long-term economic, regional, and health impacts. These models offer higher co-financing and more predictable processes, securing more robust outcomes for their sectors.
Seeking a data-driven deep dive? Explore ABPI’s comprehensive report for specific case studies and policy recommendations.
Conclusion: Setting a Global Benchmark for Life Sciences Investment UK
Fully recognizing the strategic, economic, and public health benefits of life sciences investment in the UK—and updating appraisal frameworks accordingly—is essential. Embracing proven international practices and broadening evaluation criteria can help the UK unlock private investment, boost exports, and strengthen health resilience.
