How has site selection in life sciences changed? How has site selection in life sciences changed?

Any life sciences executive on the lookout for the right site in Europe – whether for a regional headquarters, shared service center, manufacturing or warehousing site, or R&D facility – needs to do their homework on available locations. But how have the pandemic and BEPS 2.0 changed the selection criteria?

The COVID-19 pandemic has been disastrous for many industries and communities. Its impact on the life sciences industry has, however, been muted. Fortunately, with initial fears over massive supply chain disruptions failing to materialize. Instead, with new vaccines being developed in record time and manufacturing capabilities being built up quickly, life sciences businesses have demonstrated great agility and resilience.

In a generally favorable business environment for life sciences projects, many companies felt emboldened to launch their first product alone rather than licensing to a large pharmaceutical group. The success of mRNA technology has meanwhile increased interest in Biologics, generating opportunities for contract manufacturers. And the EU has released significant funds to stimulate economic growth and strengthen the resilience of critical industries, including life sciences. All of these areas and more are explored in the fifth edition of our publication Site Selection for Life Sciences Companies in Europe.

As well as comparing and contrasting the business environment, infrastructure, innovation and R&D, and availability of talent for almost all countries in Europe, we identified three evolving key trends: 

The pandemic has led to a resurgence of industrial strategies, which had long been out of favor. State-led programs include the EU's Green Deal, which aims to transition national economies toward lower carbon emitting production. We expect these strategies to intensify competition among European countries to attract life sciences investments that are generally low-carbon emitting and bring high added value.

We see first-hand how companies looking to launch a product for the first time are starting to go it alone, without the help of big pharma. Financing has become easier to secure, a number of big pharma executives have been open to joining smaller biotech businesses, and there is no shortage of highly experienced advisers who can support businesses through the launch process.

In the OECD, 130 countries approved a minimum tax rate of 15 percent and the taxing of profits of the biggest multinationals in countries where the profits are earned. This limits potential to attract investment through competitive tax planning.

There is a clear trend in Europe to increase production capacity in the area of Biologics and in Cell and Gene Therapy and Vaccines. Around 70% of all expansion and greenfield projects can be allocated to these products. Over 50% of the projects are conducted by CMOs.

We believe now is a good time to consider investing in new or existing life sciences operations. Europe is a prime candidate to host such operations. Not least due to its desire and ability to support life sciences across the entire value chain from drug development or medical device design to manufacturing. 

As tax incentives have become a less important determinant in site selection, grants and funds available through industrial strategies gain in importance. Significant funds are already available at both an EU and country level to support investments in life sciences projects and to strengthen the healthcare system more broadly.

In a landscape where decision-making remains complex, Site Selection for Life Sciences Companies in Europe is a critical read for anyone looking to make the right move.