Sir David Cooksey: The yacht can wait until the £1.3bn health research spend is shipshape

He may be 65, but before he can retire, the venture capital pioneer has a job to do for Gordon Brown

It would be hard to blame Sir David Cooksey if he were to slip off for a nice long vacation, perhaps to Croatia, where his 53ft yacht Illyria, moored just north of Split, awaits him.

A pioneer of the UK venture capital industry, Sir David founded Advent Venture Partners 25 years ago. It has since invested in more than 150 life science and technology companies worldwide. Yet rather than spending his days island-hopping in the Adriatic, at 65 he has just taken another steaming dollop on to his plate.

The Chancellor of the Exchequer, Gordon Brown, was worried that despite the river of public money flowing into health research, very few drugs were actually making it to the market. So he decided last month to put the entire £1.3bn health research budget into a discrete fund. He then asked Sir David to find how the Government can put that money to better use.

Trying to figure out how pharmaceutical companies, the Government and the National Health Service can work in harmony is an unenviable job. In undertaking such an unwieldy assignment, Sir David says he has been motivated by "a sense of giving back". But as one of the country's most active investors in life science and biotechnology, he's also motivated by some degree of self-interest. "We won't have a pharma or biotech industry to invest in unless we get some of these fundamentals right," he says. "So if the Government is prepared to listen to me, then I'm prepared to do my part."

The UK is home to the strongest medical research community in Europe, yet there is no framework for bringing innovation from university laboratories and research organisations into the business world. The presence of the drugs-rationing group the National Institute of Health and Clinical Excellence adds a layer of bureaucracy absent in Europe or the United States.

Sir David, also a former governor of the UK's largest medical charity, the Wellcome Trust, admits that the Government's relationship with industry is "dysfunctional and disorganised" as it takes a tough stance on drug pricing yet at the same time does its best to convince companies to keep their research and development in the UK. "It's a battle you can never win," he says. "The UK should be the most attractive place in the world to carry out medical research."

Central to making that a reality, says Sir David, will be making available to industry the NHS database of patient records when its massive overhaul and integration is finally completed. While that is still a few years off, the NHS integrated database would in theory allow drugs makers an unprecedented opportunity to track and analyse how patients really use drugs over very long periods.

"A database of 48 million people from cradle to grave is something no one else has," he says. "The potential is enormous." Ensuring patient confidentiality would be paramount, he says, but opening up the country's medical records to the drug companies on a large scale would surely be a particularly hot political potato.

For that, however, he will likely have a strong ally in the prime minister-to-be, who has made ensuring the UK's strength in medical research a priority. "He's quite a difficult man to get to know well," Sir David says of the Chancellor. "He sees the pharmaceutical and medical device industries as one of the few positive industries in the country. He's given me some very good people to work with."

It's not the first time Sir David has dipped into government. He was a director at the Bank of England for 11 years before stepping down last year. While fostering better industry-government relations may seem a high mountain to climb, he is resolute that it is possible.

It's an optimism that perhaps comes from having seen through the evolution of an industry once before. As chairman of the European Venture Capital Association, the private equity industry trade body, he has a unique view of the incredible growth and influence that private equity has come to wield throughout Europe. Last year it accounted for nearly one of every three European takeovers.

When he founded Advent Venture Partners in 1981, the private equity industry was, well, not even an industry. The idea of giving a great deal of money to a couple of guys to spend as they wished in the hope that they would return it many times over several years later had yet to catch on.

His first fund was just £10m. Next to such megafunds of today as Permira, which is closing in on what would be Europe's first £10bn fund, Advent's beginnings 25 years ago look ridiculously small. Yet for all its growth, private equity still has its problems - particularly its image, which it has never been particularly good at promoting. But as money pours in - €63bn (£44bn) was raised by European funds in 2005 - the targets are becoming much larger and often further from home.

"The UK market has been pretty well raked over," Sir David says. "There are far richer pickings in Europe." He believes this will be the first year that UK private equity groups, which account for roughly half of all funds managed in Europe, will for the first time invest more money there than at home. The invasion of secretive investors causes great discomfort for continental politicians, so it is crucial the industry becomes more transparent in the way it operates.

Another worry is the widening gap between the big buyout firms, which aim for well-established companies they can buy, shape up and then sell on, and venture capital groups, which pour much smaller amounts of money into what is often little more than an idea in an attempt to get in early on the next big thing.

Lately, the buyout firms are not only grabbing the headlines, they are also grabbing most of the money coming into the industry. As a venture capitalist, that is worrying for Sir David. It is also troubling for the Government, because Labour has adopted as one of its key policy planks the Lisbon Agenda, the overarching EU policy that aims to make the union the most competitive, knowledge-based economy by 2010.

Achieving that goal won't be easy. As Sir David says: "Translating new technology into new products isn't something the British are particularly good at, and it's something we need to change."

Changing the "natural British conservatism" that contradicts the very nature of the business he has chosen is daunting. But he has been fighting that fight for quite a while now, which is perhaps why he can approach it with the same cool head he brings to the mountainous problems just handed to him by Mr Brown. Illyria can wait.

BIOGRAPHY

BORN

14 May 1940

EDUCATION

Materials science degree, Oxford

CAREER

1966-70: industrial engineer, De La Rue

1970: manufacturing director, Formica

1971: led a management buyout of a Formica subsidiary and managed it until its sale in 1980

1981: founded Advent Venture Partners

1983-84: chairman of the British Venture Capital Association

1986-95: chairman of the Audit Commission

1993: knighted

1994-2005: director of the Bank of England

2003: chair of UK Biotechnology Innovation and Growth Team

2005-06: chair of the European Private Equity and Venture Capital Association

2006: appointed to head the review into healthcare research spending in the UK