Government launches the 'Life Sciences Innovative Manufacturing Fund'

The LSIMF forms part of the wider Global Britain Investment Fund

The Global Britain Investment Fund is a £1.4bn programme of public funding designed to strengthen the UK economy through investments in particular high growth sectors, including life sciences and electric vehicle production.  It will be administered by the Department for Business, Enterprise and Industrial Strategy ("BEIS") through a number of different workstreams.

The £60m LSIMF is the first part of the Global Britain Investment Fund and will focus upon helping expand life sciences manufacturing within the UK.  The Government sees the funding as part of furthering the "levelling up agenda by supporting the creation of highly skilled jobs across the country and backing world-leading health research".

The fund will provide grants for investments which contribute towards "the manufacture of human medicines (drug substance and drug product), medical diagnostics and MedTech products". 

Examples of projects which might receive grant funding include:

• "curative and therapeutic treatments for both population-level and rare diseases";
• "earlier and better detection and diagnosis of disease"; and
• "smarter pacemakers, tricorders and robotic surgical devices".

BEIS has stated that it is particularly open to receiving "applications in the following areas":

• "complex medicines such as advanced therapies and nucleic acid therapies, non-biological complex medicines and medicines that require complex delivery mechanisms";
• "innovative medical technologies such as nanomedicine applications in imaging, sensing, diagnosis, and delivery through medical devices, 5G enabled devices, smarter pacemakers and 3D printed devices"; and
• "diagnostics such as ‘breathalysers’ for the early detection of inflammatory and infectious diseases and ‘lab on a chip’".

How to become a priority LSIMF project?

BEIS has indicated that prospective projects will be assessed and prioritised "based on their alignment to the [following] objectives":

• "creating economic opportunity through investments [to] provide high-wage, high-skilled jobs";
• "deploying cutting-edge innovations…which can be embedded in either the product itself or the manufacturing process";
• "increasing health resilience, either through increased domestic capacity or by providing flexible capabilities that can be re-deployed in some way in a future health emergency"; and
• "minimising [the] impact on the environment, which might include [reducing the] input [of] resources or using alternative input materials to become more sustainable or support the government’s net zero target".

It is therefore important for applications to clearly state how they will align with each of the objectives above.

Manufacturers will be able to apply to BEIS for LSMIF grants subject to meeting detailed mandatory criteria relating to:

• company type: applicants must be "a UK register company", "a wholly private sector business", "proposing a project that is a single company investment", "a product developer, contract / development manufacturing organisations, or a generics manufacturer";
• project type: applications "can be for the upgrade, expansion or establishment of new manufacturing facilities" including the purchase of "land and manufacturing equipment" but must be located in the UK and be for "a specific amount of grant funding";
• sectorial scope: BEIS "will only accept applications whose projects are to manufacture" human medicines, medical diagnostics and MedTech;
• project costs and grant: applications must be for capital costs rather than costs "associated with R&D or staff training" and, though there "is no upper limit on total project cost", the "minimum total projects cost" required is £12 million; and
• regulatory requirements: applicants will need to "hold or intend to apply for either a" Good Manufacturing Practice Human Medicines licence or Investigational Medicinal Products Directive licence issued by the Medicines and Healthcare products Regulatory Agency.

Importantly, prospective projects must also not have been "publicly announced" or planned to be announced to be eligible for funding.

Demonstrating compliance with the Subsidy Control rules

In addition to the above criteria, applicants will be required to demonstrate compliance with Subsidy Control law to ensure that any LSMIF grants are awarded "in line with the UK's obligations and commitments" with non-compliance potentially leading to a "recovery of funds" awarded.

Compliance with the Subsidy Control rules will be scrutinised during:

• the due diligence stage of the application process where BEIS will consider the "economic, financial, project delivery, risk analysis and subsidy control [elements] of…application[s]"; and
• the grant award stage where one of the following will likely apply as a condition of each grant offer letter issued:
• the funding will be "awarded on the basis that the [activities] being undertaken…are, and will remain non-economic activities, and therefore [do not] not engage the UK’s international obligations in relation to subsidies";
• the funding "has been awarded on the basis that it is outside the scope of the [Trade and Cooperation Agreement between the European Union and the European Atomic Energy Community, of the one part, and the United Kingdom, of the other part (the "TCA")] by virtue of Article 364(4) of that agreement" (i.e. where the total amount granted falls within the scope of the Small Amounts of Financial Assistance provision); or
• the funding "has been awarded on the basis that it is compliant with the [six Common Principle] set out in Article 366 of the [TCA]".

The UK currently has a new Subsidy Control regime in place which largely replaced EU State aid law with effect from 11pm 31 December 2020.  Under the new Subsidy Control regime there are no block exemptions in place to provide legal cover for awards of funding.  For most grants for R&D and pharmaceutical manufacturing, it will be necessary to build a case against the relevant requirements within the TCA.  A Subsidy Control Bill is currently being considered by Parliament and is expected to come into force in Autumn 2022, which will further elaborate the new regime, and depending on timing may contain some important further requirements that LMSIF grants will need to comply with.  DWF can assist with ensuring bid compliance with the Subsidy Control rules.

LMSIF funding process

The Fund will be available "in 2 phases (March to May 2022 and September to November 2022), with monthly deadlines to submit" expressions of interest. The deadline for organisations to submit their expression of interest in the first wave of the first phase is 31 March 2022 at 12:00 noon and can be made through BEIS' online portal.

There are a total of six potential deadlines by which an applicant may submit an expression of interest – however the LMSIF will end "once [all] the [funding] has been allocated…[and] applicants are [therefore] encouraged to apply early, to avoid missing out".

Additional £200m investment in the sector

The Government has also announced that £200m will be invested in enabling research to provide better access to NHS data through digital clinical trial services and Trusted Research Environments.

UK Health and social care secretary Sajid Javid said: “The £200m funding into the healthcare system will deliver on government commitments set out in the Life Sciences Vision, to harness NHS data to drive health research and innovation, building on pioneering work carried out during the pandemic to develop diagnostics and treatment for COVID-19."

Conclusion

The 'Life Sciences Innovative Manufacturing Fund' provides an important opportunity for organisations within the pharmaceutical sector to secure grant funding and will be received as welcome news by the life sciences sector. Demonstrating compliance with the Subsidy Control rules will be a key feature of the application and grant award stages, so should be considered by applicants at the outset.

DWF has exceptional experience in public funding issues, including setting up programmes of support which satisfy government guidance, advising upon how to compliantly procure services and satisfy the Subsidy Control rules. Members of our Public Sector team having worked within the Central Government, Local Government, the European Commission and with private sector bodies on high profile public funding initiatives. This means that we are a safe pair of hands when it comes to managing issues such as this. Feel free to get in touch, if it would be useful to discuss any of the issues raised in this article or other matters related to public funding.