Singapore goes for Biotech

Wayne Arnold
New York Times
26 August 2003

Like mice to cheese, top biotechnology talent will be drawn to mice – a quarter of a million mice, to be exact. That, at least, is Singapore’s hope.

Workers are finishing an underground vivarium to house the rodents beneath Singapore’s new, $286 million Biopolis biomedical research and development complex. The expectation is that the mice will prove to be an irresistible to the kind of research Singapore wants to attract.

And if the mice do not do it, there will also be a pub, a fitness center and an electron microscope.

“We call it the Mickey Mouse park,” said Philip Su, assistant chief executive of the JTC Corporation, the government industrial park operator that is building Biopolis.

The mice will be surrounded by a sticky mat and what Mr. Su described as a sort of moat, to keep them from running off if they escape their cages. Biopolis’s human tenants will eventually be surrounded by a high-technology campus of nearly 500 acres, complete with condominiums, schools and wireless Internet access.

Faced with declining returns in electronics, the industry that helped catapult Singapore into the ranks of the world’s wealthiest nations, the government is throwing its administrative might – and at least $2.3 billion in investments, grants and other incentives – behind an effort to become an integrated biotechnology hub. With little home-grown expertise, Singapore has set out to import what it cannot produce.

“Over the last 20 years or so, we’ve built up manufacturing technology,” said Beh Swan Gin, second director for biomedical sciences at Singapore’s Economic Development Board. “Biomedical sciences will add an anchor to that.”

Singapore needs to find a new niche. Cheap labor in China is drawing jobs away.

The government has warned that unemployment, now at 4.5 percent, is likely to climb to 5.5 percent this year, its highest since 1987, with the economy likely to eke out growth no greater than 1 percent.

The biotechnology initiative has already attracted big-name manufacturers and research talent. But local start-ups are struggling, and economists say the biotechnology investment is unlikely to yield jobs on the scale that electronics once did.

Some critics also question Singapore’s timing. Just as the government began pushing “technopreneurship” shortly before the Internet bubble burst, it has turned to biotechnology during an industry crunch. Investors are shying away from an industry in which products take at least a decade to develop. And competition is coming from less developed countries like China, India and Malaysia, which are building biotechnology industries of their own.

Officials are quick to point out that Singapore is not starting from scratch, but that only underscores the challenges. Singapore began promoting biotechnology in the early 1980’s, luring Glaxo in 1982. The next decade, Singapore was pushing research and development; it established a Bioprocessing Technology Center Incubator Unit for start-ups, with fully equipped labs in 1997. Yet Singapore spent, and still spends, less as a portion of its gross domestic product on research and development than Japan, South Korea or Taiwan.

To help change that, Singapore in 2000 declared biotechnology the “fourth pillar” of its economy, renamed its National Science and Technology Board as the Agency for Science, Technology and Research, and spent roughly $570 million to establish three biotechnology research institutes.

Close to the Equator, Singapore is considered an ideal location for the study of tropical diseases endemic to the region, like malaria.

Its advanced telecommunications infrastructure and abundant computing resources are another draw. With companies under pressure to produce drugs more quickly from the millions of molecules and billions of genetic combinations on hand, scientists have begun to use powerful arrays of computers to eliminate years of laboratory work, an area of research known as bioinformatics.

“You can do by brute force what before only incredible brain power could accomplish,” Philip Fersht, an analyst based in London, said.

For stem-cell researchers, Singapore offers one of the world’s most liberal legal atmospheres. It allows stem cells to be taken from aborted fetuses, and human embryos to be cloned and kept for up to 14 days to produce stem cells.

The welcoming climate lured Alan Colman here last year. Dr. Colman helped clone Dolly, the history-making sheep, in Scotland in 1996, but when financing for his diabetes research grew scarce in Europe he moved to ES Cell International, a venture between Australian investors and Singapore’s Economic Development Board.

“I was just seduced,” Dr. Colman said, “by the enthusiasm for building scientific infrastructure and putting money into biotech.”

Singapore also lured Edison Liu from the National Cancer Institute in Bethesda, Md., to head its Genome Institute. “I couldn’t believe the audacity of Singapore,” said Dr. Liu, who called Singapore’s approach visionary.

As it continues to recruit, the government is also trying to create domestic talent. The Agency for Science, Technology and Research is offering $286 million in scholarships for students to pursue Ph.D.’s in biomedical sciences at home and abroad, in exchange for their promise to work in Singapore for up to eight years.

Singapore has had the most success in attracting drug makers, with tax holidays and other incentives. Among those with factories here are Merck & Company, Pfizer and Schering-Plough.

Pharmaceutical production increased about 50 percent last year, to $5.56 billion, and is well on track to reach the government’s goal of $7 billion by 2005. But this industry is less labor-intensive than the electronics industry. “It doesn’t translate into job growth,” said Song Seng Wun, regional economist at the local brokerage firm G.K. Goh.

Dr. Beh of the development board said the biotechnology push was not about numbers. “It’s about providing knowledge-intensive, research-intensive types of jobs,” he said.

To encourage companies to do more than make drugs, the board offers to pay up to 30 percent of the cost of building their research and development facilities. Among the companies that have accepted the offer are Eli Lilly and 29 other companies. In addition, Novartis is setting up an Insitute for Tropical Diseases.

But Singapore’s own start-ups, feel left out. “Local entrepreneurs still find it hard to get funding,” said Gurinder Shahi, chief executive of BioEnterprise Asia, a biotechnology consultancy here.

The Economic Development Board estimates that $5.2 billion in venture capital funds is being managed from Singapore, but little of it seems to be invested in local biotechnology start-ups. The venture capital firm Warburg Pincus, for example, has a regional office in Singapore, but a spokeswoman said that it does most of its financing in North Asia and India.

The board manages a $572 million biotech venture capital fund, which has invested in 80 companies in Singapore and abroad. Dr. Beh said the board makes sure its foreign investments have some link to Singapore. Roughly $14 million of the $572 million is reserved for local start-ups, but so far the board has invested less than $300,000 in two companies.

The board also has a program for local start-ups that provides up to $171,500 in financing if they can find a private investor to match the amount – an approach entrepreneurs say does not help much.

“If I can get private funding, I don’t need government funding anymore,” said Lee Chee Wee, a local professor who founded Lynk Biotechnologies in 2000. A local politician ultimately gave Lynk start-up money from his own pocket. The company has financed production of its biggest seller, an anti-balding tonic called Biolyn, through an investment from a Hong Kong company.

The board makes no apologies for imposing standards as high as private venture firms on local start-ups. “If they think it’s easy money, it isn’t,” Dr. Beh said. “Ultimately, we are custodians of the taxpayers’ money.”

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