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Sep 1, 2007 (Vol. 27, No. 15)

Malaysian Gov't Fosters Biotech Growth

Country Is Attempting to Grow the Industry with Investments and an R&D Zone

  • Malaysia has long aspired to become a regional hub for innovative pharmaceutical and biotechnology companies. The country is well endowed with natural resources in agriculture, minerals, and oil and has an established manufacturing base for consumer electronics and IT. Malaysia has a population of 27.2 million and a per capita GDP of $5,129. As in the case of other Asian countries, government policy has provided the principal impetus for a biotechnology industry.

    Starting in the mid-1990s, the Malaysian government launched a series of biotechnology initiatives, defined in the National Biotechnology Policy, to strengthen the scientific infrastructure, promote commercialization, and provide investment capital. The lead government agency for biotechnology is the Ministry of Science, Technology, & Environment (MOSTE), which established the National Biotechnology Directorate (Biotek). Biotek has organized biotechnology R&D into seven sectors: molecular biology, plant, animal, medical, biopharmacy, food, and environmental.

    The capstone project for Biotek has been BioValley, a biotech R&D zone that will integrate research institutions and companies on a 484-hectare site located south of Kuala Lumpur. The government has invested approximately $26 million so far and expects BioValley to begin operations in 2009. BioValley will be anchored by three new research institutions: the National Institute of AgroBiotechnology, the National Institute of Pharmaceutical and Nutraceutical Biotechnology, and the National Institute for Genomics and Molecular Biology.

  • Jumpstarting the Industry

    Malaysia still has far to go in integrating its R&D infrastructure and government programs to promote the use of biotechnology in existing companies and the creation of new firms. The slow progress has led the government to take further action. BioNexus status has been conferred on the following seven institutions: Asiatic Center for Genome Technology, Inno Biologics, Kosmo Biotechnology, KL Biotech Manufacturing, Malaysia BioDiagnostic, Nova Laboratories, and Vivantis Technologies.

    The Malaysian government also has three major initiatives to increase R&D capacity, expand the pool of biotech manpower, and stimulate commercialization. One of them, the Malaysia-MIT Biotechnology Partnership Program, is a research collaboration that is bringing together 200 researchers in Malaysian institutes and 27 researchers at MIT. This is a five-year plan that focuses on medicinal plants and palm oil.

    The second initiative is a $6.7 million program established by Malaysia Biotechnology at the California Institute for Quantitative Biomedical Research (QB3), which is a consortium of the University of California San Francisco (UCSF), UC Berkeley, UC Santa Cruz, and biotech companies.

    The program includes visits by senior Malaysian scientists and administrators for training in advanced skills and also for participation in UCSF’s Center for Bioentrepreneurship. It also provides opportunities for students to do their Ph.D. thesis work or postdoctoral research in California.

    The third initiative, The Malaysian Life Science Capital Fund, expects to raise $200 million and will be jointly managed by Malaysian Technology Development and Burrill & Co. The plans are to use $140 million for investment into some 20 companies with an average outlay of $7 million. The balance of the funds will be invested in the Burrill Life Science Capital Fund.

    Malaysia still needs to focus on certain priorities to improve its biotech industry: increasing the value of its agricultural products, the development of halal pharmaceuticals and food products, and exploiting biodiversity to generate new medicinal products.

    Most of Malaysia’s agricultural biotechnology revolves around government institutes and large plantations. Whether the agricultural sector will be changed by the partnership with MIT remains to be seen. Though there has been much publicity about the MIT and QB3 initiatives, these projects seem unlikely to increase the technological competitiveness of local companies.

    Malaysia has 208 licensed pharmaceutical companies, but it still lacks a major market leader, particularly one that takes advantage of the market for halal pharmaceuticals. The same is true of the local market for herbal products, which was estimated at over $700 million.

    To date, there are still few partnerships and investments with foreign companies and multinationals, and Malaysia is still short of the scientific and managerial manpower needed to grow its biotechnology R&D and industry. In the end, there are limitations to what any government can do on its own.

  • BioNexus Initiative

    These three institutes are part of the BioNexus initiative whose goal is to coordinate and strengthen the existing universities, laboratories, and research institutes. Agricultural biotechnology research will be done in collaboration with the Malaysian Agricultural Research and Development Institute (MARDI) and Universiti Putra Malaysia. Genomics and molecular biology will be coordinated with the Universiti Kebansaan Malaysia, while biomedical work will be located in BioValley.

    Another major component of BioNexus is to confer special status to selected domestic and foreign companies, that are then eligible for financial support, tax incentives, and access to equipment and facilities. BioNexus status is essential to major government funding and eventual listing on MESDAQ.

    Although Malaysia has 13 universities with biotech programs, much of the R&D is based in government institutes such as MARDI, the Malaysian Palm Oil Board, the Malaysian Rubber Board, the Institute of Medical Research, and the Forest Research Institute of Malaysia. The Sarawak Biodiversity R&D Center is particularly relevant to work on herbs, organic crops, and agricultural biotech.

    While research programs and science parks may provide the basis for a biotechnology industry, government policy must provide incentives for private investment to attract foreign multinationals and promote local companies. The Malaysian Industrial Development Agency promotes biotechnology through:

    • Grants for the commercialization of R&D

    • Partial funding for the acquisition of new technology

    • 70% funding of joint R&D between firms and public institutes

    • Grants for research in priority areas

    • Grants for industrial innovation

    • Tax exemption for five years for biotech companies

    Traditionally, Malaysia has been short of venture capital. To solve this problem, Khazanah Nasional, the government investment arm, joined entrepreneur Kim Tan to establish the first biotech venture fund, Springhill Biotech Ventures, with $30 million. Its emphasis is the licensing of new technologies to stimulate new business efforts in Malaysia. In 2006, the Malaysian Life Science Capital Fund, valued at $200 million, was launched with $43.6 million from the government and the rest coming from companies and financial institutions. Malaysia Venture Capital Management and Commerce Ventures play major roles in the financing of agricultural biotechnology companies.

  • Elements of an Industry

    Singapore, Malaysia’s neighbor to the south, has developed a two-pronged strategy to develop its biotechnology industry—aggressively recruiting multinational corporations, particularly drug firms, and promoting the growth of start-up biotech companies.

    Malaysia differs from Singapore in that it has a major agricultural sector. Malaysian biotechnology involves two separate kinds of companies: large plantation companies and new biotechnology companies.

    Malaysia accounts for 80% of the world’s total production of palm oil. A number of conglomerates dominate this business. Among these are the Golden Hope Plantation, IOI Plantations, United Plantations, and Sime Darby. These companies use biotechnology to improve the composition of oil products as well as to convert palm oil into biodiesel fuel. For example, Guthrie Biotech carries out research to increase the yield from oil palms, optimize the use of fertilizer, develop novel crop protection methods, and generate clonal palms.

    Another plantation company of note, TropBio Group (www.tropbio.com.my), was established as an agricultural R&D company by the former executive director of the Forest Research Institute of Malaysia. It provides a variety of services including DNA mapping, fingerprinting, and transformation; molecular testing; development and mass propagation of tissue culture; and plant bioprospecting. It also provides nursery and landscape services and develops nutraceutical and health products.

    Bio Neutraceutical, KL Biotech Manufacturing (www/klbiotech.com) and Nova Laboratories (www/nova.com.my) have focused on functional foods and/or herbal formulations. Bio Neutraceutical fractionates coconut oil to generate food and cosmetic products. Nova makes use of Malaysian herbs to prepare standardized extracts both for human and veterinary use, and KL Biotech does contract manufacturing of vitamins, herbal preparations, and nutraceuticals.

    Inno Biologics (www/innobiologics.com) and Alpha Biologics (www.alphabiologics.com)are contract manufacturers of biologics from animal cell cultures. Inno Biologics’ principal products are biological therapeutics and mAbs.

    Alpha Biologics uses cell culture technology obtained from Boehringer Ingelheim (www.boehringer-ingelheim.com) for the manufacturing of biologics. Vivantis Technologies (www.vivantis.com) is dedicated to the production of restriction enzymes and reagents for DNA work.

  • Biomedical Business

    Malaysia also has some biomedical companies, with Malaysian Biodiagnostic Research (www.mbdr.net) producing diagnostic kits for TB, malaria, and typhoid.

    One of the more unusual biomedical firms is Bioven (www.bioven.com.my), which is collaborating with five Cuban research institutes. These collaborations have enabled it to generate a number of immunological products. There is a therapeutic hepatitis B vaccine that uses the surface and viral capsid antigens in a nasal formulation. An epidermal growth factor formulation is used for the treatment of diabetic foot ulcers. Also, a cancer treatment makes use of vaccination to develop antibodies against the main EGF-R ligands to block uncontrolled cell proliferation.

    StemLife is a thriving enterprise that just went public this year. It banks umbilical stem cells and collaborates with medical centers on experimental therapeutic approaches.



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