Yahoo Finance Innovation key for UK SMEs to recover from COVID shock
The cost of innovation could be preventing small businesses from recovering from COVID-19.
The vast majority – an overwhelming 86% – of small-to-medium enterprises (SMEs) in health-related sectors in the UK told research and development and intellectual property specialists GovGrant that innovation is important for their recovery from the coronavirus pandemic.
But almost half (47%) of those in healthcare, medtech and pharmaceuticals said cost is a huge barrier to pursuing innovative activity.
This is “particularly concerning” in light of the role played by German SME BioNTech (BNTX) in the development of a potential COVID-19 vaccine, GovGrant said.
BioNTech worked alongside pharmaceutical heavyweights Pfizer (PFE) to develop one of the first working COVID-19 vaccines, which has been proven 95% effective against the coronavirus.
READ MORE: Coronavirus – Two in five UK SMEs anticipate losses this year
Pending authorisation, it will be rolled out to the most vulnerable as of 1 December, health secretary Matt Hancock recently announced.
GovGrant's research shows 76% of healthcare, 78% of medtech and 82% of pharmaceutical SMEs are aware of the R&D tax credit and Patent Box schemes, which can alleviate the cost of innovation for SMEs.
The R&D tax credit means companies can deduct an extra 130% of qualifying costs from their annual profit – on top of the standard 100%.
Meanwhile, the Patent Box scheme allows companies to pay the lowest rate of corporation tax, which is just 10%
However, with so many still concerned about the cost, “there is clearly a disconnect between the support on offer and if it is enough,” GovGrant said.
READ MORE: Coronavirus – UK SMEs may lose £2.2bn as lockdowns send customers into administration
A further half (46%) of SMEs in health sectors said the biggest barrier was lack of opportunity to innovate.
With the launch of the R&D roadmap, the government publicly recognised the importance of innovation in recovery from COVID-19 and that the pandemic has presented an opportunity for research and development.
The survey also found that over three quarters (76%) of healthcare SMEs agreed COVID-19 presented an opportunity for innovation – as did 63% and 71% in medtech and pharmaceuticals, respectively.
“The UK government has publicly recognised the role of innovation in the R&D roadmap, but it needs to do more to enable and incentivise UK businesses to innovate and build back better,” said GovGrant CEO Luke Hamm.
“For the health sector in particular, innovation is at the forefront of the response to COVID-19 that will help drive recovery from the pandemic and we can’t afford for cost to be such a big part of the reason for why it’s not happening.”
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