The Prize That Slipped Away: Rethinking The Worth of Health Innovation

The Prize That Slipped Away: Rethinking The Worth of Health Innovation

Insides from the Health Innovation Network

The UK has one of the clearest cases in the world for health innovation. Frontier Economics has quantified the ambition: up to £278 billion in gains through productivity, NHS efficiency, and foreign direct investment. Ministers back the vision. The business case is airtight. And yet, despite all the evidence and support, little has materialised.

The real tragedy isn’t just economic. It’s human. Innovations like digital cardiovascular tools, early cancer diagnostics, and AI-driven imaging are not luxuries they are lifelines. Every year of delay means thousands of patients go without treatments that could return them to work, prolong their lives, or ease the burden on families and caregivers. The cost of inaction is not only GDP lost but lives diminished.

Why Haven’t We Delivered?
- Fragmented decision-making. Innovation adoption is scattered across NHS trusts, regulators, and local health systems. Everyone has a say, but no one has final accountability.
- Short-termism. Treasury accounting rewards savings on a one-year horizon. Spending £1 today for £5 in three years is politically unattractive.
- Procurement culture. NHS procurement is designed to minimise risk, not to maximise value. SMEs with novel solutions face prohibitive hurdles.
- Political distraction. Ministers know the rhetoric but are consumed by waiting lists, strikes, and winter crises. Innovation, lacking a “photo-op,” slips down the agenda.
- Investor conservatism. And this, perhaps, is the most corrosive.
 
Sidebar: Why Capital Flows West
UK and European investors are chronically cautious. Pension funds in the UK and Ireland allocate just 0.007 % of assets to venture capital versus 15 % in North America. Across Europe, the figure is only 0.024 %. In the U.S., pension funds supply around 70 % of VC capital, compared to 10 % in the UK.

The result? Growth-stage health tech ventures born in Britain but starved of domestic funding head to Nasdaq or U.S. private equity to scale. For patients, this means innovations are often commercialised and deployed in American hospitals before they are available in the NHS. The UK funds the science; U.S. patients reap the benefits.
 
The Consequences
We’ve already seen what happens when investment falters. AstraZeneca cancelled a £450 million UK vaccine facility after delayed government backing, pivoting to U.S. and Chinese sites instead. There is even talk of a U.S. stock-market listing a devastating blow to London’s financial reputation. Meanwhile, British biotech IPOs on the LSE have all but dried up, even as Nasdaq welcomes UK-born firms.

This isn’t just about losing companies. It’s about losing time for patients. When the capital and confidence flow overseas, the deployment of life-saving technologies stalls at home. Patients wait longer. NHS staff operate with outdated tools. And the UK forfeits both the health and the economic dividend.

What Must Change
- Shift Treasury rules. Count multi-year innovation savings as current-year value. Investment should be judged by long-term ROI, not the next fiscal cycle.
- Redesign procurement. Focus on outcomes and value, not just lowest cost. SMEs should have a path to compete.
- Build domestic risk capital. Mobilise UK pension funds and institutional investors to allocate meaningfully to VC, with government de-risking mechanisms if necessary.
- Anchor flagship firms. Support AstraZeneca and others to keep their R&D and listings in Britain.
- Brand health innovation as an investment story. Market the £32 billion FDI opportunity to global investors, but with proof of domestic adoption to back it up.

The Bottom Line
The UK has the data, the endorsements, and the talent. What it lacks is delivery. Until we confront the culture of risk aversion in government, in procurement, and in capital markets the £278 billion prize will remain just that: a promise.

And patients, the very people this innovation is meant to serve, will continue to pay the highest price.
 
 

References 
Health Innovation Network. (2025). The Prize That Slipped Away: Rethinking the Worth of Health Innovation. In Defining the size of the health innovation prize (pp. 4–8). Frontier Economics. The Health Innovation Network. https://cdn.thehealthinnovationnetwork.co.uk/wp-content/uploads/2025/06/Defining-the-Size-of-the-Health-Innovation-Prize-report.pdf