Predicting demand from life sciences occupiers
Sector-specific sentiment surveys provide vital insights into the drivers behind the real estate decisions of life sciences occupiers in the UK.
4 minutes to read
In December 2021, McKinsey conducted a survey of senior executives in commercial roles at global pharma companies to understand their strategic priorities over the medium to long term.
It found that firstly, pharma companies are going to adopt more agile ways of working whilst undergoing more radical organisational restructuring, including the increased outsourcing of non-core components of the value chain.
80% of respondents think it likely or very likely that companies will embrace agile ways of working.
70% feel that organisational structures will be radically simplified, with more components of the value chain outsourced to focus on core capabilities.
The survey also found that digital innovation is an urgent strategic priority for pharma companies.
Digital transformation top priority
Investment in digital and analytical capabilities is also a top priority for MedTech occupiers.
A late 2021 Charles River Associates survey of 36 MedTech leaders working in major companies, including Boston Scientific and Roche, found that MedTech occupiers plan to prioritise growth via strengthening innovation, especially in digital. They also intend to optimise internal processes through organisational restructuring.
For real estate these findings translate to:
1. Greater occupier demand from the outsourced or services and supply sub-sector as these companies expand to support the simplification strategy of big pharma companies. Already the UK services and supply sub-sector has seen employment growth of 7,700 over the past five years - more than any other segment of life sciences. This is set to continue.
2. Life sciences occupiers will seek to reconfigure their global real estate portfolios and remodel their workplaces in order to align with new organisational structures and more agile ways of working. This will bring the quantum and qualities of space that they hold into further focus – in keeping with the wider spectrum of occupiers assessing need in a post-pandemic world.
3. The application of technology and data analytics will create a new breed of fast-growth occupiers as well as disruption-led demand from incumbents facing intense restructuring pressures. Such tech influenced life science companies will increasingly want to locate in city centre locations where the tech talent resides or gravitates towards. This is a trend we talked about extensively in 2021 and will see life sciences companies going toe-to-toe in the battle for tech talent.
UK life science investment
Another insightful sentiment survey from IQVIA a leading global provider of advanced analytics, technology solutions, and clinical research services to the life sciences industry, also published in December 2021, demonstrated the confidence the global life sciences sector has in the UK.
The results suggest that there will be further substantial flows of global investment into the UK life sciences sector going forward. This again augurs well for real estate demand.
IQVIA surveyed 216 senior level global industry stakeholders and found:
• Nearly 90% of respondents expect clinical research and medicines launch activity to increase or remain at the same level over the next four years.
• 76% of respondents confirm that the UK is the same, or more attractive as a clinical research destination post-Brexit (vs. just 3% in 2017 and 2018), and 79% believe the UK will remain a priority medicines launch country for their respective companies.
The vast majority (94%) also cited that Governments life science vision is having a positive impact on the attractiveness of the UK as a research hub.
This vision centres on the role of the NHS as a place for clinical research as well as a key purchaser of new treatments and technologies. Clusters that can provide seamless access to not only academic partners but also the NHS are therefore likely to thrive.
Future of life sciences
The life sciences sector has been one of the few positive stories to emerge over the last 24 months and public perception about the sector and its benefits is arguably at an all- time high. This looks set to continue. The sentiment surveys noted above provide positive signals in terms of the outlook for the UK life sciences sector in 2022.
Occupational demand will be driven by organisational restructuring, the adoption of new ways of working, digital innovation and transformation, investments in data analytics and changing skills requirements. All of this demand will be underpinned by the clear and growing attractiveness of the UK as a place to conduct life sciences research.
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