Life sciences sector: export plan

3. Opportunities to Increase Scottish Exports

The world faces unprecedented challenges as it seeks answers to the problems of delivering sustainable, affordable, and effective healthcare globally, managing the risks of potential future pandemics and responding to climate change. Life sciences will be at the forefront of finding solutions to these key issues and Scottish companies are already delivering in these areas.

The scale of these societal challenges presents an opportunity for the Scottish life sciences sector. With its internationally recognised strengths in medical technologies, pharmaceutical services, digital health and care, animal health, aquaculture and agritech (AAA), and industrial biotech, the sector is well-placed to take its innovative products and solutions to a global customer base (Figure 3). The proposed interventions in this plan are designed to support our companies to do this by building on the existing trade support ecosystem.

Figure 3: Life sciences sector drivers and potential growth opportunities for Scotland

Sector drivers

• An ageing global population
• Demand for value-based healthcare to address rising costs
• Advances in ‘omics’ and big data driving a move to personalised treatments
• Development of advanced therapeutics
• Digitalisation of healthcare delivery
• Advancement of the ‘One-health’ agenda
• Drive to next zero and sustainability

Growth opportunities

Pharma Services

• Global market for drug discovery and early development outsourcing is forecast to reach $28 Bn by 2026^[2]
• Global market for Contract Manufacturing and Development Organisations is forecast to reach $115 Bn for small molecules and $20 Bn for biologics by 2026^[3]

Medical Devices and Diagnostics

• Global revenue for medical devices is forecast to reach $641 Bn by 2027^[4]
• Global revenue for in vitro diagnostics (IVD) is expected to reach $128 Bn by 2027^[5]

Digital Health

• Global market for healthcare IT is forecast to reach $289 Bn by 2026^[6]
• Global market for telehealth is forecast to reach $72 Bn by 2026^[7]

Animal Health, Aquaculture and Agritech (AAA)

• Global animal therapeutics and diagnostics market is forecast to reach $49 Bn by 2030^[8]
• Global aquaculture market is forecast to reach $415 Bn by 2030^[9]
• Global agritech market is projected to reach $23 Bn by 2025^[10]

3.1 Companies

ATN outlined an approach to tailoring the export support delivered by SDI and Scottish Government though smart segmentation, a data-driven approach ensuring that exporters get the right support when they require it. It recognised the different needs of established exporters and those companies at an earlier stage in their exporting journey.

SDI and Scottish Government will continue to deliver this segmented approach to ensure Scottish exporters can access future trade opportunities and can take advantage of routes to overseas markets to increase export growth, and in turn, drive increases in Scotland’s exports.

Large companies (>250 employees) are vital to the sector’s export performance, accounting for approximately 60% of Scotland’s total life science company exports in 2019 (Figure 4). Many of these are inward investors, attracted to Scotland because of our strong skills base, expertise, and track record of innovation. These companies are experienced exporters and will continue to be supported to flourish in Scotland through the Shaping Scotland’s Economy: Scotland’s Inward Investment Plan. By sharing their experience and knowledge, these companies can provide a valuable source of insight to less experienced exporters.

See Appendix 1 for information about the export data analysis

While large companies are important drivers of exports, more than 95% of companies in the sector are SMEs. In 2019, SMEs contributed approximately 40% of the overall sector exports; with small companies (<50 employees; 83% of companies) contributing just 7%.

An important focus of this plan is to help more of our ambitious SMEs exploit global opportunities by accelerating their successful entry into new markets and/or helping them grow in existing markets. A thriving SME company base is the foundation for companies to grow and to increase their contribution to exports. It can also encourage further inward investment as international businesses look to Scotland for opportunities; supporting expansion and creating jobs.

SMEs need the right skills and capabilities to be able to successfully export. Many life science companies need help to navigate the international regulatory and reimbursement landscape (as also highlighted in The Campbell Report: a roadmap to investment for health innovation life sciences and healthtech). Others need support to access and engage effectively with the right customers, in the right markets. For some, it is about understanding the complexities of doing business in international markets, particularly following the UK’s departure from the European Union (e.g., understanding business culture or managing international tax or employment legislation).

There is support available via the existing ecosystem to help companies access relevant expertise, including from the international arm of Scottish Enterprise, SDI; its sister agencies Highlands and Islands Enterprise and South of Scotland Enterprise; Skills Development Scotland; the Department of International trade (DIT); Scottish Chambers of Commerce; GlobalScots; Scottish Government’s Trade & Investment Envoys; and trade associations.

To help companies address gaps in specific knowledge we will:

• Pilot a support mechanism in the life sciences sector to help SMEs undertake market research, market visits and/or attend specialist in-market events
• Work with enterprise agencies and partners to develop an approach to support companies to access expertise to help them navigate the regulatory frameworks in international markets
• Explore developing a database of technical expertise to support companies with commercialisation and exporting (e.g. international finance, tax, culture, legislation, regulatory and health economics)
• Partner with agencies, industry bodies and relevant experts to deliver a programme of networking events to build knowledge of markets and opportunities, and to develop exporting skills amongst businesses. This will focus on encouraging peer-to-peer learning

Case Study 1: Waire Health

Founded in 2015, Edinburgh-based Waire Health (formerly Sentinel) produce advanced medical grade, wearable vital signs monitors, delivering an unparalleled insight into the daily health and activity of patients/users in hospitals, care settings and at home. Its core team has 75 years combined experience in electronics systems design, project management in large scale digital roll outs across multiple markets.

Waire Health has ambitious plans for global growth, which have been supported by Scottish Enterprise and its SDI trade specialists both here in Scotland and overseas. Support includes overseas market development, advice on import and export regulations and attending SDI ‘Meet the Buyer’ events, resulting in meaningful in-market connections being made by the company.

“We have a whole team at Scottish Enterprise that helps us explore and see where innovation fits in to the markets. This has resulted in contract negotiations with companies.” Kathrina Skinner, Co-founder, Waire Health.

3.2 Subsector prioritisation

In 2019, medical technologies made the largest contribution to Scotland’s life science company exports, followed by pharma services and pharmaceuticals. These are subsectors with an established company base in Scotland.

See Appendix 1 for information about the export data analysis and subsector definitions

As these companies continue to innovate, there will be opportunities to deliver export growth in areas such as contract research/manufacturing for biologics and advanced therapeutics; and by supporting new approaches to the treatment, diagnosis, and management of disease, including in the delivery of precision medicine.

Scotland also has a growing cluster of companies focussing on digital solutions for healthcare delivery. These companies sit at the intersection of health and social care, information technology and mobile technology. The scale of the opportunity in areas such as remote monitoring and telehealth, and the capabilities of the Scottish cluster, make this an exciting prospect to deliver future export growth. These companies typically need assistance to develop and refine their market entry and commercialisation strategies in key markets.

Similarly, while Scotland has expertise in animal/fish health and plant science, and a company base that is already exporting, there is an emerging cluster of early-stage companies developing solutions across the AAA space. These companies have the potential to be at the centre of the green and circular economy, with innovation that can help make better use of our land, deliver sustainable food supply chains and improve animal health and wellbeing. Given the company base potentially spans the life sciences, technology, and food and drink sectors, and the global nature of the opportunities, further work is required to identify the priority markets that offer the best opportunity for Scottish companies.

To ensure Scottish companies are best placed to exploit these emerging opportunities we will:

• Design and pilot an advisory panel for early-stage companies to help them refine their commercialisation and market entry strategy in the digital health space (initially US-focussed)
• Promote collaboration across the sectors (life sciences, technology, food and drink) to further explore and validate priority opportunities and markets for the AAA subsectors to support export growth

3.3 Target markets

Following analysis undertaken as part of this plan, and industry consultation, the US was identified as the priority market for the pharma services, medical technology and digital health subsectors based on the scale of opportunity, ease of doing business and openness to innovation. In the longer-term, the investment in pharma/biotech innovation in Asia offers potential growth opportunities for the pharma services subsector, and the Middle East and Africa could be exciting future markets for Scotland’s medical technology and digital health companies. Europe and Asia Pacific are important regions for the AAA subsectors, with the priority market depending on the specific subsector, product or service.

New, emerging markets are likely to be less well-known to most Scottish companies and SMEs in particular need access to trusted advisors to help them understand the markets and how to navigate them in a compliant way.

SDI and Scottish Government will continue to work with countries and institutions across the world and have a network who work to promote Scottish interests overseas and strengthen Scotland’s international relationships. This includes Scottish Government’s ongoing work to develop trade and investment relationships with US states, such as through identifying opportunities for the life sciences sector in state-level memorandums of understanding.

To reflect the importance of the US market to Scottish life science companies, and to help companies to take advantage of opportunities in the market, we will:

• Build on SDI’s current US presence by recruiting an additional SDI in-market specialist in the US and develop new strategic partnerships in key states to support Scottish companies to enter and grow in the market
• Promote Scotland’s innovation and expertise, and build relationships with decision makers in the US, by re-establishing Scotland’s international trade and investment presence at the annual BIO International Convention. We will also explore how Scotland can best leverage opportunities at AdvaMed

To help companies take advantage of opportunities in other countries that require tailored market knowledge and insight (including emerging markets) we will:

• Leverage existing relationships and work with partners in emerging/growing markets to monitor opportunities for the Scottish life sciences sector and build awareness of the changing global landscape for life sciences

Case Study: Deepmatter

Glasgow-based deepmatter® focuses on SmartChemistry® and believes the way that molecules are made matters. The company has built a cloud-based platform to easily capture, access, share and exploit the vast amounts of data created in chemical reactions from the laboratory to enable medicines to be made better and more quickly. It combines proprietary chemistry data and existing proven software with new components to provide a scalable, efficient, safe, extensible and performant platform for the chemistry community, underpinned by proven cheminformatics solutions and tools.

deepmatter® participated in the 2022 BIO International Convention as a means to meet with customers and partners in the pharma space. This is a key target market for the company with companies tackling how they collect and use their data to improve scalability, productivity and sustainability. deepmatter® participated in a number of pre-arranged meetings as well as meeting contacts at events and receptions during the event. deepmatter® has followed up the discussions and held several demonstrations of its platform to contacts made at BIO 2022.

“It is not just the meetings at the event itself that have had an impact on our sales activities. The opportunity to represent ourselves at such a key meeting in the pharma calendar has meant an increase in market penetration and impact for our marketing efforts. We believe we will reap the benefits of attending the meeting over the coming years both through direct connections made at the event and increased market awareness of our tools and innovative approach to helping understand why the way we make molecules matters.” Kate Rowley, Chief Business Officer, deepmatter®