Growing Life Sciences Hubs
Beyond Boston and San Francisco: hubs putting their name on the map
The life sciences industry continues to grow, and so does the demand for space to innovate in. While Massachusetts, California and New Jersey operate in a different league, recent years have witnessed structural changes in the areas covered by the life sciences industry. Emerging markets across the country have burgeoned as leading pharma firms search to grow, expand and relocate in the search for talent. For areas to put their names on the life sciences map, three key factors will come into play in 2023: access to a talent pool, funding that allows commercialization potential, and a strong real estate infrastructure that can support growth.
JLL is a commercial real estate firm that has focused on tracking commercial leasable space to map the growth and demand for space across the US. Noticing polarizing shifts in the real estate space in the US, Travis McCready, head of life sciences Americas market, explained: “We witness a greater number and diversity of vibrant life sciences markets emerging. We are encouraging clients to think in terms of 20+ markets in the US that are significant. This is a different way for the industry to think in terms of where to invest, where to build infrastructure, where to find great science, and where universities are creating great science that will be translated into commercial assets.”
For growing hubs, the answer lies within. Macroeconomic shockwaves have slowed external investors’ will to explore new hubs as they look for markets with a predictable rate of entrepreneurship and innovation, along with a cluster of commercial assets and a high concentration of capital. Yet, the current – and cyclical – environment does not deter Travis McCready’s bullish stance on hubs like Boulder, Chicago, Salt Lake City, Dallas, Raleigh Durham, LA and Seattle: “They seem to have stable rates of these innovation inputs from within their respective markets that continue to invest in life sciences development.”
Accessing talent before unlocking capital
Along with access to capital, the next challenge to answer for growing hubs is access to talent. The proximity to known human capital and established universities remains a key driver in the decision-making process behind firms’ geographic implementation decisions. As put by McCready: “Today, access to talent – more than access to capital – is the barrier to progress for emerging markets.”
EisnerAmper’s partner-in-charge of the national technology and life sciences, John Pennett, agreed: “Q1 2023 showed an extreme focus on building lab space in every major market where you have a major research university.”
“As we were carved out of 3M and already had an established workforce, coupled with Minnesota being the center of the medical device universe, it made sense location-wise for Kindeva to build a new world-class research center in the St. Paul area.”
Milton Boyer, CEO, Kindeva Drug Delivery
Case studies: Illinois, Indiana and Michigan
Illinois and Michigan are two examples demonstrating the importance of a local talent pool in an area’s investment attractiveness. With roughly 1 million residents holding at least a bachelor’s degree in science and engineering, the Chicago Metropolitan Area continues to climb the ranks of life sciences hubs. What could take the state to the next level in the next decade is the collaboration between philanthropists and academia. In March 2023, the Chan Zuckerberg Initiative announced the launch of a new biomedical research hub in Chicago, which kicks off a collaboration between the three most promising anchor institutions in the city: Northwestern University Illinois, the University of Chicago, and the University of Illinois Urbana-Champaign. Michigan’s life science industry is among the fastest growing in the country. A key manufacturing hub during Covid-19, investment and medical endowment did not temper in 2022. Tom Ross, president, and CEO of Grand River Aseptic Manufacturing, a fast-growing CDMO in the fill-and-finish space in Grand Rapid, explained how the environment contributes to successful recruitment: “Having local universities and educational institutions such as Michigan State University, Grand Valley State University, and the Van Andel Institute in the same area as multiple medical and pharma facilities allows us to collaborate with people on the front line and helps with recruitment processes.”
Looking ahead, “tier 2” states will increasingly look at focusing on their strengths rather than trying to be the next Boston or San Francisco. One key is developing local capabilities that are properly scaled for the market. Indiana leads the US in pharma exports, and in 2022, 25 firms committed to invest over US$2.8 billion, more than five times the amount for 2021, in the state, according to the Indiana Economic Development Corporation. With Catalent plotting a US$350 million expansion at its Bloomington, IN, facility, and new players like INCOG BioPharma designating Fishers, IN, as their home, signs are encouraging for the state. Cory Lewis, CEO of INCOG, detailed Indiana’s appeal for manufacturers: “Indiana is a growing hub for several practical reasons: We have the second largest hub in the US for FedEx, plenty of warehouse distribution and warehouse capability, and you can access the entire continental US within a 5-hour flight.”
Recognizing the state’s competitive advantage for manufacturing capabilities, he added: “San Diego, San Francisco, and Boston are leaders on the R&D front. On the manufacturing side, bring it to Indiana!”
Finally, emerging hubs are where most greenfield opportunities are for manufacturers and pharma firms looking to grow their footprint nationwide. European manufacturers have long seen the potential of the US market, and in 2023, the Italian Dipharma Francis expanded its Kalamazoo, MI, facility by building kilo labs and quality control labs from the ground up. Basel-based CordenPharma is a leading CDMO for the development and manufacturing of complex modalities for APIs, lipid excipients, and drug products, which saw double-figure growth in sales in 2022. CordenPharma’s CEO Michael Quirmbach said: “We are also considering greenfield opportunities, as we realize the importance of the US market.”
Article header image courtesy of INCOG BioPharma Services