Life Sciences Industry Footprint Driven By R&D Productivity, Emerging Markets Sales

Life Sciences Industry Footprint Driven By R&D Productivity, Emerging Markets
                                    Sales

Jones Lang LaSalle Global Life Sciences Cluster Report reveals top cities
worldwide for innovation and growth

PR Newswire

CHICAGO, Dec. 18, 2012

CHICAGO, Dec. 18, 2012 /PRNewswire/ -- The areas where life sciences companies
locate their facilities, commonly called industry clusters, are shifting
worldwide as these companies respond to rising demand for new drugs in Asia
and Latin America, significant patent expirations and the need for increased
R&D productivity and innovation. According to Jones Lang LaSalle's second
annual Global Life Sciences Cluster Report, which will be broadly distributed
in January 2013, life sciences companies are choosing cities where they can
capture market opportunities for sales, drive R&D productivity and optimize
operations.

With downward pricing pressure and the need to control facility costs, life
sciences companies are making calculated and strategic decisions for their
facilities investments. The historical dynamic of mature-market R&D discovery
vs. offshoring lower-value operations is slowly evolving as emerging markets
increasingly drive consumer demand.

"Major life sciences companies are optimizing their real estate and location
strategies to be prepared for patent expirations – as well as to capture
market opportunity in the Asia Pacific and Latin American regions," said Bill
Barrett, Executive Managing Director, Life Sciences at Jones Lang LaSalle.
"Strategic facilities investments have become critical to keeping a tight
rein on costs while continuing to find success through R&D investment and new
drug discovery.'"

While every regional cluster is unique, the interplay at a global level
reveals clear trends separating mature versus emerging markets. Established
life sciences clusters in mature markets are being driven by R&D success and
proven innovation, while the potential for significant sales growth continues
to push expansion in Asia Pacific and Latin America.

Evolving Consumer Demand Drivers Focus on Emerging Markets

Rising demand in emerging markets is driving more than sales offices;
manufacturing and drug development operations are thriving as well, as
clusters in emerging economies strive to move up the value chain while
capturing local consumer demand, particularly in the Asia Pacific and Latin
American regions.

By 2016, China is expected to leapfrog ahead of Japan and become second only
to the United States as the world's largest pharmaceuticals market. Healthcare
expenditure is growing rapidly as a percentage of GDP not only in China, but
also in India and Indonesia—countries in which increased spending on public
healthcare is widening the prospective patient pool and increasing consumer
demand. Four of the largest pharmaceutical companies already earn a third of
their revenues outside their traditional markets of the United States, Western
Europe and Japan.

Emerging clusters in Asia Pacific and Latin America have long been
destinations for clinical trials, manufacturing and distribution by
multinational companies, which continue to make significant facilities
investments in these regions. Despite increased affluence, for example, India
continues to shine as a location for cost-effective clinical trials.

Despite the erosion of its cost advantage by rising wages and other factors,
China also remains a very cost-effective site for R&D. In Beijing, for
example, a global pharmaceutical company has launched a five-year $1.5 billion
project to build a new facility to house 600 researchers focused on drug
discovery and translational research, taking advantage of nearby major
universities and hospitals along with lower facilities costs than would be
found in more mature markets.

Some emerging clusters are aiming higher up the value chain as R&D support
destinations. Clusters in Asia Pacific and Latin America are aggressively
increasing their competitiveness and life sciences capabilities through
economic incentives, public funding, education policies and stronger
intellectual property protection and international cooperation. India, China
and Singapore have been seeking to increase their presence in the industry
beyond manufacturing, dedicating resources to fund intellectual capital,
business parks and incubator centers while retaining a competitive cost
environment for attract foreign direct investment in R&D.

"We are seeing even greater bifurcation of location strategies in response to
industry stressors," said Barrett. "Multinationals are aggressively
outsourcing operations to the most cost-effective locations, while focusing
resources on increasing R&D productivity, either in mature clusters or in
low-cost clinical trials locations."

India, China, Brazil and Singapore are also launching initiatives to ramp up
the potential of domestic start-ups and intellectual property, while promoting
the return of Western-trained scientists to help spark life sciences-related
multinational and domestic economic development. The Chinese government
reportedly is providing$1.6 billion in funding to stimulate domestic R&D drug
research programs, along with stronger intellectual property protection, to
seed future domestic life sciences innovation. These efforts are in early
stages, although some have led to acquisition opportunities for
multinationals.

R&D, Innovation Driving Mature Markets

Even as life sciences companies respond to the European sovereign debt crisis
and related economic challenges, innovation centers like San Diego are gaining
market share, with multiple middle market companies expanding into former
laboratories vacated by multinational company mergers.

The pressure is on to capture growth opportunities in biologics and
biosimilars, and to otherwise diversify product lines—whether through mergers,
acquisitions or licensing—to compensate for the traditional long and costly
biologics development lifecycle. According to Deloitte's 2012 "The Future of
the Life Sciences" study, 90 percent of life sciences executives expect
biotech companies to become the primary source of innovation in developed
markets by 2015. These trends create new facilities portfolio challenges as
companies strive to consolidate their holdings and determine the most
effective locations for different aspects of their operations. The Deloitte
study also notes that more than half of life sciences executives expect to see
further consolidation in the industry, with implications for facilities
footprints.

Mature cluster bright spots include Greater Boston and Zurich, where
world-class research facilities, deep intellectual capital and private-sector
institutions continue to drive R&D facilities development activity.

"R&D productivity and operational efficiency are paramount," said Barrett.
"Major life sciences companies continue to pay a premium for proximity to the
intellectual capital and infrastructure that characterizes the mature
clusters, while offshoring the more commodity-like functions to more
affordable clusters."

Jones Lang LaSalle has a team of real estate and facility management experts
dedicated to helping life sciences companies optimize and manage their real
estate portfolios. The firm provides a comprehensive range of facilities
management services to the life sciences community covering 70 million square
feet of research, manufacturing and commercial space. Jones Lang LaSalle's
industry leading full-service platform includes: integrated facilities
management, engineering and operations, energy and sustainability, transaction
advisory services, lease administration, project management and a new platform
for integrating laboratory services, Labwell.

A leader in the real estate outsourcing field, Jones Lang LaSalle's Corporate
Solutions business helps corporations improve productivity in the cost,
efficiency and performance of their national, regional or global real estate
portfolios by creating outsourcing partnerships to manage and execute a range
of corporate real estate services. This service delivery capability helps
corporations improve business performance, particularly as companies turn to
the outsourcing of their real estate activity as a way to manage expenses and
enhance profitability.

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About Jones Lang LaSalle

Jones Lang LaSalle (NYSE:JLL) is a financial and professional services firm
specializing in real estate. The firm offers integrated services delivered by
expert teams worldwide to clients seeking increased value by owning, occupying
or investing in real estate. With 2011 global revenue of $3.6 billion, Jones
Lang LaSalle serves clients in 70 countries from more than 1,000 locations
worldwide, including 200 corporate offices. The firm is an industry leader in
property and corporate facility management services, with a portfolio of
approximately 2.1 billion square feet worldwide. LaSalle Investment
Management, the company's investment management business, is one of the
world's largest and most diverse in real estate with $47 billion of assets
under management. For further information, please visit
www.joneslanglasalle.com

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