Establishing a Life Sciences R&D Centre in the Scottish Central BeltA cost/quality comparison(Based on information from the Financial Times fDi Benchmark tool – June 2011)

Competitiveness of Scottish Central Belt

Value for Money

Overall Attractiveness

Quality of the Location

Annual Operating Costs

Life Science R&D in Scottish Central Belt?

Large Size of Industry in Life Science

Strong Track Record in Life Sciences

Availability of Highly Skilled Staff

High Quality Business Environment

Flexible Labour Market

Highly Competitive Labour Costs

Contents

• The following analysis is based on fDi Benchmark, an online location benchmarking tool provided by

the Financial Times (FT)

• fDi Benchmark compared the Scottish Central Belt with the leading locations globally for Life Science R&D Centres

based on an analysis of over 55 quality factors and 10 cost factors

• A key emphasis was placed on:

- Presence of industrial cluster – the size of BioPharma industry, track record and R&D

capabilities; and

- General business environment – regulatory environment, operating risk, taxation and

economic growth and stability

- Costs to employ laboratory specialists and scientists

• Other factors including labour availability and quality, accessibility and the living environment were

also assessed

Benchmarking Study

The fDi Benchmark Matrix shows the trade off between cost and quality across the 5 selected locations for the Life Science R&D Centre profile. The average cost and quality score is 100 for the selected locations.

Source: fDi Intelligence, from the Financial Times Ltd

fDi Benchmark Matrix

The ‘ideal’ quadrant is the

top left

(high quality/lower operating costs)

Cost Factor Usage AmountProperty  Total Occupancy cost (in town office rent) 3,000 m²

Weighting Model Overview WeightPresence of an Industrial Cluster 50Labour Availability and Quality 20General Business Environment 15Living Environment 10Infrastructure and Accessibility 5

Employee TypeProfile Head

countR&D / Engineering  Head of Research and Development 1Laboratory Specialist 17Laboratory Technician 15R&D Team Leader 4Scientist 10Administration  Facilities/Office Services Specialist 3

5

Project Profile Overview

• The matrix is based on the weighting and cost model for the Life Science R&D Centre profile. The weighting model identifies the key location criteria for the project and the cost model shows the primary cost inputs for the operation. The cost and quality scores are calculated using real data on all the location requirements and cost inputs.

• The results indicate the different location solutions for the investor as follows:

the Scottish Central Belt offers higher quality at lower cost than the average of all the selected locations

Boston and Munich offer higher quality but at higher cost

Copenhagen and Rotterdam offer lower cost, but at lower quality

• The Operating Cost value is in GBP - United Kingdom Pound

LocationQualitative

ScoreOperating Cost

IndexOperating Cost

Value

Boston (MA) 128.4 133.0 4,608,589

Copenhagen 93.8 91.1 3,158,947

Munich 110.6 113.6 3,937,999

Rotterdam 46.7 79.0 2,737,827Scottish Central Belt 120.5 83.3 2,886,411

Source: fDi Intelligence, from the Financial Times Ltd

fDi Benchmark Matrix

The location attractiveness index shows the overall attractiveness of the 5 selected locations for the Life Science R&D Centre profile. The ratio of quality to cost is 50:50

Source: fDi Intelligence, from the Financial Times Ltd

Location Attractiveness Index

The cost quality competitiveness uses the results of the fDi Benchmark Matrix to show the value for money of each location option. The graph shows that:

The top location offering the highest quality for a given level of cost is the Scottish Central Belt the Scottish Central Belt also offers an above average level of quality and good value for money as its relative

quality is higher than its relative cost

Source: fDi Intelligence, from the Financial Times Ltd

Cost Quality Competitiveness

The annual operating cost calculation for Life Science R&D centre is based on the following primary input costs:

Labour Cost

- The average cost across the selected

locations for Life Science R&D centre is

GBP 3,465,954

- The greatest cost saving between the

selected locations is GBP 1,870,762 per

annum

- The location with the lowest operating costs is Rotterdam

In terms of the individual cost factors, the location with the lowest costs is:

- Labour Cost: the Scottish Central Belt - Property: Rotterdam

The values in the chart below are in GBP

United Kingdom Pound

Source: fDi Intelligence, from the Financial Times Ltd

Location Labour Cost PropertyBoston (MA) 3,658,046 950,542Copenhagen 2,446,628 712,319Munich 2,876,395 1,061,603Rotterdam 2,197,275 540,551Scottish Central Belt 1,648,393 1,238,017

Cost Competitiveness

The quality competitiveness assessment is based on the weight model for the Life Science R&D Centre profile which assesses each location across the following location factors: - General Business Environment - Labour Availability and Quality - Presence of an Industrial Cluster Infrastructure - Accessibility and Living Environment

The average score for the selected locations is 100.

The location with the highest quality score is Boston

In terms of the individual quality factors, the location with the highest score is:

- General Business Environment: Copenhagen - Labour Availability and Quality: Boston - Presence of an Industrial Cluster: Boston - Infrastructure and Accessibility: Munich - Living Environment: the Scottish Central Belt

Source: fDi Intelligence, from the Financial Times Ltd

Location

General Business

Environment

Labour Availability and Quality

Presence of an Industrial

Cluster

Infrastructure and

AccessibilityLiving

Environment

Boston (MA) 16 26 73 4 11Copenhagen 20 23 35 7 9Munich 11 16 67 7 9Rotterdam 12 10 10 4 10Scottish Central Belt 16 25 65 4 11

Quality Competitiveness

The quality competitiveness breakdown for General Business Environment for the Life Science R&D Centre profile is shown below

The location with the highest overall score for General Business Environment is Copenhagen

In terms of the individual quality criteria within General Business Environment, the location with the highest score is:

- Economic growth and stability: Boston - Operating risk: the Scottish Central Belt - Taxation and incentives: Copenhagen - Access to finance: Boston - Regulatory environment: Copenhagen

Source: fDi Intelligence, from the Financial Times Ltd

LocationEconomic

growth and stability

Operating riskTaxation and

incentivesAccess to

financeRegulatory

environment

Boston (MA) 1.29 4.76 2.42 4.20 2.86Copenhagen

0.64 2.88 9.19 3.53 3.57

Munich 0.88 2.33 2.10 3.34 2.63Rotterdam 0.50 2.41 2.42 4.05 3.05Scottish Central Belt

0.45 6.37 2.63 3.64 2.89

General Business Environment

The quality competitiveness breakdown for Labour Availability and Quality for the Life Science R&D Centre profile is shown below

The location with the highest overall score for Labour Availability and Quality is Boston

In terms of the individual quality criteria within Labour Availability and Quality, the location with the highest score is:

- Overall size of labour market: Boston-Tightness and competition for labour: the Scottish Central Belt- Experienced industry-specific staff: the Scottish Central Belt- Flexibility of labour regulations: Copenhagen

Source: fDi Intelligence, from the Financial Times Ltd

LocationOverall size of labour market

Tightness and competition for

labour

Experienced industry-

specific staff

Flexibility of labour

regulationsBoston (MA) 13.41 3.96 6.26 2.41Copenhagen

3.55 4.23 11.23 3.73

Munich 4.96 2.27 7.87 0.99Rotterdam 2.47 4.65 2.05 1.06Scottish Central Belt

5.61 4.89 12.59 1.80

Labour Availability and Quality

The quality competitiveness breakdown for Presence of an Industrial Cluster for the Life Science R&D Centre profile is shown below

The location with the highest overall score for Presence of an Industrial Cluster is Boston

In terms of the individual quality criteria within Presence of an Industrial Cluster, the location with the highest score is:

- Size of industry: Munich - Track record: the Scottish Central Belt - Research and Development Capabilities: Boston

Source: fDi Intelligence, from the Financial Times Ltd

Location

Size of industry

Track recordResearch and Development Capabilities

Boston (MA) 16.77 19.61 36.13Copenhagen 7.93 18.44 8.83Munich 43.83 13.28 10.11Rotterdam 6.58 0.00 3.21Scottish Central Belt

24.89 36.17 4.22

Presence of an Industrial Cluster

The quality competitiveness breakdown for Infrastructure and Accessibility for the Life Science R&D Centre profile is shown below

The location with the highest overall score for Infrastructure and Accessibility is Munich

In terms of the individual quality criteria within Infrastructure and Accessibility, the location with the highest score is:

- Access to major overseas markets: Munich- Quality of utilities: Rotterdam- Quality of ICT infrastructure: Copenhagen

Source: fDi Intelligence, from the Financial Times Ltd

LocationAccess to major

overseas marketsQuality of utilities

Quality of ICT infrastructure

Boston (MA) 2.26 0.87 0.62Copenhagen 4.12 0.96 1.60Munich 4.97 1.12 0.81Rotterdam 1.40 1.18 1.37Scottish Central Belt 2.25 0.87 0.61

Infrastructure and Accessibility

The quality competitiveness breakdown for Living Environment for the Life Science R&D Centre profile is shown below

The location with the highest overall score for Living Environment is the Scottish Central Belt

In terms of the individual quality criteria within Living Environment, the location with the highest score is:

- Cost of living: the Scottish Central Belt- Attractiveness for international staff: Boston

Source: fDi Intelligence, from the Financial Times Ltd

LocationCost of living

Attractiveness for international staff

Boston (MA) 4.96 5.63Copenhagen 4.06 5.34Munich 4.11 4.96Rotterdam 5.86 4.41Scottish Central Belt 6.01 4.66

Living Environment

To realise the potential,please contact:

Scottish Development International150 Broomielaw, Atlantic Quay Glasgow G2 8LU Scotland, UK T +44 141 228 2828F +44 141 228 2089www.sdi.co.uk

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