Pharma's Corporate Real Estate

John MacDonald
Putting high-performance organisations in high-performance spaces.

The global real estate market is steadily recovering from the difficult recessionary environment. For pharma companies, this has led to increased investment in emerging markets, together with continuous improvement of global facility efficiency.

While corporate real estate (CRE) spend may be increasing, pharma companies are also seeking value for money and, increasingly, flexible facilities that offer better futureproofing. We’re seeing greater corporate awareness of the CRE portfolio as an asset, potentially reshaped and sometimes reduced by the consolidation and rationalisation of mergers and acquisitions.

The global real estate market is steadily recovering from the difficult recessionary environment.

The drive for overall business agility has brought CRE into the core business strategy spotlight, aligning it more closely with wider business functions such as HR, IT, finance and engineering. Corporate governance is now likely to include a CRE focus, often via a sustainability perspective.

The estate is also affected by changing workspace solutions and work/life balance expectations, with initiatives such as flexible working influencing organisational culture and the associated space provision. When it works well, a company’s CRE may become a factor in staff recruitment and retention.

Pharma companies are under pressure to reduce their portfolio operating costs. The expectation that CRE strategies should deliver cost savings is now part of the mainstream agenda in mature markets, and sets expectations for any future investment in emerging markets. To support this changed focus, we’re seeing a new set of priorities:

  • Reduce portfolio operating expenses
  • Enhance portfolio productivity
  • Increase portfolio flexibility, density and agility
  • Dispose of redundant assets
  • Align portfolio with corporate sustainability agenda
  • Meet corporate standards when mergers and acquisitions occur
  • Enable flexible working.

In our experience, the lack of an effective overview of the portfolio is a common barrier to success. Many companies don’t yet have the best technology to create an effective CRE database, or the meaningful populating data required. In the absence of proper records, it’s easy to miss key events such as lease renewal dates, reducing the potential for commercial negotiation. Similarly, companies may also struggle to measure individual properties’ benefit to the business. This is a missed opportunity to generate insights into the global portfolio allowing better alignment with business drivers and effective lessons learned transference between global regions.

Corporate governance is now likely to include a CRE focus, often via a sustainability perspective.

Decentralised and fragmented real estate teams are another common problem, with lack of consistent direction in the team, and often a lack of consistent internal skillset and knowledge. The impetus to integrate with the wider business strategy and functions may suffer when estate teams have unclear goals, or are struggling with financial decision-making. Defining a simplified and standardised global approach to building and operating facilities more efficiently may be the aim, but in practice this can be especially challenging.

Many of Faithful+Gould’s pharma clients are currently implementing transformational processes and our role is to help them identify optimal portfolio strategies to meet changing business needs. We focus on creating maximum value in the CRE arena, typically addressing the challenges outlined above, and promoting more efficient procurement of real estate services.

Our global pharma and biotechnology group has many years’ experience, with operations in the Americas, UK and continental Europe, and Asia Pacific. We offer effective delivery strategies and methodologies tailored to our clients’ risk profiles, budgets, and quality and time objectives.

Our client portfolio includes Amgen, Bristol-Myers Squibb, GSK, Roche, Johnson & Johnson, AstraZeneca, Merck, Novartis, Pfizer and Sanofi. Our expertise spans research facilities, development laboratories and pilot plants, primary and secondary manufacturing units, biotech and sterile facilities, offices, warehouses and associated infrastructure.

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