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Where Should You Locate Your Next Biotech Facility?

Biotech Location Guide 2007
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The second primary category involves operational factors. Operational factors are the variables that will enable you to physically conduct your operations and ultimately create or produce your product or service. Some of these factors may actually act as barriers to your success. Often, several of these variables become filters for eliminating potential locations.

II. Operational
• What factors related to the business environment are "must-haves" for my operation to be successful? Is close proximity to raw materials or technical support functions mandatory? Will the company need special-use facilities or equipment?
• Are there barriers to success, such as factors that will hinder or perhaps even prevent a successful operation? These factors can include the regulatory environment for your product or service, your ability to recruit and retain the work force needed, or airport accessibility to your investors, your board members, or your research team.
• How important is utility infrastructure (availability, cost, and reliability) to your processes and operation?
• Are there business environment factors that could support or hinder your company's success, such as inventory, franchise, or business taxes?
• Does the threat of natural disasters create a barrier to your success or create a concern for your operation?

The third category focuses on the quantitative side of the decision equation. A number of these financial factors can actually overlap with the strategic and operational categories as they relate to project funding, operational costs, cost of living, and the cost of doing business.

III. Financial
• Do you need to be located in a community or state with strong private funding sources such as venture capital, angel funds, or low-interest loan tools?
• How important is the availability of state and local financial and economic incentives, including grants, forgivable loans, tax credits, work force training, or tax abatements. Which of these programs, if any, will most benefit your operation and company?
• Will the cost of living in the considered cities have a positive or negative impact on the ability to recruit scientists, researchers, engineers, or other critical talent? This is especially important to consider, as an imbalance between competitive salaries and cost of living (housing, utilities, transportation, food) can create a barrier to attracting and retaining talent, despite other positive factors.
• In order to be cost-competitive or best utilize investment dollars, where is the "cost of doing business" most favorable? How important is the cost of doing business relative to the strategic and operational factors?

Answering each of these questions is the first and most important step in the location decision process. While this list of questions is not all-encompassing, it provides the foundation for understanding the basic factors driving a location decision. After developing a comprehensive list of criteria, the project team should determine and assign a level of importance to each variable. Individual weightings should be based on the project type, the stage or phase of the business operation, as well as the maturity of the business.

The location selection process should be viewed as a process of elimination. As communities are eliminated due to barriers to success or the failure to "match" your critical success factors, the focus is heightened on those communities that best fit the criteria determined by your operation.

Whether your operation is a small team focusing on research and development or a multimillion-dollar investment in a manufacturing operation, you have one opportunity to make a "best-fit" decision, as it is not easily reversible. By following a structured process of identifying the success criteria and then evaluating your company's options against the criteria, you significantly enhance your company's chances of finding the optimal location for long-term success.

So where should you locate your next "biotech" operation? It depends!

Jonathan Sangster is a senior managing director with CBRE Consulting, a strategic advisory consulting group within CBRE. He assists clients in finding best-fit locations that align with their strategic business objectives, addressing needs resulting from mergers and acquisitions, business expansion, restructuring, and rationalization.

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