Growing science and medical technology companies in Leeds ...€¦ · managed by Innovate UK. UKTI...

Growing science and medical technology companies in Leeds and Leeds City Region

Creative Space Management

March 2015

Creative Space Management 1

Contents

Executive summary

1. Introduction 5

2. Methodology 5

3. Medical technology sector in Leeds 6 3.1 Leeds analysis 3.2 Leeds City Region perspective 3.3 Key issues

4. Developing a physical location and focus in Leeds 14

4.1 City centre or outlying areas

4.2 Specification issues

4.3 Operation and management

4.4 Indicative financial model

5. Recommendations and key actions 24

Appendices

A Methodology for Leeds medical technology sector research

B Methodology for Leeds medical technology and health informatics research

C Leeds medical technology survey questionnaire

D Leeds medical technology interviews summary

E Additional in depth interviews

F Breakdown of sub-sectors: Leeds City Region Medical Technology and Health Informatics

G Case studies of Medical Technology Science Parks

H SIC Codes used for identifying Leeds City Region medtech companies

I City hub financial model

J Out of town financial model

K Cambridge BioPharma Cluster Map


Growth space for science and medical technology companies in Leeds and Leeds

City region

Executive Summary

This report commissioned by Leeds City Council and the University of Leeds has been produced to inform,

develop and support an emerging cluster that already has a significant impact on the city and the wider

region.

The economic development of sector related firms is a long term commitment and requires a long term

strategic perspective. The brief required a response which addressed the strategic growth of the ‘science and

medical technology sectors’; produced case studies on national and international best practice and made use

of surveys and interviews to obtain the views and perspectives of companies, businesses and key

stakeholders. In addition, a practical approach to developing a physical focus for the cluster both for small

companies and for larger enterprises was required in order to develop a sustainable strategy to consolidate

and stimulate sector growth.

As the research was undertaken, the Creative Space team worked closely with the client to address points

from the evidence and interviews with key businesses and organizations. This resulted in the evolution of the

brief from what was initially focused primarily on medical technology businesses (medtech), to a broader

definition of medical technology and health informatics. Our initial research, undertaken by Morris

Healthcare Associates, specifically reviewed the medtech sector across Leeds as well as undertaking the case

study analysis in reference to other medical and health sector related research and innovation parks across

the UK and in international locations. Following this work (including multiple telephone interviews and

surveys) we undertook additional analysis of a wider medtech and health informatics ‘sector’ to quantify a

somewhat broader health and technology sector that is showing significant signs of growth across Leeds City

Region (LCR).

The health and life sciences (a broader categorization than the subject of this research) is one of the priority

areas for the Leeds City Region and identified as a key sector in the Local Enterprise Partnership’s Strategic

Economic Plan (2014). Leeds is also home to seven NIHR (National Institutes of Health Research) and related

centres in Health and one of the largest teaching hospitals in Europe. So whilst it is widely understood how

important the health sector is to the Leeds City Region, this report shows that these two crucial sub-sectors

(medical technologies and health informatics) are responsible for £4.3 billion of turnover and 13,000 jobs

and that there is significant potential to accelerate the growth of this cluster to maximize the positive

economic impact on the Leeds City Region.

However, we have also identified certain barriers to growth and there are some signs that for a few

companies within the sector, the city region does not appear to have had a sufficiently coherent support

infrastructure. This has resulted (in one or two cases) of businesses leaving the city region altogether or

abandoning their growth plans. This document suggests that much more focus should be placed on

developing this key sector in order to pro-actively create the conditions for a more visible, high profile

cluster that has the potential to be of European importance and to be a sustainable and long term driver of

economic growth.


Our research can be summarised in the matrix below: five key strategic recommendations and 16 sequential

actions. This is a fairly high level critical path but which will inevitably contain much detail that would need to

be further outlined following stakeholder consultation and approvals.

Strategic

recommendation

Action description

Focus on Leeds City Region as the defining area of the cluster, acknowledging greater links across Yorkshire and the ‘northern powerhouse’

i) In terms of the medtech and science cluster, define a broader sectoral definition which incorporates relevant health informatics and precision manufacturing.

ii) Build and maintain a database of every company in the Leeds City Region within the medtech and science cluster.

iii) Start to develop the Leeds City Region medtech and science sector ‘brand’ by referencing key companies and markets and including the collation of multiple locations, academic research institutes, clinical excellence and position as visible indicators of the strong sector networks.

iv)

Communicate and ‘manage’ the sector so that it is a membership network that can contribute to and benefit from geographic proximity. Build a community of interest.

v) Identify opportunities for export and growth, harnessing existing and new initiatives such as those promoted and managed by Innovate UK. UKTI and the recent 2015 UK budget commitment to ‘Northern trade missions’1.

Pro-actively seek to position Leeds City Region as a national focus for health technologies combining medical device manufacturing and related services with data and health related information technology innovation and management (health informatics).

vi) Support and advocate for multiple points of activity including Bradford based Digital Catapult Centre, the University of Leeds new research and innovation incubator, the key HEIs and the multiple large private sector employers located from York to Huddersfield.

vii) Develop a city region wide prospectus and a suite of associated resources to illustrate and showcase the cluster (as it is now); the physical growth opportunities (what is planned); and clusters of research, clinical expertise and related supply chain activity.

viii) Harness the know-how and expertise of sector champions and advocates to take ownership of the ‘network’ and to inform key strategic decisions and initiatives in the form of a steering group or advisory board with a short term (3 year) and long term plan (10 year).

ix) Leverage the city region’s expertise and multiple sub-sector strengths to take advantage of new funding to stimulate sector growth including the £20 million of investment identified for Health North in the March 2015 Budget2.

1 2.286 Northern powerhouse trade missions: £3.5 million investment in key sectors focusing on the North. UK Budget

March 2015 2 1.151 Science and Innovation. The Government is committing £20 million to Health North to enable better care for

patients and to stimulate private sector innovation through analysis of data on the effectiveness of drug treatments and health pathways. UK Budget March 2015


x) Identify specific opportunities for the City Region to link its private sector and research expertise with new technologies and initiatives such as the Government’s recent commitment to develop ‘Internet of Things’ technologies particularly in relation to healthcare technologies3.

Create a physical focus for a scalable high quality ‘healthtech’ related businesses with a Health and Medical Technologies Park in a specific location.

xi)

Develop a brief for a development partner in order to generate proposals as to how each potential ‘Health Technologies Park’ location can address key strategic needs to accelerate sector growth and maximise the economic impact on the wider Leeds City Region.

xii) Identify a pipeline of potential anchor tenants to act as a high profile catalyst around which further development can focus.

Development of health and medical Technologies Innovation Centre (working title only) as a location for SMEs.

xiii) Identify the scope for interim acceleration initiatives in interim or medium term uses associated with NHS and private sector. These could be both city centre or out of city based, or could be co-located in related accelerator initiatives.

xiv) Build on the outline business models identified in this report to deliver single or multi-phase serviced office buildings focusing primarily on clean office only but with clear letting policy targeting medical and health technology sector businesses and prioritising those with innovation characteristics and growth potential.

Develop and define a ten year health and medical technologies cluster growth plan for Leeds City Region which aims to overcome the geographical constraints and to maximise the geographic opportunities to leverage an ambitious (perhaps radical) action plan for growth.

xv) As well as dramatically increasing collaboration within the city region, increase collaboration between London, Cambridge, Manchester, Edinburgh and international partner locations in order to open up opportunities for national and international collaboration.

xvi) The implementation of this work requires a ‘fixer’ and co-ordinating role or team as part of a more formal, delivery-focused approach to developing the cluster. Whilst, this has been dealt with to some extent up until now (albeit in a somewhat informal way), this now needs to be implemented on a more formal basis. A dedicated team is required in order to deliver the management and executive leadership of the network and to co-ordinate initiatives and implement practical actions including specific areas of support for businesses such as helping to find new premises, addressing planning issues for expansion, recruitment, inward investment and research collaboration.

3 2.261 Internet of Things. The Government will invest £40 million to develop Internet of Things technologies through

large scale demonstrator programmes, business incubator space and a research centre. The funding will focus on healthcare, social care and smart cities. UK Budget March 2015


1. Introduction

This report, commissioned by Leeds City Council and the University of Leeds from Creative Space

Management, has been produced to inform, develop and support an emerging cluster that already has a

significant impact on the city and the wider city region. Largely commissioned to inform the development of

a specific multi-occupancy facility, this report has gone (following discussion with the client) somewhat

beyond the development of a model for operating a high profile focus for the medical technology sector in

Leeds. It has addressed most (if not all) the issues raised in the brief and reflects the process of an emerging

strategy which we believe should be developed and implemented to accelerate growth of this important

sector.

As operators of buildings, managers of estates and cluster managers, with a successful track record of

stimulating enterprise growth in northern cities, the Creative Space team has developed substantial

experience of working with sector specific clusters, from Advanced Manufacturing and Engineering in South

Yorkshire, to Science businesses in Newcastle and Creative Industries in Leeds in Holbeck Urban Village

where it has almost 15000m2 of space at 95% occupancy. Critical to delivering viable and successful (in terms

of economic impact) buildings with like-minded businesses sharing know-how and benefitting from the well

understood benefits of geographical co-location, is harnessing active and successful industry networks where

these are already established. These should enable those businesses to be fully aware that they are part of a

growth sector; that there are initiatives and opportunities to benefit from the network; and that this forms a

critical mass which can be leveraged nationally and internationally both to attract public and private sector

investment and to differentiate the city region from the many other competing second tier cities across the

world.

2. Methodology

As the research was undertaken, the Creative Space team worked closely with the client to address the

relatively low take up of interviews (including the planned workshop) as well as to respond to emerging

perceptions from key businesses and organisations as the survey and interviews progressed.

This resulted in the evolution of the brief from what was initially focused on primarily medical technology

businesses (medtech), to a broader definition of medical technology and health informatics.

The initial research, undertaken by Morris Healthcare Associates, specifically reviewed the medtech sector

across Leeds as well as undertaking the case study analysis in reference to other medical and health sector

related research and innovation parks across the UK and several international locations. Further research

across the Leeds City Region to a broader definition was subsequently undertaken in order to establish a

better understanding of health and innovation firms operating in the Region.

The detailed methodologies for each research area are described in appendices A and B of this report. A

draft physical specification and operational model has also been included and

management options outlined as well as indicative ten year business models and trading

projections. These reflected the original objectives of the brief which were to identify a pragmatic

and practical approach which might address the workspace needs of growing medtech businesses in

Leeds.


3. Medical technology sector in Leeds

Through discussion, this definition was refined to be companies in the healthcare or life sciences sectors that

are knowledge-based and undertake research and/or product development at a site in (or very close to)

Leeds metropolitan district area.

Candidate companies were identified through a mixture of those already known to the University of Leeds,

Leeds City Council or the author and searching directories such as Experian. SIC codes (2007) were used to

search directories and subsequently categorise the companies found. The detailed codes and methodology

are articulated in Appendix A.

Further to this, telephone interviews were held, asking a series of questions articulated below:

1) Any relationships the company has with Universities (in UK and overseas) and in particular any with

The University of Leeds.

2) The business relationships and networks available and views on the talent pool and supply chain

within the Leeds City Region/County.

3) Any experience in identifying and securing suitable premises for your business and any plans and

needs you may have for grow-on space for your business.

4) The need and potential benefit of a Science Park in the Leeds area.

Interviews were held with CEO/MDs where possible and at least at Director level. The template

questionnaire is shown in Appendix C.

3.1 Leeds analysis A breakdown of the number of companies identified and categorised by age, SIC and post code is shown in the table below.

Age (yrs) All data LS postcode: all SIC codes

LS postcode: SIC 32500

LS postcode: R&D companies

0-7 10 9 4 2

8-15 8 6 1 1

16+ 9 9 6 1

Total 27 24 11 4

The company information was presented as a ‘Market Map’ (see below) that categorises companies by SIC

code groups of 32500 (manufacturers of medical and dental equipment and supplies), 72110 and 72190

(R&D) and ‘others’ and maps them against company age. The relative size (by net worth), the trend in

growth and whether they were interviewed or not is shown. Needs for growth space of those interviewed is

also shown by means of colour coding each circle.


Market Interest. Twenty companies and one individual (Colin Glass) were contacted for interview. Eleven

(52%) responded. One other company, not based in Yorkshire (Videregen) was also interviewed. Full

transcripts of the interviews are in Appendix D. Summary findings for each question asked are reported

below.

R&D. All ten Yorkshire based companies interviewed undertake either research or product development at

locations in the Leeds area. Seven also carry out manufacturing. One (Arteries) is not yet at that stage.

Kirkstall design and prototype instruments that are to be made by their customers and RD Biomed

manufacture in the county but not directly in Leeds.

Existing relationships with Universities: Only one of the 11 companies interviewed (Vascutec) reported a

current research relationship with the University of Leeds although it is evident (from further research) that

there are multiple historic relationships with the University, several of the businesses being founded on the

basis of IP generated at The University of Leeds (Escubed, Avacta, Tissue Regenix, Keyworth) in addition to

multiple ongoing partnerships. All others bar one work with other Universities, some in Yorkshire, some

elsewhere in the UK and overseas. Kirkstall do not have any research relationships but have multiple

Universities as customers for their products.

Regional Supply Chain and supporting networks. The majority of respondents (90%) stated that they use

the local supply chain wherever possible. When this is not the case, (in one instance) at an early stage of

their business cycle, their own business requirements were limited or that there is a need for specialised


suppliers not present in the region. One, (Optimum Medical Design) source globally. With regard to business

support networks, many of the larger companies are self-sufficient. The smaller companies that do use local

services are generally happy with them giving examples such as Medipex, Medilink and the AHSN (Academic

Health Science Network).

Access to finance. Responses were varied with some firms stating that they have no current need for

finance. Some have had dealings with local sources such as banks, venture capital funds and local angels,

Yorkshire Forward / Finance Yorkshire and grants. In the main, the opinion is that local sources are generally

poor with the exception of grants. Videregen moved to Liverpool specifically to secure finance from Spark

Impact using EU money.

Talent Pool. Finding unskilled and semi-skilled staff has not been a problem for companies requiring them.

Problems arise around locally sourcing skilled or experienced staff such as technicians, time-served engineers

and experienced sales people. Sales skills are a key issue for a number of the businesses interviewed and is a

wider issue for Knowledge Intensive Businesses (KIBS) where lack of technically knowledgeable sales staff

can act as a barrier to rapid growth and international sales (see Nesta report: Geography of Creative and

High Tech Economies January 2015).

Current need for new premises. Four of the companies interviewed had no immediate need for new

premises, having either recently moved (Brandon Medical and Avacta), or can expand at their current site

(Xiros) when needed. Vascutec have no future plans to expand. Five companies do have plans to

move/expand in the next five years with one, (Escubed) having an urgent need. Brandon Medical found it

very difficult to find low cost land or a facility to purchase freehold. Avacta has secured an expansion to their

existing premises. Escubed are currently blocking University Incubator Space and need growth space by April

2015. They require high quality GMP (Good Manufacturing Practice) space and would move out of Yorkshire

to get it. They are also motivated to be the lead in developing a joint venture with a US facility serving the

same sector (drug formulation) to form a ‘National Centre for Formulation’.

Medasil Surgical has just expanded on its own land to double its capacity but will want more space in the

next 5 years for increased logistics and storage capacity.

Arterius, currently in the Bradford University Incubator, will require larger labs and a GMP facility to make

stents for first-in-man trials by Q2 2015.

Kirkstall Precision Ltd is ‘bursting at the seams’ of its 900 m2 facility. It is estimated that they will need about

1500-2000 m2 in approximately five years time. There is an option to expand into the unit next door. Due to

the nature of their equipment, moving is likely to be cost-prohibitive without assistance.

Optimum Medical Design Ltd in 1,500 m2 and will need to double its space in the next one to two years with

a focus on offices and labs for designing products and not manufacturing/logistics. Location will be driven by

the ability to attract and retain key staff, so critical are they to the success of the business.

Steve Bloor of Videregen recounted his experience with a previous company which was located in Leeds.

This company failed to find appropriate office and lab facilities and ended up converting a warehouse at a

cost of £3 million. Similar obstacles for Videregen resulted in relocation to Liverpool. The firm will eventually

need larger premises to bring some manufacturing in-house. This will require GMP facilities.

Peter Dettmar of RD Biomed had an instructive experience in setting-up his company at The Deep Business

Centre in Hull. The Centre initially aimed to specialize in the biotech sector but gave this up to adopt a more


generic focus (any business not sector specifc). This left his company as the only technology based company

at that location and resulted in him having to finance (at a loss) the conversion of office space to lab space.

As rents went up he moved to the current location in a research block at the Castle Hill Hospital where the

more clinical environment suits RDBiomed well. The lesson here is for any specialist location (in terms of

target sector) to have a clear vision of what it aims to be, who it wants to attract and then serve and stick to

that market.

A medtech ‘focal point or science park. There was a widespread view that some kind of ‘focus’ for the sector

would be of value. Being with like-minded companies and people (academic and clinical included) and

synergies between co-located companies, either as supply chain partners and customers or in sharing

facilities, were often cited by respondents as potential benefits. However there was less clarity about the

precise function it would serve and the form it should take.

The function and form depended, not surprisingly, on the stage of growth of the company. Brandon Medical

(a mature and well-established medical device company) would want to see low-cost facilities to lease or

purchase that are suitable for logistics. Others would want the ability to expand their businesses be it in

manufacturing and sales or in design and development. Two companies said that, had there been integrated

facilities to serve their companies from incubation to growth either on one site or on multiple sites in the

Leeds area, it would have helped them immensely and influenced their ultimate decision about location.

The need for an on-site Higher Education Institution (HEI) was mixed. Some said it was not necessary:

established companies like Brandon Medical and ‘low-tech’ companies like Optimum Medical Design for

example. Many would like a health sector related Science Park to have formal links to both an HEI and the

NHS. The latter for product clinical design input and product testing and evaluation. Incentives to move,

access to transportation (including air links) and the impact on staff retention were all considered important

issues.

Points of caution included not making the mistake of choosing a site and then asking or deciding what to do

with it and not being a show case for a single company.

Finally, in discussions with Dr Roland Henney of Xiros, it became clear that the company is looking to expand

through investments, partnerships and acquisitions. When asked, he had not considered being an anchor

tenant or founding partner in a Science Park. He did not discount the idea.

During the interview process, following a meeting with Leeds General Infirmary, it was suggested that the

Leeds Teaching Hospitals Pathology Services Clinical Support Unit may need to look at moving to a new

location, possibly out of the city centre to a location with good transport and road links, within the next

three to five years. Requiring a combination of lab and office space capacity for around 200 staff, this might

be a key relocation that brings a major clinical function with a strong element of Research and Development

and could be a potential anchor tenant in a new ‘healthtech’ cluster.

3.2 Leeds City Region perspective

During the course of the research, it became clear that the LCR also contained a highly significant cluster of

healthcare informatics businesses which could be considered as being directly relevant to the medical


technology sector5. As such, the brief was revised in order to include these businesses within our findings

and to undertake this revised analysis across the Leeds City Region. However, this presented difficulties as

there are no Standard Industrial Classification (SIC) codes which relate directly to this sector as they fall

under broader categories such as Computer Related Activities.

Therefore, in order to carry out this analysis we made use of existing databases, company information from

business information services DueDil and Experian, and carried out an online data trawl within the city

region.

The research shows that:

There are currently 167 medical technology and health informatics companies in the LCR with

particular clustering evident in Leeds, Bradford, York and Huddersfield.

They have a combined estimated turnover of £4.33 billion.

They employ approximately 13,302 people within Leeds City Region.

The map below shows how these companies are distributed across the Leeds City Region.

5 Healthcare informatics refers to businesses which provide data analysis and digital solutions for healthcare

professionals in the public and private sector. NESTA (2014) recently stated that ‘The city has one of the highest concentrations of health informatics professionals globally’.


It was also important to identify the trends in the sector in terms of growth and size of business. In order to

do this, we made use of IDBR data. The unfiltered SIC code search on Experian produced 1273 companies.

After filtering we found that there were 167 companies. This shows medtech makes up 13.1% of the entire

SIC code range. We then applied this percentage to the IDBR data. The table below shows the growth

patterns over the last 4 years in this sector.7

The largest sub-sectors within this area are Chemical Manufacturing, Healthcare Informatics, Electronic

Component Manufacturers and Medical Equipment Manufacturers. To cross-reference what kinds of

companies can be found within each category, please refer to the company database (supplied separately).

In terms of employment within the medtech and health informatics sector, two issues were important to

ascertain: 1) we wanted to identify growth patterns in the sector and 2) we wanted a robust baseline of

employment which filters out the irrelevant data within the broad SIC codes that cover this sector. To do

this, we used two different methods. In terms of establishing growth statistics, we used the Business Register

Employment Survey (BRES), which provides official government data on employment by using specific SIC

codes and within specific geographies. We identified that there are approximately 12,971 people working in

medical technology and health informatics sectors across Leeds City Region.

Finally, we modeled sector turnover, using available company data from Experian and DueDil. This shows

that the companies operating in this sector had a turnover in 2013-14 of approximately £4.33 billion

(although it should be noted that multi-national companies albeit with a significant presence in LCR, may be

generating a significant proportion of this revenue in other markets). The analysis shows that the broader

health sector where it includes data and informatics, medical technologies and health innovation is a highly

significant sector both in terms of employment and its value to the Leeds City Region economy.

3.3 Key issues Terminology reflecting medical technology, science and health informatics. It is now widely understood

that many current and disruptive forms of business are being driven by relatively new technologies and ways

of working. Consequently, it is not easy for analysts to reflect how these changes are impacting on city

economies, given that so much analysis is still based on traditional Standard Industrial Classification Codes

(SIC) that do not easily reflect the scope and range of services now delivered. Some digital service providers

now may operate in health, defence and finance sectors, seamlessly providing new content and services,

7 The IDBR numbers are not directly comparable with the Experian numbers, as non VAT registered businesses do not show up on the

IDBR. However, we can use the growth patterns from this data to see the broader pattern for the sector.

2010 2011 2012 2013 2014

Company Growth


that makes it increasingly difficult to constrain them to one group of business codes. Consequently as part of

our research, we undertook not only standard SIC and IDBR analysis but also pursued further searches on

Duedil and Experian (with filtering) in order to try and build a more realistic picture of the target sub-sectors.

Despite our best efforts this is still likely to be somewhat imperfect and in our view, developing and

maintaining a database as a key resource to track performance of the ‘sector’ is an important objective. The

following chart shows the breakdown of sub-sectors, broadly using standard definitions with minor

exceptions.

Breakdown of sub-sectors relating to medical health technology sectors

The research indicates that this is a young, dynamic and growing sector. It also shows that it is a highly

clustered sector, with the majority of companies based relatively close to urban centres, and in particular

those with the presence of Higher Education Institutions (HEIs) and strong clinical services and research

teams. Leeds is clearly the dominant cluster, but it was interesting to note the presence of strong emerging

clusters in Bradford, Huddersfield and York. There are particular strengths in health informatics and medical

technologies.

There is a significant relationship to the key urban areas. Leeds as the predominant conurbation but with a

wealthy (people and know-how) and dynamic labour pool, the proximity to multiple centres of excellence,

research teams and institutes and the major HEIs across the city region, makes Leeds city centre and fringe

the primary target location to focus the development of a high profile cluster hub.

Of equal importance is an out of city centre location which has sufficient land for substantial growth and

10 years of expansion and clustering. Equally the specific location needs to be a prestige showcase for the

sector. Locating it immediately adjacent to distribution sheds, call centres or industrial production units will


not send the right message to potential occupiers. It needs to have key anchor tenants that define the

quality of future investment, ideally with links to clinical research, medical research institutes, co-located

small innovative businesses and locations for board meetings, training, seminars, conferences and social

interaction and collaboration which are fundamental to current and future business cultures.

Credibility. Profile. Brand. Developing a sufficiently large and professional identity which can deliver

national and international brand value to Leeds City Region, with practical and functional locational

advantages (adequate and affordable utilities capacity / fibre) is critical. Such a place has to be a quality and

prestige ‘park’ environment that will satisfy investors and provide the best quality working environment for

high level staff recruitment and retention: one of the biggest challenges the sector is facing.

Importance of agglomeration to maximise leverage. Any future Healthtech Park needs not to be positioned

as the sole location for innovation and growth. There is a wide spread of large and small firms and

institutions and HEIs across the LCR. Cambridge’s BioPharma Cluster map (2013/14) shows how effectively a

city region can position multiple locations and even those not on ‘a Park’ to sell the concentration of related

businesses, Institutes, HEIs, and key stakeholders (see Appendix K).

The development of a HealthTech Science Park (for example) would need to ensure links across these

clusters and act as a central hub for LCR’s multiple health related sectors. The business profiles from the

Experian database also suggest that while there are a small number of long-established, large companies,

there are a majority of young, small companies which would be ideally suited to a business location where

they could interact with each other and gain the economic benefits of agglomeration. Ultimately these may

be multiple point of light; multiple mini-clusters but with a strong sense of city region identity, defined by a

regular location for events, networking, professional development and collaboration. That is why geographic

proximity is important, not simply for those at the heart of the cluster but for those 30-60 minutes away:

they still feel part of the opportunities created by agglomeration, thereby multiplying the cluster benefits to

have a much wider impact. It has taken the Advanced Manufacturing Park in South Yorkshire ten years to

make this realisation now that it is creating an ‘Innovation District’8.

4. Developing a physical location and focus in Leeds

The University of Leeds is investing directly in an expanded incubation facility at the South Eastern part of its

Leeds campus. In close proximity to key NHS locations across Leeds and with co-located R&D activity already

happening on site, this new resource is an important element in considering suitable locations across the

city. The facility is currently described as the University Innovation and Enterprise Centre (UIEC) and will

deliver:

Dedicated professionally managed laboratory (1,052m2) and office (4,000m2) accommodation for

technology-led start-up companies (5,052m2 total net area and 6,820 m2 total gross floor area). This

will be targeted towards companies within the life sciences and high value engineering sectors in the

first instance (not just medical technology sectors).

8

http://www.rotherham.gov.uk/news/article/361/sheffield_and_rotherham_reveal_plan_to_create_advanced_manufacturing_innovation_district

http://www.rotherham.gov.uk/news/article/361/sheffield_and_rotherham_reveal_plan_to_create_advanced_manufacturing_innovation_districthttp://www.rotherham.gov.uk/news/article/361/sheffield_and_rotherham_reveal_plan_to_create_advanced_manufacturing_innovation_district


High quality professional facing and easily bookable office space and meetings rooms (156m2) to

enable meetings and workshops with senior leaders of key organisations and companies with key

academics within the University. These will lead to the development of high quality research and

innovation projects. An example is the development of a consortium of large pharma companies to

work together to support target validation and control protocols through accessing pre-screening, in

vitro and in vivo test capability at the University and with other partners.

High quality café to stimulate connections and networking and to enable staff, students and visitors

to connect within the centre (275m2).

Large light atrium to allow networking space for events, breakfast briefings, seminars, technology

showcases and opportunities to bring tenants, academics, professional services and other visitors to

understand research capabilities and opportunities for collaboration. This will include a 100 seat flat

lecture theatre/meeting room for larger networking events and meetings, and a mix of meetings

rooms from small (6 people) up to larger (up to 40 people) and video conferencing/smart technology

enabled rooms (430m2).

Flexible office accommodation for partners from within Leeds City Region (LCR) wishing to co-locate

in the UIEC (264m2).

It is recognised (within the brief for this research) that the new UIEC will not have capacity to accommodate

all the potential demand across the city. Consequently, whilst the incubation capacity is important and the

ability to co-locate other organizations, further grow on capacity is required in Leeds. Equally there may be

other market segments such as health informatics or pharma that will need their own incubation facilities.

4.1 City centre or outlying areas

A number of locational options have been put forward for consideration as potential hubs for medical

technology businesses in and around Leeds. These fall broadly in to two categories: city centre locations and

out-of-town locations.

City centre locations offer a more visible focal point, proximity to city, academic and health partners, strong

public transport connections and readily available amenities. Micro-businesses will often value these

characteristics and the networking advantages that they bring Typically easy-in/easy-out serviced office

premises that serve them will be located in city centres.

Examples of potential city centre locations that offer ease of access to the train station and a plethora of

local amenities include City House, Leeds (Bruntwood) , Wellington Place, Leeds (MEPC) and the Gilbert Scott

Building / Brotherton Wing, Great George Street, Leeds (Leeds Teaching Hospitals NHS Trust: LTHT). Given

evidence of demand, there is potential at each of these locations for an accelerator initiative to drive start-

up business activity or to try and attract an interim operator to target early stage healthtech businesses as

part of an interim approach for up to 5 years.

LGI’s Grade 1 listed Gilbert Scott Building on Great George Street and the neighboring Brotherton Wing

overlooking Millennium Square provide a particularly interesting option. The High Victorian Neo-Gothic

Gilbert Scott Building’s ornamental brick façade with stone dressings on Great George Street is of

exceptional architectural quality and as well as offering the benefits of amenities and public transport in an


acknowledged business district, sits in a unique location at the interface of the civic, academic and health

clusters in the city.

LTHT is in the process of moving out-patient services and all of its administration offices from both Gilbert

Scott and Brotherton Wing and is receptive to plans to repurpose parts or all of the buildings. The

neighboring Medical Building on the west of the site will also to be vacated over time and 200-300

laboratory-related staff relocated to new-build out-of-town premises. Whilst none of the premises offer

large regular floor plates, they do offer a variety of spaces of 20-100 m2 with unique character that could,

given refurbishment, be suitable for small growing businesses.

Some initial design work has been carried out on potential future use of the LGI site by BDP Architects. A

number of additions in the form of infill area to courtyards and poorer quality buildings on the Western side

of Brotherton Wing could be removed, bringing the Gilbert Scott buildings back to their originally intended

state and opening up permeability to the southern edge of the University of Leeds campus, the location of

several related innovation spaces and of a new Innovation and Enterprise Hub currently being planned. The

next stage is likely to be the commissioning of a masterplan strategy for the LGI site and a process to appoint

development partners.

Whilst the scale of the LGI site and the listed status of its key buildings presents significant challenges, there

is long-term development potential for a mixed use innovation quarter in this area of the city. However until

the asset owner (and partners) are able to develop a long term plan for the area, it will be fraught with

uncertainty. Whilst it might be possible to consider a short term approach on the site, adapting these spaces

(just securely separating them from the LGI) will have significant costs and challenges in the first instance

despite the seeming benefits of its central location.

A number of significant University buildings on the campus border LGI on and around Clarendon Way and

there are already pharma companies at the meeting point of the LGI site and the University campus. It may

be worth all parties considering how a coordinated approach might add value, perhaps through some

collaboration around the key stakeholders and a master plan which considers interim uses and phasing as a

way of maximising economic impact rather than having empty or partially empty buildings in what is a

significant city centre location.

Out-of-town options will provide better value locations, typically in new build offices with longer-term

traditional leases located in business parks. Numerous examples of options exist including Logic Leeds,

Thorpe Park, Thorpe Arch, Valley Park, Lawnswood Park and Leeds and Bradford International Airport. Some

of these options are described below.

Logic Leeds in the Aire Valley Enterprise Zone adjacent to Temple Newsome is a development site that

provides very good out-of-town road connectivity. Close to Junction 45 of the M1, it is a ten minute drive

from Leeds railway station and will have a new Park and Ride facility from Spring 2016. It offers high speed

fibre connectivity, significant prospective rates relief associated with its EZ status (worth up to £275,000 per

business over a five-year period) and incentives associated with assisted area status, making it one of the

few places that large companies can access grant without state aid restrictions. Outline planning permission

is in place for development of land at Logic Leeds and developer Muse is now undertaking grant-funded

infrastructure works for a 5.5 acre (2.2 hectares) site and is in engaged in developing 8000 m2 of speculative


industrial premises. Ten buildings will be in construction within the next year on an adjacent site, including

commercial space for major technology companies. New bespoke facilities can be specified and on-site

within 6 months.

Thorpe Park is an established out of town business location that already houses a number of medtech

businesses as well as other significant employers. Located just off Junction 46 of the M1 it also offers very

good out of town road connectivity and is a 15 minute drive from Leeds railway station. Various new

elements of transport, housing and leisure infrastructure are either planned or have already been committed

to and this is certain to increase the success of the site as a mixed use location. Healthtech space is loosely

earmarked in the park adjacent to existing NHS premises. Values are between £16/£17 for existing and £20-

£22 for new speculative buildings. Planning for development is in place and given demand over 5000 m2

could be built now.

Masterplans are now being developed for substantial new commercial space (net 40 ha) north of Leeds

Bradford Airport. Integral to this plan is an assessment that there is potential in the market for commercial

premises aimed at R&D based technology companies. Medical technology or health sector would be

considered to be a complementary piece of the jigsaw. Well-located for north Leeds, an area of pent up

demand for office space and a preferred residential location in the city, the airport is nine miles from the city

centre. Leeds Airport itself is growing with passenger number forecast to rise £3.3m to £7.1m by 2030 (DFT

forecasts: 2013 Aviation White paper). Improved road infrastructure will be in place by 2019 with some

encouraging prospects for new rail infrastructure being developed to improve potential at the out-of-town

location. Some existing new build options are available at the Airport West business park where

approximately 100 employers are already based. However there may also be some challenges around public

transport and there remain some issues associated with green belt and planning which are not entirely

resolved.

The commercial view (developers’ agents) is that there is significant potential in Leeds for commercial space

pointed at high-value science-based businesses and it is likely that there is no single location that will meet

all of the market needs. Occupiers want a range of options – a ‘margin for choice’. A portfolio approach to

development of commercial space will widen the options for inward or expanding companies. It is notable

that some recent substantial firms actively seeking premises have been uninspired by the property options in

Leeds so new development at these out-of-town locations is welcome.

Given that LTHT is actively considering relocating 200-300 laboratory-related staff from the LGI to new-build

premises in an out-of-town location within the next few years, there is potential for a substantial anchor use

which could build momentum around an out-of-town health and medical technology location. There will be

a need to pull key stakeholders together to really give this the momentum it needs in terms of branding,

grant support and embedded links to health, university and city partners as well as enabling growth through

associated development (including potential serviced office and event space as a focus for the health

cluster).

Our view is that the Aire Valley represents the most suitable area for an out of city, branded Health and

Innovation Technology Park albeit with further work to determine exact locations. Key feedback from

companies interviewed is that the allocated area has to have sufficient expansion capacity; has to have

adequate utilities; has to have good public transport links and be a showcase for a professional and high


level science park. Co-location with recycling processing, light industrial or low grade manufacturing is not an

option.

4.2 Specification issues

Our research indicated that there was a relatively wide level of requirements from company to company in

terms of specification to suit their particular business model. Equally, depending on the approach taken to

the strategic location, specification may vary according to the nature of the property offer. The following is a

summary of the key issues:

Strategic location and

approach

Specification issues Facilities

Bespoke locations and existing key businesses as anchors for growth. Promoting a network of locations across the city region.

Use existing anchor tenants and companies as a starting point for developing multiple micro-clusters. Branding, mapping and support information and resources.

Taking a bespoke approach. Identifying specific requirements at any one time. May include sites close to motorway network, buildings for easy fit-out of wet lab and R & D facilities.

A more opportunistic approach: identifying multiple opportunities on one or several specific locations and agreeing a template for growth.

Maintaining a database of suitable opportunities and resources to assist target sector to grow with minimal barriers. Sharing demands and specific requirements openly with agents and sector networks.

As above, taking a bespoke approach and identifying specific requirements as required by clients. A commercial approach relying on collaboration with one or several locations to position the location as a medtech park.

City Centre grow-on location (short to medium term)

City Hub of circa 1200 m2. Does not have to be a bespoke new facility. Could fill gap prior to University Incubator being completed and provide interim grow-on space from the LGI site.

Leveraging its position in city centre, could include event space (ideally up to 100 people); co-working and drop-in area; rentable private offices; rentable workstations; collaboration space for projects; making / informal R&D spaces.

Out of town Healthtech/ Science Park flexible design and build approach.

Could include serviced office space (as in our out of town model) or could be focused on traditional lease lengths (5 years/minimum 3 year breaks).

A more traditional approach which could include a serviced office workspace with meeting rooms, reception and common areas, kitchenettes but probably not including shared laboratory space.

4.3 Operation and management

Six case studies on relevant Science and Medical or Bio Technology Parks are included at Appendix G and

illustrate the range of approaches and specialisation both across the UK and in Europe. They are


characterised by some (often speculatively built) shared office space for small co-locating companies and the

ability to progress into dedicated workspace, often tailored to meet the specific needs of growth companies.

All of these locations reflect multiple approaches to operation and management for a multi-occupancy

serviced office / lab facility or for a Science Park.

Lead operator Strengths Weaknesses

Local authority. High level of accountability if investing local authority cash and to ensure delivery of economic development objectives.

Current funding position reduces likelihood of directly delivered services.

Joint venture between local authority ,University, and / or LGI.

Combines the key stakeholders and provides shared responsibility from leveraging neighboring assets and resources.

Still requires need to employ staff directly and to take a delivery focused responsibility for ensuing the project delivers its objectives.

Third party specialist operator contracted by JV or lead stakeholder.

Specialist takes majority of day-to-day responsibilities for delivering outcomes.

Still requires contract management and procurement can be time consuming and expensive.

Developer led with minimal input from public sector.

Private sector led approach which allows public sector to focus on strategic facilitation rather than delivery.

Less ability to influence the quality and impact of initiatives to counter market failure.

Accelerating the growth of a cluster may, in practice, require multiple approaches to governance, i.e. this is

not simply about managing a building but may be about galvanizing private sector businesses and key public

sector stakeholders to collaborate. Working with the private sector to deliver day-to-day lettings, building

management and an operational focus is a relatively straight forward way for the public sector to achieve

their objectives with a minimum of resource input in relation to specific serviced offices to attract small, high

growth businesses and provide them with a supportive and well networked environment that drives

collaboration and employment growth. But it may be that a partnership is more important as a way of taking

a strategic overview, both to influence the strategic development of key initiatives such as the preferred

location for a designated Health Science Park or a temporary accelerator at LGI and to ensure that the

collective know-how of successful entrepreneurs and sector champions can be harnessed to maximise the

benefits of agglomeration.

4.4 Indicative financial model

Two revenue models have been produced for fully serviced office centres: an out-of-town model and a city

hub model.

The models provide a relatively cautious set of assumptions in terms of price point and rate of occupancy of

the business space. They also assume that the operations will be liable for a significant level of business rates

for administrative and common areas as well as for un-let office spaces whilst occupancy increases.


All assumptions used in the out-of-town model have been used in the city hub model with the following

exceptions:

- Price point: the price point for the out-of-town model is assumed at £25 psfpa to include service

charges and utilities in a fixed license fee. This is an assumed average income from the office spaces

– in fact prices will vary according to the aspect and quality of each individual office. For the city hub

model, the average fee is assumed to increase to £35psfpa reflect prime city centre values, based on

existing competitor price points.

- The quantum is space is reduced from 20,000 sqft lettable office space in the out-of-town model to

12,500 sqft in the city hub.

- Ratable value is assumed to be 33% higher in the city centre model.

Income and Expenditure Assumptions

For the purpose of this model all costs assume zero inflation in income and expenditure. Increases in

operating costs associated with inflation will need to be matched by increases in charging assumptions. VAT

has also been excluded.

Income Assumptions

Income Notes

Revenue

Funding

+ At this point, we assume no external revenue funding streams will be made available during the start-up period.

Office

lettings

+ We have assumed a price point of £25.00 per sq ft to include service charges and utilities but not to include business rates, IT or telephony. This is an average rate to be achieved across the spaces. Premium spaces will be charged above this rate, poorer spaces below this rate.

+ Occupancy is forecast to grow gradually from opening to 85% occupancy in Year 3 (Month 29). Pre-letting of 15% of floor space is assumed. This target will rely on well-positioned pre-marketing led by a capable operator during the pre-opening year. If the product is of a high quality and communications are effective, pre-lettings could significantly exceed the model.

+ For the base model, in Year 1, detailed occupancy grows from opening at 15% to 42% through the year, averaging at 30%. In Year2, occupancy grows from 45% to 72%, averaging 60%. In Year 3, Occupancy grows from 75% to 85%, averaging 83%. From Year 4 onwards, we assume 85% occupancy of serviced office space.

+ A 10% churn of licensees in the serviced office space is assumed each year.


Expenditure assumptions

Expenditure assumptions are largely based on expenditure formulae developed through delivery of

similar facilities themed for similar uses elsewhere in the country. Particulars on the assumptions

made for the business have been incorporated in to the forecast.

Virtual

Office

Services

+ We have made no assumption of Virtual Office service provision, at this stage. This represents a potential additional service to be considered at a later date in the project evolution.

Meeting

Room

Showcase /

Marketing

Suite hire

+ No revenue is forecast for hire of the three small meeting rooms. We propose that these meeting rooms are provided within the rental fee for serviced offices. In effect, fair use of these small meeting rooms is rentalised within the office costs as part of the serviced office package.

+ Use will be made of an Event Space for events purposes during the first 3 years of operation to assist in animation and marketing of the building. Income has been forecast modestly at £750 per week net (allowing for free use for events that have a marketing value for the building) after any prospective costs deployed on part-time temporary staff cover to service the events.

+ In Year 2 and onwards, we assume a 20% increase in general usage or hire rate. Food and drinks income is not forecast at this stage. In practice this represents an additional income stream as there will be a margin of 15% on bought-in food offers whilst hot and cold drinks will be offered by the in-house team at high margins.

Other

+ Internet and telephony services will be provided centrally in exchange for an Extra Services fee. Take up rates have been forecast low at this stage and the service is not expected to produce a surplus but is considered an important part of an easy-in/easy-out offer to occupiers which is likely to be a strong sales feature that accelerates occupancy.

+ Charged parking spaces are not assumed.

Expenditure Notes

Rental to asset

owner - We assume zero rental charges until otherwise advised.

Staff related

- Staffing budgets assume a lean team of staff for a fully serviced office operation, boosted by a small amount (0.2) of temporary (agency staff) input to cover some absences and service major events. An annual budget of £77,138 including on costs is allowed.

- The staff team consists of 1 x Centre Manager and 1 x Coordinator and 1 x Customer Service Administrator (3 in total) plus 0.2 FTE CSA cover.

- It is assumed that the staff team will deliver a full range of reception and business services, meeting room and events coordination and fully managed connectivity and telephony for occupiers.


- Staff training is assumed at £1,000 per person.

- Contracted out (or centralised operator) finance support to oversee timely monthly reporting and reconciliation and annual audit is assumed at £12,000 pa.

- Contracted IT support and specialist technical oversight (by centralised operator or third party depending on skills base) is assumed at £14,000 pa.

- Travel and subsistence assumptions are modestly allowed at £400 pa.

- A pre-opening staffing budget is allowed for to cover 3 months Manager’s salary and 1 month of salary for the other 2 posts to allow for training and systems mobilisation.

Central Costs

- Business rates are assumed as payable by the office occupiers. They are assumed as assessed in the region of £15.45 Ratable Value psf (£7.50 psf payable after the multiplier). This takes account of rental values when all servicing costs are deducted. Whilst the smallest offices with a ratable Value of below £6,000 pa will not incur rates liabilities for occupiers, the Operator will incur liabilities for them whilst they are un-let. For this reason, the Operator’s rates liability reduces as the building’s occupancy increases.

- Business rates are a significant element of expenditure based on the low occupancy and therefore high levels of ratable voids during the start-up period. There is potential to significantly outperform occupancy targets and reduce initial rates liabilities.

- Insurance costs are estimated at £12,000 pa based on comparators from other premises managed by Creative Space.

- Fire alarm maintenance is assumed at £0.008 p sq ft

- Intruder alarm maintenance is assumed at £0.037 p sq ft

- Intruder alarm monitoring is assumed at £297 pa

- Water safety is assumed at £0.008 p sq ft

- Boiler maintenance is assumed at £0.007 p sq ft

- Lift maintenance is assumed at £0.031 p sq ft

- PAT testing is assumed at £500 pa

- Emergency Lights maintenance is assumed at £0.006 p sq ft

- Fire extinguisher maintenance is assumed at £0.001 p sq ft

- CCTV maintenance is assumed at £0.011

- Cooling maintenance is assumed at £0.06 p sq ft

- General Renewals and Repairs are assumed at £12,000 pa with additional refresh costs added at Year 5 and Year 8

- Cleaning of communal areas is assumed at £0.48 p sq ft

- Washroom services are assumed at £0.088 p sq ft

- Window cleaning is assumed at £0.02 p sq ft

- Utilities are assumed at £1.60 p sq ft based on other refurbished Victorian premises within our portfolio. This assumption will need testing as the mechanical and electrical design evolves.

- Water rates are assumed at £0.10 p sq ft

- Legal fees are assumed at £2,000 pa


5. Recommendations and key actions

The research underlying this report was initially intended to inform a building based model that might

support the development of a medtech and science park building. However the analysis of the sector, both

terms of critical mass (across Leeds City Region) and in terms of sector focus (a broader scope to include

health informatics) has somewhat changed the potential outcomes for the stakeholders. Our

recommendations reflect the evolution of these realisations, which we tried to share as our thinking

developed during multiple client meetings and conference calls. The following five recommendations and

Manned

Security

- We have assumed £24,000 requirement for security patrols out-of-hours and key holder services in Year 1 (when we assume higher security will be required), dropping to £12,500 pa thereafter.

Marketing

Costs

- Assumed to begin in Year 0, 12 months prior to opening, with substantial branding work, website establishment costs and PR support. Tapering down to £12,000 pa in Year 2 and to £5,500 from Year 4, following start-up phase.

Bank charges - We have made an allowance for current account bank charges but not for any loan repayments to service the working capital requirement.

FM operator

fees

- We have assumed a budget of £10,000 to allow for some early engagement of an Operator in Year -1. This provides a sum to allow early participation in design work and in accelerating policy, strategy and procurement work.

- Full ownership of the client role is assumed for the Operator in Year 0, the 12 months before opening. The Operator is to take a key role in design meetings, steering detailed decision-making during the refurbishment project; will prepare operational systems, recruit and train staff; and, critically, will lead a development work programme to accelerate pre-lettings. Getting early traction within the business community and securing anchor occupiers will generate a positive reputation and strengthen the start-up phase. Our estimate is that this work will generate an increase in pre-lettings worth £110,000 to the business.

- Operator fees are assumed to include all sales agent responsibilities for generating and converting sales leads. If the Operator is unable to convincingly fulfill the agent role, fees should be reduced significantly. In the event that the sales function is contracted out, fees to property agents will be in the region of 10% of the value of lettings.

- During Years 1-2, operating fees of £60,000 pa are assumed to resource work in establishing the business and driving up occupancy to 85% or above.

- From Year 3, we have allowed for an Annual Management Fee (estimated at £42,500 pa) for an external operator. The reduction in fee reflects reduced marketing and sales resource. If an operator is not used after Year 5, we assume the Operator fee will recompense executive management staff of other parties that will oversee the strategic management of the operation.

Contingency - No contingency has been assumed at this stage.


sixteen actions have been honed down with the objective of delivering a clear outcome from our work both

to inform the next steps and to maximise the opportunity to accelerate growth of the sector and the

economic benefits to Leeds City Region.

1. Focus on Leeds City Region as the defining area of the cluster, acknowledging greater links across

Yorkshire and the ‘northern powerhouse’.

A single building or even a location for a number of buildings is not the only answer to the brief. The

target market shifted during the process from assuming medtech and science as a focus to a broader

medical and health technologies definition and widened beyond Leeds to the wider city region. SIC codes

and Experian are simply inadequate to adequately ‘scope’ the sector. For companies such as Kirkstall

Precision (precision manufacturing for medtech customers) or EMIS (information systems and services to

clinicians), the technologies whilst radically different are still delivering tools for enhanced health care in

markets which have ever-increasing demands and rapidly growing opportunities.

We need to go beyond a statistical analysis and assemble a more comprehensive and market sensitive

database to inform current and future strategy. The key challenge is to make a step change to improve

connectivity and communication and relationships between key stakeholders and partners (Universities,

public sector, private sector). Aggregation of know-how, of customers, of markets, and overcoming

barriers to growth and the sharing of expertise could be the key factor to accelerate these medtech and

health related science sub-sectors to one of national and international significance.

Actions

i) In terms of the medtech and science cluster, define a broader sectoral definition which

incorporates relevant health informatics and precision manufacturing and helps galvanise

sense of ownership from existing and potential sector champions.

ii) Build and maintain a database of every company in the Leeds City Region within the medtech and science cluster. This level of detailed sector knowledge is crucial.

iii) Start to develop the Leeds City Region medtech and science sector ‘brand’ by referencing key

companies and markets, including the collation of multiple locations, academic research institutes, clinical excellence and position as visible indictors of strong networks and an ambitious business community.

iv) Communicate and ‘manage’ the sector so that it is a membership (free for the first 12-24 months), who contribute to and benefit from geographic proximity (an inclusive

approach). Build a community of interest which will have scope as a portal to exchange information on contracts, placements, new inward employee networks. v) Identify opportunities for export and growth, harnessing existing and new initiatives such as those promoted and managed by Innovate UK, UKTI and the recent 2015 UK budget commitment to ‘Northern Trade Missions10’.

10

2.286 Northern powerhouse trade missions: £3.5 million investment in key sectors focusing on the North. UK Budget March 2015


2. Pro-actively seek to position Leeds City Region as a national focus for health and medical technologies

combining medical device manufacturing and related services with data and health related

information technology innovation and management (health informatics).

The NESTA report referred to in this study highlights the importance of health technology innovation in

Leeds City Region. In our view, this needs to be more strongly promoted both in terms of the cluster

network, its relevant research institutes and key strengths (York/Leeds/Bradford HEIs) but also the

outstanding firms producing innovative products and services. This should not be a purely public sector

initiative but needs to be owned and guided by key champions and stakeholders from the sector.

Actions

vi) Support and advocate for multiple points of activity including Bradford based Digital Catapult Centre, the University of Leeds new research and innovation incubator, the key HEIs and the multiple large private sector employers located from York to Huddersfield.

vii) Harness the know-how and expertise of sector champions and advocates to take ownership of the

‘network’ and to inform key strategic decisions and initiatives in the form of a steering group or advisory board with a short term (3 year) and long term plan (10 year).

viii) Harness the know-how and expertise of sector champions and advocates to take ownership of the

‘network’ and to inform key strategic decisions and initiatives in the form of a steering group or advisory board.

ix) Leverage the city region’s expertise and multiple sub-sector strengths to take advantage of new

funding to stimulate sector growth including the £20 million of investment identified for Health North in the March 2015 Budget11.

x) Identify specific opportunities for the City Region to link its private sector and research expertise

with new technologies and initiatives such as the Government’s recent commitment to develop ‘Internet of Things’ technologies particularly in relation to healthcare technologies12.

3. Create a physical focus for scalable high quality ‘healthtech’ related businesses with a Health and

Medical Technologies Park in a specific location

The interviews with business owners clearly highlighted the importance of suitability of the Park’s

location; not compromised by proximate inappropriate industrial or other uses; public transport access

for staff; good access to distribution and road networks; a high quality and prestigious environment.

Some clients do want their own stand-alone plots with expansion potential so long as they are serviced

and ready to go. Many will require Good Manufacturing Practice (GMP) facilities. Others need smaller

units in a serviced building with scalable IT services and a community of like-minded businesses.

11

1.151 Science and Innovation. The Government is committing £20 million to Health North to enable better care for patients and to stimulate private sector innovation through analysis of data on the effectiveness of drug treatments and health pathways. UK Budget March 2015 12

2.261 Internet of Things. The Government will invest £40 million to develop Internet of Things technologies through large scale demonstrator programmes, business incubator space and a research centre. The funding will focus on healthcare, social care and smart cities. UK Budget March 2015


Actions

xi) Develop a brief for a development partner in order to generate proposals as to how each

potential ‘Health Technologies Park’ location can address key strategic needs to accelerate sector

growth and maximise the economic impact on the wider Leeds City Region. Ensure that

fundamental, long term issues are clearly addressed such as clearly separated, medical and health

sector focus (from distribution, light industrial or other unsuitable related uses); access to public

transport; ability to identify a zoned area with long tern expansion space. Manufacturing grow on

space with suitable electrical and other utility capacity (fibre) is an essential requirement.

xii) Identify a pipeline of potential anchor tenants to act as a high profile catalyst around which

further development can focus. There are multiple opportunities both with companies

anxious for a new location and large organisations considering significant relocations from

the city centre to more suitable premises within the next five years. The strategy to give

them reassurance that the cluster will develop is a critical part of the jigsaw to establishing

critical mass and confidence in the initiative.

4. Development of Health & Medical Technologies Innovation Centre (working title only) as a

location for SMEs. Building on links with University of Leeds, the key gap is for grow-on space for new companies that

will spin out of the University Innovation and Enterprise Centre. Whilst it may not necessarily need

to be the first anchor building on the site (e.g. The Core at Newcastle Science Central), it may be that

developing the concept needs to be part of the strategy even if the building is delivered after other

relocations and anchor occupiers are established (e.g. Addenbrook Campus in Cambridge is now

planning such a building, 20 years after the cluster began to mature). It may also be that having a

model developed and ready to be implemented may attract funding as new opportunities arise in

2016/2017. What is clear is that the importance of having a resource for high growth businesses

such as at AMP Technology Centre in South Yorkshire can play a crucial role in providing a high

profile focus for the sector and for supporting high growth SMEs that need to be in close proximity

to other businesses, large and small.

Actions xiii) Identify the scope for interim acceleration initiatives in interim or medium term uses

associated with NHS and private sector. These could be both city centre or out of city

based, or could be co-located in related accelerator initiatives.

xiv) Build on the outline business models identified in this report to deliver single or multi-

phase serviced office buildings focusing primarily on clean office only but with clear letting policy

targeting medical and health technology sector businesses and prioritising those with innovation

characteristics and growth potential.

5. Develop and define a ten year health and medical technologies cluster growth plan for Leeds City Region which aims to maximise the geographic opportunities to leverage an ambitious (perhaps radical) action plan for growth.

With a new government and a new cycle of initiatives likely to consolidate around Local Enterprise Partnerships, Northern Powerhouse, Combined Authority and increased devolution, the importance


of having a clearly defined, well researched and managed strategy for driving economic growth for this sector is critical. LCR is well positioned to argue for additional public sector investment to strengthen the economic impact of innovation in the north of England and Leeds and its partner authorities have sufficient assets and private sector partners who can, together, make a very strong case for supported growth. For this to occur, the sector needs to boldly leverage its links to London, Cambridge, Edinburgh, Cardiff and other cities and regions across the world. The Healthtech sector is a global business with enormous potential to drive further export growth for the UK. LCR needs to be seen to be at the forefront of international trading opportunities, celebrating its successes and supporting new businesses to navigate their own routes to new markets.

xv) As well as dramatically increasing collaboration within the city region, increase collaboration

between London, Cambridge, Manchester, Edinburgh and international partner locations. Invest in initiatives to connect research and commercialisation excellence; to invite external speakers and to share knowledge and networking opportunities.

xvi) The implementation of this work requires a ‘fixer’ and co-ordinating role or team as part of a more

formal, delivery-focused approach to developing the cluster. Whilst, this has been dealt with to some

extent up until now (albeit in a somewhat informal way), this now needs to be implemented on a

more formal basis. A dedicated team is required in order to deliver the management and executive

leadership of the network and to co-ordinate initiatives and implement practical actions including

specific areas of support for businesses such as helping to find new premises, addressing planning

issues for expansion, recruitment, inward investment and research collaboration.

___________

Appendices

A Methodology for Leeds medical technology sector research

B Methodology for Leeds medical technology and health informatics research

C Leeds medical technology survey questionnaire

D Leeds medical technology Interviews summary

E Additional in depth interviews

F Breakdown of sub-sectors: Leeds City Region Medical Technology and Health Informatics

G Case studies of Medical Technology Science Parks

H SIC Codes used for identifying Leeds City Region medtech companies

I City hub financial model

J Out of town financial model

K Cambridge BioPharma Cluster Map

Appendix A: methodology for Leeds medical technology sector (medtech)

Definition

The target market was initially defined as the medical tecnology sector, to include diagnostic and

software companies within the Leeds City Region. Through discussion, this definition was refined to

be companies in the healthcare or life sciences sectors that are knowledge-based and undertake

research and/or product development at a site with an LS post code. They may or may not carry out

manufacturing at that or another site with an LS post code. There were five exceptions to the LS post

code ‘rule’ where companies were known to have experiences or knowledge of particular relevance

to the brief.

Candidate companies were identified through a mixture of those already known to the University of

Leeds, Leeds City Council or the author and searching directories such as Experian. SIC codes (2007)

were used to search directories and subsequently categorise the companies found. The SIC codes

used are shown in the table below:

SIC Codes used for searching and categorising Companies

Manufacture of medical and dental instruments and supplies 32500

Manufacture of other chemical products nec 20590

Manufacture of basic pharma products 21100

Manufacture of metal structures 25110

Manufacture of electronic measuring, testing etc. 26511

Other Manufacturers 32990

Installation of Industrial Machines and Eqpmt 33200

Technical testing and analysis 71200

Research and experimental development on biotechnology 72110

Research & Development on natural sciences and engineering 72190

Information gathered to describe each company included:

Date of incorporation of company (age) as a measure the stage of company growth. Three

age groups were used; 0-7 years to represent young companies most probably in

R&D/product development, 8-15 years to represent companies with products on the market

and in growth and 16 years plus to represent mature companies.

Current net worth as a measure of financial strength and status. These were grouped into

greater than £1m, between £500k and £999k and less than £500k.

The overall trend in key accounting parameters (net worth, turnover where available, cash

at bank, profit/loss) as an indicator of growth. This was categorised as rising, falling or flat.

Other information such as number of employees, a description of their activity and contact

details were also gathered for completeness and use in the interview stage of the research.

A summary table of all this information is available as a separate document. Information

was sourced from company websites and ‘Company Check’ (www.companycheck.co.uk), an

on line source of company information.

Interviews Telephone interviews were held, asking a series of prepares questions about:

1) Any relationships the company has with Universities (in UK and overseas) and in particular any with The University of Leeds.

2) The business relationships and networks available and views on the talent pool and supply chain within the Leeds City Region/County.

3) Any experience in identifying and securing suitable premises for your business and any plans and needs you may have for grow-on space for your business.

4) The need and potential benefit of a Science Park in the Leeds area.

Interviews were held with CEO/MDs where possible and at least at Director level. The template

questionnaire is shown in Appendix x.

http://www.companycheck.co.uk/

Appendix B: methodology re medtech and health informatics analysis

Standard Industrial Classification (SIC) codes were used to do an initial broad mapping of the sector

using the Interdepartmental Business Register (IDBR) and Experian databases. This data was then

refined and filtered, by mapping the SIC codes to Thomson Directory business classifications within

Experian, allowing the non Med-Tech businesses to be filtered out. We then were able to use this

data to apply a percentage to the IDBR data in order to work out business growth rates. We also

used the Experian data to gain an approximation for turnover, business size and age of businesses

within the sector. Table 1 shows the SIC codes that were used for the research.

Table 1: SIC codes used for identifying med-tech companies

SIC Codes Description

32500 Manufacture of medical and dental instruments and supplies

20590 Manufacture of other chemical products nec

21100 Manufacture of basic pharma products

21200 :

Manufacture of pharmaceutical preparations

25110 Manufacture of metal structures

26511 Manufacture of electronic measuring, testing etc

32990 Other Manuf nec

33200 Installation of Industrial Machines and Eqpmt

71200 Technical testing and analysis

72110 Research and experimental development on biotechnology

72190 Research and Experimental development on natural sciences and engineering

However, there are problems with using the IDBR data. The IDBR database does not include self-

employed or freelance companies. Also, because the SIC codes are broad, and cover numerous

businesses not relevant for the research, it is a blunt approach for locating companies in this niche

sector. For example, Med-Tech companies can be found in these SIC codes, but so too can

pharmaceutical distributors, non-specialised metal manufacturers, and barbers.

In order to overcome this, we purchased data from the Experian National Business Database (NBD)

in order to identify the details of the companies that came under the SIC codes and then matched

these SIC codes to the Thomson directory classifications which Experian use in order to focus in on

those classifications most relevant for the Med-Tech sector. Table 2 shows which Thomson

classifications come under the SIC codes in Table 1.

Table 2: Thomson Directory classifications matched to the med-tech SIC codes

Aerosols Metal & Metal Goods Manufacture

Air Compressors Metal Detectors

Anodisers Metal Finishing Services

Automation Systems & Equipment Pharmaceutical Manufacturers & Distributors

Bag Suppliers Playground Equipment

Barbers Pneumatic Engineers

Belting Manufacturers Pneumatic Systems & Equipment

Candle Manufacturers & Suppliers Polythene & Plastic Sheeting Supplies

Cash Registers & Check-Out Equipment Portable Appliance Testing

Chemical Engineers Power Transmission Equipment

Chemical Manufacturers Promotional Items

Chemicals - Distributors & Wholesalers Racking Systems

Chemicals & Allied Products Research Organisations

Conveyors & Conveyor Belt

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