Life sciences report: Change and Opportunity
The UK life sciences report explores the impact of technology, the growing interest in the sector from non-traditional sources, how these new investors and entrants are tapping into innovation and the implications for occupiers and developers.
The UK’s life sciences industry is undergoing a period of rapid growth, including:
- Revolutionary new treatments
- Structural changes in the industry
- Digital technologies
- Unprecedented level of investment.
All driving increasing demand for business space tailored to the sector’s unique needs.
JLL has taken an in-depth look at life sciences in the UK and how it is changing. Our report; Change and Opportunity, is the output of in-depth research with major global corporates, start-ups, investors, developers, universities, and other leading institutions.
By 2020 total global healthcare spending is expected to exceed $8.7 trillion, and annual pharmaceutical sales are predicted to pass $1 trillion by 2024. In the UK, 2018 was a record year for investment in life sciences companies according to the UK BioIndustry Association.
The ‘Golden Triangle’ formed by London, Oxford and Cambridge, which features some of the world’s most important life sciences research institutions and companies, will be at the forefront of growth, but there will undoubtedly be growth in some of the UK’s other, more specialised clusters.
Life sciences clusters in the UK
There are numerous drivers causing leading companies to rethink how and where they organise their research activities, including:
- Dramatic decline in large pharma’s return on R&D investment
- Loss of patent protection on blockbuster products
- Changing nature of drug discovery and development.
It is becoming ever more important to be close to, or even integrated with, the rapidly growing and well-funded population of smaller, entrepreneurial biotechs.
The dramatic decline in large pharma’s return on R&D investment, the loss of patent protection on blockbuster products and the changing nature of drug discovery and development is driving a rethink of how and where the leading companies organize their research activities. It is becoming ever more important to be close to, or even integrated with, the rapidly growing and well-funded population of smaller, entrepreneurial biotechs.
Number of companies has increased from an estimated 2,095 in 2015 to 3,456 today
Life sciences companies are being driven by the same forces as other participants in the knowledge economy. Agglomeration, or clustering, is perhaps the most important.
Firms now recognise that locating close to other market participants brings productivity benefits which far outweigh the downsides.
Investors and developers looking to focus on the sector need to be aware of the extent to which the industry is moving away from being dominated by ‘wet labs’. Computational space – which looks more like traditional office space – now accounts for, on average, at least a third of companies’ need, as an increasing amount of drug discovery work is computer-based.
Meanwhile, there is an increasing interest in ‘flex’ lab space, that companies can fit out quickly to their needs on shorter-term leases.
The UK has a potential life sciences property development
pipeline of 10m sq ft
These trends reflect the fact that life sciences real estate is changing from being an operational matter to a strategic one: a source of competitive advantage that boards of big and small companies need to spend time considering. It has never been more important for a life sciences company to consider where it is located, who it is located with, what access location gives it to innovation and talent and how its facilities contribute to recruiting and retaining that talent and to stimulating collaboration.
For investors, developers and landowners, understanding the nuances behind these drivers can mean the difference between a development’s success or failure.