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TITLE:  Singapore is Asia's top investor in biotech sector
SOURCE: Business Times, Singapore, by Vikram Khanna,2276,49961,00.html
DATE:   July 2, 2002

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Singapore is Asia's top investor in biotech sector

(SINGAPORE) Spurred largely by government funds, Singapore is Asia's 
leading investor in the biotechnology sector, according to a report in the 
June issue of Asia Private Equity Review, a journal that covers the 
region's venture capital and private equity industries.

The report, which focuses on biotech investments in Asia since 2000, says 
that among the five Asian countries that have moved into the sector - 
Japan, India, Korea, Singapore and Taiwan - 'Singapore is by far the most 
aggressive in providing a ready pool of capital for immediate deployment in 
biotechnology companies.'

It notes that the Singapore government has so far channelled more than 
US$700 million into biotech funds. This includes S$1 billion (US$568 
million) in the Biomedical Sciences Investment Fund and US$120 million in 
other initiatives including the Bio Innovation Fund, the Pharm Bio Growth 
Fund and Life Sciences Investments.

In addition, US$30 million was provided to the biotechnology fund 
management firm Bioveda Capital, the first such firm to be seeded by the 
government's Technopreneur Investment Fund programme.

Apart from funds channelled towards investments, Singapore's National 
Science and Technology Board has allocated S$1.5 billion for R&D in the 
biotech sector. And a further S$2 billion has been set aside to attract 
leading research organisations in Singapore to invest in local and foreign 
biotech start-ups.

The report says Taiwan has taken a different approach to Singapore, by 
concentrating on providing funds to venture capital firms. Last September, 
the government earmarked NT$30 billion (S$1.6 billion) to invest in venture 
funds over the next five years.

India and Korea have been more recent entrants in biotech funding and have 
so far made modest commitments compared with those of Singapore and Taiwan. 
In India, the central government and the government of Karnataka state have 
created funds totalling US$24 million for investment in biotech ventures, 
while Korea last year established a 1 billion won (S$1.5 million) fund 
called the MAF Muhan Agro Bio Venture Fund No 1.

Japanese investments in the biotech sector are private-sector led, 
according to the report, which notes that by the end of June this year, 
Japan will have a capital pool of US$357 million dedicated to biotech 
investments. Japan will also have the single largest private sector 
biotechnology fund, the Itochu Fund, set up by the trading house Itochu 
Corporation. Investments in biotech firms by Asian entities have risen 
appreciably since 2000.

In that year, a total of only US$30 million was invested in two ventures. 
Last year, the figure had risen more than three-fold to US$106 million, 
with six ventures being funded. In the first quarter of this year, US$61.2 
million was invested in seven ventures. At this rate, the amount invested 
in 2002 will be more than double the figure for last year.

However, the report points out that Asian venture capitalists have not 
always invested in Asian companies: More than half of the deals done 
between 2000 and the first quarter of this year involved investments in US-
based companies. This reflects Asian venture investors' 'lack of confidence 
in leading-edge knowledge in biotechnology in the region', says the journal.

Among Asian financial institutions, Taiwan's China Development Industrial 
Bank has been the most active in biotech investments, having participated 
in six of the 15 deals in biotech companies since 2000.

Looking to the future of Asia's biotech industry, the report suggests that 
China could become a leading player. It has been intensifying research in 
agricultural biotech - although it is being challenged here by India.

China can also leverage on Taiwan's advanced position in Asian's biotech 
scene and Hong Kong's financing capabilities. 'The potential of the Greater 
China region as Asia's future biotechnology hub could be formidable,' the 
report says.

Although biotechnology has not enjoyed growth as explosive as that of the 
information technology sector - the returns take longer to come and involve 
higher investments - the report points to 'clear signs that the era of 
biotech has arrived'.

One indicator is a sharp rise in biotechnology product sales in the US, 
from US$7.7 billion in 1995 to US$20 billion last year.

The sector is expected to record 24 per cent compound annual growth until 
2006 when sales will be close to US$40 billion. However, the report 
cautions that 'enlightened by the current technology carnage, investors are 
likely to exercise prudence' when investing in biotech.


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