By Kevin Wayer and Travis McCready, JLL
The life sciences industry’s meteoric growth was grounded in 2022. Faced with rising costs, falling valuations, decreased revenue, and dwindling venture capital, many companies learned firsthand the importance of resilience — and how to use this moment to plan for an eventual uptick. After all, science and innovation don’t stop. Life-saving medications, treatments, and diagnostics will continue to be in demand, and an increased focus on health and wellness appears to be here for the long term. In order to capture the next wave of opportunities, life science companies will need to focus on scalability, cost control, talent recruitment and retention, and the ability to attract investments.
All of these factors are affected, in one way or another, by location. While there is no one-size-fits-all location strategy, every life sciences company from offices and labs to manufacturing facilities should keep five essential factors top-of-mind as they evaluate their location options and look ahead to the next era of growth.
1. Industry-academia proximity
Life sciences companies need access to academia, including universities, research institutions, and teaching hospitals. This proximity is the seed from which the country’s largest life science clusters have grown.
That doesn’t mean all life sciences companies have to be based in Boston, the San Francisco Bay area or San Diego to succeed, but focusing on existing and emerging hubs will provide immediate benefits in terms of access to talent pools, networking potential, and opportunities for collaboration. While established ecosystems remain in demand, the pandemic also saw the rise of new centers for scientific advancement, with new clusters emerging in cities like Philadelphia, Chicago, New York City, and Raleigh-Durham. These markets also boast talent, funding, government support and real estate availability — and world-class university systems.
Creating a new life sciences hub takes time. Companies should give preference to those areas that already house institutions that specialize in the same or closely related field of life science. For example, a Boston-based genetics company settled on a location that affords easy access to teaching hospitals, seeing this as a natural path in the company’s growth and innovation.
2. Research readiness and local support
Having a critical mass of resources close by can improve efficiency and productivity companies, make scaling quicker, easier and less costly while supporting supply chain integrity. Research resources like equipment and materials vendors, preclinical contract research companies, validation and risk management consultants and other service providers are especially important as innovations are tested, refined and brought to market.
With a greater move toward onshoring manufacturing, life science companies should consider proximity to robotics, automation technology and small-batch processing leaders as well to provide greater manufacturing options and efficiency.
3. Government incentives and subsidies
A 2018 report by TEConomy and the Biotechnology Innovation Organization noted that a single life science job supports 3.57 jobs in the broader economy. In addition, every $1 In industry output generates an additional $1.27 in economic activity. It’s not surprising, then, that competition is fierce among municipalities trying to attract these companies.
Incentives and subsidies can greatly reduce a company’s costs and provide a long-term fiscal safety net. In fact, life sciences companies, especially those that are pre-revenue, often rely on local and state incentives to stimulate a high level of research investment. Identifying, quantifying and taking advantage of these programs should be a core action item in any location strategy.
4. Civic and community support
Governments and civic groups in some municipalities demonstrate their commitment to the industry by establishing teams with a background in life sciences, who understand and can help meet the unique needs of these companies.
For example, the Greater Boston Chamber of Commerce has a Health Care & Life Sciences Leadership Council that engages with business and government leaders to preserve the region’s role as a prime hub for the industry. Locales that have signaled their eagerness to welcome and support life sciences companies by giving them an ear and a voice in the halls of power deserve special consideration.
5. Innovation hub assets
Life sciences companies can’t just set up shop anywhere. Most require facilities with specialized ventilation systems, higher ceiling heights, and foolproof backup power systems. Municipalities, developers and institutions are providing purpose-built spaces to attract life sciences companies. These innovation hubs also address life sciences companies’ need for collaborative spaces to help fuel creativity and networking and facilitate those all-important breakthrough moments.
The Three Parkway Life Sciences Innovation Hub in Philadelphia, for example, incorporates a tenant lounge and amenity floor with a conference center and gym to draw tenants to the space. The GuideWell Innovation Center in Orlando features a Collaborative Resource Ecosystem with café, exhibition gallery and “living lab” intended to engage the public in market research.
When deciding where to locate, life sciences companies have a lot to consider. They need to find a location that’s close to potential partners in academia, convenient to the resources and workforce they’ll need to establish and grow their operations, and situated in a municipality where the local, county and state government will be welcoming and supportive.
Making the right decision now can not only help life sciences companies better ride out the current economic turbulence, it can position them to more quickly and effectively take advantage of the coming recovery.
Wayer is the Division President of JLL’s Government, Education, Infrastructure and Life Sciences industries. Leading a team of more than 4,300 professionals, he oversees the firm’s Government, Education, Infrastructure and Life Sciences businesses, providing real estate services to life sciences companies and federal, state, county, municipal, education, transit, marine port, defense and not-for-profit entities in the United States. He is a member of JLL’s Executive team that pursues and executes international public sector assignments in addition to serving on JLL’s Americas Work Dynamics Operations Committee. Wayer also started the firm’s Renewable Energy and Infrastructure business and sits on the global Sustainability board.
McCready is the National Practice Leader for JLL’s Americas Life Sciences Real Estate Markets practice, which includes brokerage, capital markets, advisory and analytics, project and development services, and valuation for life sciences occupiers, developers and investors. He has over 25 years of experience leading public, private, and nonprofit ventures with a focus on technology and innovation based economic development. The former President & CEO of the $1.6 billion life sciences funding agency Massachusetts Life Sciences Center, he remains active in the life sciences community serving as director and scientific advisor to start-ups and initiatives focused on rare disease diagnostics, the microbiome, and advanced biomanufacturing.