The hypergrowth experienced by the life sciences sector early in the pandemic has given way to a much more normalized environment today— with funding in the life sciences space having declined 26% year-over-year (YoY), according to Cushman & Wakefield’s September Life Sciences Update.
As firms’ growth trajectories have softened, so has the life sciences lab market with hiring and job postings decelerating in 2023. Although the lab real estate market remains tight, vacancy has increased by 250 basis points (bps) since 2021. The sector is now focusing again on the underlying fundamentals that made it an outperformer during the pre-pandemic years — even before the 2020-2021 spike in activity.
Focus on the Science
- As the global population continues to age, life sciences innovations will be focused on drugs and therapies aimed at tackling aging diseases.
- Building on the success of mRNA vaccines, genetic therapies will continue to attract further research and development funding.
- Addressing supply chain vulnerabilities will likely result in increased on- and near-shoring of biomanufacturing, including biologics, active pharmaceutical ingredients (API) and industrials.
More Disciplined Funding
- Venture capital, a primary source of funding for startups, has entered an era of fiscal discipline. Clinical trial successes will be more critical to securing continued funding.
- Companies, in turn, will need to continue to be more cautious when deploying their capital.
Loosening Labor Market
- The sector has struggled to fill open positions due to a tight labor market.
- A silver lining to the current slowdown is that recent signs point to some easing in the labor market.
The full report can be read here: https://www.cushmanwakefield.com/en/united-states/insights/life-science-report
