UK at Risk of Losing Bio-Based Innovation as SMEs Look Abroad for Growth

New research reveals £500 million potential economic gain from better supporting UK bio-based scale-ups

Monday 28 April 2025 – The UK is failing to capitalise on its world-leading bio-based innovation, with high-potential companies increasingly moving operations abroad to scale up their businesses, according to new research published today by BB-REG-NET.

The study, titled “From Research to Revenue: The Case for Scaling UK Bio-based Innovation,” found that supporting UK bio-based SMEs to scale domestically could create over 4,200 new jobs and generate between £300 million and £500 million in additional economic value.

The analysis, led by Perspective Economics, identifies that the UK is at risk of losing high-growth bio-based SMEs to better-resourced international markets and points to benefit of supporting domestic scale-up activity in this strategically valuable sector.

Following a review of more than 430 UK bio-based companies – refined from an initial pool of 2,800 – the report reveals a trend of innovative British firms relocating manufacturing operations to countries such as the Netherlands, Sweden, and Portugal, where scale-up infrastructure and support are more accessible.

Jonathan Hobson, Director at Perspective Economics and the report’s author said: “This research – made possible thanks to funding from Innovate UK – suggests that the UK is a great place to start a bio-based company, but that the longer-term economic benefits of world-leading bio-based research and innovation may be constrained by a comparative lack of scale-up funding, sub-optimal access to scale-up infrastructure and less favourable domestic market conditions.

“At a time when the UK is arguably more in need of value adding businesses than ever, a little support to plug gaps in scale-up infrastructure, unlock patient later-stage capital, and leverage upcoming regulatory opportunities could go a long way.”

The report highlights that while only 24 per cent of UK bio-based chemicals and materials companies have international operations, these businesses demonstrate substantially stronger growth trajectories. Across micro, small, and medium-sized enterprises (SMEs) in the sector, the median employment figure for companies with international activity (18 employees) is double that of UK-focused companies (8 employees), with internationally focused companies generating 1.8 times higher median revenue (£3.1 million versus £1.7 million)

When comparing medium-sized firms, internationally-active companies have experienced employment growth approximately seven times greater than their UK-focused counterparts since 2019.

Commenting on the findings, Jen Vanderhoven, Chief Operating Officer of the Bio-based and Biodegradable Industries Association (BBIA) and project lead for BB-REG-NET: “”The urgent need to support bio-based scale-ups is clear. We are losing talent and innovation to countries with more accessible infrastructure, funding, and regulatory support. The UK must act now to ensure that bio-based SMEs have the resources they need to thrive and keep jobs and investment at home.”

Richard Lock, Managing Director of Holiferm, which manufactures biosurfactant products in the UK, added: “As a growing bio-based enterprise, we are increasingly constrained by systemic barriers to scaling within the United Kingdom. Chief among these is the shortage of patient capital – long-term investment willing to support the inherently high-risk transition from laboratory research to commercial-scale manufacturing.

“Compounding this is a pronounced deficit in skilled personnel, particularly scale-up scientists, process engineers, and industrial biotech operators – all of whom are vital to effectively bridging the gap between innovation and implementation. The absence of such critical expertise, alongside underdeveloped infrastructure, is making it ever more difficult to scale competitively within the UK.

“Other nations are advancing more rapidly, offering more robust support systems, better access to specialised talent, and streamlined scale-up environments. Without targeted intervention, the UK risks falling behind in a globally strategic and economically significant sector.”

The research calls for five immediate actions to reverse this trend:

• Audit and enhance access to existing UK scale-up infrastructure – this will address significant gaps in the UK’s scale-up landscape, bridging progress from laboratory to industrial-scale production.
• Introduce targeted patient capital and scale-up tax credits – less than 10 per cent of the UK Future Fund portfolio went to manufacturing businesses, while over 50 per cent went to less capital-intensive sectors like IT and finance.
• Streamline regulation to reduce time-to-market – Multiple case studies demonstrated that regulatory barriers significantly impact commercialisation timelines for bio-based materials in the UK compared to some EU countries.
• Strengthen cross-sector collaboration – The report documents university spin-outs that maintained R&D in the UK while establishing manufacturing abroad, highlighting the need for better academic-industrial partnerships.
• Address skills gaps – Bio-based manufacturing start-ups identified a critical need for ‘Scale-Up Scientists’ with combined scientific and engineering expertise to support the transition from laboratory to commercial production.

The study, funded through BB-REG-NET, forms part of a broader research initiative to evidence the economic potential of bio-based chemicals and materials to the UK economy and support decision-making across key policy areas.

ENDS

Notes to Editors

About the report: The research analysed publicly funded UK bio-based companies, focusing on their growth patterns, international expansion, and economic impact. The study was conducted between January and March 2025, examining a refined list of approximately 430 in-scope companies from an initial pool of 2,800 identified via nine open and proprietary data sources.
The report will be available on the bb-reg-net.org.uk website on Monday 28^th April 2025.

Images available on request

About the bio-based sector: The bio-based chemicals and materials sector involves producing chemicals, polymers, and materials derived from biological feedstocks rather than fossil resources, contributing to a more sustainable and circular economy. The UK bioeconomy contributes approximately £220 billion in gross value added (GVA) to the UK economy and supports over 5 million jobs.

About BB-REG-NET: The Bio-based and Biodegradable materials REGulatory NETwork (BB-REG-NET) is the UK’s first regulatory science network dedicated to bio-based and biodegradable materials. The initiative brings together stakeholders from across industry, academia, and government to accelerate the adoption of sustainable chemicals and materials in the UK market.

For further information visit: bb-reg-net.org.uk or contact jen.vanderhoven@bbia.org.uk