The Asia-Pacific biotechnology scene has been dormant for the past two years. The main hub of activities is still (predictably) Japan, which has been successful in biotech sectors such as microbiology and fermentation technology for decades. But now, Australia, Taiwan, and Singapore are striving to make their presence felt. New players including India, China, Hong Kong and Malaysia are just beginning their mission to enter the new economic wave: BioEconomy.
Going Down Under
As one of the pioneers in this global biotechnology revolution, Australia's biotech sector is still growing by leaps and bounds, although revenue remains relatively low on the world stage, at US$250 million a year. Already setting world-class standards in biotechnology-related fields - notably agricultural and environmental research - Australia hopes to build on these strengths to develop its biotechnology industry. In other areas such as the pharmaceutical industry, biotechnology offers substantial opportunities to improve its competitive edge.
Meanwhile, what has Australia achieved from its vigorous attention towards biotechnology? The sector enticed 244 firms, with more than half focused on human health, while 14% was in agriculture and 13% in gene research. Australian research focused on human health biotech-related fields, proving the country's strong commitment to compete with other western counterparts especially in drug discovery activities.
Lately, success stories have originated from anti-tumour protein research to human embryonic stem cells - a new method of human cloning to produce cells, which Australian researchers termed "therapeutic cloning". The biotech sector also offered employment for up to 5,700 people, which is a leap of 46% over the past two years. With strong government support, through tax incentives and attractive remuneration packages, the sector has managed to lure back their scientists who had left the country. Before, manpower expertise was the main export of Australia, but with the progressive biotech industry, Australia's scientists are coming home.
However, Australia's capital investments are limited in comparison to other countries. The Federal Government spends a total of US$130 million a year on biotech, which will amount to about US$650 million by 2005. The investment is only a fraction of what the Taiwan and Singapore governments are spending, considering the fact that Singapore had looked to Australia as its scientific partner and mentor.
Since capital is the main driver for biotech success, the low government spending on this sector has created some fear among Australian biotech investors that the industry outlook may not be as positive as previously thought.
In many countries that have successfully implemented biotechnology programs, the government's capital injection is the main driver to boost the industry. Cash is essential in the area of restructuring research activities, as well as building new infrastructure in order to support the sector. The government's biotechnology strategies provide the necessary backbone to deliver innovative products, building fast-growing enterprises, attracting international investment and creating high-value employment opportunities.
Nevertheless, Australia is definitely geared towards achieving its biotech goal.
Land of the Rising Sun
Though seen by many as Asia's best bet in biotech, Japan's market receptiveness is still lukewarm compared with the heated race going on in the US and Europe. Though there has been a big increase in activities recently, Japan still needs to pick up its pace to hit its target to make biotech a US$200 billion industry by 2010.
In the past two years, the country has witnessed a mushrooming of funds set up for investment in bioventures. It is estimated that there are about 220 "bioventures" in Japan at present.
In March 1999 the five ministries concerned with biological research set up the Life Science Council, devised a set of recommendations covering research, nurturing new enterprises, strengthening patent applications, and raising public awareness.
The government also began to encourage investment in the sector, including investment in university research, aiming for 1,000 startups by 2010. Numerous funds, such as the "SoftBank Life Science Ventures ILP" with a bank of US$110 million, have been established by various government bodies and conglomerates to invest in bioventures. Bioventure capitalists, such as Bio Frontier Japan, have also emerged, where there were none previously.
So far, the industry's movers and shakers have not been individual entrepreneurs setting up new companies, but the big players - pharmaceutical companies and breweries, which have strong in-house research. Japanese pharmaceutical companies usually do not invest in bioventures as actively as their western counterparts. Nevertheless, of late, there are significant increases in expenditure for biotechnology R&D as seen from recent announcements by top Japanese pharmaceutical giants like Takeda Chemicals, Sankyo Pharmaceuticals and Yamanouchi Pharmaceuticals. The total planned investment in R&D for the top 10 firms exceeded US$4.8 billion for 2001, with several companies reporting decreased profit margins mainly because of biotech R&D investments.
The industry would also benefit from an increase in investment in bioventures by pharmaceutical giants who have the expertise to identify and groom promising bioventure companies involved in genomic research. This is especially important, as one of Japan's main focuses in the biotech field is biopharmaceuticals, a necessity considering the country's rapidly aging society. Last year, under the Millennium Project, a joint industry-government-academia effort to promote new industries, US$550 million was allocated for analysis of human and rice genomes. Based on the results of the analysis, by 2004 the project will start developing therapies and new drugs to treat diseases that typically affect the elderly - dementia, cancer, diabetes and hypertension.
The government has also shown a strong stand in promoting the growth of the local biotech industry. It increased the expenditure for biotech to 3.2% of total GDP this year, even with the GDP on a downward trend. With full support from the government, industry players and academia, biotech just might be the cure for Japan's ongoing economic slump.
Green Silicon Valley of the East
The Taiwan government has identified biotechnology as a target for high-tech industry development. With huge investment funds and various incentives, the government estimates that biotechnology investments will amount to US$5.0 billion by 2005. The current private sector/government investment ratio in the industry is 60:40. The government hopes that the local biotech industry will support 500 biotech companies by the end of the decade and turn Taiwan into a Green "Silicon Valley" Island. Part of the plan is to increase biotech spending, which at the moment is 1.9% of GDP, to 3% within the decade.
Whether biotechnology will be as successful as its semiconductor industry is another matter. With the government's support, more and more companies are expected to invest in Taiwan. Venture capitalists investing in biotech businesses would benefit from 25% tax-free capital income and receive financial aid to take the business public. This attractive environment has encouraged Taiwan's big conglomerates to join the biotech bandwagon. Taiwan's strongest point is the infrastructure it can offer world-class scientific institutions and scientists.
But not all parties are happy. University researchers feel that despite the government's commitment to the biotech industry, university facilities are not given enough funding. They say that university research should be the backbone of Taiwan's biotech industry as is the case in North America and Europe. Even in the private sector, funding is mostly focused on product development, not research. To ensure the future success of biotechnology, both research and development must have parallel investment of interest and resources.
The Lion Roars
Singapore is determined to establish itself as the hub for science and technology in the Asia-Pacific region. Realising this dream, however, would require the government, particularly the Economic Development Board, to focus more intently on the biotechnology sector. Unlike other nations in Asia, Singapore recognises that capital injection is the main driver of success in the biotechnology sector. The government, therefore, has announced investment of US$7 billion over the next five years to this sector. This is good news for Singapore, as it means the city-state will be able to move away from its longtime scientific partner, Australia. While the research focus will not be as in-depth as when it partnered with Australia, Singapore can now rapidly establish its own research and incubator facilities.
However, Singapore will still face hurdles in terms of its small population and few natural resources. A population of 3.5 million people may not be sufficient to supply large number of local researchers, thus it is likely Singapore will still have to rely heavily on foreign expertise. This means the government will have to develop incentives to lure and retain talent, in order to realise its biotech vision.
What's Next?
The Asian biotech race is definitely heating up. But there remains a great opportunity for Asian countries to work together to create an industry which is specifically aimed at the Asian market. An example would be research into the genetics of diseases common to Asian people, such as liver cancer and hepatitis-C, which are not given high priority by western researchers.