Life Sciences Cluster Report

2014

Global Trends Spotlight

• Global trends are stimulating significant changes to space needs

• Mid-tier companies and specialty players are prompting a majority of new demand. They are experiencing overnight growth and highly variable needs in response to promising products and treatments

• As further overhead cost cutting is required for Big Pharma and mid-tier players grow beyond their current capabilities, the prospect of outsourcing strategic facility functions will become more attractive

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• Asia has surpassed both North America and Europe in overall PCT applications Global innovation share shifts

• As of 2012, the top five countries accounted for 74.0% of all PCT applications

• Emerging clusters with highest levels of PCT growth are also the least collaborative

1. Geographic shifts in innovation

• Mature North American and Western European countries among the most collaborative nations on PCT applications

• The U.S. maintains the highest percentage of the working population with bachelor’s-type degrees, but loses its lead when only the younger generations are considered

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• Building blocks of development - Investment in R&D - Higher-education institutions - Physical infrastructure - Foreign direct investment - Technology transfer - Effective government regulation

• Changes in labor productivity differ greatly between developing and developed economies

2. Transferring technology from bench to marketplace

• Barriers to entrepreneurship have declined in most countries and more established global clusters; however they remain high among emerging life sciences clusters

• Corporate statutory tax burdens are highest among Japan and the U.S., however these countries also have some of the best regulatory systems and high political and transparency rates

3

• European nations post flat growth while developing nations continually post year-over year increases in Gross Expenditures on Research and Development (GERD)

• China, Brazil, Russia, and India are expected to outpace the overall global total for year-over-year increases in GERD

• 10 countries account for 80.0% of global R&D spend

3. Global funding perspective

• While businesses contribute the most to R&D spend for most countries, the contribution ratios of this, and other funding sources, vary widely

• Since businesses are the biggest source of R&D funds, the broader economy and investor confidence levels can have a major impact on funds appropriated for R&D. Confidence in biotech has returned, with a banner year for life science IPO activity in the United States

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• Decision makers are now open to outsourcing functions in critical and highly regulated space

• For decades, the yellow line designating a critical/regulated area has served as an actual and symbolic boundary for IFM providers Advancements in the IFM world are breaking down some of the barriers to entry

• From 2010 to 2020 nearly 2 million life scientist and engineering jobs are expected to open

4. Efficiency, compliance & facility trends

• The ManPowerGroup’s annual global survey of 38,000 employers in 42 countries revealed that 35.0% report difficulty in filling jobs

• The difficulty filling Life Sciences jobs may potentially lead to rising costs and prevent getting the job done in time and on budget

5

Americas

• Region is unique in that it is comprised of some of the most and least established life sciences clusters across the globe

• U.S. and Canada have mature and deep-seated industry presence

• Most growth opportunity lies in expansion and development of operations in Latin America

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Top 5 U.S. clusters

1 2 3 4 5

Greater Boston

Area

San Francisco

Bay Area

San Diego

Metro Area

Raleigh-Durham

Metro Area

New Jersey/

NYC/

Westchester

Metro Area

7

EMEA

• Region continues to witness strong competition from the emerging markets across the globe

• Increasing expenses on R&D, rising healthcare spending and development of European clusters is expected to sustain growth of the sector in the near future

• Europe continues to offer a conducive environment for life sciences companies mainly due to its:

- Technological leadership

- Manufacturing know-how

- Laws toward protection of intellectual property (IP)

- Availability of skilled workforce

8

APAC

• Strong growth facilitated by strong demographic trends

• Market potential in Asia has attracted major international players to the region and spurred on a flurry of M&A activity

• Improvement of public health coverage in a number of markets

• Asian pharmaceutical market continues to be exceptionally varied

• Innovation and R&D continue to gain momentum outside of the well-established Japanese hubs

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© Copyright 2014 Jones Lang LaSalle

How did your city stack up?

The Global Life Sciences Cluster Report tracks geographic shifts in life

sciences innovation, operations and facilities investments, including

analysis of countries and cities most actively investing in their life

sciences sectors. It includes a ranking of the top U.S. life sciences

clusters, as well as analyses of life science hotspots around the world.

Take a deeper diver into this research and download the report

comprehensive, 143 page report today.

Have questions about your real estate needs in the Life

Sciences industry?

Contact Roger Humphrey: Roger.Humphrey@am.jll.com