• Germany

• The Netherlands

• Switzerland: Zurich

• Switzerland: Basel

• France

• Denmark

• UK

• Poland

Germany

An established pool of talent and rising levels of corporate investment will create new opportunities in Europe's largest economy, says Matthias Pink, Germany

Government support is the key to building a life science cluster. A strong life science campus requires the commitment of both public and private stakeholders to ensure sufficient local support and funding. Covid-19 has put healthcare, research, and thus, the life science sector at the top of the agenda of every government. The German government has long supported scientific innovation and research, both domestically and in conjunction with other nations. German spending on research and development has more than doubled in the last 20 years and is expected to reach 3.5% of GDP by 2025. This makes Germany one of the world's most research-intensive economies.

In 2017, the state, universities and industry invested a total of €99.6bn in R&D. According to preliminary calculations, total expenditure on R&D increased further to €104.8bn in 2018. R&D expenditure has risen sharply since the beginning of the 2000s, and during the financial crisis of 2008/2009, the state and the economy continued to invest continuously in R&D. In a European comparison, Germany thus has the highest R&D expenditure in absolute terms and 31% of all R&D expenditure in the European Union. Germany has the world's fourth-highest absolute R&D expenditure – after the major economies of the USA, China and Japan.

The number of R&D employees in Germany has been rising continuously for more than a decade and reached over 686,000 workers in 2017. In the past 10 years alone, this figure has increased by almost 180,000 full-time equivalents, an increase of over a third (+35%). According to preliminary calculations, the number of R&D personnel increased to almost 708,000 full-time equivalents in 2018.

The level of interaction within the German innovation ecosystem is also significant: the country ranks 8th in cooperation between universities and industry and third in the development of clusters. The level and quality of the innovations produced in Germany are also exceptional. The country is the world leader in patents by origin.

The key figure for patents relevant to the world market per capita in Germany is almost twice as high as in the USA. In absolute terms, Germany has the highest number of innovative enterprises in Europe, which in turn have the highest innovation expenditure in the economy compared to other European countries.

Germany has an excellent human capital and research system, thanks to its high number of graduates in the natural and engineering sciences, leading R&D-intensive global companies and a strong university system. The domestic business sector contributes greatly to these efforts, as it both carries out and finances a large part of R&D expenditure.

Overall, Germany has a scattered life science network, indicated by the network of life science students shown in the map below. The most important cities in Germany are of equal rank, in contrast to some other European countries, where there tend to be much stronger cities. Munich is particularly strong in terms of growth, but there is a higher concentration of the larger science parks in and around Berlin. Key leasing examples include Sanofi signing for 5,520 sq m in Berlin City West during 2020, and MSD signing for 8,500 sq m in Munich in 2018.

The latest example of Berlin's attractiveness is the announcement by the World Health Organisation (WHO) in Berlin to build a new global base as a pandemic early warning centre. The hub will lead innovations in data analytics across the largest network of global data to predict, prevent, detect prepare for and respond to pandemic and epidemic risks worldwide.

The Netherlands

Scato de Smit, Savills Research, explores how Leiden competes as a key European life science hotspot

The Netherlands has eight comparable Innovation and Science Campuses. All these campuses have a (technical) university, a university medical centre and accommodate companies such as DSM or Philips. However, none of the campuses are very similar; each of them is at a different stage of development and has a certain specialisation. For instance, Wageningen Campus mainly focuses on the agri-food sector, while Eindhoven High Tech Campus targets the development of high-quality technologies.

Although distances in the Netherlands are small, in comparison to other European countries, the Netherlands has a wide geographical spread of campuses and each campus is complementary, rather than competing with each other. The success and maturity of these campuses heavily depends on whether established companies and knowledge institutions are connected to international science developments and innovation.

Life sciences patents fuel demand for clustering

The Netherlands has attracted international science clusters due to its R&D capabilities in certain scientific fields, reflected by the number of approved patents, which continues to drive employment growth. For instance, general employment grew by nearly 8% between 2013 and 2019, while employment within R&D businesses, education and knowledge institutions grew by almost 15%. Within the most relevant R&D sectors, Life Sciences & Health and High Tech has the largest share in R&D expenditure from private investment.

Due to the pandemic, many technical fields declined in terms of European Patent Applications, while medical technologies (+2.6%), pharmaceuticals (+10.2%) and biotechnology (+6.2%) experienced a strong performance, due to the demand for medical and pharmaceutical innovation. These three fields, fall under Life Sciences and comprised 16.7% of all worldwide patent applications to the EPO in 2020. The share of these fields is 30% higher in the Netherlands than the European average.

So, the Netherlands represents a large share in patent applications in Life Science in comparison to other countries. Developing new drugs is a time consuming and expensive process and many firms recognise that being close to academics and to start-ups brings many benefits which far outweigh the downsides. Since, they can work in an agile way – sharing ideas, share resources and make use of the latest technological innovations. Life Science academics are mainly clustered in three different locations in the Netherlands – Leiden, Amsterdam and Utrecht – due to its international medical, biomedical and pharmaceutical research and teaching activities.

Clustering of Life Science

Each campus is in its own stage of maturity, whereby the amount of corporate pharmaceutical, medical and biomedical companies is reflecting the maturity of the campus. The most mature life science campus is Leiden, due to its amount of international biomedical and pharmaceutical companies (Astellas, Johnson & Johnson, Galapagos). For example, the Covid-19 vaccine 'Janssen' has been developed by Johnson & Johnson and these companies have access to a wide talent pool, consisting of the Leids Universitair Medisch Centrum, which has an international leading position. The whole campus has almost 20,000 jobs and aims to create another 10,000 over the next five years. The campuses of Utrecht and especially Amsterdam are smaller, which is reflected by fewer corporate pharmaceutical and biomedical companies. However, the amount of VC that has been invested in life sciences start-ups sheds light on the maturity of these campuses. The volume of capital and the attraction of talent might contribute to increase the number of life science start-ups of these cities.

Besides capital, an important ecosystem consisting of laboratories, tax subsidies and available office space are vital for the growth of life science clusters. Leiden Bio Science Park distinguishes itself from other life science clusters in the Netherlands due to the strong focus on innovative therapy development, especially medicines.

A successful example of this ecosystem is whereby the incubator, BioPartner Center, Leiden offers flexible offices and laboratory facilities to start-ups, where they can conduct research, particularly focused on the development of medicines and vaccines. The flexibility of this incubator is unique, since tenants have the possibility to scale up and move quickly, while laboratories are equipped with the most modern amenities. This flexibility is essential for life science businesses, since these are built on innovation and knowledge-intensive investments, while profitability and results might take decades to manifest. This paradox impacts the real estate market for life sciences from a real estate investment point of view.

Mismatch between supply and demand

Over the past few months, the global race to develop therapeutics and vaccines has required rapid adaptation, both in activity and working environment, also in the Life Science Clusters in the Netherlands, particularly in Leiden. This activity is reflected by the increased market activity of life science occupiers. LUMC & NECST, Janssen Vaccines & Prevention B.V. and the Netherlands Center for Clinical Advancement of Stem Cell & Gene Therapies B.V. took more than 12,500 sq m in 2020. Life science companies consisted of 52% of the total office take-up in Leiden in 2020, while prior to 2020, this percentage was between 2% and 6%.

As a result of occupier interest in Life Science clusters, vacancy rates in these clusters are low. New supply in these clusters is often pre-let or built by corporate life science companies. Recently, the pharmaceutical company Bristol Myers Squibb (BMS) signed a lease agreement of 19,500 sq m for a building plot on Bio Science Park Leiden. BMS will spend the next few years building the new manufacturing and laboratory facility.

As a result of Covid-19, future supply-demand ratios of life sciences real estate might become even tighter, swinging in favour of the landlord. Despite the improved fundamentals of the life science market, the number of investment deals has so far been limited.

The small size of the investment market is twofold. Firstly, the life science real estate market is predominantly owner-occupied, whereby major companies own their real estate. Secondly, there is an enormous number of start-ups, which are perceived as too risky by investors, since these often rent small spaces and are not able to sign long-term leases.

There are three possible solutions to increase market activity and to create a win-win situation for occupiers and investors. Firstly, major companies who own their real estate can free up capital by sale and leaseback of their real estate-recently for example, the Japanese company Astellas sold Mirai House in Leiden Bio Science Park to Fidelity International for €54m. Secondly, investors perceive life science start-ups as too risky, but a vast amount of start-ups in an incubator program, are less risky due to the spread of risk. Thirdly, mid-size companies and scale-ups are underserved by investors.

These companies still predominantly own their real estate and cannot make use of real estate facilitation by incubator programs. These occupiers are attractive for investors, since they result in cash flow, while these type of occupiers can free up capital and reinvest in further innovation. In this manner, real estate investors can contribute to further innovation in life sciences and may result in more market activity.

The life sciences industry has benefitted from pandemic-related tailwinds. Long beyond the pandemic, the innovation race will continue as downward pricing pressures continues. As one of the front-runners in life sciences innovation, the Netherlands will be therefore on the list of investors’ life sciences wish list.

Switzerland: Zurich

Guest Column: Lukas Sieber, Greater Zurich Area, on Zurich’s transformation from banks to biotech: how Zurich became a leading life sciences location

Nine out of 10 of the largest biotechnology and pharmaceutical companies globally have a substantial presence in the Greater Zurich Area in Switzerland, including Johnson & Johnson, Pfizer, AbbVie, Bristol-Myers Squibb, Novartis and Roche, Novo Nordisk, Abbott and Merck. While the big names in life sciences tend to garner a lot of attention, the Zurich region has a rich diversity of pharma and biotech companies and help the region and Switzerland to maintain its reputation as one of the global innovation leaders.

Talent matters

Switzerland has been ranked as the world’s most innovative country for the tenth year in a row by the United Nations Global Innovation Index (GII). Also in other rankings including the World Economic Forum (WEF) Switzerland has been top ranking for many years. While those rankings aim to capture the multi-dimensional facets of innovation, a key differentiator for the life sciences industry is talent. According to WEF, Switzerland is the country with the most extensive and highest quality staff training as well as the highest skill set for graduates worldwide. Other top positions for Switzerland include international co-inventions and R&D expenditure per capita. An important factor regarding talent is Switzerland’s labour law, with one of the most liberal labour legislations in the world. Last but not least, Switzerland is attractive to highly qualified employees, as it offers a very high quality of life, security as well as the highest disposable income in the world.

While global companies can easily recruit international talent from Switzerland, Greater Zurich has become a leading location for biotech start-ups. Of particular significance is the Biotechnopark Schlieren, a science park for life science companies and institutions in very close proximity to the Swiss Federal Institute of Technology (ETH) and the University as well as the Zurich University Hospital. The park, 55,000 sq m in size, today hosts 55 companies and many academic institutions, representing a healthy mix of young start-ups and global companies as well as university clinics, institutes, and research groups. Mario Jenni, CEO of the Biotechnopark Schlieren, names antibody-related therapeutic agents, gene therapy and personalised health as key life sciences verticals of the Greater Zurich Area.

Not only Swiss start-ups are thriving in the region. More and more foreign, particularly U.S. start-ups are expanding into Greater Zurich to accelerate their growth in Europe and expand R&D as well as production capabilities. Some of the most recent additions to the local life sciences cluster include Apellis, Reata Pharmaceuticals, Deciphera, Global Blood Therapeutics, Stemline, Arvelle Therapeutics and many others.

Life sciences: key pillar of the Swiss economy

In 2019, the Swiss pharmaceutical market totalled around $7bn, while pharmaceutical exports reached more than $90bn, representing almost 30% of all Swiss exports. Europe still represents the main export and import market for Swiss life science goods, although the US and other markets are growing. The productivity of the Swiss pharma and biotech sector is seven times higher than that of the global economy. Another indicator of Switzerland’s significance as a biotech and pharma location is the fact that around 40% of the capital of European life sciences companies is being traded on the SIX Swiss Stock exchange in Zurich.

Recent and ongoing changes to international tax and regulations make it more important than ever to select the most appropriate location for life sciences companies. In 2020, Switzerland successfully introduced a new tax legislation that allows Swiss cantons to offer the attractive ordinary corporate tax rates and incentives for manufacturing and R&D jobs as well as reasonable taxation of intellectual property income from patents, technology or trademarks. Thanks to the country’s high volume of tax autonomy, the combined effective corporate tax rates (federal, cantonal and municipal) in Switzerland ranges between 12% and 20%.

Switzerland: Basel

Christof Klöpper, CEO Basel Area Business & Innovation, explains how Basel's existing life sciences cluster attracts global innovators to the city

An international workforce, tax-friendly environment and global innovation positions Basel as one of the leading European life science clusters. Renowned international businesses and a world-class academic community attract skilled and talented employees from all over the world, with more than 40,000 expats settling here from 160 countries. In total, there are 14 universities with about 170,000 enrolled students within a one-hour drive of the Basel Area, spread across three countries. Specialisms cover pharmaceuticals, biotechnology, medical technology and digital health. Global summits and conferences including the European Aids Conference, Future Health Basel and the Swiss Innovation Forum attract international attention.

Basel's leading life science companies have been involved in M&A activity in recent years. Actelion, a pharmaceutical company based in Allschwil, was sold to Johnson & Johnson for $30bn in 2017. Furthermore, in 2013, Basel-based biopharma Okairos was sold to GlaxoSmithKline for $250m, in 2019, Basel-based biotech Therachon was sold to Pfizer for $810m, and in 2020, Basel-based biotech NBE-Therapeutics was sold to Boehringer Ingelheim for $1.2bn .

The lighthouses of the Basel Area’s life sciences cluster are the two global headquarters and research centres of Novartis and Roche in Basel. Roche is currently building a second tower and a new research centre, Novartis is developing the new Novartis Pavillion scheduled for opening in Q4 2021, with the ETH Basel campus in close proximity. Furthermore, Novartis is opening its campus for startups, incubators, institutes, companies and partners.

Opened in mid-2020, the Switzerland Innovation Park Basel Area was the first major external organisation to have offices on the Novartis Campus. It supports startups and established companies from the fields of digital health and personalised medicine.

Future key development schemes for the Basel Area include:

• BaseLink: The development site of 75,000 sq m in Allschwil is part of a thriving life sciences ecosystem with renowned and innovative companies and research institutions such as Johnson & Johnson and Idorsia nearby. On the site and next to the new home of the Swiss Tropical and Public Health Institute, the Main Campus of the Switzerland Innovation Park Basel Area is currently under construction. The building was designed by Herzog & de Meuron architects and will be ready for business in summer 2022.

• Rosental Mitte: Centrally located at the German train station in Basel, the former birthplace of Basel's chemical industry and current HQ-site of Syngenta covers 68,000 sq m and will transform into a modern business and research district with potential for up to 8.500 jobs and new development completions set for 2025.

• Stücki Park: Four office and laboratory buildings totalling 25,000 sq m will expand the existing business park until 2023. The area is already home to a research centre of Lonza and the Technologiepark Basel, offering 6,700 sq m of office and lab space for early-stage tech startups.

• Klybeckplus: The transformation of the centrally located former Ciba factory site into an urban district of 300,000 sq m development area offers potential for 7,000 jobs in office, research and production facilities.

France

Cyril Robert assesses how rising corporate investment and infrastructure development will support occupier activity in Paris

France’s expanding life science industry employs 99,000 workers, second in Europe only to Germany. According to EFPIA, France’s public and private healthcare spending accounts for 11.2% of GDP, the joint highest in the European Union alongside Germany and above the Netherlands (9.9%) and the UK (9.8%). Paris’ medical universities, Paris Sciences et Lettres (PSL) and Sorbonne University feature within The Times University Guide’s top 15 European universities for life sciences, attracting global talent to the French capital and positioning Paris as a key European life science hub.

Paris has subsequently attracted €1bn of VC funding into the life science sector over the last five years, fourth in Europe behind Cambridge, London and Oxford, although this is increasing each year, with €258m across 18 deals in 2020. Much of the funding has targeted companies in the biotechnology and drug discovery subsectors, including Inotrem, Enterome and Eyevensys.

In Paris, pharma companies strongly favour the western suburbs of Paris when it comes to choosing office space. Situated in the direct vicinity of Paris, it provides a mixture of large efficient buildings with excellent access to public transport and good amenities.

The three pharma clusters of La Défense, Rueil Malmaison and Boulogne Billancourt currently show relatively higher vacancy rates, as a result of the pandemic. Options are available for occupiers and incentives to tenants tends to be more favourable compared to central Paris, however, most of the production/ manufacturing sites are located outside Paris or even Greater Paris.

Over the last five years, Paris’ pharmaceutical sector has accounted for over 240,000 sq m of total take-up, with Novartis signing for 42,000 sq m of laboratory space in 2015 boosting the total.

Leasing activity slowed considerably across the traditional offices sector in 2020, although the pharmaceutical sector performed resiliently, in line with previous years. Medtronic signed for 4,610 sq m in Montrouge, south of the CBD, which remains an attractive hotspot for occupiers due to its proximity to Le Kremlin-Bicêtre and Villejuif, offering four teaching hospitals. New infrastructure developments as part of Le Grand Paris will also provide direct transport routes to Paris Orly and the city centre. The Gustave Roussy research centre and oncology hospital specialises in the treatment of rare tumours in the nearby southern suburb and is at the heart of the Cancer Campus biocluster project, which is entering its operational phase and is set to become a research and innovation park dedicated to cancer. Supported by Europe and the French State, Cancer Campus benefits from the assistance of numerous partners such as Gustave- Roussy and Gustave Roussy Transfert, the Institut Curie, the Medicen competitiveness cluster, the Assistance publique - Hôpitaux de Paris, the Université Paris Sud, the Agence régionale de santé and the Caisse des dépôts (the State's financial arm). Its development also involves the Genopole, a nearby biocluster (Evry) specialising in genetic and genomic research.

Laboratory facilities tend to record a lower occupational density than in the traditional offices sector, usually around 19 sq m per employee, above the office average of 11 sq m per employee due to the space requirements for life science activities. As a result, laboratory space has traditionally been located to the outskirts of the city, although we are seeing more examples of pharmaceutical companies relocating inwards to city fringes in order to attract talent pools.

Paris prime CBD office rents achieve as high as €935 per sq m with La Defense rents at circa €543 per sq m, although these locations tend to attract pharmaceutical headquarters rather than laboratory facilities. For example, IQ VIA reorganised its real estate portfolio across Greater Paris and signed for 11,300 sq m in La Défense, whilst Sanofi recently signed for 9,200 sq m in Paris CBD for its world headquarters. Laboratory rents in Gentilly typically achieve rents in the region of €300–€350 per sq m, where Sanofi’s R&D centre and French headquarters are located on more than 50,000 sq m (buildings inaugurated in 2014).

Beyond the capital, Lyon is positioned as a stronghold of the Pharma Biotech sector, at the forefront of one of Europe's largest pharmaceutical and biotechnology markets. With nearly 100,000 jobs in the healthcare sector, Lyon is one of the largest biotech and healthcare markets in Europe, and we have observed a number of production facilities developed both here and in Grenoble as part of the BioValley cluster.

Relative to the total level of office investment, the level of R&D transactions remains limited across France, with €184m invested in 2020. A shortage of institutionally owned stock is likely to limit transactions in the near future, but we believe there is an opportunity for landlords to gain access to the sector through sale and leaseback transactions.

Denmark

Public, private and university clusters are driving life sciences growth in Copenhagen, says David Hauge, Nordicals Research

For the Danish science/pharmaceutical market rents have reached levels of €550 per sq m for laboratory space in the prime Copenhagen area and the prime yield level for this sector is registered at 4.5%. Compared to the office sector, laboratory rents achieve a premium- prime rents for office space is €300 per sq m with a prime yield of 3.75%. As a consequence of the Covid-19 pandemic, we have observed a change in the Danish office market. Companies demand modern office facilities with flexible layout options, with a higher focus on the physical work environment and human resource management.

The pharmaceutical sector’s leasing level has held stable with some minor increases over the last five years. The high prices are reflected by the good quality of the leases and prices seem not to be challenged.

Pharmaceutical companies looking for lab space have traditionally chosen to build their own labs instead of leasing through institutional landlords. It has become very expensive to design or convert a property into a lab and to meet every pharmaceutical/ science company’s individual needs and demands, which is an explanation as to why labs are primarily owner-occupied.

Most of the pharmaceuticals, science and research centres have locations in Copenhagen, closely located to the universities. Novo Nordisk, which is a global pharmaceutical business, has operations in the north of Greater Copenhagen in Bagsværd. The location of Novo Nordisk has attracted other pharmaceutical companies, such that clusters are primarily located in Greater Copenhagen in the north. A few pharmaceuticals have locations outside Greater Copenhagen where they have established their highly specialised production facilities.

One of the key occupiers in Greater Copenhagen is Denmark’s Technical University (DTU) with the DTU Science Park, which is the largest science park for deep tech companies in Denmark with locations in Lyngby and Hørsholm. The science park is owned by the University, where more than 290 companies are located and together they are a part of the Danish leading growth of development environment.

Currently, the wider municipality has life science clusters at Hørsholm with DTU, ALK-Abelló and Chr. Hansen HQ. In 2022, Chr. Hansen plans to expand its headquarters in Hørsholm by 15,000 sq m. Genmab has planned to move their offices to Valby in Copenhagen from a location in central Copenhagen. In Valby, the pharmaceutical company Lundbeck is also located, which focuses on brain diseases. Novo Nordisk and Novozymes are both located in Bagsværd, which is a part of Greater Copenhagen. Leo Pharma is a Danish medicinal company located in Ballerup.

Denmark’s life science university research is ranked among the highest globally, especially from DTU. Research and knowledge at the universities is considered to be of paramount importance for Denmark’s life-science sector. Plenty of new startups are established from DTU’s research and the supply of offices makes it possible for these to find proper environments to develop on their projects. The life science start-ups from Denmark are in high interest for global and international investors as a result, with considerable levels of life science facilities sold to non-domestic investors.

DTU works with a lot of different companies and using a business PhD, the cooperation gets closer. The collaborative research between companies and DTU is a great opportunity for companies to get access to the newest research and knowledge at a professional level and secures a continued level of innovation and development.

UK

London and the OxCam arc remain the market leaders, although regional locations are witnessing rising investment activity, says Steve Lang, Director, Life Sciences.

The UK life sciences sectors employ over 250,000 people within 6,300 businesses and generates a turnover of nearly £81bn per annum. The core biopharma sector of life sciences includes all businesses developing and/or producing their own pharmaceutical products – companies involved in this area include small R&D-focussed biotechs to multinational Big Pharma. However, the life science sector also includes MedTech, which is particularly prevalent in the Midlands of the UK, within a traditional manufacturing heartland. Increasingly, with the blurring of life sciences and technology, the Digital Health sector is also growing strongly in the UK, particularly within London.

Within the UK, the life science sector has created significant opportunities for real estate developers and investors from across the UK and indeed the globe. However, the past couple of years has shown a much higher level of real estate interest in the life science sector than any time during the past 20 years. Despite the post-Brexit business and economic environment remaining an unknown, following the EU referendum in 2016, the importance of research and development (R&D) was made very clear. In particular, the UK would remain a 'go-to' place for scientists and global talent. In parallel to this pledge, and a more recent announcement, the UK will look to pursue 'high-risk, high-reward' investment via a new state-backed agency.

The UK life science sector, geographically, is predominantly driven by London, Cambridge and Oxford. Companies in these locations are spending billions in R&D costs and placing them in the top ranks in the world. Whilst Cambridge and Oxford are leading the way for life science and discovery, it is clear that the amount of available laboratory and R&D space in our cities is small compared to other global locations. Currently, London has c.100,000 sq ft (9,000 sq m) and Manchester has 360,000 sq ft (33,000 sq m) of stock compared to Boston (US) and New York which has 14.6m sq ft (1.4m sq m) and 1.36m sq ft (126,000 sq m) available, respectively. The delivery of more R&D workspace is vital for the UK's growth in this important sector going forward. Despite more limited stock, there are many pockets of life science across the UK, including most large cities.

The continued growth of clusters in the UK is key, as shown in the map opposite. Like-minded and complementary companies, within the life science sector, want to be co-located, to a certain extent, to take advantage of shared knowledge and business synergies and to be near to knowledge gateways, often academic institutes. Some landlords and developers have recognised that owning various commercial buildings in close proximity creates opportunities for a new science/ tech cluster. However, to do so, successfully, requires an exciting vision, curation of the right tenants and a longer-term strategic commitment to deliver the right space.

There are locations across the UK where the density of corporate investment is significant. Today, the notable exception is in the Midlands of the UK, where capital raising has been relatively muted. However, with high-quality teaching and research hospitals, as well as major universities, this will change over the next few years and it is a region to watch.

To understand the relative strength of the UK life science sector, and understand the future demand for real estate, an analysis of the level of capital raising (including mergers & acquisitions (M&A) and VC transactions) is relevant. For UK headquartered life science companies, the total level of all types of corporate investment was £18.6bn in 2020, which was 15% higher than 2019. This year has also started strong with UK-headquartered companies already attracting nearly 90% of the 2020 total by mid-June.

The VC trends indicate growth at the discovery end of the life science ecosystem. The level of VC attracted by UK-headquartered life science companies was around £2.5bn in 2020, which was in line with the 2019 total amount. However, by mid-June 2021, the total for this year is already 3% higher. Additionally, the average deal size for these VC deals is £9.6m, which is well above the 10-year average of £2.5m.

The UK is at the forefront of life sciences in Europe, based upon this finding. As a nation, the UK has two of the top five global universities and attracts the lion’s share of corporate investment funding on a European basis. As a result, the UK is home to some major life science clusters and research hubs. The key hotspots include the following:

Scotland: The last five years has seen companies headquartered in Scotland, in all sectors, raise around £1bn of capital. For the life sciences sector, specifically, there were £170m of deals in 2020, the majority of which occurred in Q2 and Q3. This total is 31% higher than 2019, and the VC share of the total, by value, is 84%. This shows a future strengthening life science sector in Scotland across all the major cities. There is considerable investor interest in real estate assets across the key markets.

North of England: 2020 continues to show a geographical distribution of companies that have attracted some form of capital. The 'Northern Arc' stretching from Manchester, through Leeds and onto Newcastle is important for the UK to show the polycentric nature of the life sciences sector in the UK and provides evidence that the life science sector is prevalent in many locations of the UK, underwritten by strong universities and teaching hospitals.

London: This is emerging as the dominant cluster in the UK and Europe in terms of capital raising. However, it does suffer from a shortage of appropriate science-related workspace, particularly laboratories, to accommodate company demand as a result of them raising capital and headcount growth increasing. London has grown in White City and the King's Cross/Euston Road cluster. There is also an increased appetite to convert office space to life science space, including laboratories.

Oxford-Cambridge 'Arc': This continues to show significant strength of fundraising, with the area 'bookended' by two of the leading universities in the world. The level of appetite for investors in this market area, particularly around Oxford and Cambridge cities.

The leasing activity in the London-Oxford-Cambridge markets is shown below. The take-up level fell during 2020, which wasn’t Covid-19 related, but rather the lack of available stock. Recent investment transactions and development site sales will look to bring more stock to these markets over the coming years. This includes the repurposing of some ex-retail assets in both Oxford and Cambridge city centres.

Poland

Biotechnology and nanotechnology activities continue to support occupier demand across Poland, explains Wioleta Wojtczak

The Covid-19 pandemic has accelerated the growth of pharmaceutical companies in Poland, which is now home to the sixth-largest pharmaceutical industry in Europe. According to the latest available data, the number of companies operating in the pharmaceutical sector in Poland was 482, a 27.5% increase compared to the previous year (2019 vs 2018) and 24,900 employees (3% increase YoY). 41 new pharmaceutical companies were registered during 2020 (22.6% less compared YoY and 18% less compared to the five-year average).

Rapid development of the pharmaceutical sector in Poland is also due to the well-developed academic background. In the academic year 2019/2020 there were almost 145,100 students (medical, biology and related faculties) and more than 41,200 graduates. Biotechnology is especially one of the most popular fields of study chosen by high school graduates, therefore it is included in the program offer of most large universities in Poland.

Pharmaceutical companies operating in Poland, especially those running production facilities and laboratories, are mostly concentrated in Central Poland: namely in Warsaw city and suburbs, Łódź suburbs, followed by Poznań suburbs, Kraków and Rzeszów. Nevertheless, Central Poland is now a major pharmaceutical hub in Poland. R&D centres and laboratories run by pharmaceutical companies are usually located close to, or are part of, the production facility of the company.

Most of the companies own the production facilities or laboratories in which they operate. The exceptions are mainly represented by the company’s main offices, back offices or financial services centres, which are located in the different office buildings.

During the last five years, the annual take-up of pharmaceutical/life science companies in Poland was at the average level of 76,300 sq m per annum, with the largest volume recorded in 2016 (91,600 sq m) and the lowest in 2020 (63,300 sq m). The average share of the pharmaceutical/life science companies of total take-up recorded during the five-year period was 5.4%. The decrease of the take-up volume of the pharmaceutical/life science companies in 2020 is in line with the general occupier activity trend observed in Poland due to the Covid-19 pandemic.

Warsaw, so far, was the main beneficiary of the pharmaceutical/life science companies take-up (circa 66% of total Poland demand during last five years). The regional cities Wrocław and Kraków were home to more than 52% of the entire pharmaceutical/ life science companies take-up recorded in the regions during 2016–2020. 23% went to Poznań and Katowice (11.7% and 11.4% respectively) and 16% to Gdańsk and Łódź (8% each), while the rest (9%) was scattered across such cities as Radom, Kielce, Białystok, Rzeszów or Gliwice.

Biotechnology and nanotechnology are currently the most rapidly developing industries not only in Poland but all over the world. The companies operating on that market focus mostly on novel molecules, innovative therapies and biosimilar products.

According to Statistics Poland data, 268 biotechnology and nanotechnology companies operated in Poland in 2019, 13% less than in the previous year. The number of people employed in the biotechnology and nanotechnology industry remained almost the same compared to the data from 2018 (5,611 vs 5,673 people).

Biotechnology and nanotechnology is also very extensively developing outside the corporate sector. In 2019, 377 entities and 10,254 people were involved in the research and development in this field. At least 100 entities were represented by the units connected with the universities, while circa 30 were from the government sector or non-commercial private institutions.

Many of those entities are located in the technology parks or 'life science' clusters in Poland. Many of the existing clusters in Poland were created as joint ventures between private companies and higher educational institutions, e.g. Nutribiomed Cluster (Wrocław), LifeScience Claster Kraków or Bionanopark (Łódź).

_{Read the articles within Spotlight: European Life Sciences below.}