Europe's $48 Billion Pharma R&D Spend Reshapes Life Science Real Estate Demand, JLL Reports

Europe's life sciences sector continues to generate substantial demand for specialized real estate, driven primarily by corporate R&D spending from the continent's largest pharmaceutical companies, according to new analysis published June 2, 2026 by JLL. At the same time, the firm's research identifies mounting structural pressures — including a declining share of global clinical trials and intensifying competition from China — that are reshaping how investors and occupiers approach life science real estate across the region.

$48 Billion in R&D Anchors Life Science Real Estate Demand

According to JLL's EMEA 2026 Life Sciences Industry & Cluster Report, four of the world's 10 largest pharmaceutical companies by R&D expenditure are headquartered in Europe: Roche, AstraZeneca, Novartis, and Sanofi. Together, these four companies spent a combined $48 billion on research and development in 2025 — more than three times the $14.6 billion in venture capital raised across the entire European life sciences sector during the same period.

JLL notes that this corporate R&D expenditure, rather than venture capital, remains the primary engine driving demand for physical laboratory space, innovation hubs, and specialized real estate across the region.

"The scale of R&D capital originating in Europe remains substantial, but the investment infrastructure required to execute these programmes is increasingly becoming globalised," said Dr. Alexander Nuyken, EMEA Head of Life Sciences, Leasing Advisory at JLL. "When Europe's share of global clinical trials falls by more than a third in fifteen years, it sends a clear signal. Regional markets must create highly efficient research environments to keep corporate investment local."

Clinical Trial Share Declines as China Expands European Footprint

Despite the strength of corporate R&D budgets, JLL's research indicates that Europe's share of global Phase I–III clinical trial starts has fallen from 35% in 2009 to 21% in 2024. China's share has risen to 30% over the same period, surpassing Europe. JLL attributes the shift to a combination of capacity constraints, regulatory inefficiencies, and evolving drug pricing frameworks.

U.S. policy adjustments are also prompting pharmaceutical companies to be increasingly selective with capital allocation, the report notes. The United Kingdom's April 2026 agreement to boost domestic healthcare spending — securing zero U.S. tariffs on UK pharmaceuticals — is cited as an example of how global policy decisions are directly influencing local markets.

Chinese biotech firms are simultaneously expanding their physical presence in Europe. JLL highlights that Asymchem acquired Pfizer's former Sandwich site, while Pharmaron operates nearly 80,000 square meters across four UK sites. Western pharmaceutical companies are also increasingly licensing therapies from China's pipeline, generating additional European real estate needs across development, manufacturing, and distribution segments.

AI Integration Expands Real Estate Requirements Beyond Traditional Wet Labs

JLL's report identifies artificial intelligence as a significant force reshaping life science real estate requirements. AI-driven drug discovery accounted for 20% of all European venture capital funding in 2025, according to the firm's data. This technological shift is expanding the mix of space requirements, with high-specification, tech-ready "dry labs" and office spaces increasingly complementing traditional wet lab facilities.

JLL identifies London, Paris, Oxford, Cambridge, and Zurich as the markets best positioned to capture this demand, citing the combination of AI talent, proximity to world-leading universities, and advanced infrastructure.

Investors Pivot Toward Income-Producing Assets in Established Hubs

As the sector transitions from a period of oversupply toward strategic consolidation, JLL reports that investor sentiment is shifting away from speculative real estate development and toward income-producing assets in established clusters. Transactional volume has contracted as investors adopt more selective approaches, focusing on properties with proven tenant bases and long-term income streams in supply-constrained continental European markets.

With yields trending upward and a widening bid-ask spread, JLL says successful investors are prioritizing active asset management — leasing up properties in prime locations and expanding tenant profiles beyond traditional life sciences to adjacent innovation sectors such as advanced materials, robotics, and computational sciences. Joint ventures in high-growth, supply-constrained markets are expected to replace speculative development as the dominant investment strategy, according to the report.

"The life sciences market is moving past its historic oversupply phase and entering a period of refinement," said Juan Pablo Negus, Industry Head for EMEA Life Sciences Accounts at JLL. "Proximity to world-class academic institutions remains the primary driver for location strategies. Investors who focus on premium, 'All-Rounder' hubs like London, Paris, and Munich, which offer both deep R&D talent and robust manufacturing capabilities, will be best positioned to capture this next wave of demand. The opportunity lies in proven assets within ecosystems that can sustain long-term tenant growth and cross-sector innovation."

Sources

JLL EMEA Newsroom — Europe's $48bn pharma R&D strong despite US and China shift (June 2, 2026)