Singapore’s Biopharmaceutical Industry Development Strategies and Its Enlightenment

LI Wei-xia, WANG Cheng-lin

(1.School of International Pharmaceutical Business, China Pharmaceutical University, Nanjing 211100, China; 2. Teaching and Research Section for English Major, Nanjing 211100, China)

Singapore’s Biopharmaceutical Industry Development Strategies and Its Enlightenment

LI Wei-xia1, WANG Cheng-lin2

(1.School of International Pharmaceutical Business, China Pharmaceutical University, Nanjing 211100, China; 2. Teaching and Research Section for English Major, Nanjing 211100, China)

Objective To provide suggestions for the upgrading of biopharmaceutical industry in China. Methods A qualitative analysis was conducted concerning the existing problems of biopharmaceutical industry in China and the successful experiences of Singapore in starting and developing its biopharmaceutical industry in the past ten years. Results and Conclusion The successful strategies of Singapore provide a significant enlightenment. To achieve the upgrading of biopharmaceutical industry, Chinese government should take the opportunity of R & D centers of multinational companies moving eastward to develop the domestic innovation network as well as optimize the environment for creativity and entrepreneurship to promote the evolution from production to innovation.

biopharmaceutical industry; Singapore; development strategy; optional way

Since the 1970s, the modern biotechnologies have developed rapidly in the world, which mainly involve genetic engineering, cell engineering and enzyme engineering. 60 percent of them were applied to biopharmaceutical industry, which pushed the sector from an initial stage into a period of rapid development. Biopharmaceutical industry can be defined as a set of companies and other organizations primarily (or otherwise substantially) involved in the research, development, manufacture and marketing of biopharmaceuticals[1]. Since the 1990s, the global sales volume of biotech drugs has grown at an average rate of 30% annually, much higher than traditional drugs that has less than 10%[2]. The biopharmaceutical industry has developed into one of the most dynamic and fastest growing strategic emerging industries in the 21st century, keeping pace with other popular industries, like aerospace, e-communication and computer, and it will become a pillar of the economic development in the future.

1 The state of biopharmaceutical industry in China

As biopharmaceutical industry was taken as one of national strategic new industries in China in 2010, the biopharmaceutical industry is endowed with unprecedented opportunities for further development. According to the statistics from CCID Consulting, this sector has reached 1,200 billion by the end of 2012. The number of companies, universities and scientific research institutions engaged in the biotechnology and relevant medicine R&D activities in China has reached 600, of which 200 have registered biopharmaceutical companies and 60 are capable of manufacturing their products[3]. In addition, the State Council issued the planning for biological industry development on Jan 6th 2013, which claimed to strengthen innovation and manufacture of biotech medicines and prompt the industrialization.

Despite the current rapid development, the biopharmaceutical industry in China, has not reached the same heights as that in the developed countries due to a later starting-offs. The progress has been hindered by a variety of factors, which can be summarized as follows:

(1) Lack of the capability for independent innovation. On one hand, the invested funds for R&D are insufficient despite that Chinese government has appropriated for the biotechnology innovation positively. On the other hand, many biopharmaceutical companies are short of innovative consciousness, scared off by both the requirement of tremendous investment with high risks and a long term returns in the industry. Hence, they are neglecting the cultivation of independent competencies in new drugs R&D.

(2) Lack of versatile talents in biotechnology. The prosperity of biopharmaceutical industry requires commercial mindsets as much as scientific ones. However, talents of different kinds in biopharmaceutical areas are inadequate, such as those engaged in project operation, capital management and market development. The lack of versatile talents has evidently constrained the progress of the industry.

(3) Irrationality of the financing structure. Since a perfect market for capital financing has not been established in China, the domestic investment in biopharmaceutical industry is dominated by the entrepreneurs’ own funds and bank loans, while venture investment and direct financing from the security market are rare. Those biopharmaceutical companies which are in their infancy can hardly get support from the venture investment and also suffer from various limits if they expect to seek financing by listing on the stock market directly.

(4) Insufficient protection to intellectual property. Several problems, like imperfect management institutions, superficial awareness of protection and short of relevant talents, still exist in China, which leads to the fact that the domestic protection to intellectual property is much weaker than that in foreign countries in either application or protection of medical research findings.

2 Singapore’s successful experience in start-up and development of biomedical industry

Although Singapore’s involvement in biomedical science (BMS) can be traced back to the 1970s, the major push started only in 2000 as part of the government’s effort to diversify the country’s economic portfolio. Just within a short decade, nearly 4,500 researchers, tens of multinational companies, numerous public and private research institutes as well as small and medium biomedical companies around the world have been attracted to Singapore to form an international advanced biomedical cluster[4]. From 2006 to 2010, the biopharmaceutical industry has contributed to the GDP in Singapore at an average rate of 4%[5]. And the gross output has reached USD 21.5 billion in 2011[6]. Singapore is becoming one of the greatest hubs in Asia for BMS research and manufacturing.

2.1 The construction of production network ----strategies for introducing foreign investment

The production network is mainly composed of some economic subjects like manufacturing enterprises, supporting enterprise, distributors and consumers, with the primary objective to fulfill large-scale production of novel products and technologies tested by the market so as to lower costs. The formation of this network in Singapore started from the 1980s and it lasted for ten years. Singapore depended on direct foreign investment to initiate and develop BMS in the early years. The basic idea of this strategy is to draw in foreign investment from multinational companies who are taking a leading position in the biomedical area through optimizing domestic investment environment and exploiting the attraction of Asia-Pacific markets. As a result, numerous multinational companies and biotech companies, such as GlaxoSmithKline, Pfizer and Novartis, were attracted to engage in drug R&D, clinical trial and production in Singapore due to the success of the strategy[7]. Besides, the government of Singapore once funded more than one billion for BMS and established plants with foreign partners with capital, land and workshops at a discount, which gradually shaped a perfect production network in Singapore[8]. In this network, local manufacturing enterprises led by multinational companies mainly focused on biotech drugs production, while R&D is completed in the home countries of multinational companies.

2.2 The construction of innovation network ----innovation-driven strategies

Innovation network presents the whole value of biomedical industry, which encompasses research, development and production and is a complicated unity composed of universities, research organizations, company R&D centers, government, intermediary organizations, manufacturing, supporting and marketing enterprises, and consumers.

The international experience of emerging industries reveals that neither nations nor regions can depend solely on the establishment of production network during the progress of strategic emerging industry to form a sustaining, stable and prosperous industry. In order to be geared to the tendency of international biomedical industry, the government of Singapore began to transform the investment-driven pattern to the innovation-driven one. The transformation was reflected in the following three aspects: the first is the presence of R&D centers of multinational companies. The statistics from EDB suggests that there are more than 50 biomedical enterprises which are transferring their R&D centers into Singapore[9]. The second aspect is the establishment of universities and public researchinstitutes. The former has already established relevant education and research institutes in biomedical area, while the latter is represented by the Biopolis，an integrated R&D complex that houses both biomedical research institutes and R&D laboratories of numerous biomedical companies. The third is the emergence of innovation and entrepreneurship in small and medium-sized enterprises driven by domestic R&D. As an environment for creativity and entrepreneurship was increasingly optimized, numerous small and medium-sized enterprises has kept on emerging since 2000, especially those novel research organizations like CRO.

2.3 Driving forces of evolution from production to innovation

2.3.1 Attaching importance to introducing commanding technological talents

The development of BMS in Singapore has a short history but the speed is fast, hence personnel with relevant experiences in this area are inadequate. Thereupon, the Government digs in scientists at different stages in their career throughout the world, providing them with preferential contracts, lower taxes as well as comfortable environment for living and working. By now, the population of foreign research personnel who are devoting to the BMS in Singapore has reached 2000, accounting for a half of the existing researchers[10]. Some world-class scientists, such as Edward W. Holmes and Judith L. Swain, American top doctors and scientists and Dr. Alan Colman, renowned stem-cell experts and one of the contributors to the cloned sheep Dolly, are also among them. These commanding technological talents have become the hard core of research innovation, personnel training and technological entrepreneurship in Singapore.

2.3.2 Intensifying cultivation of domestic talents

Although foreign scientists have been successfully attracted to Singapore, the country still expects to cultivate its own talents. For this reason, corresponding life science specialties have been set up in National University of Singapore and Nanyang Technological University in order to launch professional and graduate education. Furthermore, the government has established national science scholarship for subsidizing students to finish their eight-year study from bachelor degrees to doctorate on the condition that they have to work in Singapore for six years after graduation. In 2009, more than 8,500 domestic undergraduates devoted themselves to the research and production in biomedical industry. The formation and expansion of domestic personnel has played a pivotal role in advancing the independent innovation and invigorating the entrepreneurship in the biopharmaceutical area.

2.3.3 Strong support for biomedical research

The Agency for Science, Technology and Research (A*STAR) is responsible for biotechnical research and carries out research work in multiple areas. In addition, specialized national research council has been established to charge of application, approval and appropriation about biopharmaceutical research programs and 40% costs of scientific research is allocated to support them. The strong support for basic research and application of BMS from the government has exerted great influence on improving domestic innovation and optimizing the environment for the industry.

2.3.4 Encouraging venture investment and entrepreneurship

Besides direct investment to BMS, the government of Singapore has also established specialized investment funds and venture capital firms to fund some biomedical companies or programs with potentials around the world. The most famous example is the Bio*One venture capital firm built by EDB, which is oriented by the national strategy and motivated by profits. The firm is operated to identify some promising programs for investment through marketing operation and professional management. As of 2009, Bio*One had funded more than 50 companies, becoming a leading investment management company in Asian biomedical domain as well as an indispensable access for small and medium-sized enterprises to obtaining capital[11]. Furthermore, diversified policies have also been adopted to inspire scientific, technological and managerial talents abroad and talents at home to invest and start business in Singapore, which has created an environment of active risk bearing and investment in the country.

3 Optional ways for the development of biopharmaceutical industry in China

3.1 Grasping the opportunity that the multinational companies R&D Centers moving to Asia and developing the innovative network

Judging from the current trends of global biopharmaceutical industry, developed countries are accelerating a transfer of this segment to developing countries. The expansion of biomedical market and the adjustment of related policies in China have brought opportunities for its progress, which have already attracted the multinational companies to quicken pace of transferring biotech drugs production and research, enabling China to gradually establish a better production network.

However, technologies in local production network are strictly controlled by multinational companies and most R&D activities are still retained in their home countries. The incompleteness of the local production network has hindered the promotion of its value creation and would ultimately impact the sustainable development of China’s economy. Besides, the production costs would move up along with the increasing prices of domestic capitals, labors and land, which would probably cause multinational companies to transfer their bases to other countries momentarily. In this context, it would be a practical choice for China to grasp the eastward trend of R&D centers of multinational companies, and attract the advanced scientific innovation resources around the world so that we can retain those internationally excellent enterprises. If this can happen, advanced technologies and management skills would be absorbed within several years or a much longer time so as to establish domestic enterprises and finally a complete innovation network. The problem of lack of the capability for independent innovation can also be avoided.

3.2 Optimizing the environment for creativity and entrepreneurship

Singapore has fulfilled the transformation from production to innovation through constructing the environment for creativity and entrepreneurship, which should shed light on the counterpart in China. Therefore, it would be another practical choice for China to optimize the environment for creativity and entrepreneurship for boosting the evolution. Several specific measures could be taken:

(1) Internationally commanding technological talents should be introduced so that they would bring in their research findings or engage in research innovation in scientific institutes, both of which can gradually lead the biopharmaceutical technologies in China to the international level. For attracting international leading researchers, the governments are supposed to create an excellent environment for them to fully display their talents and provide them some certain favourable terms, higher salaries, lower taxes, comfortable environment for living and working, subsidy for their children’s enrollment, employment for their spouses and vacations etc, for the sake of retaining as well as drawing leading talents.

(2) Plans for personnel training should be designed to provide adequate and qualified human capitals for this sector. Since a better development of biomedical industry requires as many high-level researchers as highquality managerial personnel, multi-dimensional plans for cultivating talents are needed. On one hand, the government can establish multiple scholarships for the support of students to go abroad for better education as well as absorbing advanced technologies and management experiences from developed countries on the condition that they must devote themselves to China’s biomedical science after their graduation. On the other hand, policies for encouraging the combination of efforts from scientific research institutions, enterprises and universities to establish personnel training bases should be formulated, which would facilitate a close integration of manufacture, study and research as well as cultivate more versatile talents in this field.

(3) Mechanisms for venture investment should be established through mirroring the successful experience of Bio*One in Singapore. A venture capital firm oriented by the national strategy and motivated by profits can be built in order to solve the problems of insufficient investment and lack of financing channels in biopharmaceutical area. Meanwhile, the government is expected to set up corresponding laws and regulations for venture capital firms to abide by. Those incentives, tax deduction and exemption as well as risk compensation for instance, should also be implemented practically to increase investors’sense of security and to expand teams of venture investors eventually.

(4) Protection to intellectual property like existing biotechnologies and mature biomedical brand must be intensified, which can consolidate investors’ confidence and appeal to more foreign technology enterprises and researchers. Since reform and opening-up, a relatively complete system for protecting intellectual property has been gradually established in China, yet some defects remain to be improved in terms of the formation of law enforcement mechanism, public administration and legal consultancy service. Governments at all levels are expected to develop local regulations for intellectual property protection and to severely punish those who conduct different kinds of patent infringement in fields of production and distribution.

References

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[3] LU Yi, JIANG Hong-bo. The Current Situation and Trends of the Global Biophar Maceutical Industry [J]. Science, 2012, 64(5): 59-61.

[4] HAN Shuo. The Biomedical Science in Singapore has Promoted the Country’s Competitiveness [N]. People’s Daily, 2013-1-8(22).

[5] ZHANG Zhe. The Inspiration of the Development on Biomedical Science in Singapore to ZheJiang Province [J]. ZheJiang Economy, 2013: 38-39.

[6] GE Te-wei. The Economic Performance of Key or Characteristic Industries in Singapore in Recent Year [EB/OL]. http://www. cngateway.cn/Article.aspx?id=4063, 2013-5-18 .

[7] QIU Jia-xue, LIU Lin. The Progress of Biomedical Science in Singapore and Its Implication to China [J]. Shanghai Medical & Pharmaceutical Journal, 2006, 27(2): 87-88.

[8] LI Man. Singapore—Striving for Creating a Scientific Research Hub in Asia [N]. Economic Daily, 2009-10-15(15).

[9] SingaporeEDB. “Biopolis” [EB/OL]. http://www.edb.gov.sg/etc/ medialib/downloads/industries.Par.37672.File.tmp/pdf:P2.

[10]SingaporeEDB. “Biopolis” [EB/OL]. http://www.edb.gov.sg/etc/ medialib/downloads/industries.Par.37672.File.tmp/pdf:P3.

[11]SingaporeEDB. Bio*One [EB/OL]. http://www.edb.gov.sg/etc/ medialib/downloads/industries.Par.82223.File.tmp/pdf:P1.

Author’s information: LI Wei-xia, Master degree candidate. Major research area: National drug policy and medical industrial policy. Tel: 15261483898, E-mail: lwx09485@163.com