Spin-offs lose their momentum

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Big push: initially, ‘too many universities’ climbed on the spin-off bandwagon

The number of university spin-off companies created in the life sciences in England, Wales and Northern Ireland fell by 30 per cent between the periods 2005-09 and 2007-11, new data show.

However, this trend was bucked in Scotland, where university spin-offs accounted entirely for an overall 47 per cent increase in the number of life sciences start-ups in the region.

Realignment: UK Life Science Start-up Report 2012, launched at the 2012 Genesis conference in London in December, says that the success of Scottish universities might be linked to public sector support holding up more strongly in Scotland than in the rest of the UK.

The University of Edinburgh’s surge, up from four life sciences spin-offs in 2006-10 to 11 in 2007-11, was most likely the result of Scottish Enterprise’s £24 million Edinburgh BioQuarter initiative, says the report. Meanwhile, in the rest of the UK, funding through the regional development agencies and the University Challenge Seed Fund ceased.

According to the report - by Glenn Crocker, chief executive of BioCity Nottingham and BioCity Scotland - the University of Oxford remained by far the most prolific creator of life sciences spin-offs between 2007 and 2011, with 15, whereas activity at Imperial College London had “surprisingly” declined.

Outside the universities of Oxford, Cambridge, Edinburgh and Manchester, the level of life science spin-off formation is now running at less than one a year, with the report adding that it “remains to be seen whether we are seeing a focus on quality rather than quantity, or simply a reduction in quantity”.

A factor behind the decline may be that universities are no longer driven by the “numbers game” and are more circumspect when it comes to determining whether to spin-off or license a technology.

“Too many universities jumped on to the spin-off bandwagon around the early years of this century without the wherewithal to necessarily produce good-quality businesses. Consequently many were burnt when their spin-offs failed to take off or deliver any returns,” he writes.

However, stability in the total number of UK life sciences companies created - alongside a flurry of investment in 2012, such as through the government’s £180 million Biomedical Catalyst fund - means the UK has “strong grounds for optimism”, Dr Crocker says.

Universities may also benefit from a £50 million fund to invest in life sciences companies spun off from UK institutions, announced by the venture capital fund Rock Spring Ventures on 21 January.

elizabeth.gibney@tsleducation.com.