Research article

Vaccine boost

A positive outlook for the vaccines sector, of course


The vaccines that are being rolled out for this current global pandemic are probably one of the most important scientific discoveries to happen. The world was in a coronavirus emergency looking for a vaccine. Most successful vaccines, for any virus, on normal trajectories, usually take up to a couple of decades to discover. The deadline for Covid-19 was clearly 'yesterday'. The symptoms known as the 'common cold' are caused by coronaviruses, and as we are fully aware, there is still no cure. This made the discovery of a Covid-19 vaccine, in a relatively short time period, with high efficacy all the more impressive. The world looked expectantly at the life science community to find the vaccine, and it delivered. This section looks at the scale of capital raising by companies involved in vaccines.

Before the Covid-19 pandemic, there were real estate investors putting life science real estate under their microscope. It had always been an alternative real estate subsector that was developed, in the majority of cases, by more specialist investors/developers, but over the past nine months, there has seen an explosion of interest from all types of investors looking to diversify their portfolios to capture the expected increase in demand from life science companies.

The question is which global measure reveals the future direction of travel for the life science real estate sector? The pandemic emergency has seen increased level of funding into vaccine research, which in the earlier stages of company growth, is usually in the form of venture capital (VC). Growth in this type of corporate funding will result in employee headcount growth. More employees needing to be accommodated in the office and/or laboratory results in a larger footprint in terms of real estate.

Last year, the global level of venture capital in vaccines-related companies was 294% above the preceding 10-year average

Steven Lang, Director, Commercial Research

The chart below shows the growing level of VC going into companies involved with vaccines over time. The strength of 2020 is no surprise with around £2.7 billion recorded globally. This was more than double the total for 2019 and 294% above the 10-year average. Compared to all sectors, the five-year period (2015–2019) had seen vaccine-related VC account for 0.6% of the total global VC spend; in 2020, this rose to a 1.2% share. Both the US and Germany have been dominant countries in the vaccine market – faster growth in the smaller companies VC raising bodes well for developing a strong life science ecosystems, which attracts the global larger corporates. This is positive for the real estate demand prospects.

So what does real estate demand from vaccine companies look like? Overall, it’s difficult to determine the global real estate impact at the moment. However, in occupational terms, as shown during the lockdown, scientists will always get into the laboratory to work. This more consistent level of occupation, compared to office-based companies, suggests that life science companies, on the whole, will have a much higher willingness to maintain or increase their office and laboratory real estate footprint. As shown with a substantial rise in the level of funding, this will have a positive impact on the demand for the relevant real estate.


 

Raising the response in the UK

An immediate real estate response to Covid-19 in the UK was the fast-tracking of building the Vaccines Manufacturing and Innovation Centre (VMIC) at Harwell in Oxfordshire. This part of the UK was already leading the way, globally, in vaccine research and manufacture and this new 7,400 sq m (footprint) facility will increase the manufacturing capability by 20 times and can provide 70 million doses within four to six months of opening – enough for everyone in the UK. VMIC has been working with the Oxford/ AstraZeneca vaccine since day one.

VMIC was founded in 2019 by academia (University of Oxford, Imperial College London and London School of Hygiene and Tropical Medicine) with support from industrial partners (Merck Sharp and Dohme, Johnson and Johnson and GE Healthcare). Very soon after the UK's first lockdown, the centre was sped-up significantly for delivery and will be fully operational in 2022.

Read the articles within Spotlight: Life Sciences – Trends & Outlook below.

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