Scotland: a trading nation

Life and Chemical Sciences

Introduction

This is a significant export sector for Scotland, with strong linkages between the life and chemical sciences aspects. For example, areas like bio-economy and high value manufacturing straddle both sub-sectors. Our enterprise agencies recognise this and define them under the wider healthcare and high value manufacturing sector.

The analysis in this report is based on the sector definitions from Scotland’s Export Performance Monitor. The life sciences sector includes the manufacture of pharmaceutical products, medical equipment, dental instruments and scientific research and development. The chemical sciences sector covers the manufacture of coke and refined petroleum products, chemicals and chemical products. 

The life and chemical sciences sector accounts for around 0.4 per cent of total enterprises in Scotland, 1.1 per cent of total employment and 2.5 per cent of total turnover (see Table 1 for more detail). 

Table 1: Life and Chemical Sciences, Number of Enterprises, Employment and Turnover, 2016

Source: Inter-departmental Business Register (IDBR). Proportions may not sum to 100 due to rounding.

Export Performance

Life Sciences 

In 2017, life sciences accounted for around 4.8 per cent (£1.6bn) of Scotland’s total international exports and 0.7 per cent (£360mn) of exports to the rest of the UK. International exports have increased reasonably consistently over time, with strong growth in recent years in particular. Exports to the rest of the UK has also grown over the time period, though growth has weakened in recent years (Figure 3). 

Figure 1: Life Sciences Exports, International and Rest of UK, 2002-2017

Source: Scotland’s Export Performance Monitor

Chemical Sciences 

In 2017, chemical sciences accounted for 9.7 per cent (£3.2bn) of Scotland’s total international exports and 2.7 per cent (£1.3bn) of exports to the rest of the UK. International exports and exports to the rest of the UK have grown over time in this sector, though growth has been fairly inconsistent over time (Figure 2). 

Figure 2: Chemical Sciences Exports, International and Rest of UK, 2002-2017

Source: Scotland’s Export Performance Monitor

Our Strengths 

Life Sciences:

• Scotland is one of the largest life sciences employers in Europe. 
• We have a range of multinationals and SMEs with a strong track record of creating and growing start-ups and a thriving entrepreneurial culture. 
• Comprehensive supply chains and world class manufacturing expertise. 
• Among the top three worldwide for research productivity and impact, collaboration across academia, government and industry.
• Innovation Centres in data, sensors and imaging, stratified medicine, industrial biotechnology and digital health and care.
• Centre for Tissue Repair and Regeneration in Edinburgh will be the largest academic centre for stem cells in Europe.

Chemical Sciences:

• Leading chemical companies like FujiFilm, Ineos and Syngenta have Scottish operations alongside innovative Scottish SMEs allowing collaboration across the cluster.
• Scotland is home to 200 chemical sciences companies – large and small, and our chemical sciences R&D is consistently ranked in the top three in the world.
• Glasgow is home to Scotland’s Industrial Biotechnology Innovation Centre (IBioIC) which helps foster the commercialisation of biotech solutions in both the chemical and life sciences sectors.

Our Challenges

• Leveraging Scotland’s networks; maximizing the use of the existing industry network within the Scottish life sciences community (industry, academia, and government).
• Facilitating business development across the sector with overseas organisations, helping to create international SMEs.
• Enhancing the leadership of life sciences SMEs to develop an international mindset.
• Raising ambition and confidence of businesses to exploit international markets.
• Enhancing the sales skills of leaders in the sector.

Our Opportunities

• The global challenge of responding to an ageing population presents opportunities for Scottish based businesses in healthcare, in particular med-tech, medical devices, clinical trials and personalised medicine. 
• Promoting Scotland as a leading life and chemical sciences location and “living lab” ensuring that we market, support and highlight the success of our companies, research base, health service innovations and clinical research. There are particular opportunities in sub-sectors such as clinical trials, precision medicine, medtech and agritech.
• The global market for outsourced contract research is expected to continue to grow at 8 to 9 per cent per annum, Scotland is well placed to benefit from this.
• Both chemicals and life science sectors have a focus on growing industrial biotechnology in Scotland and on attracting global companies to join the supply chains and consider Scotland’s offering of a rich and diverse supply of renewable bio resources – this being a global competitive advantage for industrial biotechnology companies located in Scotland. 

Current Export Markets

In 2017, the top five international markets for life and chemical sciences exports were:

• Netherlands
• Belgium
• Germany
• USA
• Ireland

The top five export markets vary between the sectors, a more detailed breakdown is provided below (Table 2).

Table 2: Top Five Destinations for Life Sciences and Chemical Sciences Exports, 2017

Source: Scotland’s Export Performance Monitor 

Key Growth Markets 

Analysis for A Trading Nation, identifies 15 priority markets in which there are significant opportunities to increase Scotland’s exports as well as a further 11 where there are more specific sectoral opportunities. Tables 3 and 4 below break down these opportunity markets for life and chemical sciences exports:

Table 3: Key Opportunity Markets for Life Sciences Exports Life Sciences:

Source: Office of the Chief Economic Adviser calculations 

Table 4: Key Opportunity Markets for Chemical Sciences Exports

Source: Office of the Chief Economic Adviser calculations

Actions We Will Take

• Industry, SDI and Scottish Government will work together on market development plans for life and chemical sciences.
• Work with industry leadership groups and industry bodies in support of their export plans.
• Make best use of ministerial visit programmes to build relationships in-market with the parent companies of our key Scottish based businesses and promote Scottish capability.
• Develop the international leadership and sales skills of businesses in the sector to enable them to take advantage of export opportunities
• Identify GlobalScots/Trade Envoys who are in a position to provide the right advice/support/ introductions to benefit businesses in this sector.

Stakeholder Consultation

In total, more than 30 organisations have been consulted in the development of this plan. These consultations have helped to shape the plan and have helped us to make links to other relevant work within individual sectors. 

While we are not able to reflect all the comments and input we received through these consultations, some pertinent points from key consultees in this sector are captured below.

Key consultees in this sector included both Industry Leadership Groups, Chemical Sciences Scotland and Life Sciences Scotland. This brought out a number of key points on the data analysis and the priority growth markets for the sector.

The US, Japan, China and Europe markets have scope for growth as ageing populations drives increased demand for healthcare provision. This will create opportunities in sub sectors where we have key strengths, including clinical trials support, preclinical services (in companies such as Charles River, BioReliance (Merck) and Bio-Outsource, SGS-Vitrology), specialist and high value manufacturing and regulatory support companies. Most of these companies are “contract research organisations” that already generate the majority of their sales from international exports and are in areas with high growth potential.

Improving utilisation and productivity within the sectors will drive export growth. Growth potential exists in building on the sector’s existing key strengths such as preclinical drug development services, biopharmaceutical safety testing, regenerative medicine/stem cells and precision medicine.

The new Centre for Tissue Repair and Regeneration in Edinburgh will be the largest academic centre for stem cells in Europe. It’s important to develop a commercial sector around this with a frequent exchange of staff and skills between the industry and academic sectors. Skills and IP developed by the centre should be commercialised rapidly and flexibly to create a similar reputation for Scotland as an investment hub as already exists for big data and AI in Edinburgh.

Precision medicine is a newly emerging market with strong Scottish academic and clinical research base and supportive innovation centres (stratified medicine and also big data/AI). It will be important to develop and nurture companies of scale that can maximise the output of the academic/clinical base. 

In 2017, Life Sciences launched their Strategy for Scotland – ‘2025 Vision’ with the aim of growing the industrial turnover of the life sciences sector to £8bn. The strategy includes measures to support internationalisation within the sector, including;

• Leveraging Scotland’s networks - We will maximize the use of our existing network of contacts and information within the Scottish Life Sciences community (industry, academia, and government) to enable and facilitate business development across the sector with overseas organisations, helping to create “international“ SMEs.
• Promote life sciences in Scotland - We will continue to actively promote Scotland as a leading life sciences location, ensuring that we market, support and highlight the success of our companies, research base, health service innovations and clinical research.
• Develop an international mindset - We will continue to support our company base to raise their ambition and confidence to exploit international markets and opportunities by sharing valuable in-market experience and international networks.

In 2018 Chemical Sciences Scotland launched their Strategic Plan 2025 outlining their four main priorities:

• Grangemouth Vision 2025
• Industrial Biotechnology
• Manufacturing
• Skills