U.S. Site Selection Profile: Life Sciences Industry
by Michaela Martin, on Nov 9, 2023 9:30:00 AM
A variety of industries have contributed to unprecedented site selection activity in the U.S. since the COVID-19 pandemic, but among the most consistent has been the life sciences industry. Life sciences is a diverse and dynamic industry that continues to evolve with technological advances and growing market demands.
Site Selection Group, a full-service location advisory, real estate and economic incentive services firm, is active in the life sciences industry and proactively follows national site selection trends. While life sciences may be a catch-all term, it is crucial to distinguish between the many sectors investing in the U.S.
The many sectors of the life sciences industry
- Biotechnology uses living organisms, parts of organisms, and biological processes from plants, mammalian cells and bacteria to develop new products and processes utilized in the agricultural, industrial and environmental industries. Examples include food additives, protein engineering, pesticides, GMOs and biosensors.
- Pharmaceuticals are any drug produced or used for medicinal purposes. Pharmaceutical components can be copied and reproduced for generic forms of medicine. The essential differences between biopharma and traditional pharma are the ingredients and drug development process.
- Biopharmaceuticals are drugs made from living cells or organisms used to treat and prevent critical human health issues such as cancer, diabetes and autoimmune diseases. Human insulin was the first biopharmaceutical created and approved in the U.S.
- Medical devices/Medtech involves the development, manufacturing and distribution of medical devices, equipment, and diagnostic tools and testing. Examples include prosthetics, pacemakers and radiation therapies.
Top site selection considerations for current life sciences projects
While every life sciences site selection project is driven by a set of criteria unique to that company, there are several broad themes. The following list represents the three drivers prevalent in most life sciences projects:
- Workforce: Access to critical talent is arguably the most influential site selection driver for life sciences sectors across the United States. A skilled workforce with STEM knowledge and skills is required across the value chain, from researchers and data scientists to expert production technicians and engineers. In addition to having an available talent pool, access to workforce training to develop a long-term talent pipeline is vital.
- Established ecosystem cluster: A concentration of research universities and institutions, industry associations and other compatible companies provide the necessary support for this rapidly evolving sector. This established presence supports innovative scientific development, capital funding, third-party lab space and overall collaboration. Currently, there is tremendous activity on the periphery of large population bio-markets across the United States. This leverages proximity to established ecosystems.
- Favorable operating environments and economic incentives climates: Modern life sciences projects tend to be capital intensive. Therefore, a substantial ongoing cost burden for most companies is related to state and local taxes. It is no coincidence that newer life sciences markets are blossoming in more business-friendly states, as well as states that are willing to reward job creation and capital investment with economic incentives.
Recent life sciences site selection announcements
The following represents five notable life sciences site selection announcements from the last six months. The common thread was geographic location on the periphery of a prominent life sciences hub anchored by established and emerging ecosystems supported by a talent pipeline.
- Eli Lilly and Company (Lebanon, IN)
Investing $1.6 billion and creating 200 new jobs with two new manufacturing facilities to expand its network for active ingredients and the latest therapeutic modalities, such as genetic medicines.
- ProKidney (Greensboro, NC)
Investing $485 million and creating 330 new jobs to establish a new biomanufacturing facility for chronic kidney disease.
- Meissner Filtration Products (Meissner Corp.) (Athens, GA)
Investing $250 million and creating 1,700 jobs to produce advanced microfiltration and therapeutic manufacturing systems at a new facility.
- Trendco USA (Tuskegee, AL)
Investing $43 million and creating 292 jobs to produce nitrile medical gloves at a new facility.
- Isotopia Molecular Imaging (Westfield, IN)
Investing $20 million and creating 50 jobs at the first U.S. facility to produce a radioactive medical isotope used in pharmaceuticals for targeted cancer treatment.
Economic incentive packages vary by state and locale
While operational factors such as access to a skilled workforce and an established ecosystem drive site selection early in the process, economic incentives can often be the differentiation between candidate locations. Using fDi Intelligence, Site Selection Group tracks economic incentive packages in the life sciences industry. The following represents several incentive deals completed in the last four years (top three per year).
Capital Investment ($M)
Incentive Amount ($M)
|Eli Lily and Company||IN||2023||1.6||200||293.03|
|Meissner Filtration Products||GA||2023||250||1700||12.5|
|Eli Lily and Company||NC||2022||1||600||16.03|
|Global Life Science Solutions||MI||2022||430||200||5.7|
|FUJIFILM Diosynth Biotechnologies U.S.A.||NC||2021||2||725||21.75|
|Eli Lily and Company||NC||2020||470||462||11.59|
|Elanco Animal Health||IN||2020||300||573||150.5|
*These values typically reflect publicly announced state-supported incentives and may not reflect local and other support.
Overall, economic incentive assertiveness can differ considerably by region. The following represents the most common types of incentives currently being leveraged by companies.
- Property tax assistance: Whether in property tax abatements, refunds or payment in lieu, offsetting property taxes can be a meaningful incentive for these large capital investment projects.
- Infrastructure and development assistance: The most popular mechanism to offset upfront capital investment is assistance aimed at infrastructure and or civil development costs.
- Job creation cash grants: While the most coveted by companies, upfront cash assistance is becoming less popular among states and communities. However, several states still offer closing fund assistance based on job creation and payroll.
Life sciences site selection outlook for 2024
The COVID pandemic showed the volatility of the global supply chain, shipping and logistics channels, causing the re-evaluation of onshore and nearshoring efforts of many critical components required to support the life sciences industry. This activity resulted in record growth in life sciences from 2020 through 2022.
As the industry growth starts to level out due to financing turmoil, inflation and political uncertainty in some countries, Site Selection Group sees the life sciences industry continuing to stay stable with steady demand for product development, M&A activity, clinical trials and research and development-supported venture capital funding. Given market activity and the fierce competition for resources, it’s more important than ever for life sciences companies to employ an objective and rigorous framework for their location decisions.