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June 30, 2017

Top Eight Asia Biopharma Clusters 2017

Meet the East’s Most Promising Regions for Biotech and Pharma Businesses

Top Eight Asia Biopharma Clusters 2017

Asia’s biotech industry outperformed the U.S. in one key measure last year by registering a smaller decline in overall financing compared to 2015, according to EY’s annual “Beyond Borders” report. [ansonmiao/Getty Images]

  • Even in a down year, Asia’s biotech industry outperformed the U.S. in one key measure. As noted in the latest edition of EY’s annual “Beyond Borders” report, biotechs in China, Japan, Singapore, South Korea, and Taiwan combined to raise more than $2.5 billion in overall financing—30% below the $3 billion-plus racked up in 2015. Last year’s shrinking IPO market and a decline in follow-on financings and other fundings of publicly-traded biotechs more than negated an 11% increase in venture capital (VC) financing.

    However, Asia’s year-to-year decline is smaller than that of the U.S., where biotech financing fell in 2016 by 45% (to $34.2 billion) paced by its own declines in IPOs (64% less in proceeds) and follow-on financings (down 49%)—the result of investor skittishness about the U.S. presidential election—and even VC financing (down 18%).

    Of course, it takes more than money to make a country inviting to biotech and pharma employers, which is why factors other than money are included among the criteria used by GEN to rank Asia’s nations as biopharma clusters. The following is GEN’s 2017 edition of its annual Asian cluster ranking. Countries are ranked on the following five criteria:

    • Public R&D spending—Figures for most nations appear in the Organization for Economic Co-operation and Development (OECD)’s most recent edition of its semiannual Main Science and Technology Indicators, published in February 2017. For nations not included in OECD data, GEN cited figures published by UNESCO Institute for Statistics on its website.
    • Patents—Based on the number of “biotechnology” and “pharmaceutical” patents as of May 19 that list at least one inventor from that nation in the World Intellectual Property Organization’s PATENTSCOPE database, consisting of some 64 million patent documents, including 3.1 million international patent applications published through the Patent Cooperation Treaty (PCT) of 1970, under which applicants can simultaneously seek protection for their inventions in 148 countries.
    • Initial public offerings—Figures taken from a combination of publicly available data sources and company announcements dating back to 2016, to ensure a minimum number of Asian nations that could be ranked.
    • Number of companies—Combines figures furnished by the countries themselves on their own websites, in publicly available reports or public announcements, or in press articles when written by or directly attributed to an industry source.
    • Jobs—Based on various sources, from industry groups, regional life sciences campuses, public and/or private economic development groups, and press articles when written by or directly attributed to an industry source. Because of differences in criteria, such as inclusion of medical device or hospital patient-care positions, GEN found widespread discrepancies in job figures, including among several of the top-ranked regions.

    Two countries included in some Asian cluster listings, Israel and Turkey, do not appear on this list since their locations within the Middle East also place them on cluster listings for that region. One up-and-coming nation to look at in future years, for example, is New Zealand, which finished seventh in patents (1,207 listing at least one inventor from the country, according to WIPO) and eighth in companies (an estimated 150 to 200).

  • #8. Malaysia

    Malaysia told the world it was stepping up its commitment to growing biopharma in June 2016, when it rebranded the Malaysian Biotechnology Corp. as the Malaysian Bioeconomy Development Corp.—and charged the agency with an expanded role and functions as the nation’s leading vehicle for advancing biotech economic development. A few months later in January, the corporation put some proverbial money where its mouth was by creating the Biotechnology Commercialisation Fund 2.0, allocating RM100 million ($23 million) in loans to assist BioNexus companies and corporate giants in growth projects.

    Since 2005, when then-Prime Minister Abdullah Badawi launched the country’s first national biotech program with a goal of generating 5% of GDP from biotech, and growing the industry’s workforce to 170,000 jobs, by 2020. While progress has been made, it has been slow going: Malaysia is still seventh in jobs (31,000) and companies (283 “BioNexus” designated businesses as of June 24). Malaysia remains eighth in both R&D ($9.68 billion in 2014, according to UNESCO) and patents (ninth with 337 listing at least one Malaysian inventor, according to WIPO). Malaysia has seen only a single biotech IPO since 2015: Bioalpha Holdings, which raised $5 million last year. That’s not to say the country cannot nurture initial offerings, since 1.55 trillion WON ($1.38 billion) is set to be raised soon by a plastics maker, Lotte Chemical Titan Holding. But while home-grown entrepreneur Ryan Parker said June 27 he plans to launch a biotech, he also said he’d make the company public not in Malaysia but in the U.S., where stock values run 15 to 18 times earnings.

  • #7. Singapore

    Singapore’s lowest ranking is in number of companies (ninth with about 100—including more than 30 biopharma giants according to Singapore Economic Development Board). That’s something the city-state hopes to address with a startup development program announced June 19: The Singapore Exchange (SGX) and Exploit Technologies (ETPL), the commercialization arm of Singapore’s Agency for Science, Technology, and Research (A-STAR), will grant promising startups access to A-STAR’s R&D capabilities, as well as to growth capital from Singapore-based private or public capital markets.

    Another challenge for the city-state is increasing its number of IPOs, in which Singapore ranked seventh with a single company—but only if you count home-grown Aslan Pharmaceuticals, an immunotherapy developer which back in April completed in Taiwan an initial offering of NT$1.157 million ($38 million). However, Morrisville, NC-based drug developer Liquidia Technologies, which in 2011 won a $10 million investment from the Bill and Melinda Gates Foundation, has been rumored since January to be seeking an IPO in Singapore; Bloomberg said the offering could be valued about S$300 million ($216 million). Singapore ranks sixth in patents (sixth with 1,838 listing at least one Singaporean inventor, according to WIPO) as well as seventh in R&D ($12.27 billion in 2015, according to OECD).

  • #6. Australia

    “Down Under” is more like middle of the pack, placing fifth in R&D ($35.59 billion as of 2015, according to OECD), jobs (48,000, according to AusBiotech), and patents (6,207 listing at least one Australian inventor, according to WIPO). Australia is not too much further back in companies (sixth with more than 700, consisting of 300 biotechs and 400 medtechs, a category that includes diagnostics, according to AusBiotech), and IPOs (sixth with A$34 million [$26 million]), two planned and one completed this year. The completed IPO was the A$12 million ($9 million) offering of Imagion Biosystems, based both in Australia and the U.S. (Albuquerque, NM), and whose bioimaging detection technology is designed to spot cancer early without radiation.

    Hoping to generate more jobs and companies, Australia’s government in June rolled out its A$5 million ($3.8 million) Biotech Horizons program, a first-time biotech grant program designed to support proof-of-concept efforts by research teams as well as small and medium enterprises. Initial investments will focus on precision medicine and 3D anatomical printing. Also continuing to grow is the nation’s biggest biotech, CSL, which is expanding its presence in China—where it is already a leader in supplying albumin—and on June 13 acquired an 80% stake in plasma-derived therapies manufacturer Wuhan Zhong Yuan Rui De Biologics (“Ruide”) for $352 million.

  • #5. Taiwan

    One year into its BioEconomy Plan, aimed at growing its bioindustry to NT$3 trillion (nearly US $100 billion) by 2020, Taiwan remains strongest in companies, placing third with 830—510 applied biotechs and 320 pharmas, according to 2015 statistics published this year by the Ministry of Economic Affairs (MOEA)’s Biotechnology and Pharmaceutical Industries Promotion Office. Taiwan is fourth in IPOs (second with 12 totaling about $351 million)—though one IPO, Aslan Pharma, came from a Singapore company that raised NT$1.157 million ($38 million) in May. The nation is sixth in both R&D (sixth with $33.653 billion in 2015, according to OECD) and jobs (37,759 as of 2015, according to MOEA).

    Notwithstanding Taiwan’s progress in growing its biopharma industry, discussion has surfaced in recent weeks about making the nation biopharma-friendlier. Audrey Tseng, deputy chairwoman of PricewaterhouseCoopers (PwC) Taiwan, has urged the government to lift restrictions on angel investors and match Singapore in offering tax exemptions for individuals who invest in biotech startups, the Taipei Times reported on June 1. Specifically, she said, Taiwan should lengthen the time in which tax credits can be claimed, and should improve its English-language information and resources to attract more investors.

  • #4. South Korea

    South Korea remains on track to grow its biopharma industry—notwithstanding the impeachment and removal in March of President Park Geun-hye, an industry supporter, on charges of extortion, abuse of power, and bribery. South Korea’s Ministry of Health and Welfare in September 2016 announced a series of measures designed to add 940,000 more jobs, and catapult the nation into a global biopharma giant by the year 2020. Measures include more R&D investment in new drugs (plus medical devices and cosmetics), with a goal of increasing the number of marketed treatments developed domestically to 17 by 2020, from the current three.

    R&D is already a strength of the “Land of the Morning Calm” (third with $74.218 billion in 2015, according to OECD). So too are jobs (third with 760,000 as of 2015, according to the Ministry of Health and Welfare) and patents (third with 7,627 listing at least one South Korean inventor, according to WIPO). This year, South Korea is also second in IPOs, thanks to the approximately $2 billion initial offering completed in November 2016 by Samsung Biologics. Another huge biopharma IPO is expected in July when Celltrion is set to raise KRW 799.6 ($697 million). Yet, the nation ranks fifth in number of companies (456 in 2014, according to OECD). Park’s successor, Moon Jae-in, is looking to boost those numbers. In March, the Ministry of Science, ICT, and Future Planning announced the creation of a $100 million fund to help finance biotech startups and venture firms. A month later, Health Minister Chung Chin-yeob met with biopharma executives, and said new workforce development measures were in the works.

  • #3. India

    India is second in companies (3,492 pharma companies as of 2015–16, according to the Pharmaceutical Export Promotion Council and India Brand Equity Foundation, which also lists “about 800” biotechs). The nation has climbed a notch since last year to become second in patents (7,998 listing at least one Indian inventor, according to WIPO); but remains fourth in R&D ($67.70 billion in 2015, according to OECD). India fares better in IPOs (third with five companies totaling $550 million) and in jobs (fourth; figures have varied during this decade from 50,000 to 450,000).

    In June, India’s Cabinet Committee on Economic Affairs chaired by Prime Minister Narendra Modi, announced plans to spend $250 million—half of it to be funded by the World Bank—through 2023 toward industry–academic collaborations to develop biotherapeutics, vaccines, diagnostics, and medical devices. Funding would also be spent toward shared infrastructure and facilities, strengthening knowledge and management skills, and advancing tech transfer in the public and private sectors. The program is the latest action by Modi to achieve India’s long-stated goal of growing its biotech industry to $100 billion by 2025.

    Supporting biotech startups was also the goal of another initiative announced in June: India’s government said it will boost biotech with five new bio-clusters, 50 new bio-incubators, 150 technology transfer offices and 20 bio-connect offices in research institutes and universities across the country.

  • #2. Japan

    The “Land of the Rising Sun” continues to be Asia’s number-one country in biotech and pharma patents (13,748 listing at least one Japanese inventor, according to WIPO), as well as a firm number-two in R&D ($170.082 billion in 2015, according to OECD). Japan is also second in jobs (figures during this decade have varied wildly from 210,000, to about 878,000). However, Japan ranks lower in companies (third with 1,100+, including 591 biotechs according to 2013 data released in 2015 by Japan Bioindustry Association), and fifth in IPOs, with two biopharmas completing initial offerings totaling $38.5 million—the most recent being Solasia Pharma, which raised nearly ¥3.6 billion ($32 million) in March.

    One factor that has held back innovation, say industry advocates, is Japan’s curbs on prescription drug prices. They fell 10% (to 31%) for several branded treatments after the nation required sponsors to submit data on their drugs to Japan’s National Health Insurance. Yet, Japan is also the home of buyers willing to spend big money on biopharma deals. Some “blockbuster” drugs saw prices fall 51% if they generated ¥100 billion (about $1 billion) in sales and met other criteria. One of the year’s biggest deals came in February, when Takeda Pharma completed its $5.2 billion acquisition of ARIAD Pharmaceuticals. Also in February, home-grown Asahi Glass completed its $511 million acquisition of CMC Biologics; the Danish CMO bases its bioscience unit in Bothell, WA.

  • #1. China

    Asia’s top biotech country, and an increasingly formidable rival to the U.S. in global leadership of the industry, remains number-one in four of this list’s five measures, including R&D ($408.829 billion in 2015, according to OECD), number of companies (up to 7,500), and jobs (estimates in recent years have ranged from 250,000+ [according to Kelly Services] to 2,882,903 [according to JLL]). China is also number-one in IPOs ($3.047 billion raised by 11 companies), not counting two pending nine-figure IPOs—BGI Genomics ($250 million, set for July), and Gan & Lee ($226 million)—or Berry Genomics, which went public without an IPO through a $619-million reverse merger with Chengdu Tianxing Instrument & Meter.

    The only measure where China lags is patents. The nation placed fourth (6,930 listing at least one Chinese inventor, according to WIPO), but is rapidly making progress generating new intellectual property. According to the Ministry of Science and Technology, China saw the publication in 2015 of more than 80,000 life science papers and applications for over 20,000 biotechnology patents, state-run news agency Xinhua reported.

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