This report analyzes the responses of life sciences CRE executives to JLL’s 2013 Global Corporate Real Estate Survey. Their views point to some alignment challenges for the CRE function in the industry while emphasizing extremely high demands for optimizing portfolios that shift across geographies.

1. Rewriting the code
of Life Sciences CRE
2014 Corporate Real Estate
Trends for the Life Sciences Sector

2. 2 2014 Corporate Real Estate Trends for the Life Sciences Sector
The life sciences industry has experienced major upheavals in recent years. The changing
healthcare landscape, patent cliff, tighter regulations and pricing pressures have forced
companies to reconsider their business models and revamp their organizational structures.
Industry leaders are focusing on improving efficiency, driving down costs and building more
productive R&D platforms. This often leads to significant layoffs, acquisitions, spin-offs and
relocations to more promising markets.
These changes inevitably affect corporate real estate (CRE) operations, demanding innovative
solutions that can support the overarching corporate strategy. After R&D, real estate costs
are among the most significant expenses for life sciences companies. From sophisticated
laboratories and compliant manufacturing facilities to modern offices with flexible workplaces—
optimized and efficient real estate portfolios are required to uphold business goals while
supporting the bottom line.
This report analyzes the responses of life sciences CRE executives to JLL’s 2013 Global
Corporate Real Estate Survey. Their views point to some alignment challenges for the
CRE function in the industry while emphasizing extremely high demands for optimizing
portfolios that shift across geographies.
Please refer to JLL’s Global Corporate Real Estate Trends report for global CRE trends.
Three CRE trends for the life sciences sector:
1. CRE’s disconnect with business strategy creates
performance risks
2. Mounting senior leadership demands for portfolio
optimization put more pressure on CRE teams
3. Geographical shifts compel portfolio reshuffles
Introduction

3. JLL 3
CRE success hampered
by a disconnect with
the C-suite
The CRE function is quite well established in the life sciences sector. Sixty-three percent
of CRE employees and 48% of global heads of CRE in this industry are positioned within a
dedicated CRE department (compared with 55% and 38%, respectively, in other industries).
Yet respondents report a degree of disconnect between CRE departments and overall
business strategy and operations, which potentially limits the contribution and visibility of the
CRE function within an organization.
The biggest factor contributing to the disconnect between CRE departments and business
strategy is a lack of communication with the C-suite. In fact, among all sectors, life sciences
CRE is the least connected to the C-suite, with the majority of CRE executives reporting at
the managerial level (Fig 1). This issue stems from the organizational structure life sciences
firms tend to have: revenue-generating activities report directly to the C-suite, while support
functions report to lower-level officers. Since the CRE function is not seen as a core element
of the business, it is not top of mind for the C-suite when making important planning decisions.
This prevents the CRE function from contributing to the leadership agenda and, consequently,
reduces its impact on the overall corporate strategy.
Figure 1. Reporting lines for the global head of CRE
Question: To what level of the organization does the global head of CRE currently report to?
Note: C-suite refers to senior company executives such as the CEO, COO and CFO; managerial
level includes presidents, vice presidents and managers; executive level includes officers and
supervisory roles; and operational level includes administrators, personal assistants and clerks.
Life sciences Other industries
C-suite Managerial Executive Operational Other
38%
59%
46%
25%
13% 14%
1%
4%
1%

4. 4 2014 Corporate Real Estate Trends for the Life Sciences Sector
Given the limited connection with the C-suite, it is not surprising that a lack of sustained C-suite
commitment represents a major challenge for CRE teams. More than half of the life sciences
respondents reported that it was the key constraint hindering CRE from enhancing itself as a
strategic value add to their organization compared with less than a third in other sectors (Fig
2). The lack of C-suite commitment even outweighs financial constraints, which is cited as the
most challenging hurdle for CRE across all organizations.
Figure 2. Major constraints hindering CRE from enhancing its strategic position
Question: In your opinion, what are the top two constraints that are hindering
CRE from enhancing itself as a strategic value add to your organization?
Another important factor affecting CRE performance is team organization. A third of life
sciences respondents pointed out that the fragmented and/or decentralized nature of their
teams prevents them from adding strategic value to their organization. This, again, could be
explained by the typical structure of life sciences firms which tend to be organized around
products (by therapeutic area) or by business unit.
Life sciences Other industries
C-suite
commitment
Financial
constraints
Fragmented
team
Data and
analytics
Skill sets/
knowledge
31%
37%
56%
49%
33%
26% 26%
35%
22%
26%

5. JLL 5
This fragmented structure, combined with the lack of rapport with the C-suite, appears to
affect the CRE relationship with other corporate functions. CRE’s collaboration with the human
resources (HR) department is currently the most limited of all industries—with just 19% of life
sciences CRE respondents engaging in shared services integration with HR and 22% not
having any interaction at all (Fig 3). While in other sectors, CRE functions are expected to have
a significant increase in collaboration with HR in three years’ time, integration in life sciences
will only see a slight upturn to 26%.
Figure 3. Level of integration with other corporate functions, today and three years
from now
Question: How would you describe the collaboration of CRE with the following business
functions today and in three years’ time?
Note: Percentages represent proportion of ‘shared service integration’ responses.
A decentralized CRE organization that is disconnected from other business functions and
from the C-suite can create significant performance risks for CRE teams. With little linkage
to business strategy, CRE departments may have to operate primarily on a tactical level
where day-to-day business needs drive CRE activity. In addition, following rapid business
transformations, CRE teams often have to respond to immediate requirements of reorganized
or relocated business divisions which may also limit them to tactical solutions. The challenge
for CRE teams in life sciences companies is to balance the need for responsiveness and
optimal real estate solutions at a local level, while ensuring greater proactivity and alignment
with overarching strategic objectives.
Life sciences All industries
HR now HR in
3 years
IT now IT in 3
years
Finance
now
Finance
in 3 years
27%
45%
31%
46%
51%
60%

6. 6 2014 Corporate Real Estate Trends for the Life Sciences Sector
As life sciences companies continue to transform, senior leadership expectations for
optimized portfolios are increasing exponentially. Demands related to portfolio efficiency,
costs and flexibility are the most critical and are expressed to a higher degree than in
most other sectors (Fig 4).
Figure 4. Increasing senior leadership demands on CRE
Question: How are the demands of senior leadership/C-suite on the CRE team changing
in the following areas? (Those who responded that demands are increasing)
Demands for portfolio efficiency represent a major challenge for CRE teams. Life sciences
companies traditionally own many of their core assets, including R&D labs and manufacturing
facilities. However, as the industry evolves, companies are exploring new products, using new
Strong demands for
portfolio optimization
Increasing the utilization of existing buildings
in the portfolio
Transforming the quality of the portfolio/workplace
Enhancing productivity of the real estate portfolio
Reducing direct real estate costs
Reducing the run costs of the real estate portfolio
Challenging the business on its presumed
space needs
Presenting scenarios and solutions to the business
on demand, bringing innovation into the real estate
function and portfolio
Life sciences Other sectors
93% 72%
81% 63%
74% 66%
85% 74%
81% 71%
74% 63%
67% 63%
EfficiencyCostsFlexibility

7. JLL 7
Regional portfolio
reshuffle
“Novartis is shifting its center of
gravity toward these fast-growing
markets, particularly China, in
order to drive growth, gain access
to broad distribution networks,
tap into local market expertise and
move a higher volume of medicines
to those in need.”
Joseph Jimenez
Novartis CEO, in China Daily
1
For more details on property disposal solutions, please see the JLL report Releasing Value from Complex Assets.
The life sciences industry’s move to more profitable and faster growth models includes
reorienting their geographical presence, focusing on opportunities in emerging markets. The
changes in life sciences real estate portfolios that follow are some of the most drastic among
all industries. (Map 1)
Our survey showed that over a third of life sciences companies anticipate reducing or
consolidating their real estate portfolios in European markets, such as the Netherlands, Italy
and Spain (with 0% planning to increase). On the other hand, 63% and 48% plan to increase
their portfolios in China and Brazil, respectively (with 0% planning to decrease). Russia, the
third most favored market, is expected to see 35% net portfolio growth.
Life sciences companies are not only moving their production facilities—whole business units
and R&D centers are shifting to emerging markets as well. Countries such as China, Brazil
and Russia are investing heavily in global drug development businesses. New life sciences
clusters lure companies by offering access to universities, research institutes and open
innovation platforms. Partnership schemes allow companies to tap into local talent pools
and share facilities.
technologies and research methods, and employing different operational models. Hence,
their historical facilities often become unsuitable and underutilized. In addition, many
companies face the challenge of surplus facilities acquired through M&A activity, which
makes their portfolios even more complex to manage.
As a result, life sciences companies are increasingly implementing strategies such as
asset disposals, portfolio consolidations, and flexible workplace solutions.1
For example,
GlaxoSmithKline has sold some of its buildings and consolidated its R&D portfolio in North
Carolina, USA to reduce its Research Triangle Park space by almost 50%. Combined with its
SMART Working program, this portfolio optimization project saves the company millions of
dollars per year.

8. 8 Global Corporate Real Estate Survey 2013
Multinational life sciences firms realize the importance of creating a presence in emerging
markets beyond manufacturing and distribution. In 2012, AstraZeneca announced it would open
its China Innovation Center in Pudong, Shanghai, a facility that would produce injectable and
oral drugs for the domestic market. In 2011, Pfizer opted to relocate its antibacterial research unit
from Groton, Connecticut (USA) to Shanghai, at its Pfizer China Research and Development
Center. Following the strategic move from ‘made in China’ to ‘created and discovered in China’,
Sanofi established its regional R&D center in Shanghai, while the purchase of Medley SA in
2009 gave Sanofi ownership of Brazil’s third largest pharmaceutical company and the country’s
biggest maker of generic drugs.
Such geographical shifts will continue in the future, leading to more changes in real estate
portfolios. This, in turn, could prompt life sciences companies to increasingly partner with
service providers as a way of gaining flexibility and expertise in less familiar markets. Life
sciences companies are already the most active sector in outsourcing their portfolio and facilities
management (22% are fully outsourcing, compared to 13% in other industries), and this trend
is expected to increase in the next three years—to a point where one-third of life sciences
companies fully outsource these activities.
Map 1: Net portfolio growth anticipated over the next three years (life sciences companies)
Question: Over the next three years, how will your portfolio evolve in each of the following regions?
Note: Net portfolio growth percentages in this map are obtained by deducting responses
anticipating portfolios to decrease from responses anticipating portfolios to increase.
Other possible responses (‘remain the same’, ‘do not know’ and ‘not applicable’) were left out.
Country
Rest of
Region
Negative Net Portfolio Growth (30+%)
Negative Net Portfolio Growth (11-29%)
Negative Net Portfolio Growth (1-10%)
Stability (~0%)
1-10% Net Portfolio Growth
11-29% Net Portfolio Growth
30% + Net Portfolio Growth

9. JLL 9
CRE C-suite
Corporate
function
Core
business
Conclusion The unprecedented business transformation in life sciences is having a profound impact on
real estate portfolios. Senior leadership is placing immense pressure on the CRE function to
deliver optimized, effective and cost-efficient portfolios, as well as to support the drive into new
and emerging markets. Yet it is clear that evolution is also required in CRE itself.
Best-in-class life sciences companies have recognized the shortfalls of a localized reactive
model and are now investing significant effort in better alignment with the core business. This
is evidenced through the reorganization of a number of CRE teams in leading life sciences
companies, as well as changes to reporting structures. Better alignment with the broader
business through the use of quality data and proactive portfolio management and strategy
is also in focus.
To succeed in the dynamic life sciences business environment and capitalize on the expansion
in emerging markets, CRE teams will need to reinforce their dialogue with the C-suite,
establish and drive a closer collaboration with other corporate functions, and ensure effective
communication and alignment between local, regional and global CRE departments. Only after
proving its strategic role—boosted by senior leadership support—and working cohesively with
the other functions will life sciences CRE be able to provide optimal solutions for the business
on all levels (local to global) and in all geographies.

10. 10 2014 Corporate Real Estate Trends for the Life Sciences Sector
Business Contacts
About JLL
Christian Beaudoin
Director of Corporate Research
Americas
christian.beaudoin@am.jll.com
Susan Sutherland
Director of Corporate Research
Asia Pacific
susan.sutherland@ap.jll.com
Kateryna Kyryllova
Manager of Corporate Research
Asia Pacific
kateryna.kyryllova@ap.jll.com
Tom Carroll
Director of Corporate Research
Europe, Middle East, and Africa
tom.carroll@eu.jll.com
Richard McBlaine
Managing Director
Corporate Solutions
Americas
+1 312 228 2793
richard.mcblaine@am.jll.com
Mike Walsh
Managing Director
Corporate Solutions
Asia Pacific
+65 6494 3891
mikeE.walsh@ap.jll.com
Charles Tillett
Director
Corporate Solutions
Europe, Middle East and Africa
+44 (0) 207 852 4643
charles.tillett@eu.jll.com
Contributing authors
JLL (NYSE:JLL) is a professional services and investment management firm offering
specialized real estate services to clients seeking increased value by owning, occupying
and investing in real estate. With annual revenue of $4 billion, JLL operates in 75 countries
worldwide. On behalf of its clients, the firm provides management and real estate outsourcing
services for a property portfolio of 3 billion square feet and completed $99 billion in sales,
acquisitions and finance transactions in 2013. Its investment management business, LaSalle
Investment Management, has $47.6 billion of real estate assets under management. For
further information, visit www.jll.com.

11. JLL 11
About JLL Corporate Solutions
A leader in the real estate outsourcing field, JLL’s Corporate Solutions business helps
corporations improve productivity in the cost, efficiency and performance of their national,
regional or global real estate portfolios by creating outsourcing partnerships to manage and
execute a range of corporate real estate services. This service delivery capability helps
corporations improve business performance, particularly as companies turn to the outsourcing
of their real estate activity as a way to manage expenses and enhance profitability.
Acknowledgements
JLL gratefully acknowledges the assistance of those CRE professionals who participated in this
survey, and Kadence International, our market research partner. We welcome any feedback
on the published results to continue to improve future editions and make them as meaningful
as possible for our readers. If you have any comments or would like to participate in future
surveys, please email insightteam@jll.com.
Visit www.jll.com/globalCREtrends to explore the global trends in more detail.
See how CRE executives based in your region responded and compare your
answers with the global survey results.

12. www.jll.com