Top 10 Asia Biopharma Clusters 2018

Chinese Economy, Overseas Investment Scrutiny Challenge the East’s Most Promising Regions

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China’s slowing economy and Washington’s new scrutiny of overseas investment in 27 U.S. industries

The rapid growth of biopharma in Asia has created a community of investors with plenty of capital, and an increasing desire, until now, to spend a significant amount of their money in the United States. This year through September, some $4.2 billion in capital from Asian investors has been invested in private U.S. biopharma startups, accounting for nearly half (43%) of total venture funding invested Stateside, according to Pitchbook, compared with just 11% in 2016.

Whether that appetite for U.S. investment will continue to grow among Asian firms and wealthy individuals remains to be seen. One reason is a recent slowdown in China’s economy—including a year-over-year dip in the rate of growth of fixed-asset investment (5.3% in January–August, down from 5.5% in January–July)—which has led to speculation that the country will attempt to stimulate growth through infrastructure spending.

Another reason emerged on October 10, when the U.S. Treasury Department included “research and development in biotechnology” among 27 “critical technology” industries subject to a new pilot program that expands the scope of transactions subject to review by the Committee on Foreign Investment in the United States (CFIUS), which is chaired by the Treasury department.

The pilot program, authorized under the Foreign Investment Risk Review Modernization Act of 2018 (FIRRMA) enacted in August, is designed to assess the U.S. national security impact from non-controlling investments made by people from overseas in U.S. businesses. An interim rule implementing the pilot program will take effect November 10.

The effect of these developments will not be immediately apparent on biopharma activity in Asia as measured by GEN. This year’s Asian biopharma cluster list includes all eight countries ranked in previous lists, including last year’s list, with two new nations added to round out the ranking into a top-10—same as GEN’s U.S. cluster list and European cluster list. Countries are ranked on the following five criteria:

  • Public R&D spending—Figures for most large nations appear in the Organization for Economic Co-operation and Development (OECD)’s most recent edition of its semiannual Main Science and Technology Indicators, last updated in July 2018. For nations not included in OECD data, typically smaller countries, GEN cited figures published by UNESCO Institute for Statistics on its website, which has been enhanced this year for easier country-to-country comparisons based on purchasing power parity dollars (PPP$).
  • Patents—Based on the number of “biotechnology” and “pharmaceutical” patents as of May 19 that list at least one inventor from that nation in the World Intellectual Property Organization (WIPO) PATENTSCOPE database, consisting of some 72 million patent documents, including 3.4 million international patent applications published through the Patent Cooperation Treaty (PCT) of 1970, under which applicants can simultaneously seek protection for their inventions in 148 countries.
  • Initial public offerings—Given more robust activity compared with past years, countries were measured on 2018 IPO activity, based on figures from a combination of publicly available data sources and company announcements.
  • Number of companies—Combines figures furnished by the countries themselves on their own websites, in publicly available reports or public announcements, or in press articles when written by or directly attributed to an industry source.
  • Jobs—Based on various sources, including industry groups, regional life sciences campuses, public and/or private economic development groups, and press articles when written by or directly attributed to an industry source. Another source for some nations was the International Federation of Pharmaceutical Manufacturers & Associations (IFPMA), which compiles an annual yearbook that includes employment numbers. Because of differences in criteria, such as inclusion of medical device or hospital patient-care positions, GEN found widespread discrepancies in job figures of several nations.

Two other nations included in some Asian cluster listings, Israel and Turkey, do not appear on this List since their locations within the Middle East also place them on cluster listings for that region.

#10. Indonesia

Indonesia marked a biopharma milestone on February 27 when Cikarang-based Kalbe Farma formally opened the nation’s first biopharmaceutical factory outside Jakarta, attracting dignitaries led by President Joko “Jokowi” Widodo—whose “Nawacita” policy framework includes promoting economic independence by developing domestic strategic sectors. Kalbe Farma’s IDR 500 billion ($32.9 million), 11,000-square-meter (108,403-square-foot) plant is designed to manufacture drug ingredients and biological products—including erythropoietin and granulocyte colony stimulating factor (GCSF), plus insulin and monoclonal antibodies (mAbs) to treat cancer. Plans also called for Kalbe Farma to spend IDR 200 billion ($13 million) toward R&D and tech transfer from China and South Korea.

Widodo isn’t alone in tying biopharma growth to independence and prosperity: “It is now the time to develop an industry based on the wealth of biodiversity. If you want this nation to become more independent, life science is the right solution,” Iskandar, president director of state-owned vaccine producer PT Bio Farma (Persero), said during the 2015 book launch of “Life Science for a Better Life,” according to the Jakarta Globe.

Indonesia is 11th in R&D funding ($2.13 billion, according to UNESCO) and 12th in patents (38 listing at least one Indonesian inventor, according to WIPO). IFPMA lists the nation as having 64,059 pharma jobs, which would place the nation sixth. However, Indonesia ranks lower in companies (ninth with 182 domestic and state-owned companies, 24 multinationals), and has had no biopharma IPOs this year.

#9. Thailand

With a population of senior citizens that has climbed to 11% (about 7.5 million people) as of 2016, and is projected to more than double to 25% by 2040, Thailand has set its sights on expanding its biopharma industry as well as medical device development. Thailand has included “agriculture and biotechnology,” “biofuels and biochemicals,” and “health, wellness, and biomed” among industry groups targeted for expansion through its “Thailand 4.0” 20-year national economic growth strategy.

Biotech companies enjoy corporate tax exemptions stretching up to eight years, with a five-year additional 50%-off tax exemption for businesses that locate in science and technology parks. However, as of October, Thailand’s first-ever effort to promote private investment in biotech-related businesses, and adding value to farm products, “is still far from being completed,” the Bangkok Post reported on October 10. The nation has shown more progress, however, in targeting medical tourism for growth, with a 10-year strategic plan launched last year to become a global medical hub by 2026.

Thailand places seventh in jobs, with estimates ranging from 2400 (Thailand Board of Investment) to 48,000 (IFPMA). The nation is eighth in companies with “approximately 200” as of 2016, according to the investment board. However, Thailand placed ninth in R&D ($5.147 billion, according to UNESCO) and 10th in patents (155 listing at least one Thai investor, according to WIPO).

#8. Malaysia

Since 2005, when then-Prime Minister Abdullah Badawi launched the 15-year National Biotechnology Policy, with a goal of generating 5% of GDP by 2020, progress has been steady if slow. One challenge drawing public attention in recent months has been workforce development: Johor state Consumerism, Human Resources and Unity Committee chairman Dr. S. Ramakrishnan told The Star newspaper that several companies at the Bio-XCell Malaysia technology park in Iskandar Puteri—a joint venture of Malaysian Bioeconomy Development and developer UEM Sunrise—have struggled to hire skilled workers, saying the country’s 15 public universities offering biotech courses did not produce enough graduates to meet industry needs. However, one public university, Universiti Teknologi Malaysia (UTM), earlier this month said it was committed to advancing more collaborations with industry partners, starting with Klang, Selangor-based CCM Duopharma Biotech, whose activities include manufacturing and distributing pharmaceuticals.

Malaysia is seventh in jobs with 31,000, and companies. Malaysian Bioeconomy Development’s website listed 250 “BioNexus” designated businesses as of October 10—though a September 25 news report stated the figure was 285, of which 60% were in agriculture, 24% biomedical, and the rest bioindustrial. Malaysia remains eighth in both R&D ($9.728 billion according to UNESCO) and patents (ninth with 357 listing at least one Malaysian inventor, according to WIPO). Malaysia has not seen a biotech IPO since Bioalpha Holdings raised $5 million in 2015.

#7. Singapore

Among biopharma giants that have expanded in Singapore recently is Merck KGaA, which last month opened a S$20 million (about $14.6 million), 3800-square-meter (40,903-square-foot) BioReliance laboratory that is the company’s first in the region. And in May, Amgen opened a 7500-square-meter (80,729-square-foot) manufacturing support office at Tuas Biomedical Hub. The “NextGen Workplace” is designed to foster innovation and collaboration, and has raised Amgen’s investment in Singapore to S$400 million ($291 million).

Another encouraging sign: According to the Agency for Science, Technology and Research (A*Star), the number of local drug development biotech startups more than doubled in six years to about 50 as of October 2017, from less than half that in the preceding decade.

Singapore rose to fifth in IPOs, as Hyphens Pharma International and Aslan Pharmaceuticals raised a combined $51.8 million (most of that being Aslan’s $42 million in American Depositary Shares)—though speculation had the healthcare arm of Luye Life Sciences Group pursuing a S$500 million ($362.9 million) offering. Singapore was also sixth in patents (2032 listing at least one Singaporean inventor, according to WIPO) and seventh in R&D ($10.104 billion, according to UNESCO). The nation ranked eighth in jobs (“around 6900,” according to the Singapore Economic Development Board) and tenth in companies with 100, including some 30 biopharma giants.

#6. Taiwan

In Taiwan, 5+2 equals more than seven. The 5+2 Innovative Industries Plan, championed by President Tsai Ing-wen, aims to grow the nation’s economy by building five pillar industries, including biopharma, plus “high-value” agriculture and a regenerative/reuse or “circular” economy). That program was launched in 2016, when a decade of successful activity helped the biotech industry more-than-double to NT$109.7 billion ($3.55 billion), while pharma grew to NT$159.8 billion ($5.2 billion).

Taiwan has committed to a combined biopharma and medical device industry totaling NT$1 trillion ($32.4 billion) by 2025, in part by developing and marketing 20 new drugs, and establishing at least 10 biotech and health-related corporate giants or “flagship brands,” either through organic growth or acquisitions. Taiwan took its latest step forward on October 15 when Tsai led dignitaries in formally opening the 25-hectare (61.8-acre) National Biotechnology Research Park. The NT$20 billion (US$648 million) park consists of seven buildings, including a bioinformatics facility, incubation hub, and translational medicine research center.

Taiwan’s strengths include R&D (fifth with $35.757 billion in 2016, according to OECD) and number of companies (fifth with 845—520 applied biotechs and 320 pharmas, according to 2016 statistics from the Ministry of Economic Affairs [MOEA]’s Biotechnology and Pharmaceutical Industries Promotion Office). Taiwan finishes seventh in both jobs (38,719 of 2016, according to MOEA) and IPOs ($35 million from the U.S. IPO of Taiwan Liposome), and eighth in patents (853 listing at least one Taiwan inventor, according to WIPO).

#5. Australia

Australia signaled its interest in expanding its biopharma industry into genomics in May, when its national government agreed to spend A$500 million (about $335.3 million) over the next decade on the nation’s first human genome project. The Australian Genomics Health Futures Mission is intended to foster and fund new research, clinical trials, and technologies, all with the goal of helping Australians live longer and better by expanding access to genomics knowledge and technology.

Also in May, the government unveiled reforms to its research and development tax incentive (R&DTI) that spared companies from lifetime caps on their refunds, and exempted clinical trials from a A$4 million ($2.8 million) cap on the annual refundable amount—prompting a sense of relief from industry group AusBiotech.

The “island continent” makes its strongest showing in its number of companies, where it has climbed to fourth with 876, according to AusBiotech—281 drug developers, 270 food/agricultural concerns, and 325 “medical technology,” a category that includes diagnostics. “Down Under” landed at the center of this year’s list in patents (6556 listing at least one Australian inventor, according to WIPO) and in jobs (69,108, also according to AusBiotech)—and placed only one position lower in R&D (A$31.179 billion [$22.153 billion] in 2015–16, according to the Australian Bureau of Statistics) and in IPOs (five companies raising a combined A$51.4 million [$36.7 million)].

#4. India

While India’s heritage has been of multinational and home-grown pharmas, several recent developments have focused on expanding the country’s universe of smaller biotechs and biotech leaders. Last month, India’s state of Gujarat disclosed plans for the nation’s first biotech-focused university. Gujarat Biotechnology University aims to advance research, innovation, and entrepreneurship in the sector. In August, the state of Telangana proposed India’s first accelerator or “biopharma-hub,” a Rs. 60 crore (about $8.2 million) site designed to include a scaleup manufacturing facility and an incubator space.

The Association of Biotech Led Entrepreneurs (ABLE), an industry group, counts more than 1000 biotech startups as being launched between 2012 and 2016, with another 500 created in 2017. Women account for one-third of the nation’s 3000-plus bio entrepreneurs—one of whom, Kiran Mazumdar-Shaw, leads the nation’s largest biotech, Bangalore-based Biocon.

India is second in companies with 4000+ pharmas as of 2017–18, according to the Pharmaceutical Export Promotion Council and India Brand Equity Foundation, which also lists “about 800” biotechs. The nation is second in patents (8530 listing at least one Indian inventor, according to WIPO) and in jobs (587,468, according to IFPMA) but remains fourth in R&D ($50.269 billion in 2015, according to UNESCO figures cited by the National Science Foundation) and fifth in IPOs (fifth with seven companies totaling $52.25 million).

#3. South Korea

South Korea has long nurtured multinationals and smaller enterprises, many earning the “Innovative Pharmaceutical Company” designation by showing officials that they possess high R&D capacity for new drug development and are globally competitive. Earlier this month, the ruling Democratic Party introduced a bill in the National Assembly designed to increase the number of innovative pharmas, sparking criticism from the opposition Liberty Korea party saying that too many corporate giants would benefit.

Two giants are closing facilities: Johnson & Johnson subsidiary Janssen Korea plans to close a solid-dosage factory in Hyangnam in 2021, while Bayer intends to shut down a contrast-agent production plant in Anseong by year’s end, the companies confirmed in August. The facilities are among 16 that have closed, or will close, domestically in the past two decades, The Korea Times reports.

The “Land of the Morning Calm” enjoys strong showings in four of the five measures. South Korea is second in patents (8479 listing at least one South Korean inventor, according to WIPO) and IPOs (10 companies, of which eight have raised or disclosed plans to raise a combined $239.5 million). The nation also places third in R&D ($79.354 billion in 2016, according to OECD) and in jobs (760,000 as of 2015, according to the Ministry of Health and Welfare), but finishes sixth in number of companies (737 drug manufacturers as of 2016, according to data released this year by the Korea Pharmaceutical and Bio-Pharma Manufacturers Association).

#2. Japan

Under Prime Minister Shinzo Abe’s “Abenomics” economic policies, Japan has identified regenerative medicine as a biopharma specialty for future expansion, with plans to grow that market to ¥26 trillion ($231 billion) by 2020—in part by cutting regulatory red tape to create the “world’s fastest approval process,” and by creating “National Strategic Special Zones” for cardiac, neurologic, and ophthalmic treatments. Ten such zones have been created between 2013 and June 2018.

Yet Japan’s heritage pharma industry remains formidable, as seen in Takeda Pharmaceutical’s two global acquisitions this year—the €520 million ($602 million) purchase of collaboration partner TiGenx, and especially the planned £46 billion ($60.7 billion) acquisition of Shire, expected to close in the first half of 2019—the second-largest biopharma M&A deal so far this year.

Notwithstanding its number-two ranking in Asia, Japan leads the continent in biotech and pharma patents (14,414 listing at least one Japanese inventor, according to WIPO), as well as a firm number-two in R&D ($168.645 billion in 2016, according to OECD). Japan remains second in jobs (most figures since 2010 have continued to range wildly between 210,000 and 878,000, though IFPMA last year put the number much lower at 91,529) but is third in companies (1100+, including 591 biotechs as of 2015, according to the Japan Bioindustry Association), and third in IPOs (six companies raising a total $162.54 million).

#1. China

China’s government has poured billions into biopharma through its “Made in China 2025” initiative and an effort to attract overseas-educated Chinese to industry positions in China. Some 250,000 life sciences professionals are among the 2 million Chinese that have returned. However, the nation continues to reel from a vaccine safety scandal: On October 17. Changsheng Bio-Technology was assessed RMB 9.1 billion yuan ($1.32 billion) in government fines and penalties for falsifying data related to faulty vaccines for rabies, diphtheria, tetanus, and whooping cough. The company’s chairwoman Gao Junfang, and 14 other executives were banned from the industry.

The world’s most populous nation, and the world’s second-largest biotech nation behind the U.S., continues its leadership within Asia in four of this list’s five measures. Only in patents does China lag, placing fourth (8447 listing at least one Chinese inventor, according to WIPO), but has narrowed its gap with South Korea significantly in recent years, and is very close to taking third place.

China leads Asia in R&D ($451.201 billion in 2016, according to OECD), number of companies (about 7500), jobs (estimates over the past three years have ranged from 2,301,534 (IFPMA) to 2,882,903 [commercial real estate firm JLL])—and especially IPOs ($5.69 billion raised or planned by 18 companies), led by WuXi AppTec, which raised $354.3 million on the Shanghai Stock Exchange, and is planning a $1 billion IPO on the Hong Kong exchange. Hong Kong has emerged as a preferred destination for public biotechs thanks to new regulations that allow pre-revenue companies to go public.

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