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
------------------ archive: http://www.gene.ch/genet.html ------------------
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."
NEED TO ATTRACT TALENT
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.
PHARMACEUTICALS STILL KING
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
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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