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Foreign Direct Investment in Life Sciences Shifting to High Growth Locations Worldwide, Jones Lang LaSalle Study Reveals

Report reveals shifting location choices by pharmaceutical companies, benefitting countries such as Brazil, Canada, China, India, Singapore and Switzerland

CHICAGO, Feb. 21, 2012 — Foreign direct investment in new pharmaceutical R&D, office and manufacturing locations has shifted since the global economic downturn changed industry dynamics, according to a recent life sciences study from Jones Lang LaSalle. Since 2007, companies have adjusted their location strategies to focus on new markets that offer revenue growth potential, cost efficiencies, favorable tax structures and consolidation opportunities. While the United States remains the top recipient of foreign direct investment, Asia (particularly China, India and Singapore) is emerging as a market viewed as ripe with opportunity, not just for cost reduction in manufacturing, but also as a growth market for sales and R&D.  Additionally, Brazil, Canada and Switzerland have emerged since 2007 as top markets for life sciences sector foreign direct investment in both R&D and manufacturing.

Top 10 Markets for Life Sciences Different Before, After the Downturn
In this global study, Jones Lang LaSalle looked at investment in life sciences facilities throughout the world before and after the global economic downturn.  Specifically, the study looks at the top 10 markets for drug and pharmaceutical inward direct investment by country between 2003 to 2010. To establish investment patterns before and after the downturn, the study ranked top markets for such investment during the time period of 2003–2006, then during 2007–2010, and compares the two. 

The analysis revealed key findings regarding which locations are primed to lead industry activity based on where companies are directing their resources, based on the $607 billion of total investments for the period. 

Hear more insights from Bill Barrett in his video blog entry on foreign investment drivers.

“Some countries have emerged during the last decade as major recipients of foreign direct investment in pharmaceuticals, while in others, the industry talks of rationalization or consolidations,” said Bill Barrett, managing director of Jones Lang LaSalle’s life sciences business. “For investors, it’s important to understand trends that affect facility planning, especially the need to realign the enterprise operating footprint with the new realities of how revenue will be generated and how profit margins can be preserved.”
Top 10 Regions of Foreign Direct Investment between 2003 & 2010 (in billions)
United States 
$     112.0
$       53.1
$       49.5
$       45.3
$       29.0
$       26.7
$       14.8
$       14.2
Puerto Rico 
$       14.1
$       13.1
Industry Shifts: Top Markets 2003 - 2006 versus 2007 – 2010
Jones Lang LaSalle Managing Director Matt Jackson added there are several important shifts occurred as the industry made new choices in the 2007-2010 time period:
  • Asia emerged as a location not just for manufacturing, but also as a growth market with double-digit revenue growth potential. As a result, China, Singapore and India emerged as the #2, #3 and #4 markets for foreign direct investment in life sciences. (Only the United States outperformed these markets.)
  • Brazil, Canada and Switzerland emerged as new Top 10 markets in life sciences; before 2007, they were unranked. Government support coupled with educated workforce has been noted as fuelling life sciences clusters in those countries.
  • Ireland and Singapore were noted as favourable locations from a tax perspective, and attracted some investment that might otherwise have gone to Puerto Rico or other jurisdictions with expiring incentives.
  • Outsourcing of support functions such as finance, tax, HR, IR, procurement and customer service led to expansion in Asia, particularly in India and China.
Hear more insights from Matt Jackson in his video blog entry on foreign investment drivers.
Location Preferences Strategically Aligned with Growth, Not Just Cost-Driven
While cost control was a top driver of location selection, it was one of multiple factors, not a singular driver of changes in investment location preferences.  Pharmaceutical companies looked to shift their location strategies to support the following business drivers:
  • Revenue growth potential. Particularly in Asia, double-digit revenue growth potential in certain markets has made them attractive for locating sales offices, as well as manufacturing and R&D.
  • Favorable tax structures. In jurisdictions such as Singapore and Ireland, government-backed tax incentive programs have created opportunities for pharmaceutical and other life sciences companies.
  • Asset efficiency. The global economic downturn led to decreased demand for certain products, which led to overcapacity in many manufacturing locations. Locations that remained open tend to offer flexibility in production, and are conveniently located with other components of the supply chain (warehouses, airports, and so on).  R&D locations have also been consolidated for operational efficiency, and to take advantage of workforce expertise in certain cluster locations.
  • Cost control and operating margin advantages.  Cost reduction and operating efficiency continue to drive investment decisions; however, choices to locate operations tend to consider cost control and operating margin together with other factors.
Jones Lang LaSalle has a team of real estate experts dedicated to helping Life Sciences companies optimize their real estate portfolios.  The firm provides a comprehensive range of facilities management services covering 70 million square feet of space including research, manufacturing and commercial sites with more than 1,000 staff on-site. As the life sciences industry changes, Jones Lang LaSalle’s experts continue to evolve to accommodate the changing environment that companies face.  The firm’s industry leading full-service platform includes: integrated facilities management, engineering and operations, energy and sustainability, transaction management, lease administration and project management.
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About Jones Lang LaSalle
Jones Lang LaSalle (NYSE:JLL) is a financial and professional services firm specializing in real estate. The firm offers integrated services delivered by expert teams worldwide to clients seeking increased value by owning, occupying or investing in real estate. With 2011 global revenue of $3.6 billion, Jones Lang LaSalle serves clients in 70 countries from more than 1,000 locations worldwide, including 200 corporate offices.  The firm is an industry leader in property and corporate facility management services, with a portfolio of approximately 2.1 billion square feet worldwide. LaSalle Investment Management, the company’s investment management business, is one of the world’s largest and most diverse in real estate with $47.7 billion of assets under management. For further information, please visit our website,