Martin Vander Weyer

Turning science into profit

Sir Richard Sykes of Imperial College tells Martin Vander Weyer that Britain’s world-class scientists hold the key to future economic success

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Sir Richard Sykes of Imperial College tells Martin Vander Weyer that Britain’s world-class scientists hold the key to future economic success

Approaching Imperial College through the long tunnel from South Kensington station, I recalled that the last time I met the College’s rector, Sir Richard Sykes, he was chief executive of Glaxo, the drugs group, and we were lunch guests of the industrialist Lord Hanson. Our fellow guest (forgive the name-dropping) was the broadcaster Selina Scott, and it would be fair to say that glamorous Selina was served a rather larger portion of Hanson’s charm and attention than Sir Richard or me. There was a particularly sticky moment when Sir Richard started talking about Retrovir, Glaxo’s Aids treatment, only to be cut off by Hanson with a remark about not wanting ‘to talk about queers’.

The point of the story is that it highlights a contrast between two very different types of British business leader. On one side, the charismatic deal-maker that was the late James Hanson; on the other, the science-driven manager of complex processes that was and is Richard Sykes, in a career which took him to the chairmanship of the multinational GlaxoSmithKline.

Both these plain-speaking Yorkshiremen have rightly been admired for their business achievements. But there is no doubt that the Hanson formula — generating high returns by buying low-tech companies cheap and ripping costs out of them — has long gone out of fashion. Sykes’s vision of science-based entrepreneurship, by contrast, belongs by definition to the future. Arguably, one reason why British industry lost competitive advantage in recent decades is that we gave too much kudos and reward to cost-slashing deal-makers like Hanson, while investing too little in the pure science and product research espoused by Sykes.

So I went to Imperial to ask him whether he thinks the wheel has turned, and whether British business and science are sufficiently connected today. This time the only glamorous distraction was the electric-blue Norman Foster block in which he has his spacious office; having spent 20 years as a microbiologist before moving from lab to boardroom, he clearly relishes his return to academe.

‘I came back because I felt passionately that science is critically important to the future of the British economy and its businesses, and that relationship has to be strengthened,’ he told me. ‘We have to use our brains. We can’t compete against the Indians and the Chinese in terms of manpower, but we can compete in areas in which we have great strengths. We’re good at high-end engineering... Formula 1 cars, world-class hi-fi... and we’re very strong in biosciences.’

For that reason, all the big drugs groups tend to have a research base in the UK, but even in this flagship sector our advantages are eroding, he warns. The animal rights issue is deterring inward investors. Europe’s socialised healthcare systems — including the NHS — mean that in each country the drugs companies have only one significant customer, demanding the lowest possible price. America’s free-market pricing system makes investment in drugs R&D much more attractive.

The Americans have the edge on us in lots of ways, says Sykes. Oxford, Cambridge and London rank high in the world league, but they cannot begin to compete with the billion-dollar research endowments at Yale, Stanford and Harvard. And by comparison with Gordon Brown’s maze of tax credits and investment reliefs, the US tax system is simpler and more encouraging, both for venture capitalists and for scientists hoping to turn ideas into businesses.

I sketched the worrying picture this seemed to conjure. First, a continuing brain-drain of boffins whose university work has been funded by the British taxpayer, yet whose only hope of turning that work into saleable products is to take it across the Atlantic. Add to that what is happening at the undergraduate level: students with dumbed-down A-levels need remedial maths teaching to bring them to the university starting line, whereas those from overseas generally do not. And Imperial now has 1,000 Chinese students who will take their learning home and use it as a competitive weapon against us.

But the situation is not as bad as that, Sykes says. In contrast to the lean years of Thatcher and Major, the Blair government has pumped money into the university science base. The flow of brains across the Atlantic is two-way, ‘more of a churn than a drain’. And universities are acutely aware of the need to provide an efficient mechanism for ‘spin-out’ businesses, turning research into commercial ventures.

In Imperial’s case, this is done through a company called Imperial Innovations, owned 71 per cent by the college and 29 per cent by City institutions, which has acted as midwife to 60 spin-outs so far. The most prominent is Ceres Power, a fuel-cell technology business which floated on the stock market in 2004 with a value of £66 million. Others include HydroVenturi, which has a novel method of generating power from tidal currents, and ComMedica, which has won a £33 million NHS contract. In each case the college retains a stake in the intellectual property, so that if and when the spin-out is sold or floated, money flows back to Imperial to fund future research projects.

‘The point about technology is that you have to move it fast,’ Sykes says. ‘If the money isn’t there to back it, it soon loses impact’ — because someone else will bring the same idea or a better one to market before you do. The spin-out mechanism now works well enough in what Sykes breezily calls ‘basic’ physics and engineering, but in the biosciences, which are his own first love, the challenge is harder.

To take a major medical innovation from the test tube via the animal laboratory to human trials, ‘proof of concept’, regulatory approval and commercialisation, can be a 15-year, £500 million proposition. And it can involve the whole range of sciences — Sykes cites the example of aeronautical engineers working with cardiovascular specialists to study flow mechanisms in the heart. Only the best universities can bring all the disciplines together, and only very large companies can fund the projects to completion. Nevertheless it happens, and it offers a model of co-operation that could be followed by other industries — notably in the search for clean and renewable energy.

Is it too late to harness British science and make it drive our economy in the way that engineering drove it in the 19th century? Walking back through the tunnel to the station it occurred to me that most business people regard science as something remote from everyday life, and innovation as something that comes from California or Bavaria, not from South Kensington. Sir Richard Sykes disagrees: he’s on a mission to ‘integrate business into the knowledge base’, and he could be the light at the end of the tunnel.

Written byMartin Vander Weyer

Martin Vander Weyer is business editor of The Spectator. He writes the weekly Any Other Business column.

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