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7-Business: Singapore pins hopes on biotech; investors hold back

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TITLE:  Singapore pins hopes on biotech; investors hold back
SOURCE: The Mercury News, USA
DATE:   July 16, 2002

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Singapore pins hopes on biotech; investors hold back

SINGAPORE (Reuters) - Singapore's government sees medical research as a key 
to its economic survival, but investors are waiting for more signs of 
success before injecting cash. The city-state, still feeling pain from its 
worst recession since 1964, says it is pumping money into the life 
sciences, importing talent and building complexes to focus activity. But 
the private sector is unimpressed. "It's all infrastructure, 
pronouncements, announcements," Christina Lim, head of Vertex Management's 
biotech investments, told Reuters. "But actual ground level of the research 
and the fundamental content, it's really very nascent at this stage."

She and her fellow venture capitalists are "all just watching and 
waiting...You cannot expect VCs to just pour in money, especially when 
there is no track record here." Singapore's spending coincides with the 
slide of share prices in U.S. biotech firms. Shares of U.S. biotech 
companies have plunged more than 30 percent since January. Research firm 
IDC says only one out of 33,333 life sciences projects ever makes it to a 
market launch. "Singapore investors have shied away from biotech only 
because it's been too risky," Lim said.

And there have been few suitable start-ups for investment capital. "The 
rate of company creation in Singapore is not the same as what you have in 
Western Europe and North America," said Sanjay Sehgal, a partner with 
Schroder Capital Partners Asia. "If you don't have that entrepreneurial 
creation happening, the money is not going to be there. It's a little bit 
of a chicken and an egg."


The Economic Development Board (EDB), which is spearheading Singapore's 
funding effort, boasts a long list of venture capitalists in its biomedical 
sciences directory. But just a few are active in the biotech sector and 
fewer still invest in local start-ups, market watchers say. Many prefer to 
look for deals in the United States, Europe or even China. "The 
sophisticated U.S. and European investors aren't investing in Singapore 
because it's unknown to them," said Dr. Yvette Flanigan, a biotechnology 
consultant at Singapore law firm Rajah & Tann. "They can get investments 
where they already are."

Singapore, which became independent in 1965, has pledged at least S$3 
billion ($1.7 billion) in the last two years to build infrastructure, train 
scientists and fund research and start-ups. "It has the infrastructure," 
Anil Thadani, Schroder Capital Partners Asia's chairman, said. "It's a 
matter of attracting more and more talent." EDB has funded privately held 
companies such as stem cell firm ES Cell International and drug discovery 
company S+Bio and says it hopes to have 15 world-class biotech firms by 
2010. EDB created Exploit Technologies in January to commercialise 
intellectual property from its research centres, such as the Genome 
Institute, as well as the National University of Singapore.


Manufacturing output for the biomedical sciences industry -- made up of 
pharmaceutical, medical technology, biotechnology and healthcare -- is 
projected to reach S$12 billion by 2005 from S$6.6 billion in 2001, the EDB 
says. But pharmaceuticals are still expected to account for half of the 
industry's output by 2005 as biotech and healthcare services struggle. 
"You've got to have government intervention...including sustained 
government support," said Edison Liu, head of Singapore's showpiece Genome 

Singapore is also likely to take a middle path on rules governing 
biomedical research with a total ban on cloning people and strict 
guidelines on human stem cell investigations. That will bring it in line 
with the likes of Britain and Japan, but make it more liberal than the 
United States. Market watchers say it will take three to five years for 
private investors to wade into the local biotech scene. The only biotech 
firm listed in Singapore is British generic drug developer GeneMedix Plc. 
But that may change.

Anthony Soh, director of UOB Bioventure Management, expects at least three 
to five Chinese or U.S. firms to hold initial public offerings in Singapore 
in the near future. "The window for biotech IPOs is going to be within the 
next 12-18 months because there is a pent-up demand," Soh said. 
Biopharmaceutical firm Rockeby Biomed, founded two years ago with 
Australian technology and money from angel and private investors in the 
city state, hopes to be among the frontrunners to list with a test kit for 
fungal infections.

But Liu of the Genome Institute, a renowned breast cancer scientist wooed 
from the U.S. National Cancer Institute, said Singapore had to look beyond 
IPOs as a measure of the biomedical sector success. "No country can really 
measure their success by simply looking at internal activity," Liu said. 
"So long as the experience, expertise and revenues come back to Singapore, 
that's the key. You can have a company in Siberia. It doesn't matter."


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