Sir John Bell, one of Britain’s leading life sciences leaders, warned of an imminent exodus of pharmaceutical companies from London, calling the City “a bad place to raise funds”.
Sir John, a veteran of the industry known for his crucial role in the Covid vaccine launch, has said that British biotech companies “will all pack up and move somewhere else” if UK equity markets don’t become a more attractive place to raise capital.
These comments follow two British drug discovery firms quitting London’s junior market. Redx Pharma announced plans to withdraw from the Alternative Investment Market on April 2. The company claimed that its low valuation made it difficult to raise cash for more treatments. C4X Discovery had announced a week before that it would be leaving Aim due to the recent financial downturn, which “adversely affected our share price and our future ability of raising funds on the public markets”.
These moves have raised new concerns about the state of the UK capital market. In the last year, there have been a number of departures from the London Stock Exchange. These include Paddy Power’s owner Flutter and travel giant Tui.
Sir John said that London’s Nasdaq was “night and Day” when compared to New York’s Nasdaq.
He continued: “London’s public markets have too little investment capital. They are not a good place to raise capital.
The London Stock Exchange no longer allows investors to raise capital as a primary reason for trading.
Sir John stated that this led to “inappropriate valuations” for many small- and medium-sized companies in the biotech industry. You can already hear it gurgling down the gurgler.
The government is being urged to take bolder action in order to reverse the decline in London’s market.
Recently, the leaders of City stockbroker Cavendish said that ministers should look at tax breaks for entrepreneurs in order to give London Stock Exchange an edge over private equity.
Cavendish’s co-chief executives John Farrugia, and Julian Morse proposed that the Government could cut corporation taxes for pension funds investing a certain amount of assets in UK companies.
Sir John said that bringing more pension funds to the UK market was a simple solution. “Pension fund receive a huge tax benefit from government, and the government needs to trade for this tax benefit.
It needs to say that we don’t want to invest you all in gilts, but rather in a more diverse range of assets which would help us build the economy. And, ideally, a percentage of it should be in the UK.”
Other life science chiefs, however, have signaled that there are wider issues which must be addressed before London markets can convince businesses to stay listed or join.
Clive Dix said, “Money alone is not the problem.” There are no sophisticated healthcare funds or analysts who analyse the sector either.
Mr Dix asked, “How is money going to be able to flow into these companies in an advanced way without those people and infrastructure?”
In recent years, some of Britain’s best biotech companies chose to list in the US. Vaccitech, a Covid vaccine manufacturer, made its New York debut in early 2021.