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How Can Biotechnology Companies Manage Growth and Mitigate Risk in a Global Market?

Biotech Location Guide 2008
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Biotech companies require a robust and reliable infrastructure for every aspect of the value chain. Availability of sufficient electrical and water capacity may create a more challenging search for a potential location. While emerging countries tend to lag in overall infrastructure availability and quality, established biotech hubs may also face utility challenges. For example, Ireland has determined that the nation's current electric capacities cannot fully meet the demands of the growing manufacturing industry. As a result, plans are in place to increase the overall electric supply, improve the transmission network, and thus open up more locations to future investors.

Being a knowledge-based industry, biotech companies are not only in need of a location that can provide a deep talent pool, but also a location that can attract outside talent. According to third-party surveys, the availability of qualified engineers is as high in a populated country such as India as it is in comparatively smaller nations such as Switzerland or Singapore (IMD World Competitiveness Yearbook 2005 and 2007). This suggests that quality of life and amenities are vital factors in attracting talent. As a result, Switzerland and Singapore, while not as populous as India, are able to attract talent to meet their labor demands.

As with any major investment, operational, financial, and managerial risks in each potential location need to be thoroughly evaluated. A sound and well thought out strategic plan that addresses the key value-chain drivers is paramount in making an expansion or location decision. There is no single dominant location that attracts expanding biotech companies. Every location has its advantages and challenges; however, the evaluation of these factors is solely dependent on a company's philosophy and business strategy.

The successful growth and establishment of an effective global footprint is a challenge that all companies must face. As competition increases and biotech companies evolve, the global footprint will evolve to reflect the changing market demands, operating conditions, and costs of prospective global locations.

Matthew Szuhaj is the life sciences industry leader for Deloitte Consulting's Global Expansion Optimization practice. He has 16 years of experience in domestic and international site selection and development, specializing in global strategy, real estate and site evaluations, infrastructure review, and operating costs/conditions analysis and has worked on numerous life sciences projects throughout North America, South America, Europe, and Asia.

Olaf Babinet and Jovana Trkulja of Deloitte Consulting LLP, Global Expansion Optimization practice, also contributed to this article.

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