April 15, 2005 (Vol. 25, No. 8)

Senior Executives Comment on the Cost and Production Benefits of Operating in the Region

In the preceding column (see GEN, Singapore Grooms Firms for Success, April 1, 2005, p. 38) on Singapore, the activities of five new Singapore companies (two drug discovery companies, two stem cell companies, and one contract manufacturing firm) positioning themselves to become major biotechnology players were reviewed. This installment focuses on the views of their senior executives in establishing themselves in Singapore.

One common characteristic of these five biotech firms was that all had received financing from the Singapore government. Interviews with the key executives emphasized the importance of the scientific infrastructure (the product of the Economic Development Board’s and the Agency for Science, Technology and Research’s efforts) and the availability of investment capital.


The principal source of financing for biotechnology in Singapore is Bio-One Capital, which is a subsidiary of EDB Investments Pte, the investment arm of EDB. Bio-One has two major objectives: long-term capital gains and the establishment of Singapore as a major center for the biotechnology industry.

In addition to financing, Bio-One has acted to establish important contacts with biotech and pharmaceutical companies, research institutes, and venture capital funds in Asia. Bio-One manages S$1.2 billion (around US$698 million) in four separate funds.

Singapore Bioinnovations Funds I and II emphasize overseas biotech companies. The funds have invested S$110 million (US$64 million) in fifty companies.

The PharmBioGrowth Fund co-invested strategically in companies that had operations in Singapore. This fund, along with Life Sciences Investment Fund, has invested S$100 million (US$58million) in 10 companies.

The Biomed Sciences Investment Fund invests in companies that have long-term plans to establish operations in Singapore. It has invested S$1 billion (US$581 million) in 30 companies.

A general aspect of the financed companies was that their involvement with Singapore had resulted in significant value added. A partial review of companies financed by Bio-One showed 22 drug discovery, 4 cell therapy, 8 medical technology, 2 biologicals, and 5 venture capital.

Twenty-one of the companies are headquartered in the U.S., two in the U.K., ten in Singapore, and one each in Germany, Israel, and France. Of the venture capital funds one was Swiss with the remaining four being U.S.

The success of Asian biotechnology companies will depend not only on financing but in establishing close relationships with institutions in U.S., Europe, and Asia, and Bio-One is in a position to facilitate this through its network of contacts.

Conversations at the Top

The success of the five companies described in the preceding column is linked to the overall Singapore environment which is shaped by the government. Philip Yeo, who had been chairman of EDB, took over and reorganized A* (Agency for Science and Technology) while still retaining his chairmanship of EDB.

Basic research and training remained the responsibility of A* while venture capital and technology transfer came under EDB. The targets of this policy were multinational companies (MNCs) and early-stage biotech companies. The focus was drug discovery, biologicals, and the emergence of Singapore as a major center for clinical trials.

While the availability of capital in Singapore was an attraction, sustainable development depends on the availability of skilled manpower. It is unlikely that Singapore can educate the numbers required, particularly at the more senior levels, making it essential that the island have the opportunities and quality of life that would make it attractive to expatriates with the appropriate skills.

GlaxoSmithKline (www.glaxosmithkline.com) executives have described how the company has had a major presence on the island for more than two decades with a wide range of activities.

GlaxoSmithKline has manufacturing plants for the production of active compounds, strategic partnerships with Singapore companies MerLion and Bio-A, clinical trials in vaccine testing, and a planned neurosciences research center.

The perspective of an MNC such as GlaxoSmithKline sets the benchmark for the smaller and younger biotech companies. MNCs know that they must have a major presence in their growing Asian market and try to internationalize many of their operations. (e.g., about 30% of GlaxoSmithKline’s clinical development takes place outside of Europe and the U.S.)

The Work Environment

Singapore is an attractive choice as an integrated business hub. Operational costs in Singapore are significantly lower than in Western countries (in the order of 5070% of U.S. costs depending on the operation), but perhaps equally important is a work environment that makes the pace of work speedier and more efficient.

Strong patent protection and regulatory framework, ease of research on animals, and good work ethic are important attractions.

All of the companies feel that Singapore has reached a critical mass in two respects: the presence of a substantive number of biotech companies and drug MNCs, and a pool of experienced scientists and engineers in the biological sciences.

Aside from being a major financial investor, EDB is considered to be a proactive partner and an underwriter of training programs for skills that are in rare supply in the island. It was frequently mentioned that the recruitment of key personnel was often facilitated by renowned scientists that had been chosen to serve in the various Singapore scientific advisory committees.

The large pharmaceutical manufacturing presence on the island results in a constant traffic of senior MNC executives providing opportunities for the development of corporate collaborations. In the long-term, expansion of Singapore’s research institutes, such as the Genome Institute and the Bioinformatics Institute, has provided local expertise in genomics, cancer, and cell culture.

The expansion of CROs in Singapore promoted clinical trials in the region, though it remains to be seen what the FDA’s position will be on the proportion of patients in the U.S. versus those abroad for an FDA clinical trial.

Singapore allows work to be done on the use of stem cells for therapeutic purposes at a time when it is still hotly debated in the U.S. and Europe. This allows ES Cell and Cordlife to establish themselves in Singapore and explore regenerative techniques for major disease categories such as diabetes and heart disease.

If the results are promising, ES Cell and Cordlife are likely to see the creation of more partnerships while other companies may move similar operations to Singapore.

ES Cell and Cordlife have plans for therapeutic centers in Singapore which is in line with EDB’s vision of Singapore becoming a destination for medical tourism. This would attract significant numbers of patients from all over Asia for treatment in Singapore medical facilities.

The Cons

While the biotech companies felt that this was an exciting time to start up in Singapore, there were some serious reservations as to the social/business culture of the island.

From the perspective of a MNC, Singaporeans were felt to be less entrepreneurial and agile than their counterparts in countries like Taiwan and South Korea. The local business community is more conservative and still not very familiar with the opportunities and risks of biotechnology.

None of the companies interviewed saw themselves launching their IPO’s in Singapore and were more likely to do so in Australia or even Hong Kong. In a period of about five years, a new group of Singapore biotech companies has emerged that is markedly different than those that preceded them. They have used new research findings and approaches and taken advantage of the opportunities provided by EDB and A*.

Their success will depend on the synergy between them and their partners abroad as well as the MNCs that have major operations in Singapore and the recruitment and retention of world class scientific teams.

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