China’s pharmaceutical and life sciences industry has seen rapid growth in recent years as the country’s technological and industrial revolution gains momentum, with the onset of the COVID-19 pandemic in 2020 providing the sector with added impetus for expansion. Much of this growth has been focused on Shanghai, which has already established itself as one of Asia Pacific’s leading high-end R&D, manufacturing, and outsourcing service centres.

As China’s fastest-growing international biomedical innovation hub and industrial cluster, the city is home to nearly 100,000 enterprises in the life sciences and pharmaceutical field. The report by CBRE identifies the factors driving the expansion of the life sciences and pharmaceutical industry in Shanghai; assesses how these trends are impacting the city’s office, business park and logistics property sectors; and explains how investors can access real estate catering to this rapidly growing sector.

Office

The rapid development of Shanghai’s pharmaceutical industry has helped accelerate the growth of domestic enterprises of all sizes in the pharmaceutical, medical and health service segments. As both domestic and foreign pharmaceutical companies accelerate their expansion, consolidation and upgrading demand will be the main driver of new office leases.

Business Park

Recent years have seen a trend for pharmaceutical companies in Shanghai to base themselves in Zhangjiang district, while also utilising supporting ‘nodes’ in other districts dedicated to specialised fields. As Shanghai’s pharmaceutical industry reaches a mature stage of clustering, agglomeration and integration, space availability is tightening. Measures such as upgrading and revitalisation existing stock are needed to meet emerging demand.

Cold Chain

Rapid industrial growth, supportive policies, a stronger emphasis on quality control and the onset of the COVID-19 pandemic have led to the pharmaceutical cold chain system taking on a more prominent role in the national logistics industry. CBRE expects the coming years to see a greater focus on integration, e-commerce, standardisation, and intelligence.

Investment

Growing demand for pharmaceutical related assets such as R&D parks and cold storages is being powered by limited EIA resources and high returns.