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‘China will be Asia’s biotech leader in future’

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CIOL Bureau
New Update

Amy Tan

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SINGAPORE: China could well become Asia's brightest biotechnology star but

the region first needs to develop its venture capitalists' market to support the

fledgling industry, the Singapore arm of SG Securities said.

"China has got very significant potential," group research head Dr

Foo Fatt Kah told Reuters in an interview after the brokerage launched its

inaugural Asian Biotechnology report spanning China, India, South Korea,

Singapore and Taiwan.

China's huge base of scientists versus other Asian countries was augmented by

government programs to woo overseas talent to the mainland, Foo said. Its 1.3

billion people were also a magnet for global healthcare companies seeking a

slice of the pie.

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"The great thing about a massive market is that the foreign companies

want access to this market. China will attract alliances from foreign

companies," Foo said. Alliances in manufacturing and marketing already

exist but Foo expects the nature of the tie-ups to shift to basic stage research

as China pays more attention to intellectual property rights after its recent

entry into the World Trade Organization.

But intellectual property rights remain a key stumbling block to China's

biotechnology industry in the immediate future. "In China, where there is

no intellectual property rights enforcement, products go in and a hundred

competitors try and copy the product and that pushes prices down," Foo

said. "Without good pricing, research and development investment is going

to be very difficult."

India, with its huge population and low intellectual property rights

infrastructure, faced the same problem of depressed prices, Foo said. "The

integrity of the intellectual property infrastructure -- that is the first step

towards better pricing," he said.

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Government funding

Foo said hard data on the number of start-ups, the amount of venture capital

invested and funds allocated by governments were difficult to come by. But he

saw the commitment of Asian governments to funding early stage biotechnology

projects as encouraging in itself.

"The involvement of government in early stages is clearly very positive

and required, but in the longer term there must be a mechanism by which publicly

funded science projects are transmitted to the private sector," Foo said.

Taiwan has strong support for intellectual property rights, good infrastructure

and a well-developed market for venture capitalists (VCs) but sorely lacked

mechanisms to commercialize publicly funded research, he said.

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Government-funded Taiwanese scientists also could not run private

biotechnology firms, further impeding the growth of biotech spin-offs from the

public sector, Foo said.

Strong capital markets were crucial to support fledgling start-ups after they

had left the arms of government funding. "The capital markets must exist.

The VCs play a very critical role in the whole process," Foo said.

"Asia needs to ratchet up its skills in biotech VCs. The VCs are not only a

supplier of capital, they supply management expertise."

Singapore and Taiwan were the two Asian countries with the highest

biotechnology VC skill sets and the most developed stock markets for the sector

at the moment, Foo said. Taiwanese VCs and the Singapore government were also

the two most active biotech investors in the region.

"I see these two markets as attracting the vast majority of listings in

the next two to three years," Foo said. The rest of Asia still has some way

to go. "It is very long term and requires a lot of capital

investment," Foo said. "The whole financial services industry has to

grow alongside the biotech industry, from the VCs right up to the investment

banks."

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