The life sciences industry in the United States is a dynamic and rapidly evolving sector. From pharmaceuticals to medical devices, biotechnology to genomics, it is responsible for some of the most important innovations in modern medicine.
With a focus on improving patient outcomes and reducing healthcare costs, the industry is driven by a combination of scientific research, cutting-edge technology, and entrepreneurial spirit. In this article, we will take a closer look at the life sciences market in the U.S., with a focus on emerging markets and labor market trends in 2023, and beyond.
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U.S. life sciences emerging markets
Record life sciences years in 2021 and 2022
The U.S. life sciences market, which grew sharply in response to the Covid-19 pandemic, is returning to more normal levels following record years of growth in 2021 and 2022. However, laboratory and Research & Development (R&D) facility space remains at pre-pandemic levels, with forecasts suggesting this may increase by a further 20% over the next two years, with a record high of 40.2 million square foot of construction underway. The regions with the most lab and R&D space under construction are Boston/Cambridge, followed by the San Francisco Bay Area and San Diego.
Cumulative lab space in these markets has expanded by 47% since 2018, according to the recently published CBRE life sciences 2023 outlook, to 220 million square feet. The strong demand for research facilities is a positive sign for the U.S. life sciences R&D labor market, with almost a third of extra space already pre-leased or under currently under construction. The level of R&D activity is supported by research recently published in the Deloitte Life Sciences Industry Outlook, which states that 91% of life sciences companies plan to invest in R&D innovation in 2023.
Life Sciences Job Growth in the U.S.
Despite record employment within the U.S. life sciences industry, with 2.1 million jobs at the start of 2023, overall growth has slowed. The current economic climate, high interest rates, and a reduction in private and public funding have all contributed to the slowdown in industry employment. In 2022, according to the Cushman and Wakefield U.S. life sciences report, average monthly life science job postings outpaced hires every quarter—a trend that continued at the start of the year, with 49, 809 life sciences jobs posted Vs 41,791 average monthly hires in January 2023. It should be noted that during periods of economic instability, such as a recession, job losses within life sciences are historically less severe than those experienced by other industries and the labor market bounces back more quickly—a trend we can expect to be repeated should a recession hit in 2023.
The fastest growing life science labor markets in 2022 were the San Francisco Bay Area, Boston/Cambridge, and Seattle. Supported by high occupancy rates and demand for R&D space, the biotechnology sector job market grew by 8.75%, leading the way in life sciences industry annual job growth. According to the U.S. Bureau of Labor Statistics in February 2023, the top U.S. markets for Life Sciences Employment growth (2019 – Q2 2022) were Pharmaceutical/Medicine Manufacturing 65% (Indianapolis), R&D 43% (Boston/Cambridge), and Medical Devices 68% (Minneapolis-St Paul), as shown in Figure 1 below.
Pharmaceutical/Medicine Manufacturing | Research and Development (R&D) | Medical Devices |
Indianapolis 65% | Boston/Cambridge 43% | Minneapolis-St Paul 68% |
Chicago 35% | Washington D.C./Baltimore 49% | Orange County 48% |
New Jersey 30% | San Francisco Bay Area 40% | Cleveland 48% |
Figure 1. Bureau of Labour Statistics table showing the top three major markets within leading life sciences specialities (% of total life sciences employment 2019-Q2 2022
Life Sciences Emerging Markets
Boston, San Francisco, and San Diego remain dominant as the premier life science markets, but new hubs continue to emerge. Life sciences markets in the U.S. tend to be driven by the proximity of academic institutions, the number of graduates related to industry, as well as funding and the availability of real estate facilities. This is certainly true in relation to the latest emerging life sciences markets, which include Atlanta, Phoenix, Austin, Dallas-Fort Worth, Houston, Salt Lake City, and Costa Rica. Texas has seen a healthy flow of venture capital investment and is home to three of the top emerging life sciences markets. Austin attracted $345 million in funding in 2022, followed closely by Dallas-Ft. Worth ($151 million), and Houston ($137 million).
The National Institutes of Health (NIH), the largest source of funding for medical research in the world, also plays a significant role in driving emerging life sciences markets. NIH federal funds have bolstered academic institutions. Over a five-year period from 2018, Atlanta’s Emory University has been awarded $2.3 billion. Atlanta is home to one of America’s most rapidly growing life sciences labor pools, with 2,000 graduates in biological and biomedical sciences per year. Nashville is also on the list of emerging life science centers and secured $521 million in NIH funding in 2022. The majority of these funds went to Vanderbilt University and medical centre, making it one of the top 20 largest single recipients of NIH funding in the U.S. last year. Notably, over the past 10 years, the number of bio-degrees awarded has increased in every emerging U.S. life sciences market.
Source: Lightsource - CushmanWakefield
When it comes employment, Houston leads the pack of emerging markets, with 22,365 people employed in life sciences—a 10-year growth rate of 50%. However, Atlanta saw the biggest percent increase in life science employment during the same period at 111%, followed by Salt Lake City at 70%.
U.S. Life Sciences Labor Market Insight and Observations
Tom Hancox, Cpl Life Sciences U.S Director, shares his thoughts on the outlook for the U.S. life sciences labor market in 2023:
"After analyzing data published by CBRE, and Cushman Wakefield, of the 44,500 clinical trials tracked, it’s interesting to see the near even split (45%) of those in phase 3 or 4. It’s likely to always be the case that phase 4 will be significantly lower, with the largest portion (38%) currently in phase 3, suggesting a trend to more commercially focused skill-sets coming soon, including market access, marketing, business insights, making up the important launch excellence teams. But this does not necessarily mean that geographically the higher growth or funding areas will continue, as R&D teams may differ geographically to their commercial counterparts. However, assessing the current data showing Boston, New York, and Sub-Urban Maryland as the top three would indicate the trend in 2023 in commercial roles could continue in these areas.
Raising over $12 billion, San Francisco leads the regional investment charts but seemingly much heavier weighted to the R&D side, where demand for space is double that of the current supply. To fuel this longer-term, there is also a very significant 91% increase in the completion of annual life science degrees.
Data shows 50% of trials focus on traditional drug types, but we expect this to be challenged over the coming years because of the increased use of biologics (currently at only 10%) – driven by advances in science and the cost restraints that come to local health authorities because of macro-economics.
Overall, with growth slowing, it seems we might have hit the peak with a record 2.1 million life science jobs in January 2023. The ongoing life sciences skills gaps and shortages will hopefully be eased long-term thanks to the continued increase of completed life science degrees in the U.S.. For employers, the pressure is on to improve time to hire and stay ahead of the competition to attract and recruit premium life sciences talent in 2023. It’s of paramount importance that employers have timely and effective hiring processes in place; as life sciences job postings continue to outpace hiring, even if that growth is slowing (4.1%)."
Conclusion
The life sciences market in the U.S. is a rapidly growing and ever-evolving industry that is poised for continued success in the coming years. With the advancements in technology, the increasing demand for personalized medicine, and the focus on disease prevention and treatment, the U.S. life sciences industry is sure to make a significant impact on healthcare and medical advancement. Although mergers and acquisitions have declined since 2013, increased competition and high demand for multi-indication pharmaceutical products could see that change in 2023. Vaccine development and the rise of next generation treatments, like cell gene therapy, are also creating new revenue streams and labor opportunities for life sciences companies in new and emerging life science hubs across the Americas.
The U.S. is home to some of the world’s leading life science companies, research institutions, and universities, making it a global leader in the field. As the industry continues to grow, it will undoubtedly create new opportunities for innovation, investment, and collaboration, leading to new discoveries and breakthroughs that will improve the lives of millions of people around the world.
Key takeaways
Following record growth years in 2020-2021, the U.S. life sciences industry has returned to more normal levels.
At the start of 2023, life sciences employment reached a record high, although the rate of growth is starting to slow.
The fastest growing U.S. life science markets in 2023 were the San Francisco Bay Area, Boston/Cambridge, and Seattle.
According to CBRE data, U.S. lab/R&D space could increase by more than 20% by 2025.
Over the past 10 years, the number of bio-degrees earned has increased in every emerging U.S. life sciences market.
U.S. and the Americas emerging life sciences markets include:
Atlanta
Phoenix
Dallas-Ft. Worth
Houston
Salt Lake City
Nashville
Costa Rica
Three of the emerging life sciences markets are based in Texas, a growing hotspot for tech, which is convenient to aid life sciences digital transformation and for biopharma companies looking to mature digitally.
Sources:
https://www.cbre.com/insights/books/2023-us-life-sciences-outlook
https://cushwake.cld.bz/2023-March-Life-Sciences-Update/38/