Oxbridge Biotech Roundtable: Sustaining A Biotech Ecosystem In Singapore

Is the biotech ecosystem in Singapore truly self-sustaining? A senior panel of speakers shared their views at the recent Oxbridge Biotech Roundtable session.

AsianScientist (Oct. 7, 2013) – In 2000, the Singapore government committed S$6 billion over five years to establish a biomedical hub in Singapore and attract global scientific talent.

Since then, it has increased research and development (R&D) spending to S$16.1 billion for Phase III of its Biomedical Science Initiative, with the aim of “capturing opportunities for greater economic and health impact.”

As the Oxbridge Biotech Roundtable launches its Singapore Chapter on October 2, a distinguished panel of policy makers, venture capitalists (VCs) and entrepreneurs discussed the challenges and opportunities facing Singapore’s nascent biotechnology ecosystem, as well as the recurring question: “Is the biotech ecosystem in Singapore truly self-sustaining?”

Government support

Prof Low Teck Seng, CEO of National Research Foundation (NRF) of Singapore, which sets the national direction for Singapore’s R&D policy, said that the role of the government is to establish proper healthcare and top-notch education in Singapore. This way, MNCs will be attracted by Singapore’s educated workforce and infrastructure and set up regional headquarters here, he said.

Likewise, the government can provide VCs with better incentives such as a higher percentage of possible upside gain to compensate for a higher perceived risk when investing in local start-ups, he said.

Prof. Low elaborated on the Technology Incubation Scheme, where NRF co-invests up to 85 percent (capped at S$500,000) in Singapore-based start-up companies that are incubated by technology incubators. These incubators provide their investee companies with physical space, mentorship and guidance. As an incentive, incubator operators are given the option to take over NRF’s stake in the start-up companies within three years by repaying NRF’s investment with interest.

“Knowing when to give small and medium enterprises (SMEs) financial incentives and when to step away eventually is crucial… The market will ultimately determine and validate the products that are truly outstanding, not the government,” said Prof. Low.

When asked if Singapore start-ups are artificially propped up by the government, Dr. Steven Fang, founder of CordLife Ltd and partner with Clearbridge Accelerator, said that the first few years are a usually series of failures. He told the audience that he sold his house and invested his (and his children’s) savings into his company. If he had support from the government, he could have afforded to fail and iterate along the way, he said.

“Fail as early as possible, you can change direction, be on the look-out for other technologies. Some government support is to help companies figure that out… The government cannot be an entrepreneur, but can provide a leg-up to entrepreneurs,” he said.

 
Synergy between SMEs and MNCs

Dr. Rosemary Tan, CEO of diagnostics company Veredus Laboratories, shared her experiences with founding the company years ago.

“Start small, concentrate on your technology,” she said.

Veredus’ first product was a diagnostic kit to detect the H5N1 strain of the avian influenza flu. This was one of the world’s first kits for H5N1 and was in great demand during the H5N1 crisis. The Economic Development Board (EDB) of Singapore subsequently introduced Veredus to STMicroelectronics (a multinational electronics and semiconductor company) to explore mutual opportunities. Seeing a synergy in their lab-on-chip technology and Veredus’ expertise in avian flu detection, STMicroelectronics partnered with Veredus in 2006 to develop a point-of-care diagnostic platform for the rapid detection of H5N1 and other viral strains. Veredus is now a majority-owned subsidiary of STMicroelectronics.

“MNCs have deep pockets and they have good brand names. We (SMEs) can learn from them. There is also a halo effect as MNCs have a globally-orientated business mentality and a globally-trained workforce,” said Dr. Tan.

MNCs also have the advantage of looking across the globe for superior technologies and manpower skills, she said. Though she cautioned against the comfortable and “safe” environment that prevailed in MNCs, she feels that SMEs can only benefit and learn from them, to “build a product that stands for Singapore, and built for Singapore.”

“There needs to be a big ecosystem of SMEs that will support the use of technologies. In order to be globally competitive, we cannot ride on the coat-tails of MNCs,” Prof. Low said.

Prof Low emphasized the government’s commitment towards building a knowledge-based economy driven by R&D, adding that there has to be a “consistent funding policy, while there might be changes in shaping the funding, the amount committed to R&D is still there.” For that reason, Dr. Fang advised entrepreneurs to “continue maintaining contacts with EDB, NRF, universities and VCs.”

Think global and don’t be afraid to fail

The panelists also emphasized the need for Singapore-based scientists and entrepreneurs to constantly think global. While Singapore serves as a good base for setting up a company, the Singapore domestic market is simply too small for a business to be profitable, they said.

“You need to build a global company, with its base here and technology developed here. But when VCs and incubators look for an exit via the initial public offering (IPO) route, it might not necessarily be in Singapore,” said Dr. Fang.

He said that the local VC investor community is somewhat risk-adverse, as they are typically on the look-out for investments that have quick returns and dividends. But biotech companies are high-risk investments as they usually take 10 to 12 years to achieve success (if any), and most do not have any measurable revenue for a long period of time.

The panelists also stressed the importance of failure in setting the foundation for success.

Prof. Low shared the lessons learnt from government investments in the hard disk industry in the 1990s. Micropolis’ parent company Singapore Technologies had tired of losses generated by the disk-drive manufacturer and decided to end Micropolis’ operations worldwide. It operated at a loss from 1993-1996, and the main reason for its failure was its inability to compete with larger companies such as Fujitsu, IBM and Samsung who had entered or redoubled their efforts in the hard-drive market.

However, key lessons gleaned from this experience were subsequently applied to other areas of policy making, he said, even if there is no one-size-fits-all policy that applies to all industry and market sectors.

Dr. Fang agreed, adding that these are early days for Singapore. He noted that the thriving biotech culture in the United States went through many generations of failure before it reached its current vibrant state.

“Within the investment circle, the biotech industry is the original dot.com. There have been more dead-end investments dollar for dollar in biotech than in any other industry… We have not had had the benefit (of time), and I think the government is putting us in the right direction. We need to have more patience,” said Dr. Fang.

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Copyright: Asian Scientist Magazine.
Disclaimer: This article does not necessarily reflect the views of AsianScientist or its staff.

Sarah has a PhD degree in biomedical sciences. She hops on a plane or dive boat every chance she gets, and firmly believes that “one’s destination is never a place, but a new way of seeing things.”

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