News & Articles

Episode 21 – High-Impact Opportunities in Life Sciences

Site Selectors Guild
Episode 21 - High-Impact Opportunities in Life Sciences
/

Rick Weddle: Welcome to “Site Selection Matters” where we take a close look at the art and science of site selection decision making. I’m your host, Rick Weddle, president of the Site Selectors Guild. In each episode, we introduce you to the top leaders in the world of corporate site selection and economic development. We speak with members of the guild, our economic development partners, and corporate decision-makers to provide you with deep insight into the best and next practices in our profession.

In this episode, we have as our guest, Bob Hess, vice chairman for global strategy with Newmark. In this capacity, Bob is team leader for their global business and real estate practice, and he’s responsible for strategy development, quality assurance, business development, and overall client service.

Today, Bob will talk with us about life sciences, an industry he’s conducted many site selection efforts for, and why it is a top targeted sector among scores of metros, ecosystems, corridors, and even countries around the world. Join me as we welcome Bob Hess to “Site Selection Matters.”

Bob, ever since the human genome was mapped, many different forms, or functions, or segments of life science have really become top of mind in economic development. Take a minute, if you will, and explain to our listeners exactly what we mean by life sciences and economic activity.

Bob Hess: Thanks, Rick. Yeah. Life science is such a dynamic innovation — I’ll call it growth industry — that everybody wants to participate in. And here’s some of the reasons why. There’re almost two million jobs in the sector, 100,000 companies. And, obviously, what a lot of communities like to hear is the average salary is anywhere from $75,000 to $150,000, depending on whether you’re looking at technicians or higher-end scientists or even more than that, of course. So, it’s a very high-impact industry.

It also involves a lot of research dollars, you know, almost $200 billion in 2019. And, of course, that’s increasing by tens of billions of dollars every year. So, it’s a global industry. It is an offshoot of different types of fields like biotechnology, pharmaceuticals, biomed, a lot of life system technologies. Maybe you’ve heard of things like nutraceuticals or even cosmeceuticals, food processing, environmental, certainly biomedical devices, and all kinds of issues around therapeutics and biologics.

And it’s all underpinned by a huge supply chain for the life science industry. So, think about stories of all those molecular elements, and biologics, and core blood or blood samples. So, it continues to be just a, you know, big economic driver here in the United States and across the globe.

Rick: Big driver, it is. Let’s follow up a little bit, kind of unpack that set of definitions a bit. Talk a little bit about how the growth of this industry from a job-creating standpoint. Because, you know, in a life science facility, there’s a lot of different…not everybody in there is a PhD scientist. There are a lot of different kinds of jobs associated with it. Do you have any comments on that?

Bob: Yeah. No. It’s a lot. It’s like the word “supply chain.” It’s a huge concept in that industry, different elements, different segments. This could get into agriculture, too. This can get into, obviously, the health care systems. This is about improving people’s lives and quality of life, and making sure that we improve the health, secure more sustainable food supply, promote cleaner energy, too. It all is linked to the life science sector.

But, yeah, there’s something for everybody in the life science sector. Yeah, you could be working in medical device industries, you know, where the skill level might be a little bit lower. And you need more technicians on a skill labor. You can move into the lab environment, you know, and, of course, there you need clinical medical technologists, clinical technicians. Not all of them have to have college degrees. And then, of course, you move into the more, you know, development side and the R and D side. Of course, then, you get into scientific skills, research skills.

So, it’s a very broad set of skill groups, which I think most communities would find very attractive because there’s something for everybody. And then it will continue to be as the… You know, the human genome was mapped 20 years ago, and all of these innovations come into play. And one thing I do want to mention is the whole issue of big data and the analytics and AI sitting on top of the life science industry has just exploded that it’s allowing it to move quicker, have more innovation, come up with new therapies, different derivations of, you know, anywhere from cell biology, stem cells. So, there’s a lot going on. It’s just accelerating even more and more, Rick.

Rick: You know, Bob, it’s kind of hard for our listeners probably to get their head around it. You think about it. Because you’ve mentioned medical devices. So, there would be the businesses made up of actually making a device that would either deliver or be a part of a therapy. I guess, the manufacturer are making a research and development of a drug or a therapy, which is also an element of that, but then also you mentioned big data and AI. In the old days, most of the work was in the lab. Now, a lot of it is on the computers.

Bob: This is a very exciting part of the industry. It’s also spawned new fields like bioinformatics and, you know, other types of skills where you actually, you know, look at the data, the output, the inputs, run diagnostics with these amazing diagnostics machineries where you can put in a lot more into the front end of that, the bough and the backend comes data. So, right now you’ve got this burgeoning industry where it has been pharmaceutical and biotechnology, but now you’re throwing in health care. And then you’re throwing in information systems. And so, it’s kind of, like, a combination of all of these things.

Right now, I’m working for a company in the industry. It’s so exciting [inaudible 00:05:53] where the front end is basically, you know, a raw product. You know, it involves parts of people’s, I guess, bodies, for lesser terms. Samples from all over the world. The outcome of that will actually be diagnostics and data relative to cancer treatment, cancer diagnosis and other types of rare diseases, enzyme deficiencies. We’re at an exciting time where we could actually take all this computing power, apply it to, you know, an industry that’s always had lots of data. Right? Lots of data that has to be verified and actually increase the accuracy and efficacy and the actual results to help people’s lives. Such an exciting time, Rick.

Rick: So, this is an industry that is obviously at the forefront of the latest technology, the latest development, the latest use of big data and all that. So, we get that. It’s something we want to attract or grow in our communities. But, Bob, from your perspective, what do you see, specific as you can be, about what it takes to attract the different types of life sciences activities to a community?

Bob: Yeah. As I mentioned before, there’s… You can segment the life science industry. There are lots of different segments. So, obviously, the crème de la crème is research and development, which is primarily…it can be a very localized industry to, like, say, Iowa, to, you know, ag chem or, you know, issues around agriculture. And it could be in smaller rural areas, too, with universities and smaller towns like Des Moines and things of that sort — I was just there for a conference — to R and D actually searching the globe for the best scientists in the best places, to attract talent from across the globe. You know, some companies have their R and D in Shanghai. Some would have it in Dublin. Some would have it in Zurich, Switzerland. And, obviously, San Francisco, Boston.

So, there’s that research and development. And then there’s the actual, I call it the commercialization from that. So, some of these companies have their first manufacturing plants. Well, where are you going to put that? Are you going to put that right next to the R and D, which is typically more of a higher cost environment, maybe more of an urban environment? So, you’ve got to look for manufacturing environments. Of course, that opens up the geography. Right? Different clusters and ecosystems, countries.

Then it moves into more, you know, like, distribution. You can get into sterile, fill, finish, like, for vaccines. And then you can get into all kinds of different types of storage facilities. So, again, there’s something for everybody here. A lot of the times, it doesn’t have to be in the campus environment. There are large campuses. Like, you can look at Roche and Novartis and, you know, GSK and those types of companies. They want to have a campus environment where they have different functions working together, adjacency, innovation, people coming together exchanging ideas.

But there’s plenty of companies and examples where manufacturing is not [inaudible 00:08:37] with R and D. And distribution and manufacturing could be anywhere.

Rick: So, you’re really describing a process where maybe once upon a time, a lot of these big companies had all these things together or a lot of them together around one big mother plant, if you will, from kind of the whole food chain, to really where it’s broken up and different pieces can go in different communities or different locations where they can maximize or optimize their performance, I guess. Does that make sense?

Bob: Yeah. Yeah. It’s about ecosystems, infrastructures. So, if you’re a medical device company… Look at Indianapolis. Let me use it as an example. It’s a great example. Of course, you’ve got Eli Lilly there. Huge company. They’re involved in many different therapeutics and biologic. R and D is also there, but you also have some smaller manufacturing facilities outside of the region. And, of course, they have plants all over the…and facilities all over the globe.

So, it depends on the critical location factors, right, where we’re talking about site selection today on this podcast. So, it’s about talent, sourcing the talent, finding the talent, securing the talent, what type of talent. Again, it could be lower skill all the way to the PhDs. You’re going to need sites and infrastructure and real estate. You know, with the life science industry, a lot of times it’s very capital-intensive. You’re going to have bioreactors, lots of machinery, things of that sort. The lab space…by the way, lab space is at a premium these days. It’s hard to find plug-and-play lab space across the country. So, that’s something to keep in mind.

Then it gets into things like utilities, the infrastructure, the sites, and of course the business climate. Where is a place that you can scale your operations? Scalability, by the way, is a very important thing to these companies. A lot of these companies are growth companies. Right? They started out as a $20 million concept in Silicon Valley. Gets funded by, you know, $200 or 300 million investors, and all of a sudden, they’re off and running with a new product. And then they get purchased. And at some point, they say, “Well, I need to stay in Silicon Valley. Is there a better place to manufacture?” So, lots of decisions along the way that involve good site selection processes, critical location factors. And every…if you look at a map, every state, every region, every metro, they’re after the life science industry and you know why. I just talked about it in this podcast. It’s a strong economic impact industry with different needs and different drivers.

Rick: And the growth trajectory has been one way, and that’s up. Just the path to…as we find this industry becoming more and more important over time. You know, this seems to make sense. And I think everybody can kind of understand how a large community with a research university or a strong economic brand with well-developed capabilities could compete for life science. But what about smaller communities? How does a small community have an opportunity to participate in this life science industry, or in some piece of it or some specialized area of it?

Bob: I think the best way for me to comment on that is to actually bring up a project from the past many, many years ago. It was brought on by a utility that had been working with a number of communities around Georgia. This is a large storage utility. And they were looking at various communities, and they were looking at retraction retention strategies, how could they create jobs, improve the quality of life, everything. All communities are trying to do that. Right?

And this community, which is roughly about 50 minutes outside of Atlanta… Because that’s going to be important for… This industry is very global. So, you have to be able to get places. Whether you’re going to go to China or just another metro down the road, up to the northeast or you got to go to your R and D center. So, you’re going to have to always be near a larger airport. That’s going to be…you know, could be an hour, an hour and a half max outside. But this community was about an hour outside. It’s just a matter of looking at your assets. So, they had four clinics in town. They had four hospitals with some small research capabilities going on in some of those clinics.

Well, we sat down, did some asset mapping, looked at what we were doing to those clinics, saw some synergies. Actually, talked about venture capital. I mean, there wasn’t a lot of venture capital in this part of the state or even Georgia at the time. But they actually had, you know, I’ll call it old money in the community where they had leadership that wanted to create and grow their own jobs, grow their own before they attract it. Especially in this industry, you know, that’s a really good attracter to grow your own. So, basically, you got these clinics together, the doctors, the universities, the centers. We got some money together. They created their own, you know, research clinical operation there that, you know, was involved in various therapeutics. You know, it wasn’t a lot of jobs, initially. It was, like 5 or 10 jobs. But that’s where it starts. Right? So, there’s a good chance…

So, this community was only 50,000…25,000 to 50,000, depending on whether the city or the county. You can move on to places like agriculture. By the way, the agriculture industry, geez, it’s about a $3.7 trillion industry. Look at companies like Indigo based in Boston. And they’re working in rural communities. They’re working with the rural universities, like in Ames, Iowa and other universities like that in rural states, making sure some of their programs get in front of farmers, increase yield, food processing, you know, actually make our food better, healthier. So, that’s a very rural activity. Right? You’re out there in the farm fields, making sure you bring science and technology to the actual growers and vendors. So, there’s just something for everybody there, Rick, in my mind.

Rick: That’s really interesting, the ag piece of it and how it relates to the whole…I mean and shares the same kind of technology requirements that you might find…a cancer drug finding. I mean, obviously, you have research, you have development. It has to be commercialized. There’s a lot of fieldwork and things of that sort. So, it’s really interesting they often don’t think of ag as a related field to what you would normally find in life science or health care. But that’s pretty important. What about the health care delivery system itself for smaller communities? Are there ways they can enhance that piece of it? Like, I’m very impressed with your story about the case study of the small community that really started their own and grew their own. But the whole delivery system is a part of that also. Right?

Bob: Yeah. Well, just quickly back to the ag side. I just want to mention yield, efficiency, microbiology, regenerative farming, reducing chemicals in fertilizers. So, there’s good things going on there, absolutely. Relative… State your question again.

Rick: Well, the question about…like, if you’re… So, let’s say I’m a small community that maybe I’m a little farther than an hour away from a major airport, but I have a strong clinical capability with, you know, the…on the health care delivery side. Are there opportunities to benefit from this growth industry in that type of community also?

Bob: Oh. Great question. Thank you for bringing that up. So, I’m going to use another…a case study. So, about six or seven years ago, my firm got hired by the State of Mississippi to do something called Mississippi Blueprint Health Care. So, it was the governor’s initiative to look at the intersection of health care and economic development. In the past, the intersection wasn’t really looked at, I’ll call it in a very nuanced or I’ll call it strategic way. It was just like, “Oh, hospitals happen, right? We need health care, we need doctors, we need local clinics. Things happen. Health systems come in. They come and go.”

But when you really start looking at, like, a hospital, I mean, the average salary could be $70,000 to $80,000 with nurses. You look at the equipment, the vendor, the supply chain in the region. So, I really applaud Mississippi back then. And many states have done this since then. They looked at health care as an economic driver. So, what’s going on in that hospital is related to, you know, the bio-industry and the pharmaceutical industry. It could be a supplier cluster or ecosystem an hour, two miles down the road where they can make a product, actually provide, you know, even materials like gauze and supplies.

So, there’s these big…I’m familiar with the concepts of equipment…original equipment manufacturers in automotive, the OEMs. Some of these hospitals are like OEMs. And actually, some of these ecosystems, larger communities are like OEMs. And around them, they do pull on these smaller edge communities, suburban communities, standalone communities where there could be a manufacturing facility, a certain process or a vendor that can participate in a life science industry. So, again, it just depends on the critical location factors, the industry and, you know, all the inputs and outputs. But again, this can move into smaller communities and that’s also an area where a lot of medical device manufacturers have gone to lower-cost manufacturing communities in the Southeastern United States. It’s been a prevalent trend in the years past.

Rick: And that’s why this is such a demand…high-demand industry for so many of our communities going forward. Let me get you to switch gears just a bit as we now look into 2020 and beyond. Maybe you could put…look into your crystal ball and tell us, our listeners what you see or where do you see the life science industry heading. What changes, what shifts? What’s going to happen around the corner here?

Bob: It’s going to continue to be… Because this involves people’s lives and health care. Obviously, health care is in the bull’s eye, too, right? And preventative health care will get involved, and more, some of these innovations like some companies are doing red blood cells right now. Or I don’t know if you’ve heard of this new technology called CRISPR where you can actually do gene editing and make stem cells invisible to, you know, the immune system. So, everybody listening to the podcast, you know, look up CRISPR. That’s clustered regularly interspaced short palindromic repeats. I won’t say that again. But CRISPR is going to be the basis for a lot of cell biology, actually change the DNA of the cell, [inaudible 00:18:38] an enzyme or a certain component of that cell.

So, this is going on all over the place, Rick. It’s happening in labs, in all the places like Boston, San Francisco, you know, the big clusters, RTP of course, Raleigh Durham, North Carolina area, other clusters. So, there’s just a lot of innovation going on. It’s being powered by this whole issue around big data and technology and being able to run, I’ll call it, a lot of batches or different ways of looking at things. I mean, this is a tremendous amount of innovation, investment going on.

The R and D investment is going to be increasing, like I said, like, 30 to 40 billion a year if nothing really stops it. And all this computational biology and software engineering and business computing. Even cybersecurity is included in this. All that is kind of intersecting. And if it’s pointed in the right direction and if it’s brought together in the right environments with the right investors in the right environments, we’re going to continue to cure cancer, diagnose cancer, we’re going to continue to beat diabetes, we’re going to continue to go after some of these rare diseases and autoimmune diseases. And that’s what this is all about.

You know, the one thing that does worry me is the cost of R and D. I mean, R and D costs are, you know, 70% to 80% of the overall investment sometimes in developing a therapeutic or drug. That’s a lot, a lot of dollars. So, there’s going to have to be a lot of discussion about regulatory issues, who actually gets released to develop things. There’s going to be a lot of mergers and acquisition. By the way, M and A is a big part of the life science industry. Trillions of dollars. And we start small and then you get to medium and then of course the big boys want to look at you.

So, those are a number of things. I’m not the mighty Karnak [SP]. You’re a wizard when it comes to what’s going to happen. All I know is after the human genome was mapped back in the early 2000s and then, you know, with all of these…you know, the popularity of the industry in terms of what it involves…it has a purpose, right? When we work for clients in this industry, it just drives us to do extraordinary things. Why? Because there’s a mission involved. It involves people’s lives and their economic prosperity and their health. And that still drives the millennial population and the new talent coming into the marketplace. They want to work for a purpose-driven organization, and this is truly a purpose-driven industry with many segments are going to make a big impact, Rick.

Rick: It’s one that really makes, as you said, a huge, huge difference. You’ve taken us, Bob, from mapping the genome to begin with, now to editing. And I’m going to have to go do some Googling on CRISPR myself to make sure I understand. I’m not going to ask you to repeat the specifics of that, but you’ve really had a great conversation with us today. But that’s really about all the time we have.

So, let me just pause and say thanks to Bob Hess with Newmarkfor taking life science and unpacking it and helping us understand what it is today and what it will be tomorrow, on this episode of “Site Selection Matters.”

Bob: Thanks, Rick. Appreciate it.

Rick: Thanks for listening to this episode of “Site Selection Matters.” And a special thanks to Bob Hess for helping us get inside and better understand life sciences and the breadth and depth of this industry for job creation and investment all across the globe. What an informative discussion that left us with a lot to think about. This podcast represents my views and the views of my guest, and they do not necessarily represent the views or opinions of the Site Selectors Guild or its membership. Again, I’m Rick Weddle, president of the Site Selectors Guild. We hope you’ll subscribe to the “Site Selection Matters” podcast on Apple Podcast, Stitcher, Spotify, or wherever you get your podcast. We look forward to bringing you some great discussions in the year ahead. Until next time, good day.