Trade in Services Report

Science & Research

4.1 Sectoral Composition & Overview

• Gross Value Added (GVA) 2022: £1.1bn which constitutes 0.6% of Scotland’s Economy. By comparison, the GVA of UK S&R services was £20.4bn in 2022, which is 0.9% of the UK Economy
• Employment 2024: 15,000 workers which is 0.6% of Scotland’s workforce. In 2022, employment was 18,000 workers which implies a productivity of £58,998.47 per worker in 2022.
• International Trade (Destination outside the UK) 2022: £562m representing 52.9% of the Science & Research sector’s total Gross Value Added in Scotland.
• Domestic Trade (Destination in Rest of the UK) 2022: £329m representing 31.0% of the Science & Research sector’s total Gross Value Added in Scotland.
• Total Exports (Destination not in Scotland) 2022: £895m representing 84.3% of the Science & Research sector’s total Gross Value Added in Scotland.

Source: Scottish National Accounts, UK National Accounts, BRES

The science & research sector includes science led businesses engaged in R&D, life sciences, or intellectual property that deliver services or expertise overseas. For the purpose of data analysis, this sector encompasses firm classified under SIC 72 (scientific research and development).

Scotland’s Science & Research Sector is relatively similar to its UK counterpart, despite evidence of distinction.

The Scottish sector exports just under one third (31.0%) of its GVA to the Rest of the UK. Meanwhile, 52.9% is exported internationally.

Therefore, whilst a considerable quantity of GVA is destined for the rest of the UK, international exports are far more valuable, indicating the sector is distinct from, rather than highly integrated with, its UK counterpart.

The Scottish sector also contributes a slightly smaller proportion to Scotland’s economy, 0.6% of GVA, compared to the UK sector’s 0.9%.

Source: Scottish National Accounts

Growth in the value of international science & research exports has typically outpaced growth in the value of the sector, averaging annual growth rates of 12.2% and 6.2%, respectively, prior to the pandemic.

Exports to the rest of the UK grew at an average annual rate of 9.5% before the pandemic. Although greater than the Scottish sector overall, this is slightly less than the growth in international exports which further underpins the distinction of the Scottish sector from its UK counterpart.

The value of the sector and its exports were significantly impacted during the pandemic. However, the sector overall appears to have been impacted more considerably in the years immediately preceding the pandemic, suggesting Brexit was a more notable event. By 2021, the sector has recovered to pre-pandemic levels.

Source: Scottish National Accounts

Source: OECD, CITP Research

The UK’s S&R exports are extremely concentrated within the top 10 market destinations; with the European Union and United States dominating the top 10, similar to what has been observed in other sectors.

Additionally, 17% of global S&R exports originate in the UK – the highest share of any individual economy in the world – which matches with the Scottish sector’s considerable export intensity.

Whilst data on trade restrictiveness for S&R specifically is not available, over the past decade the UK trade environment has generally operated in an increasingly liberalised trade environment, with the UK being a less restrictive market than the EU and the average OECD economy.

This shift reflects greater global openness in the UK’s post-Brexit reality. Whilst the EU enables free trade within its borders, it is relatively restrictive to external economies – especially in services.

Being outside the EU, the UK’s services must deal with increased barriers with the EU despite more access to non-EU global markets. The net result is improved access to individually less valuable markets.

Despite this liberalisation, certain barriers still exist in the UK, primarily related to related to licensing, qualifications, and operational transparency. With the UK’s largest trading partners – the US and EU – temporary movement of service providers and entry of foreign firms are the most prominent barrier.

4.2 Current and future global regulatory and non-tariff issues in the Sciences Sector

4.2.1 Global regulatory and non-tariff landscape

Scientific and life‑science industries operate under some of the most complex regulatory ecosystems globally due to their dependence on clinical safety, public‑health safeguards, IP‑based innovation, and data‑intensive research methods.

International‑organisation research finds that trade in high‑technology, R&D, and life‑science sectors is shaped primarily by non‑tariff measures (NTMs) such as: regulatory approvals. licensing & testing requirements, standards & conformity assessment, clinical data rules. IP protection and enforcement, bio‑security controls. restrictions on biological samples, and data‑governance rules around genomic and health information

UNCTAD stresses that in knowledge‑intensive sectors, NTMs -especially technical regulations (TBTs) and sanitary/phytosanitary (SPS) measures- are the main determinants of market access. This is particularly acute in pharmaceuticals, medical devices, and biotechnology, where safety‑driven regulation acts as both a legitimate public‑policy tool and a practical trade barrier.^[36]

UN/ESCAP adds that a new generation of NTMs tied to data policy increasingly affect clinical trials, genomic research, AI‑for‑drug‑discovery, and cross‑border scientific collaboration. These include data localisation, approval requirements for transferring sensitive biological/health data, and compliance regimes for digital research infrastructure.^[37]

In short, across international evidence, the global science‑led R&D and life‑sciences

sectors face the most intense and structurally embedded NTBs of any industry group. These barriers arise not from tariffs but from safety, ethical, data, IP, and regulatory‑alignment requirements that differ widely across jurisdictions. International‑organisation research suggests that the main policy challenge for life‑science industries is navigating divergent national rulebooks, while the main opportunity is international cooperation on standards, mutual recognition, and interoperable data‑governance regimes.

4.3 Science and Research Roundtable Summary

This roundtable gathered senior leaders from firms and trade associations based in Scotland providing science and research services, taking in disciplines including life sciences, pharmaceutical services, life sciences, optics, cell and gene therapy, animal health, space and innovation.

Participants agreed with official data that show the US and EU make up overwhelmingly the bulk of Scottish exports of science and research services but noted that future potential growth will likely come from demand in India, China and Saudi Arabia.

That being the case, most participants voiced trade barriers concerns regarding access to the US and EU markets. For example, the absence of an EU–UK mutual recognition agreement for batch testing/release, complicated EU release requirements, complex Qualified Person (QP) arrangements and different rules on laboratory practices between the US and the OECD add costs to Scottish exporters.

While not strictly speaking trade related, participants also noted that the domestic operating environment strongly influences export capacity: the group cited limited NHS adoption of innovative devices/digital health, diminished early-stage support for quality/regulatory capability and infrastructure/skills gaps slow scale‑up and weaken Scotland’s position as an export platform as the current domestic procurement policies don’t encourage domestic champions that can build on a strong domestic track record overseas.

4.4 SWOT analysis: Science and Research Service

4.4.1 Strengths

Scale and Quality Signal

• Scotland represents approximately 31 percent of the UK’s CRO and CDMO capability, providing critical mass and clustering effects.
• For US sponsors, who account for roughly half to two-thirds of sales for several firms, Scotland functions as a reliability signal: strong data integrity, auditability and quality systems reduce perceived regulatory risk.
• Advanced therapy and sterile biologics capabilities operating under MHRA oversight provide a distinctive clinical-phase attraction point.

Standards and Governance Influence

• The UK’s institutional architecture, including engagement through the Regulatory Horizons Council and the British Standards Institution, positions Scotland close to emerging rule-making frontiers.
• Influence over standards in areas such as in silico methods and AI allows Scottish providers to anticipate validation requirements and convert regulatory insight into export-ready processes and data packages.

Research and Innovation Base

• Strong university research ecosystem with internationally credible pre-clinical human tissue networks and specialist virology and efficacy/safety expertise.
• Established capabilities in animal health, agritech and aquaculture, particularly in pre-farm-gate innovation aligned with global sustainability demand.
• Coherent value proposition centred on low risk, high compliance and scientific depth.

4.4.2 Weaknesses

Absence of EU–UK Mutual Recognition

• No mutual recognition agreement for pharmaceutical batch testing and release forces duplicative EU-based processes and Qualified Person workarounds.
• Additional cost and delay are compounded by perception risk, as sponsors question EU market access pathways. This feedback was universally echoed at roundtables.

GLP Divergence with the United States

• Divergence in Good Laboratory Practice implementation increases relative compliance burden for Scottish labs.
• Sponsors sensitive to cost and speed may retain pre-clinical work in the US, even where Scottish capability is technically strong.

Domestic Adoption Constraints

• Limited NHS uptake of innovative devices and digital health solutions weakens local reference-building. While this is strictly speaking more domestic procurement than trade policy, a demonstratable domestic track record can serve as a foundation for overseas success.
• Reduced early stage regulatory and quality support for spin outs lengthens time to export readiness. This sector, due to its needs has structurally long timelines, and quality support that can reduce timelines is a competitive advantage for a Scottish firm.

Capacity and Skills Gaps

• Documented shortages in engineers and regulatory professionals.
• Lab and manufacturing capacity constraints in Scotland have been known to limit scaling response by firms.

4.4.3 Opportunities

Clinical Trials Reform

• Delivery of the 150-day clinical trial approval target under MHRA reform could reposition the UK as a fast, predictable R&D base.
• Mutual recognition pilots with regulators such as Switzerland, Australia, Canada and Singapore could lower entry barriers for multi country programmes.
• Streamlined pathways for rare diseases and decentralised manufacturing create competitive differentiation.

Standards Led Equivalence

• Greater use of internationally recognised standards can provide functional regulatory equivalence without awaiting legislative change.

Geographic Diversification

• India represents a medium-term opportunity following the SLA–ABLE memorandum, especially if procurement and regulatory navigation support is provided.
• China’s discovery and licensing environment is more active than in previous years, creating demand for specialist services.
• Continued expansion potential in animal health, agritech and aquaculture exports.

Strategic Positioning

• Consolidating Scotland’s role as a high compliance, clinical-phase and advanced therapy specialist platform for global sponsors.
• Leveraging standards leadership and regulatory credibility as a core export narrative.

4.4.4 Threats

Persistent EU UK Recognition Gap

• Continued absence of a mutual recognition agreement may eventually lead to EU sponsors to bypass UK testing and release entirely.
• Maintaining parallel QP arrangements is commercially fragile and unlikely to provide sustainable advantage.
• While not in the data, businesses in the roundtable noted growing risk of gradual hollowing out of EU facing teams.

US Reshoring Pressures

• Growing expectation that commercial scale manufacturing occur in the US constrains export of higher value production stages. This is another example where manufacturing and services are not as detached as they may seem in economic data.
• Costly technology transfer processes can discourage sponsors from initiating early stage trials in Scotland.

Regulatory Divergence in Devices and Digital Health

• Misalignment between UKCA and CE marking systems may encourage FDA-first strategies that deprioritise the UK and EU.
• Reduced local approvals weaken downstream trial and services demand.

Spin-Out and Infrastructure Risks

• IP and equity negotiation challenges in university spinouts risk relocation of promising firms at an earlier stage serving as a ceiling on growth potential.
• Infrastructure bottlenecks and limited later stage finance may drive high-growth firms abroad. This has been well documented as a risk, and was also acknowledged in the business roundtables.
• Sustained under investment in manufacturing and lab capacity would compound long-term erosion. Roundtables echoed the importance of a manufacturing foundation that keeps the services “sticky” to the economy.

4.5 Roundtable Feedback and Policy Considerations

4.5.1 Trade Policy and Regulatory Alignment: Reserved to the UK Government, with a Strong Scottish Advocacy Role

• Make a UK–EU mutual recognition agreement for pharmaceuticals a top priority in negotiations with Brussels, including mutual recognition of Good Manufacturing Practice batch testing and release, to eliminate duplicate testing and reduce time-to-market.
• Work with international partners, particularly the United States, to address divergence in pre-clinical Good Laboratory Practice frameworks, recognising that misalignment creates friction for Scottish-based providers operating across OECD jurisdictions.
• Undertake reforms to MHRA clinical trials processes, focusing on delivering the 150-day approvals target, progressing mutual recognition pilots with third countries such as Switzerland, Australia, Canada and Singapore, and streamlining pathways for rare diseases and decentralised manufacturing. The objective should be to position the UK as a fast, predictable base for multi-country programmes.
• Support greater regulatory alignment in medical devices and digital health by mitigating duplication between UK and EU certification systems and ensuring that UK acceptance pathways remain clear and time-efficient for exporters.
• Empower accreditation bodies proactively, both in the UK and in future growth markets, to support early regulatory harmonisation. This should be treated as long-term infrastructure investment that enables future export growth rather than reactive adjustment after divergence occurs.
• Promote the use of international standards as a complement to formal regulation by working with the British Standards Institution and international standard-setting bodies to develop frameworks that provide credible equivalence and facilitate cross-border recognition.

4.5.2 Trade Support and Market Development

Actions for the Scottish Government and Scottish Enterprise, in Partnership with DBT and FCDO

• Position Contract Research Organisations and Contract Development and Manufacturing Organisations as a national export proposition, building a unified narrative around Scotland’s regulatory excellence, advanced therapy testing capabilities and sterile biologics expertise. Promotion should focus primarily on the United States and the European Union as these are the key markets.
• Shift towards market-making trade missions in priority markets, particularly the US and EU, with at least six months’ preparation, upfront financial support for participating firms and structured 12–18 month follow-up to convert meetings into signed contracts. This recommendation was endorsed unanimously at the business roundtables.
• Develop route to market playbooks offering practical guidance on FDA first strategies, EU notified body navigation, Qualified Person release workarounds and GLP and GMP expectations. These should include template agreements and curated lists of trusted partners to reduce entry friction.
• Rebuild early-stage regulatory and quality capability support for start-ups, scale-ups and university spinouts through targeted grants, vouchers and mentoring. Early regulatory preparedness reduces later revalidation costs and accelerates export readiness.
• Prioritise India as a medium-term growth market by operationalising the 2025 Memorandum of Understanding between ABLE and the Scottish Lifesciences Association. Trade support should focus on procurement processes, regulatory navigation and pipeline development.
• Enhance sector intelligence and awareness regarding growth potential in China and the Middle East for research and scientific services, ensuring firms understand regulatory pathways and buyer dynamics before market entry.

Anchor domestic adoption of Scottish-produced science and research services by establishing selective NHS early-adopter pathways, particularly in high-impact cell and gene therapies and digital health. Early domestic validation strengthens export credibility and provides reference customers.

4.5.3 Notes on terminology (as used by participants)

• CRO – Contract Research Organisation
• CDMO – Contract Development & Manufacturing Organisation
• GLP – Good Laboratory Practice (pre‑clinical)
• GMP – Good Manufacturing Practice
• GCP – Good Clinical Practice
• QP – Qualified Person (batch release).

4.6 Case Study: Life Sciences Sector and the circumnavigation of different regulatory regimes on different continents

A Scottish/UK based life sciences firm reported that it has progressed lead assets into late-stage clinical trials and manufacturing scale-up continues to access European and US markets but operates within a significantly more complex regulatory and commercial environment than at earlier stages of development. As products move into Phase III trials and pre-commercial manufacturing, the firm faces parallel regulatory engagement with UK, EU, and US authorities, requiring separate and often duplicate inspections, quality documentation, and validation processes for clinical supply and commercial readiness with limited to no opportunities for mutual reliance. For EU market access, the firm must undertake additional conformity assessment, batch testing (for every single batch), and ongoing pharmacovigilance arrangements through EU-based entities, while in the US the scale and cost of FDA engagement, combined with heightened liability and assurance requirements, materially shapes decisions on where manufacturing and quality oversight are located. These fixed regulatory and compliance costs increase sharply with scale, leading the firm to concentrate investment in a small number of facilities and products, often favouring locations that offer regulatory proximity, established supply chains, or access to larger end-markets.

In practice, this has resulted in some elements of late-stage manufacturing, quality management, or commercial batch release being undertaken outside Scotland, even where earlier-stage development was domestically anchored. Although the firm retains high value research and some manufacturing activity in Scotland, the need to de-risk market access and manage regulatory timelines has lengthened time to market, raised capital requirements, and reduced flexibility in scaling production domestically, with implications for the extent to which Scotland captures downstream manufacturing, productivity gains, and spillover benefits as therapies move from development into commercialisation within the wider United Kingdom.