The Life Sciences growth sector is defined by the Standard Industrialisation Classification (SIC) 2007 codes:

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1 Growth Sector Briefg Life Sciences Office of the Chief Economic Adviser, Scottish Government May Growth Sector Defition Life Sciences was identified the Government Economic Strategy 1 as one of the growth sectors which Scotland can build on existg comparative advantage and crease productivity and growth. The term Life Sciences reflects a wide range of activity cludg the discovery, research, development and manufacture of therapeutics; diagnostics; medical devices and platform technologies as well as the specialist suppliers of products and services necessary for these organisations to function. As such it is not possible to specifically defe the dustry terms of SIC codes. However, a set of SIC codes (outled below) can be used to track changes part of the Scottish Life Sciences growth sector over time. The Life Sciences growth sector is defed by the Standard Industrialisation Classification (SIC) 2007 codes: SIC 21: Manufacture of basic pharmaceutical products and pharmaceutical preparations SIC 26.6: Manufacture of irradiation, electromedical and electrotherapeutic equipment SIC 32.5: Manufacture of medical and dental struments and supplies SIC 72.11: Research and experimental development on biotechnology SIC 72.19: Other research and experimental development on natural sciences and engeerg An alternative source for measurg the economic activity of the Life Sciences sector can be derived from a Scottish Enterprise mataed database of busesses volved Life Sciences activities Scotland cludg animal health, human health, agricultural and mare biotechnology. This database encompasses the wider range of life science busesses and cludes professional service busesses that support the Life Sciences sector e.g. legal services. This broad approach to defg Life Sciences is therefore based on the busesses identified directly to be part of the life sciences sector or, some cases, busesses which provide services to the sector through its supply cha. 2 Scottish Enterprise supplies the Scottish Government with its Life Sciences database each year so that estimates of turnover and GVA can be sourced by matchg the Life Sciences database with fancial and data from the Annual Busess Survey. This briefg will provide data from both of these sources, where appropriate. Key Statistics Recent trends GDP - SIC defed sector (Q4 2014) - updated May, next update July Increase output 4.6% latest quarter, crease of 14.2% year on year The latest GDP data 3 shows that output the Life Sciences growth sector, as defed by the SIC codes above, creased by 4.6 per cent the most recent quarter, and year on year terms output creased by 14.2 per cent. The quarterly change output for the Life Sciences growth sector is the same direction as that measured across the economy as a whole (shown by the total GVA le the accompanyg graph), where output creased by 0.6 per cent the last quarter and 2.8 per cent year on year. Sce 2007 the sector has seen an crease output, creasg by 23.7 per cent between the first quarter of 2007 and the fourth quarter of Although the sector creased by 65.3 per cent between the second quarter of 2007 and the third quarter of 2010, this was followed by a 23.4 per cent decrease between the third quarter of 2010 and the third quarter of Sce then the sector has been recoverg aga, but it has not yet reached the peak seen Some of the companies the wider supply cha may however also provide services to other sectors. 3 The dex represents the volume of GVA created compared to the 'base' year (currently 2012). Figures are deflated to remove the effect of price changes over time to produce an estimate of real terms (or constant price) growth. The figures are seasonally adjusted to remove the effects of regular, calendar based cycles certa dustries.

2 =100 Scottish Quarterly GDP dex, 2014 Q Life Sciences Total Gross Value Added Decrease from 2011 to 2012 Nearly 60% of SIC sector biotechnology research Employment (2012) 4 SIC defed sector updated November 2013, next update October Employment the Life Sciences growth sector stood at 16, , representg a decrease from 2011 (down 1,300 jobs). In Scotland, the sector accounts for 0.7 per cent of, whilst across Great Brita as a whole, the Scottish sector accounts for 8.3 per cent of the Life Sciences growth sector. With the Life Sciences growth sector, 58.8 per cent (9,400) of jobs are Research and experimental development on biotechnology. Manufacture of basic pharmaceutical products and preparations represent another 20.6 per cent (3,300) of jobs this growth sector. Employment Life Sciences (SIC-based) 2012 Employment % 20.6% 15.6% 3.8% 16,000 SIC 72.19: Other research and experimental development on natural sciences and engeerg SIC 21: Manufacture of basic pharmaceutical products and pharmaceutical preparations SIC 32.5: Manufacture of medical and dental struments and supplies SIC 72.11: Research and experimental development on biotechnology SIC 26.6: Manufacture of irradiation, electromedical and electrotherapeutic equipment 0 2,000 4,000 6,000 8,000 10,000 12,000 14,000 16,000 18,000 Employment ,400 3,300 2, Estimates for 2013 have been suppressed due to concerns over their quality. Note that these quality concerns apply to the data for 2013 only, past trends are not affected.

3 Wider sector employs 33,000 Employment (2012 based) - Life Sciences Cluster updated February, next update March 2016 The wider Life Sciences sector employs 33,000 people busesses and other organisations 5. Employment across Scotland (2012) 6 update October - SIC defed sector updated October 2014, next Nearly a third of Edburgh Midlothian and West Lothian Employment the Life Sciences growth sector is spread across Scotland, but is most concentrated Edburgh City, Midlothian and West Lothian, which together have 28.1 per cent (4,500 jobs) of this growth sector. Glasgow City and South Lanarkshire combed have a further 13.2 per cent (2,100 jobs) of, and Highland 8.8 per cent (1,400 jobs). Sector most overrepresented Midlothian To better understand the importance of the Life Sciences growth sector to local economies, it is useful to consider location quotients 7. The top three local authority areas terms of location quotients are: Midlothian 7.2, North Ayrshire 3.1 and West Lothian 2.4. In these local authority areas the Life Sciences sector is over-represented, where Scotland as a whole 0.7 per cent of is this sector, Midlothian it is 4.7 per cent, North Ayrshire 2 per cent, and West Lothian 1.6 per cent. 5 Scottish Enterprise takes results from Life sciences company matchg exercise and adds separate data for Higher Education Institutions (data provided by Higher Education Statistics Agency) and other research stitutions (data provided by SE ternal research) order to produce overall organisation counts and. 6 Estimates for 2013 have been suppressed due to concerns over their quality. Note that these quality concerns apply to the data for 2013 only, past trends are not affected. 7 The location quotients used here compare the percentage of jobs a local authority that are Life Sciences agast the percentage of all jobs Scotland that are Life Sciences. Therefore, a local authority with a location quotient of 1.0 the percentage of jobs Life Sciences is the same there as Scotland as a whole. In a local authority with a location quotient greater than 1.0 the percentage of jobs Life Sciences is higher there than Scotland as a whole, and a local authority with a location quotient lower than 1.0 the percentage of jobs Life Sciences is lower there than Scotland as a whole.

4 Exports - Global Connections Survey (2013) 8 SIC defed sector updated January, next update January % of Scotland s total exports 36.7% exports to RUK Total exports from the Life Sciences growth sector stood at 1.6 billion 2013, accountg for 2.1 per cent of Scotland s total exports. Exports from the sector were 4.7 per cent up real terms 9 from their 2012 level. Exports to the Rest of the UK (RUK) stood at 570 million 2013 and accounted for 36.7 per cent of total Life Sciences exports. Exports to the Rest of the World (RoW) stood at 985 million and accounted for 63.3 per cent of total Life Sciences exports. Turnover/Gross Value Added (2012) SIC defed sector updated August 2014, next update September Turnover SIC sector 2 billion, GVA 1.2 billion Total turnover the Life Sciences growth sector was 2 billion 2012, down 1.4 per cent on per cent of this turnover was produced by Other research and experimental development on natural sciences and engeerg, and another 32.5 per cent by Manufacture of basic pharmaceutical products and pharmaceutical preparations. Gross Value Added this growth sector totalled 1.2 billion, an crease of 16.4 per cent on Wider sector turnover 3.3 billion, GVA 1.6 billion Turnover/Gross Value Added (2012) Life Sciences Cluster updated February, next update March 2016 Total turnover the wider Life Sciences cluster 2012 totalled 3.3 billion, down 1.9 per cent on the figure for Gross Value Added this wider cluster was estimated at 1.6 billion, up 3.3 per cent on Enterprises (2014) 10 SIC defed sector updated January, next update November Life Sciences share of Enterprises and Employment by sizeband % 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% Enterprises Employment Large (250+ employees) 5.1% 60.0% Medium ( employees) 7.1% 20.0% Small (0 49 employees) 87.8% 20.0% 8 The figures for growth sectors are derived by aggregatg estimates based at a low Standard Industrial Classification (SIC) level. The Global Connections Survey is not designed to collect data at this level of accuracy, therefore these results should be treated as dicative prices based on Treasury GDP deflators (December 2014). 10 Employment statistics referred to here are not directly comparable with Busess Register and Employment Survey (BRES) data.

5 Nearly 88% enterprises small, but 60% large enterprises In March 2014, there were 490 registered enterprises operatg the Life Sciences growth sector, representg 0.3 per cent of all registered busesses operatg Scotland. In 2014, 87.8 per cent of registered Life Sciences growth sector enterprises were small (0-49 employees), although these accounted for just 20.0 per cent of the sector. In contrast, large enterprises (250+ employees) which accounted for 5.1 per cent of registered enterprises, accounted for 60.0 per cent of the sector. The majority of enterprises the sector are UK owned with their registered office address Scotland (85.7 per cent), but they accounted for 37.3 per cent of Only 9.2 per cent of busesses were abroad owned, but they accounted for 51.8 per cent of Wider sector 613 organisations Organisations (2012 based) - Life Sciences Cluster updated February, next update March 2016 The wider Life Sciences sector comprises of 613 organisations 11. Median weekly earng well above average at 671 Earngs (2014) SIC defed sector updated January, next update November Median weekly full time earngs across the Scottish Life Sciences growth sector stood at up 4.9 per cent on 2013 (nomal terms). Earngs the Life Sciences growth sector compare favourably to the Scottish average, which stood at Research and Development (2013) updated January, next update December Sector BERD expenditure is 34% of Scotland total Busess Enterprise Research and Development (BERD) spendg the Life Sciences growth sector was 271 million 2013, an crease of 6.6 per cent sce Spendg on Research and Development this sector represents 34.0 per cent of the total BERD spend Scotland. Sources of Information SIC derived Life Sciences sector: GDP Scottish Government Quarterly GDP Index. Employment Busess Register and Employment Survey for food and drk manufacturg and fishg; Agriculture Census for agriculture. Exports Global Connections Survey. Turnover & GVA - Scottish Annual Busess Statistics for food and drk manufacturg and fishg; Agriculture Census for agriculture sub-sector. Enterprises Inter Departmental Busess Register. Earngs Annual Survey of Hours & Earngs. Research and Development Busess Enterprise Research and Development survey. Wider Life Sciences cluster: Scottish Enterprise database matched to Annual Busess Survey. Most data are available from the Growth Sector Statistics Database, at: And the Life Sciences Sourcebook, at For more formation about the methodology behd the Growth Sector Statistics Database and Life Sciences Sourcebook, please see the Methodology Note, at 11 Scottish Enterprise takes results from Life sciences company matchg exercise and adds separate data for Higher Education Institutions (data provided by Higher Education Statistics Agency) and other research stitutions (data provided by SE ternal research) order to produce overall organisation counts and.