Vectura marks a sorry outcome for UK biotech

With Vectura’s sale to the private equity company Carlyle Group for £958m ($1.4bn), UK investors have another reason to be down on biotech. Vectura, like Cenes and Vernalis before it, is the result of numerous UK biotech mergers that failed to amount to much. During its 24-year existence Vectura subsumed Innovata, Activaero and Skyepharma for a combined £680m, but shortly after building this respiratory disease focus it gave up on drug development to become a service company. Its sale price amounts to a 142% premium to its 2004 IPO. Cenes and Vernalis were sold for a pittance to Paion and Ligand respectively, and UK biotech’s shining star is probably GW Pharmaceuticals, which had to seek fame and fortune in the US. The UK still produces cutting-edge science, but the likes of Autolus, Achilles and Nightstar all chose Nasdaq to float. The UK sector is left with a rump of micro caps, and even the once mighty Oxford Biomedica is now largely a services business. Though Vectura has started generating contract revenue its top line is driven by Flutiform, Enerzair Breezhaler and an Advair generic, and a private equity group would typically now cut costs and take on debt.