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The British government is moving ahead with plans to position its capital city as the “health-tech capital of Europe.”
London deputy mayor Christopher “Kit” Malthouse paid a visit to Silicon Valley this week to meet with executives from the hottest startups, including Yelp, Salesforce.com, TaskRabbit, and Industrial Light & Magic. Also on his calendar? Sit-downs with representatives from fastest-growing med-tech companies, like CardioDx and Ariosa Diagnostics. Ariosa just filed for a $69 million initial public offering and is plotting European expansion.
Startups in the health care and life sciences spectrum are a high priority for the Mayor’s office. Malthouse, who called me after taking a tour of the bio-design program at Stanford University, said an announcement is underway to introduce “Med City” to the global press.
He expects to start briefing the media sometime in April.
“You’re going to hear a lot more about Med City,” Malthouse explained. “Frankly, we’re very excited about convergences, like science and tech or finance and tech.”
Med City is intended to be a “sister organization” to “Tech City,” the UK government’s scheme to nurture homegrown tech companies, Malthouse said. Tech City has come under fire in recent weeks, with a contributor for the Guardian predicting a “slow death” and calling it “misguided government glitz,” and the BBC questioning the absence of a British Mark Zuckerberg.
“Google bought a plot of land [in London] for $1 billion and we have thousands of people working in Tech City,” said Malthouse, who referred to the local press as occasionally “snippy.”
“How you can calculate that as a slow death, I have no idea.”
Introducing Med City
A source who met with the deputy mayor said Malthouse wants to convince Silicon Valley’s tech firms to open a European headquarters in London rather than in a viable alternative — achingly cool Berlin.
Malthouse took exception to the idea that startups would need to be convinced.
“To be honest with you, we don’t need to seduce or convince every company we come across. We want to be helpful to businesses rather than to do the hard sell.”
“We came here to learn as much as to proselytize,” he added.
But Malthouse and the communications team at the mayor’s office do have a sell of sorts. A source forwarded me a copy of an official invitation to a brunch, hosted by the deputy mayor, which promises tax breaks for promising startups and a host of resources. From the invitation:
London’s life sciences community is a recognized world leader in R&D; second only to Boston globally. London has 3 out of the top 10 universities in the world and it is these centers of excellence that form 3 out of the 5 Academic Health Science Centers in the UK – internationally peer reviewed centers of partnership between academia and healthcare providers focusing on research, clinical services, education and training that provide fertile ground for new therapies, technologies and talent.
We will share how Med City reinforces the incredible momentum of London as one of the world’s most vibrant and dynamic cities and how the UK’s innovative ‘Patent Box’, which offers significantly reduced corporation tax rate for income generated from patents, provides unparalleled opportunities.
Last Summer, the press first got wind of Med City when the mayor’s office put in a bid to the London Enterprise Partnership for £1 million ($1.66 million) seed funding to create a “golden triangle” in medical and life sciences research, linking the capital with Oxford and Cambridge universities. The mayor’s office kept plans under wraps and instead focused on promoting Tech City.
With the launch around the corner, Malthouse served up a bit more concrete information about Med City:
- Budget: The government will have a £4 million ($6.7 million) budget to start with, but it plans to raise more money from industry. A separate budget will be used for a public relations effort to promote Med City. Malthouse is also hoping to attract “really hungry risk capital” to the region from the increasing army of venture capitalists who are willing to invest outside of the Bay Area.
- Openness to a range of health-tech startups: The UK government is specifically keeping an eye out for big data diagnostics companies, synthetic biology research, anti-aging technologies, genetics, cutting-edge research on Alzheimer’s Disease, and a variety of other conditions.
- Tax cuts: The UK’s new Patent Box scheme, referred to in the invitation, is on target to reach £305 million ($507 million) in tax breaks in 2013/14, its first year in operation. The Patent Box allows companies to elect to apply a 10 percent rate of corporation tax on all profits attributable to qualifying patents, whether paid separately as royalties or embedded in the price of products. It’s a particularly attractive prospect for biotech and Life Sciences firms.
- University partnerships: The top science universities, including Imperial College London, University College London, Oxford, and Cambridge (both an hour or so outside of London) are helping build this Med City ecosystem and will tackle the key challenge in Malthouse’s mind: “finding enough space.” Science and technology-focused Imperial College, for instance, just opened a £1 billion ($1.66 billion) campus in West London that will focus on interdisciplinary research and is intended to be the UK’s version of MIT.
- Public funding: Malthouse said science research budgets at the top universities are in a safe position — “they have been ring-fenced.” Senior members of the British government are supportive of science (the chancellor of the exchequer told the press that it’s a “personal priority”), and last year, £190 million ($316 million) of new money was given to quantum technologies and £455 million ($757 million) to international scientific collaborations. That said, the UK spends just 1.79 percent of its GDP on R&D, which is slightly below the European average and the U.S. spend of 2.8 percent.
Malthouse also pointed to London’s smorgasbord of culture and diversity. “We have a lot to offer to life sciences and health care startups: We have a diverse demographic with every genome type,” he said.
Plans for Med City are key to the future of the UK economy. David Cameron once referred to the BioPharma industry as the “jewel in the crown” of the UK economy, with an annual turnover of over £50 billion ($83 billion). This sector has grown faster than any other industry, with the exception of finance and insurance.
The promise of billions in new revenues is enough to entice Malthouse to the Bay Area. It was his first trip since his university days. “The last time I visited Silicon Valley, I was in a backpack and flip-flops,” Malthouse said jokingly.
If all goes well, representatives from the British government will a frequent presence in the Bay Area, the birthplace of biotechnology that lays claim to the highest concentration of medical-tech startups in the nation.