Consulting Report
26 Feb 2024

UK life sciences are set for growth, but challenges remain

The life sciences industry makes a major contribution to the UK economy. One in every 121 employed people in the UK works in the sector, which in 2023 contributed over £13 billion to the national economy.

Last year, the sector performed better than many other industrial sectors, which partly reflects that demand for pharmaceuticals is less sensitive to the economic cycle relative to other goods and services. This includes demand from the public sector (the NHS is the largest buyer of pharmaceutical products) and consumers’ willingness to continue to spend on these items despite the real value of household budgets having been eroded by inflation and the increase in interest rates. Focusing on the dominant pharmaceutical sector, our central forecast is that UK pharmaceutical output will grow by an average of 1.3% a year between 2024 to 2026.

On the regulatory front, the sector is facing a period of change as post-Brexit revisions take effect. From the beginning of 2024, companies will need regulatory approval from the UK’s Medicines and Healthcare products Regulatory Agency (MHRA) to sell medicines and medical products in the UK. As many UK-based life sciences businesses also sell into other European markets—with approximately half of UK exports of medicines and medical products going to the EU—these companies will need to continue obtaining separate regulatory approval from the European Medicines Agency, creating an increased compliance burden.

Nevertheless, the sector has promising long-run growth trends. Increased purchasing power in developing economies, and ageing populations and increased interest in health in developed ones are expected to keep demand strong in the long run. The UK also has several strengths in the life sciences field with some its universities ranking among the best in the world for research into life science and medicine.

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The expert behind the research

Our Industry Consulting team are among the world’s leading analysts of a variety of industrial sectors. They combine their expert insight with our state-of-the-art economic models and tools to answer the crucial questions facing our clients.

Emily Gladstone

Senior Economist

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