LONDON ¿ The government has vowed to maintain the UK¿s leading position in European biotechnology, which is under threat from strong growth in Germany. It will set out a plan for action early next year to create ¿an environment which means investors see the UK as a natural place for biotechnology, second only to the U.S.¿

The plan will be based on a survey of the sector published last week, titled ¿Genome Valley,¿ which concludes the UK faces major challenges in maintaining its position because other European governments are taking measures to stoke the sector. Germany, in particular, is aiming to be No. 1 in Europe by 2000.

The BioIndustry Association (BIA) hit back, saying there needs to be a greater sense of urgency. John Sime, chief executive of the BIA, said the report ¿provided a useful overview of the industry,¿ but added members are disappointed that ¿it fails to enable the quantum leap which will ensure that UK bioscience maintains its lead in Europe.¿ The report does not commit the government to any new initiatives in support of the sector.

The BIA is particularly upset that the report makes no mention of one of its chief ambitions, the establishment of a National Biotechnology Center, modeled on the center in North Carolina. ¿We would have liked to have seen some inclusion of this idea in the report and will continue to push this idea, to demonstrate the kind of creative thinking required by government to support this sector,¿ it said.

In fact, the devolution of power to Scotland and Wales earlier this year is undermining the vision of a single integrated strategy for UK biotechnology. The economic development bodies in Wales and Scotland have targeted development of the sector, with Scottish Enterprise last month announcing plans to invest #40 million (US$65 million) of public money over the next four years. This will include construction of a Scottish Biotechnology Institute.

The UK now has 270 specialist biotechnology companies; Germany has 220. However, many of the UK companies are at a later stage of development and have raised more money. While the UK has the advantage of a more developed venture capital market, German institutional investors are more open to biotechnology investment.

With the public markets closed, companies in the UK are now facing a funding crisis, the report noted. To survive they will need #1.5 billion to #2 billion in the next five years. But investor confidence has been undermined by high-profile failures of drugs in clinical trials. ¿Unless we can persuade institutional investors to invest more in biotechnology it is hard to see how such sums could be raised,¿ the report said.

The government believes investment is being further undermined by the row over genetically modified foods and the destruction of GM crop trials, and the direct action against researchers involved in animal experimentation by animal rights activists.

¿The UK needs to continue to attract and hold onto internationally mobile R&D investment,¿ it said. ¿But the ongoing furor . . . will be taken into account by companies considering locations for future investment.¿

To counter this, the government said it will increase informed public debate about the potential risks and benefits of biotechnology, and about ethical and social issues. This will include debating the use of National Health Service clinical records and tissue banks in genomics research.

Other shortcomings of the UK infrastructure include a shortage of contract manufacturing facilities. There is also a shortage of business managers and people with expertise in bioinformatics.

Other areas requiring action include better incentives for entrepreneurs, including tax incentives for founders, investors and top managers. There is also a need to clarify the ownership of intellectual property derived from publicly funded research to improve its commercial exploitation.