Life Sciences
Sections: Overview Project activity Key considerations
Life Sciences
Sections: Overview Project activity Key considerations
Life Sciences companies are leveraging existing manufacturing sites to expedite market entry, adapt quickly to demands and alleviate current market uncertainties.
Michael McCabe
Director, Europe Life Sciences Sector Lead
Overview
Europe’s life sciences investment landscape has had a solid start in 2025, with €1.2bn invested in life sciences research and development start-ups during Q1, accounting for over 55% of the region’s total deal value across all sectors for the year.¹
However, future capital investment remains uncertain. Until there is greater clarity on the tariff landscape in Europe, export performance may be hindered, posing a risk to sustained investment momentum.
As of 2025, Europe is home to 24% of the world’s R&D companies, with the UK leading the charge, hosting approximately 340 companies.² Germany and France also play key roles in driving pharmaceutical development activity within the region. Oncology and neurology continue to lead the way in clinical trials across Europe. However, other therapeutic areas, including cardiovascular disease, rheumatology, and infectious diseases, have seen noticeable growth recently.
The small molecule 'Contract Development and Manufacturing Organization' (CDMO) market is also expanding, particularly in the production of Active Pharmaceutical Ingredients (APIs). Research in immunotherapy, especially for cancer treatments, is making steady progress, while the anti-infective market, with a focus on antivirals, is evolving as well. Antibody-based therapies are advancing, offering promising options for both cancer and autoimmune diseases. Collaborations in rare disease research are driving important breakthroughs, and biosimilars are gaining traction as cost-effective alternatives to biologics, improving access to vital treatments.
While the value of biopharma deals in European life sciences has risen, the overall number of funding rounds is decreasing, suggesting that fewer, larger transactions are occurring. According to PitchBook, this trend is expected to continue globally throughout the year, with investors increasingly prioritising late-stage, capital-intensive companies. Moreover, Europe’s global influence is expanding, as evidenced by its share of venture capital deal value, rising from 12.4% in 2020 to 18% in 2024.¹
However, the sector may face challenges considering the recent developments in US trade policy. European pharmaceutical exports may be subject to tariffs in the not to distant future. Countries like Ireland, Switzerland, Germany, Belgium, Italy, the Netherlands, UK and France, which together account for over 60% of total pharmaceutical exports to the US, could see significant impacts, potentially reshaping medium-term investment strategies.³
Policy trends in Life Sciences
- From a policy perspective, initiatives like Horizon Europe and the 'EU Pharmaceutical Strategy' are driving advancements in rare diseases and antimicrobial resistance. In 2025, several key initiatives are set to shape Europe’s life sciences sector.
- The 'Critical Medicines Act' will address shortages of essential medicines and devices by tackling supply dependencies.
- The 'European Biotech Act' will support the transition of biotech innovations from research to market, boosting Europe's biotechnology and biomanufacturing capabilities.
- Attracting and retaining top talent will also be a priority to drive innovation forward. This will include new efforts focusing on providing researchers with the infrastructure and labs they need, fostering public-private partnerships, and strengthening University alliances and collaboration between research, higher education, and business.
- In the UK, the life sciences sector is similarly recognised as a key growth driver in 'Invest 2035: The UK's Modern Industrial Strategy', underscoring its vital role in advancing economic and health outcomes. There is a push for improved integration of clinical, genomic, and primary care data to support pharmaceutical development. The government is backing these initiatives, emphasising public-private partnerships to strengthen the UK's position in global life sciences.
- As part of government policies, the UK’s R&D tax relief programme continues to support life sciences companies by offering enhanced tax credits of 20% for qualifying R&D costs.⁴
- Additionally, recent changes allow research-focused SMEs to access repayable cash credits based on their losses at a rate of 14.5%, providing crucial financial support, particularly for start-ups in the sector.⁵
- In terms of government policies, several regulatory changes are occurring in Germany, including the 'GKV-Finanzstabilisierungsgesetz (Financial Stabilisation of Statutory Health Insurance System Act)', developments in digital health solutions, and the introduction of various research and development incentives under 'Germany Trade and Invest', such as tax breaks, grants, and subsidies - all of which may impact the life sciences sector.
Geopolitical Impact
Geopolitical influences, including the regional conflicts and changing US economic policies, are creating uncertainties in the life sciences construction market. US tariffs on pharmaceuticals could have an impact on Europe’s pharmaceutical sector by potentially raising pharmaceutical prices and disrupting supply chains. The effects may include:
- Export reductions: Countries such as Ireland, which have strong trade ties with the United States, saw the US represent 48.4% of their total goods exports and 19.7% of their total goods imports in January 2025 and could face a potential decline in demand due to increased costs from tariffs.⁶
- Supply chain risks: Higher tariffs could force European manufacturers to absorb added costs or lower profit margins, which might prompt them to reconsider future investments in the region. Many pharmaceutical companies are already looking into reshoring or nearshoring options to simplify their supply chains.
- Regulatory uncertainties: Tariffs could add to the uncertainty already surrounding Europe’s pharmaceutical industry due to changes in the 'General Pharmaceutical Legislation'. This could impact competitiveness and potentially reduce investment in the sector.
Project activity
Ireland
Ireland’s life sciences sector is experiencing steady growth, with 19 of the top 20 pharmaceutical companies, and 18 of the top 20 medical device firms operating in the country.⁷ Recent investments include the expansion of a medical imaging production site in Cork and a €919m commitment from a pharmaceutical company to boost production of treatments for chronic conditions.⁸ ⁹ However, there is a possibility that upcoming investments in Ireland could be influenced by potential US tariff measures affecting the pharmaceutical sector.
Germany
In Germany, there is a clear shift towards anti-infectives, immunotherapy, and antibody-based therapies. At the same time, the clinical development pipeline remains robust, with the majority of trials focused on oncology, followed by infectiology and neurology. Germany also experienced a 5% growth in its R&D pipeline in 2024.²
UK
The UK continues to be a key hub for pharmaceutical R&D in Europe, showing a 4.5% growth in its R&D pipeline in 2024.³ Notably, non-small cell lung cancer has surpassed breast cancer as the leading area of focus in the country. Cancer-related projects now occupy the top eight spots in the UK’s R&D pipeline.
Denmark, Sweden and Finland
Construction activity in the Nordics is still limited, but with a focus on R&D investments, these are likely to pick up soon. Pharma companies headquartered in Denmark are the biggest R&D spenders in the Nordics region. They witnessed a growth of 22% in R&D spend from 2022 to 2023.¹⁰
Key considerations
01
Focus on existing sites
Pharmaceutical companies are increasingly focusing on utilising existing manufacturing sites to expedite market entry. This strategy allows for quicker adaptation to market demands without the extended timelines associated with constructing new facilities, and associated utility connection challenges. Power availability is becoming ever more critical in the life sciences sector, as securing grid connections in some countries is challenging, and could potentially delay development. In the UK, for instance, power and water shortages are emerging as significant concerns. Furthermore, many large pharmaceutical companies are moving away from using gas to align with sustainability goals.
02
Integrating AI into labs
AI is increasingly being adopted for pharmaceutical discovery, as it efficiently models new molecules, combining chemistry and data science to optimise results. For clinical trials, AI speeds up processes by identifying and enrolling patients more effectively and selecting the best trial sites, enabling faster regulatory approvals. Additionally, AI integrates diverse data like genomics and medical records to drive innovation and improve patient care.
As the use of AI in biotech grows, power becomes even more essential. Facilitating AI in lab-oriented real estate requires proximity to data centres that provide the computational power necessary for AI, as well as ensuring a reliable, high-quality internet and power supply at all times.
03
Labour mobility
The mobility of resources is emerging as a critical factor in executing large-scale projects. As life sciences construction projects increase across Europe, there is an emphasis on ensuring the availability of skilled labour by relocating workers to where their expertise is needed most.
In March 2025, building on the relaxed immigration rules for construction workers introduced in 2023, the UK government announced £600mn in funding over the next four years. This investment aims to expand training opportunities, ensure a steady pipeline of skilled construction workers, and support businesses in enhancing their training efforts.¹¹
04
Supply chain and standardisation
A growing trend in life sciences manufacturing is the replication of facilities to improve standardisation and efficiency. This involves applying consistent design standards while adapting them to meet local site conditions and regulations. This modular approach, using adaptable design models, helps simplify construction and supports the rapid expansion of facilities across different locations.
Procurement and supply chain management are evolving. In supply chain management, AI is increasignly being used to automate routine tasks, lower costs, and boost efficiency. Predictive analytics can help optimise inventory and demand forecasting, while machine learning adjusts stock levels to prevent shortages. AI also enhances decision-making, collaboration, and simplifies order management, making supply chains more responsive and cost-effective. There is also an increasing emphasis on onshoring and localising supply chains to help minimise the risks and disruptions that can arise from geopolitical market shocks.
05
Fragmented regulatory landscape
Europe's fragmented regulatory landscape presents challenges for life sciences companies, with varying policies at both the EU and member state levels. To navigate this complexity, stronger cross-border collaboration and partnerships between countries like Germany, Switzerland, and the UK are becoming essential in boosting competitiveness in areas like clinical trials and biologics production.
While clinical trial setup times in Europe are longer than in the US, ranging from 20 to 38 months, the European Medicines Agency (EMA) is working to streamline the process through initiatives like the Priority Medicines (PRIME) scheme.12 Meanwhile, adherence to Good Manufacturing Practice (GMP) regulations remains critical to maintaining high industry standards and ensuring the quality of the pharmaceutical supply chain.
Sources
- European life sciences kicks off year with deluge of VC capital, Pitchbook, Published January 2025
- Pharma R&D Annual Review 2025, Citeline
- UN Comtrade 2023
- R&D expenditure credit for large companies and small and medium-sized enterprises, Gov.UK, November 2024
- Enhanced support for Research & Development (R&D) intensive small or medium enterprises (SMEs) - Gov.UK, Updated November 2023
- Goods Exports and Imports January 2025, Central Statistics Office, Ireland, March 2025
- Ireland: How The Irish Life Sciences Sector is Leading the World, NSF, October 2024
- GE HealthCare Invests $138 Million in Cork, Ireland Manufacturing Facility to Address Increasing Contrast Media Demand, GE Healthcare, January 2025
- Lilly expands manufacturing footprint in Ireland with $1.8 billion investment, Eli Lilly and Company, September 2024
- The 2024 EU Industrial R&D Investment Scoreboard, European Commission, December 2024
- Government unleashes next generation of construction workers to build 1.5m homes, Gov.UK, Published March 2025
- Assessing the Clinical Trial Ecosystem in Europe, IQVIA, EFPIA & Vaccines Europe, October 2024
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