Blackstone Launches Life Sciences Platform
It won’t be investing in life science real estate but its funding activity will give the space a boost.
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NEW YORK CITY–Blackstone has launched its life science investment platform with a deal to acquire Clarus, an investment firm in the space that has raised $2.6 billion since its founding. To state up front, this is not a real estate play. Yet the private equity giant’s entrance into the life sciences sector will accelerate trends that are affecting real estate–namely the strong growth of these companies, the growing likelihood they will stay independent as opposed to being acquired by Big Pharma and the growth of mid-tier life science clusters around the US.
Clarus, for example, which has offices in the life sciences hubs of Boston and San Francisco, is focused on funding growth-stage investments, through R&D collaborations.
The Platform
Blackstone Life Sciences plans to invest across the life-cycle of companies and products filling a void in the industry, which Blackstone characterizes as seeing unprecedented growth, but lacking the necessary funding to bring medicines and healthcare technologies to market.
“This is a unique moment where rapid advancements in science and technology are creating unprecedented innovation and unparalleled impact on human health,” says Jon Gray, Blackstone President and Chief Operating Officer in a prepared statement. “Private capital can play an important role in accelerating the lengthy clinical development process to help bring vital, but underfunded, drugs to market.”
Blackstone has invested $19 billion in healthcare and healthcare-related transactions across more than 40 deals. It is also the second largest owner of life sciences office space in the world.
Blackstone’s acquisition of Clarus is expected to close in the fourth quarter of 2018.
Mid-tier Clusters
Blackstone is entering the life science funding market as the sector is undergoing significant change in terms of technologies and methodologies and business structures, according to JLL’s 2018 Life Sciences Outlook.
As a result the real estate needs of these companies are shifting as well.
Not everything is in flux: Boston and San Francisco are still the top markets for the life science real estate industry despite the high rents and low space availability, JLL said.
But it also noted that some of the most dynamic changes for 2018 have been in the mid-tier clusters. “The Denver metro area has seen life sciences employment double in the last decade as the area is home to a growing start-up community,” it said. “Seattle has benefitted from a flurry of M&A activity and now commands some of the highest rents outside of San Francisco and Boston. Suburban Maryland, New Jersey and Westchester, three long-established clusters, recorded some of the highest year-over-year job growth in the industry.”
Houston is also beginning to make a mark in the industry, JLL said. Earlier this year the city launched an ambitious plan to create a new collaborative life sciences research hub on the campus of the Texas Medical Center.
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