The life sciences sector saw significant growth and support in the past few years, largely due to the pandemic and a surge of demand for new drugs to combat the infection. That flood of funding decreased in 2022. Amid challenges such as material costs and labor shortage, many are now wondering where the service segment is heading.
One firm that believes in continuing growth for the sector is Cushman & Wakefield Services, a wholly-owned facility management services subsidiary, which recently created a leadership position to oversee development of the firm’s portfolio of life science properties across North America.
Facilities Dive spoke with Ronald Chisolm, C&W Services’ newly appointed senior vice president of client services, life sciences, to discuss his views on the life sciences service sector and opportunities to balance customer satisfaction with cost savings.
Editor’s note: This interview has been edited for clarity and brevity.
FACILITIES DIVE: Why is now the right time to focus on life sciences? How do you see this sector move forward?
RON CHISOLM: There are about 10 to 12 of what we call the big whales. There's Bristol Myers Squibb, Roche, Merck — they’re the ones that are really the big clients in pharma. Most of the time, you get a lot of service providers focused on these guys, right? I actually think the market supports that the growth is going to come from the small- and mid-tier markets. It's not going to be the big guys. The market is going to be driven by the small- and mid-tier folks, and I think that's really the sweet spot for Cushman & Wakefield Services.
We're an organization that is able to focus on what we do best — janitorial and hard services. I think it's easier to expand and add more service lines than it is to be a big fish like CBRE and try to be as nimble as they need to be with the small and mid-tier markets. So, the intriguing thing for me is I see CWS in a really opportune sweet spot, where we're small enough to grow with clients and build out our room plans, but still nimble and quick to move around the space, like those small and mid-tier markets need us to do. That's what has intrigued me to come. I think that in the next two or three years, we've got a great story to tell about how we build out our capabilities and partnerships, if you will, in this region and sector of business.
What are your immediate goals? What are the strategic areas that really interest you and that you want to hit as you look even a little further down the line?
It's really about expanding our capabilities. When I think about falling into markets, we’ve got to go in and deliver excellent service to start with. But, what I'm really intrigued by is being able to be a partner that can lead the way for these small and mid-tiers. What I learned is that the small and mid-tiers, and the large ones for that matter, all want the same thing. They want a provider, a partner, where they can focus on making molecules and making their products without having to worry. And trust that they are going to be given the industry best practices in leading-edge solutions on how to run facilities. Whether we're talking about soft services or hard services, that is really where we need to galvanize. It’s important to find our niche there by anchoring on aspects that they know us for, while being able to provide additional services like calibration, maintenance and good manufacturing practices. Focusing on new areas of growth could also increase value for our clients. It's about expanding our service lines. It's about making sure that we continue to provide for those partnerships that allow us to pursue our growth in these markets and with these clients.
What are the biggest differentiators when it comes to servicing the life science sector?
The industry is very small. What's interesting is that decision makers have about two or three degrees of separation at most. One of the cultural things about life sciences that's really important is that people want to know that you grew up in this business and you understand it. That's first.
What separates it from a lot of the other verticals, if you will, is that it is a very process and Good Manufacturing Practices-driven business. When you talk about hard services, supplying those services to a GMP operation involves a very different set of rules you have to follow versus non-GMP operations. Controlled environments have a different way of managing those than non-control environments. Whether you're inside or outside the yellow line, there's a lot of different expectations on how you manage that in a predictable way. We're governed by GXP, FDA and ISO requirements. And it's almost an unwritten rule that you only get in the door if you appreciate those requirements and can demonstrate your competence there. That's one of the big differences.
Also, there was a time when money wasn't an object in biotech pharma. It was really just about delivering what our clients and end users needed, without worrying about the price. “We'll pay a premium” for now is becoming “I need you to meet all the regulatory expectations, but I need you to be doing that much more efficiently.” That has mostly been the case since COVID. There's a lot of cost and efficiency pressures that our colleagues and clients are navigating through right now. How do we become even more innovative about our ability to help our clients deliver? Those principles of managing in such environments and understanding how to build capabilities, within the perimeters of GXP, ISO and other quality system requirements, differentiate life sciences service delivery from other sectors.
It seems challenging to balance all of these requirements with a need to drive cost efficiencies. How do you make it work?
The opportunities change from client to client. But some key drivers around this include moving to what we call demand-driven services on soft services. Demand-driven meaning, instead of having cleaning routes that are just schedules, going to where you're able to understand which areas to prioritize for cleaning, because you have intelligence and data that tells you where people have sat, and where they haven’t. Which bathroom door swings have been used? Which ones haven't been used? What floors of a building are occupied, and which ones aren’t? The historical data you have on this has always just been real estate. The real estate teams would know how many people came in through the door and where they sat. That's not really accurate. What works now is, for a relatively minimal investment, you can get good information to understand. I'm in a little room right now, and I am probably the only one that is going to use this room all day. Is this room worthy of a full cleaning today? How would someone that needs to clean his room even understand that? They're going to default to just doing a full cleaning if it's on the schedule. They may have an insight that someone sat here, but they don't know for how long, for what reasons or what they did here. I think one of the biggest opportunities is having demand-driven cleaning where you actually know where to channel your resources for cleaning, especially in big complex buildings. It gives you insights on what amount of resources you need over time to clean an area, versus just doing a broad brush around it, and trying to predict it in some other exotic way that isn't data driven.
In the GMP and life sciences space, you would think these business processes are laid out, but they're really not. So, another opportunity-driver we’re seeing is going into hard services. The latest data that I’ve experienced is that predictive maintenance costs about 15 times less than reactive or scheduled maintenance. It's a humongous difference in cost, and it makes a whole lot of sense. So, designing and figuring out what the key assets are, building asset management strategies that are much more based on predictive maintenance than reactive and preventive maintenance — these are parts of the strategy to go for. It takes time to do it, but it pays huge dividends. That’s an opportunity to be efficient for the client. If I’ve got a sensor that tells me, “Hey Ron, three weeks from now, you really need to go in and get this all changed. I can plan that a lot easier than when the red light comes up. It makes total sense that it costs a lot less to be in a proactive mode of managing your maintenance than reactive. Now, a lot of people are hell bent on reactive maintenance, but I'll tell you every time you go in and touch an asset for maintenance, how many times I've had the experience where I went in to get one thing fixed, and all of a sudden something else doesn't work, because they’ve gone in and played around with it. Every time you touch equipment and machinery, you’re at a risk of changing up something, because it's all settled in and you start realigning things again, and all of a sudden it causes more problems, right? From my perspective, I've seen this play out in my facilities life a lot, where being proactive in your maintenance executions is a lot less costly.
How do you look at labor right now?
We'll see how this all shakes out. I think it's all an opportunity, because there's a shortage of labor. It's best to pay more for labor. What clients are most worried about is turnover, right? I always think about this in terms of, how do we secure people in a way that helps us avoid turnover? A turnover costs more than the one or two dollars you cut wages on. You can get in somewhere at a lower price point, but how long are they going to stay there? The employees are going to stay there until they see an opportunity for more money. And then they walk away, and you're left trying to manage a loss of service. That costs more than the one or two dollars you shortchange the worker on. From my standpoint, it’s about full compensation. It’s about wages, and what else we can incentivize. How do we come up with a program where we do profit-sharing, add additional amenities and provide additional benefits to workers, so that they stay? Getting that consistency in the labor pool is much more important than fighting about one or two dollars. The financial folks can roll those numbers up, it's all concrete, and you could argue about all those costs, but the hidden costs that no one is able to put their full number on is if you lose those workers. Imagine how much time you’d spend trying to recruit all over again, filling those positions, managing the client and figuring out how you're going to intervene when you have less labor than you planned for. I would argue that it's better to have continuity of labor than it is anything else. The client will appreciate that, and the client in many cases will pay for that increment if you're able to justify it in the labor market. That's the way I think about it.