Shanghai’s 14^th Five-Year Plan indicates that the biopharmaceutical market in Shanghai was valued at over 600 billion yuan in 2020, and the city is looking to grow the market to 1 trillion yuan by the end of 2025. The report also points out that the high market demand for healthcare services and technologies is the driving force behind the industry’s growth.

Policy support and system reforms boost the life science sector. Strong government support in the areas of “reform” and “innovation” will reshape the market positioning of the biopharmaceutical industry and promote a paradigm shift in the industry.

Introduction of foreign talent and return of overseas Chinese fuel innovations and breakthroughs. The Chinese government has introduced a series of policies to attract both overseas Chinese and foreign talents, and companies are providing high-value research opportunities and other incentives to enhance their competitiveness in the global talent market. LinkedIn data from 2021 shows that China has a strong appeal to overseas top talent. Notably, the inflow of talent from the US and the UK, the leading countries in the life sciences industry, to China is 2.3 times and 2.26 times the number of Chinese outflows to the respective countries.

Continued capital investment supports the development of the life science industry. Over the last decade, private equity and venture capital investments in life science companies have grown significantly. Average annual investment in life sciences rose to a new level in the 2018-2021 period, nearly doubling its level from the previous four years. Additionally, we noticed that Shanghai-based life science companies received nearly 25% of the country’s total capital investment in this sector.

Daniel Yao, Head of Research for JLL China, indicates, “Looking ahead, Shanghai as well as China’s life science industry, is expected to prosper further, supported by strong market demand, supportive government policy, better talent acquisition strategies, and sustained capital inflows. ”

Leasing demand from life science companies in Shanghai has continued to expand in recent years, making this sector the second-largest source of demand in Shanghai’s core business parks in 2021. JLL statistics show that the leasing demand from life science companies has climbed from 13% of all industries in 2020 to 26% in 2021

Zhangjiang submarket saw the most active life science leasing activities among Shanghai’s business parks, recording both expansion demand and new setups from companies over the past two years. In addition, Zhoukang, Pujiang, and Lingang Blue Bay submarkets also are becoming popular locations for life science companies. Each submarket benefits from distinct positioning, supportive policies, and other resources.

JLL has estimated the future supply of life science R&D office properties in each of Shanghai’s industrial parks based on detailed plans from the city’s administrative districts as well as the development progress of individual business park areas. Approximately 1.6 million square meters of life science properties are expected to enter the market in the next three years. Although the expected supply is substantial, most of these projects have already been pre-leased or customized by committed life science companies. Overall, the market has achieved an average pre-leasing rate of 70%. In the short term, R&D office properties will remain in short supply and the leasable space will remain limited.

“Strong demand from life science companies and scarcity of vacant space has led to a steady increase of the rent level of life science R&D properties. Vacancy rates for these properties in Shanghai will remain below 5% over the next three years, and the rent level of R&D properties will continue to rise steadily,” said Stephen Yu, Head of Shanghai Business Park Services of JLL Office Leasing Advisory.