Evolving a National System of Biotechnology Innovation - MyWeb

EVOLVING A NATIONAL SYSTEM OF BIOTECHNOLOGY INNOVATION n 105

Science, Technology & Society 10:1 (2005)SAGE PUBLICATIONS NEW DELHI/THOUSAND OAKS/LONDONDOI: 10.1177/097172180401000106

Evolving a National System ofBiotechnology Innovation: Some

Evidence from Singapore

SACHIN CHATURVEDI

This article attempts to look into the dynamics of a national system of biotechnologyinnovation (NSBI) in the wider framework of its role in economic development. It hasbeen found that NSBI crucially depends not only on budgetary allocations and insti-tutional support for advancement, but also on response to market demand. The evidencefrom Singapore shows that a sectoral approach in NSBI may help developing countriesin finding a niche for growth instead of broadening the area of investment withinbiotechnology. In case of Singapore, the biomedical sector has been chosen by thenational government for achieving the desired growth rate in the manufacturing sector.The various components of the NSBI and specific achievements of Singapore in thisregard have been discussed in the article.

IN THE LITERATURE on the national innovation systems (NIS), the role ofcountry-specific institutional frameworks in light of technologicalcapabilities has been discussed at length. However, the analysis of innov-ation systems with regard to emerging sciences is a rather new phenomenon.Some papers, such as Bartholomew (1997) and Senker (2001), have at-tempted to analyse such an innovation system for biotechnology. In thesestudies efforts have been made to develop and define the contours for anational system of biotechnology innovation (NSBI). Incidentally, bothstudies have a predominant focus on developed economies.

Sachin Chaturvedi is Senior Fellow, Research and Information Systems, Zone IV B,4th Floor, India Habitat Centre, Lodhi Road, New Delhi. E-mail: [email protected].

106n Sachin Chaturvedi

However, since the late 1990s, developing countries have also enteredbiotechnology in an important way. Therefore, the NSBI for developingcountries may help developing countries draw policy insights from theseexperiences. It is also interesting to find that some developing countriesare viewing biotechnology as a panacea for economic growth. Thus, alarge number of them are making strides in various sectors and are makingefforts for development of this technology. One of the most aggressive ofthem is Singapore, where the biotechnology industry is being promotedwith a clear target of achieving 6 per cent economic growth through themanufacturing sector.1

Singapore has actually attempted to redefine the national institutionalcontext in light of developments in biotechnology. It has chosen a par-ticular sector, namely, biomedical science, for advance of biotechnology.Unlike its earlier technology policies, Singapore now supports public re-search institutions to a great extent. This signifies a major change in thecountry’s approach towards S&T policy itself. It has already investedabout US$ 20 billion in research and industrial parks as against US$ 15billion by South Korea and US$ 13 billion by Taiwan (Mitchell 2000).The Singapore government has also promoted specific financial assistanceschemes. Start-up companies from Singapore are now eligible for accessto a US$ 20 million government fund set up exclusively to promote thebio-industry (ibid.). This article is an attempt to look into the variouscomponents of the NSBI in light of the current status of biotechnology inSingapore. It is organised in the following way. The next section attemptsto develop an analytical framework for NSBI. Section three puts togetherbroad S&T-policy-related initiatives by the Singapore government, whilesection four tries to enumerate Singapore’s attempts to find a niche withinbiotechnology for expanding economic growth and exports. The next sectiondeals with emerging demand of biotechnology goods and services in con-text of private sector participation in the evolution of biotechnology inSingapore. The last section puts forth the broad conclusions from thearticle.

Framework for the NSBI

The foundation pillars of the NSBI have largely emanated from the dy-namics of NIS, which has evolved over a decade as a conceptual researchframework rather than a formal theory (Mani 2002). Instead of providing


definite relationships between its variables, NIS suggests broad relationsbetween various components (Nelson 1993). In the NSBI the integrationof basic and applied research that is required for innovation takes placelargely between firms and research institutions rather than within firmsonly. Accordingly, biotechnology innovation may be conceptualised asthe product of the accumulation of scientific knowledge in research in-stitutions and firms (stock), and the diffusion of that knowledge betweenthem (flow). The conceptual framework as developed by Bartholomew(1997) focuses on eight particular features of national institutional contextthat affect these stocks and flows of scientific knowledge. They are: trad-ition of scientific education; pattern of basic research funding; linkageswith foreign research institutions; degree of commercial orientation ofacademia; labour mobility; venture capital system; national technologypolicy; and technological accumulation in related industries.

This model also considers three R&D practices at the level of the firm:collaboration with research institutions; inter-firm R&D cooperation; andutilisation of foreign technology. However, in terms of desiderata for theNSBI, especially in the context of developing countries, one may like toadd a couple of additional components that may play an important role inits working. Some developing countries may overcome preconditions likethe scientific traditions by resetting institutional orientation towardsscience and technology. Apart from this, the model for NSBI also needsto consider the demand in the system and, second, the public acceptanceof biotechnology products (Senker 2001). The policy support to encouragetargeted research and the ability to outsource R&D at firm and institutionallevels are other important constraints (Chaturvedi 2002).

It is important to realise that evolution of biotechnology in a particularscience and technology system is also a function of demand for biotechnology-related products. It also depends on the institutional dynamism withinthat system, which caters to the emerging demand of those products(Figure 1). As the system responds to the emerging demand, this mayeven lead to sectoral specialisation within biotechnology. The NIS incase of developing countries is often found to be less developed in termsof institutional composition, sophistication of scientific and technologicalactivities, and linkages between organisational units (Shulin 1999). More-over, Shulin points out that for developing countries, as against developedones, it is capital that plays a key role in achieving technological excellencerather than knowledge and learning.2

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Flow of Knowledge

The policy thrust on evolving the domestic innovation system becomesclear from Singapore’s National Innovation Framework for Action (NIFA).3

The NIFA document, prepared by Economic Development Board (EDB),National Science and Technology Board (NSTB) and Singapore Prod-uctivity and Standards Board (SPSB), aims to be a starting point fromwhich an innovation roadmap for Singapore can be developed. The estab-lishment of the NSTB was the first formalised effort by Singapore in thedirection of developing an NIS. One of the policy thrusts in Singaporehas been to firm up coordination between scientific infrastructure andindustrial capability.

The NSTB has been instrumental in launching three major five-yearplans on science and technology (Table 1). The Third Singapore Plan(2001–5) classified technology development into three tiers. The firstcomprises the development, innovation/adaptation and acquisition of near-term technologies. It called for deepening the technological capabilitiesof Singapore and engages in medium- and longer-term technology de-velopment. The idea is to anchor the competitive position of its key indus-try clusters as well as to foster the growth of emerging high-value-addedclusters. Developing technologies in the medium- and long-term wouldequip Singapore with a continuous stream of innovative ideas and tech-nologies that will support the development of future generations of productsand services. The strategy is to be world class in a few key technologicalareas with strengths in strategic areas of research, which demonstratesmedium- to long-term economic relevance. Such R&D efforts, it isproposed, are to be carried out in the research institutes/centres anduniversities.

Singapore has made efforts for the promotion of a sectoral innov-ation system. The S&T 2005 Plan is a clear example of that. It sets fortha couple of key points: focus and strengthen R&D capabilities in nicheareas; encourage private sector research and development in that field;establish a system for effective technology transfer and intellectual propertymanagement; recruit global talent and nurture local talent; and developstrong international relationships and networks. The Plan document alsoproposed to set up two research councils—the Biomedical ResearchCouncil and the Science & Engineering Research Council.

There are certain important components of a policy regime that areessential for making the NSBI work. They include arrangements like


financial support; a clear strategy for supporting contract research organ-isations; open policy for imports of skilled manpower; promotion of closecooperation with firms; and arrangements for the emergence of publicattitude. In this section we will not get into details about public attitudeas Singapore does not have any exhibited inclination for agricultural bio-technology against which public attitude has been strengthened in manycountries.

TABLE 1S&T Plans in Singapore

Time period

1991–95

1996–2000

2001–5

–

Five-Year Plans

National TechnologyPlant (NTP)

National Science andTechnology Plan(NSTP)

Third Science andTechnology Five-Year Plan

Science andTechnology 2005Plan

Objectives

Provision of grants and fiscalincentives to encourage moreR&D by the private sector;developing and recruiting R&Dmanpower; support andfunding for research institutesand centres that can train themanpower or provide thetechnological support to enablecompanies to undertake theirR&D.

Capability development inselected fields of advancedtechnologies.

Selection of strategic areas ofresearch with medium- andlong-term economic relevance.

Focus and strengthen R&Dcapabilities in niche areas;encourage private sector R&D;establish a system for effectivetechnology transfer andintellectual propertymanagement; recruit globaltalent and nurture local talent;and develop stronginternational relationships andnetworks.

Allocation(S$ billion)

2

4

7

–

Source: Chaturvedi (2002).


National Funding of Basic Research

The Singapore government has taken several measures to promote equityinvestments in commercial projects in biomedical sciences. Recognisingthis, the EDB has allocated an additional US$ 600 million to attract leadinginternational companies to conduct R&D through corporate research cen-tres in Singapore. This was set aside as the Biomedical Science InvestmentFund (BMS-IF) (Lee 2001). The objective is to enhance industrial activ-ities in Singapore by forming joint ventures, making venture investmentsin overseas companies with spin-offs to Singapore, or investing in localstart-ups. The biomedical sciences industry attracted a record US$ 21billion worth of manufacturing fixed-asset investments commitmentthrough thirteen new projects in the year 2000. Singapore Bio-Innovations(SBI), a company funded by the Singaporean Ministry of Trade and Indus-try, makes equity investment in foreign companies that have opted for al-liances with Singaporean firms, for R&D, manufacturing, marketing andfor distribution. There are also provisions for tax holidays and traininggrants. As a result, some foreign biotechnology companies plan to makeSingapore a base for their Asian activities. Since its establishment in 1990,the SBI has invested US$ 15 million in shares in three European, fiveAsian and fifteen US-based companies. The European companies are largelyfrom the UK, including Oxford GlycoSystems, Xenova LTD and Inter-national Biotechnology Trust. Some of the local companies in the SBIportfolio are Aroma Biotech and Plantek International. One of the severalventure capital funds in Singapore dedicated to investments in the bio-medical sciences industries is the BioMedical Sciences Investment (BMSI).This is part of EDB Investments Private Limited, which is the investmentarm of the EDB. The BMSI draws from direct equity investments inpromising private companies worldwide venture capital, co-investmentswith established players in Singapore-based joint ventures, investments inindigenous start-up companies and investments in established overseas bio-medical sciences funds.

As of now, the BMSI has in its portfolio over fifty companies globally.A number of these investments have resulted in research activities andclinical developments being undertaken along with the formation of jointventures and start-ups in Singapore. In the year 2000 the governmentcommitted an additional S$1 billion (US$ 600 million) in the BMS-IF,


bringing total investment funds under the BMS’s management to S$ 1.21billion (approximately US$ 700 million) (EDB 2001b).

National Tradition of Scientific Education

Another important feature of the NSBI is to strategise for overcomingthe lack of scientific R&D traditions. The Singapore government decidedto gear up the entire value addition chain to tap the potential of growth inbiomedical sciences. This gradually led to the building up of institutionsaddressed to specific excellence in pharmaceuticals and molecular biologyresearch. The government also launched efforts to evolve Singapore as amajor base for contract research organisations (CROs). In Asia Singaporehas emerged as a major base for CROs. Singapore provides a rich databaseof patients with Indian, Malay and Chinese origin to conduct such research.The size of Asian market is around $500 million and is expected to reach$800 million by 2004. While at the global level the CRO industry size isof US$ 5 billion (McManus and Saywell 2001). Some of the examplesfor instance are like Eli Lilly, which has set up a joint venture clinical re-search centre in collaboration with the National University of Singaporein 1998. Another major group active in this field is Covance, which hasset up a facility in Singapore. Covance had revenue of S$ 899 million.The group aims at getting 8 to 10 per cent of its revenue from the Asianregion. Another major CRO is Quintiles Transnational, the world’s leadingprovider of information, technology and services to bring new medicinesto patients faster and improve health care.

In light of limited domestic expertise in the biomedical sector, Singaporehas chosen an open policy to allow skilled manpower. Research and edu-cational institutes are working towards this objective. The National Univer-sity of Singapore (NUS) and the Nanyang Technological University (NTU)provide training at undergraduate and postgraduate levels, and researchinstitutes, the Institute of Molecular and Cell Biology (IMCB) and theNational University of Medical Institutes at postgraduate and postdoctorallevels. The centres of competence contribute by providing project-basedtraining in strategic fields. At the lower levels, Ngee Ann Polytechnicand Singapore Polytechnic arrange three-year diploma courses in bio-technology to train technical personnel for employment in the industry.

Singapore has also earned a distinct name as a centre for learning inbiotechnology by establishing the IMCB in 1987 in the NUS to develop


and foster a vibrant research culture for biological and biomedical scienceto support the development of biotechnology industry. It has already pro-duced sixty Ph.D.s, a few hundred postdoctoral fellows and many summerstudents. The institute offers an integrated programme of advanced coursework, laboratory research and seminars. Figure 2 shows the position theIMCB has acquired in terms of attracting students of different Asian origin.

FIGURE 2Internationalisation of Graduate Programmes in Singapore

The National Biotechnology Programme (NBP) envisages manpowertraining at all levels. The NBP has also introduced the Training in Biotech-nology Scheme (TIBS) to provide additional training in biotechnologyby encouraging individuals from industry and academic institutions toattend short courses and engage in research attachments overseas. TIBSalso supports developments in local infrastructure, which in turn facilitatestechnology transfer to Singapore. Other schemes include the Initiativesin New Technologies Scheme (INTECH) and the Research ExchangeProgramme. A more recent example of how university education followsclosely with the national agenda is the emphasis on biomedical sciences(DBJ 2001).

Close Cooperation with Firms

Inter-firm cooperation is a vital component of the NSBI, which the Singaporegovernment has encouraged. Apart from financial assistance as mentioned


earlier, the government is also providing several sops to firms so as tomaximise their operations in Singapore. In this regard, EDB support hasalready started showing results. Recently, a research team from the NUS,found a way of growing human embryonic stem cells that eliminate therisk of animal genes or diseases crossing over to humans. The breakthroughgives researchers an edge in the race to produce tissue and organs thatcan be transplanted into humans to help cure diseases (Straits Times 2001).There is a private company called ES Cell International that is makingefforts to commercialise stem cell research. This company is partly ownedby the EDB and it is one of the few firms in the world that can supply stemcells to researchers. It is a joint collaboration between institutes inAustralia, Israel and the Netherlands. The company holds six of the sixty-four stem cell colonies that have been approved by the US for governmentfunding. Human embryonic stem cells can transform into any cell in thebody, so if scientists can control this, they can grow tissues and eventuallyorgans to replace diseased ones, or cure deadly diseases.

Stock of Knowledge at Research Institutes

The mission of the NSTB is to encourage, develop and nurture humancapital in scientific and engineering research, and indigenous capabilitydevelopment for a knowledge-based economy in Singapore. The Singaporegovernment has been consistently enhancing domestic allocations as partof a wider strategy to increase the domestic knowledge base of researchinstitutions. International comparisons of GERD/GDP ratios in 1997suggest that Singapore (1.39 per cent) compares unfavourably with SouthKorea (2.89 per cent), the US (2.77 per cent), Germany (2.32 per cent)and Japan (2.91 per cent), but the observed gap is closing rapidly. It iswith the Third Five-Year Plan that total national R&D expenditure reached2.09 per cent of GDP by 2001. As is clear from Table 2, the gross expend-iture on R&D (GERD/GDP ratio) rose from 0.84 per cent in 1990 to1.13 per cent in 1995 and 1.84 per cent in 1999. Singapore is aiming at aminimum 40 per cent private sector share of GERD and a target of sixtyresearch scientists and engineers engaged in R&D per 10,000 labour forceby 2002 (DBJ 2000, 2001).


TABLE 2Singapore’s Gross Expenditure on R&D

Year GERD (S$ million) GDP (S$ million) GERD/GDP ratio (%)

1978 37.80 17830.40 0.211981 81.00 31004.70 0.261984 214.30 40048.00 0.541987 374.70 43415.00 0.861990 571.70 67878.90 0.841991 756.80 75320.90 1.001992 949.50 80997.50 1.171993 998.20 94258.70 1.061994 1174.98 108224.00 1.091995 1366.55 120628.80 1.131996 1792.14 132629.30 1.351997 2104.00 141261.90 1.491998 2492.30 141216.20 1.761999 2656.40 143814.40 1.84

Source: National Science and Technology Board, http://www.nstb.gov.sg.

Institutional Flexibility

The NBP strengthened technology capability in core areas by establishingcentres of competence. However, Singapore has shown dynamism in over-coming institutional inertia by constantly monitoring the utility and contri-bution of research institutions in the light of broad economic goals of thecountry. This has enhanced the effectiveness and efficacy of the NSBI.The urge for institutional innovation for international excellence savesthe system from what is often called as ‘institutional drag’ and even ‘insti-tutional sclerosis’ (Johnson 1992: 23). Institutional flexibility in the realmof biomedical and other related sectors has tremendously contributed tothe emerging excellence in this field.

New courses are being introduced to suit the needs of the biomedicalscience venture. Table 3 enumerates the attempts made in academics tomatch the broader goals for economic development. It is evident that thecourses being offered by universities and other educational institutionsare tailored according to economic priorities. For example, with the recentemphasis on biomedical sciences and technopreneurship, there has beena substantial increase in the number of such new centres and courses offeredby the universities. Similarly, the NTU will be establishing a School of


Biological Sciences and a Biosciences Research Centre. A third component,a Graduate School of Medicine, is being considered for phase two tooffer an MD programme, modelled on specific requirements and inte-grated learning approach in life sciences research, medical education andhealth care services.

TABLE 3National Economic Priorities and

Matching University Education Programmes

Year

1999

1999–2000

Area ofdevelopment

Techno-preneurship

Biomedicalsciences

University developments

NUS: A minor programme intechnopreneurship wasintroduced at theundergraduate andgraduate levels

NUS: Another new coursecalled ‘ConsultingPracticum for High-Tech Start-up’ wasintroduced that allowedstudents to undertakeresearch/businessstrategy

NUS: New coursesintroduced in the yearto train specialisedmanpower for theworkforce such as:l Master in Pharmacy

(Clinical Pharmacy);l Graduate Diploma in

Psychotherapyl Graduate Diploma

in BasicUltrasonography

NTU: To establish US$ 465million College of LifeSciences

Key national development

The US$ 1 billionTechnopreneurshipInvestment Fund waslaunched to spur thedevelopment of theventure capital industry inSingapore

US$ 62 million SingaporeGenomics Programme(SGP)US$ 2 billion investments

Source: Development Bank of Japan, August 2001.

Some attempts are also being made for streamlining institutional infra-structure as it may affect all cognitive processes. Recently, the govern-ment decided to close down a research institute working on agricultural


biotechnology as Singapore does not have very high stakes in the agriculturalsector, but later considered the Ministry of Trade and Industry proposalto work towards the merger of the Institute of Molecular and Cell Biology(IMCB) and the Institute of Molecular Agrobiology.

The proposal has already been approved by the Life Sciences Minis-terial Committee. Similarly, in 1998 Kent Ridge Digital Lab (KRDL)was formed through a merger of the Information Technology Institute (ITI)and the Institute of System Science (ISS). It is mostly funded by theNSTB—around 65 per cent—and the rest comes from other sources. TheKRDL quickly established itself as one of the most dynamic software labsin Asia. In this short span of two and a half years, its has ten spin-offsfounded by its staff utilising KRDL technologies. The company has spe-cialised in IT infrastructures for life sciences and knowledge-basedsolutions for enterprises in medical imaging and bio-informatics systems.

Scientific-Output-Oriented Targeted Research

To encourage development of technological capability, Singapore hasenacted a new patent law with effect from 1995. There are some fairlyelaborate transitional provisions. Furthermore, until a cadre of examinershas been established, examiners at the Australian Patent Office will infact carry out examination. Principal features of the new law cover asimilar definition of protractible subject matter as that of the EuropeanPatent Convention. The law proposes that novelty will be assessed on aworldwide basis, with regard to both publication and use. Furthermore,the whole contents of any prior-filed Singapore application will be destruc-tive of novelty of an application having a later filing or (where relevant)with any prior date. The term of a Singapore patent is for twenty yearsfrom the filing date. Maintenance fees will be payable on the fourth andsubsequent anniversaries of the filing date. A number of options regardingexamination are provided, including a request for local search and exam-ination. Presumably there will be fees in connection with both requests.Examination must be requested within twenty-two months of the prioritydate.

The impact of this growing emphasis on domestic R&D is evidentfrom patenting activities as well. The number of patents applied for were902 in the year 2000, up by 34 per cent from 1999, while the number ofpatents awarded grew to 285, up by 77 per cent from a year ago in 1998(Figure 3). This shows the increased awareness, by both private and public


FIGURE 3Number of Patents Applied for and Awarded (1993–2000)

sector, on the need to protect their intellectual properties arising fromtheir research activities.

Linkage with Foreign Research Institutes

At leading research centres like the IMCB, the pressure for internationalpublications has gone up several times. Scientists have published over800 research papers in top international journals and filed several patents.The IMCB has also facilitated the growth of the International Molecu-lar Biology Network for Asia and Pacific Rim, which has participationfrom Japan, China, South Korea, Hong Kong, Taiwan, Malaysia, Thailand,Indonesia, Australia, New Zealand and Israel. The network has beenestablished on the lines of the European Molecular Biology Organisation,and is a significant coordinating organisation for the life sciences in Europe.One of the important projects at the IMCB involves the sequencing thegenome of the puffer fish (commonly known as fugu). This represents ahuge step forward for the worldwide human genome project. Joining inthe collaborative efforts to sequence the fugu genome are 500 to 600researchers from the UK-based Human Genome Mapping ResourceCentre, the Molecular Sciences Institute in Berkeley, California, and theInstitute for Systems Biology in Seattle. The impact of this project wouldbe huge in terms of helping derive the advantages of the human genome,which has been nearly sequenced.

Actually now a pyramidal institutional structure for life sciences hasemerged in Singapore with the NUS and NTU at its base providing criticalsupport to the IMCB, which is at the peak of this pyramid. The KRDL andJohns Hopkins Singapore are other major institutions on the biomedical


institutional map of Singapore. In 1998 itself the Johns Hopkins Universityalso established Johns Hopkins Singapore (JHS) as a base for medicaloperations in South-East Asia. The JHS works hand in hand with otherSingapore medical institutions and organisations to perform world-classresearch in biomedical sciences in various diseases endemic to Asia, withthe hope of developing new therapies and diagnoses.

Stock of Knowledge at Firms

Singapore has carefully carved out areas to promote and develop industry-driven R&D. For this it provides grants and fiscal incentives to encouragemore R&D by the private sector, develop and recruit R&D manpower,support and fund research institutes and centres that can train the man-power or provide the technological support to enable companies to undertaketheir R&D and provide commercialisation and infrastructural support. Inthe First National Technology Plan (NTP) the budget was of S$ 2 billion,which become S$ 4 billion in the Second Plan.

The strategies and policies for developing the biomedical sciences in-dustry, conceptualised by the EDB’s Biomedical Sciences Group (BMSG),is to build Singapore into a world-class hub for biomedical sciences, withcapabilities across the entire value chain—from research to manufacturing,and housing regional headquarters of major companies. This priority plangets very well at least for the pharmaceutical sector for which empiricalresults show a high degree of correlation between internationalisation ofR&D and industrial growth (Patel and Pavitt 1998). Thus, TNCs in thissector choosing Singapore for investment is very much on the expectedlines. The BMSG provides assistance to TNC entrants that are consideringSingapore as a location for investments in R&D, manufacturing or head-quarter services by linking them with suitable local research organisations,industrial land/facilities agencies and other supporting services.

At the same time, the BMSG nurtures the growth of local start-ups andother major companies. It focuses on three strategic thrusts in its effortsto make Singapore a global focal point for biomedical sciences activities:human capital, intellectual capital and industrial capital development.Table 4 shows that in the year 2000 the manufacturing output of the bio-medical science industry (BMS) grew by 2.1 per cent to S$ 6.4 billionand its value added grew by 2.7 per cent to S$ 5.2 billion. The share ofBMS in the total manufacturing output grew from 4.64 per cent in 1999to 4.76 per cent in 2000, which in value terms was S$ 130 million.


Similarly, the share of BMS in manufacturing value-added sectors grewfrom 15 to 19 per cent during the same period. The share of BMS in directexports in 1999 was $ 709,000 which was almost 9 per cent of totalmanufacturing exports. One of the aims of the EDB is to house fifteenworld-class companies, and a regional centre for clinical trials and drugdevelopment by 2010 in Singapore.

TABLE 4Share of the Biomedical Sciences Industry in the

Manufacturing Sector of Singapore

2000 1999

Manufacturing Share Manufacturing Sharesector BMS (%) sector BMS (%)

Employment (no.) 338,885 5,300 1.56 338,885 5,600 1.65Output

(S$ million) 130.24 6.4* 4.76 133.57 6.2 4.64Value Added

(S$ million) 27.52 5.2* 18.53 34.92 5.2 14.89Establishment – – – 3,928 36 0.9Workers – – – 338,885 5,312 1.6Direct Exports

(S$ thousand) – – – 85,359,764 709 8.31

Source: EDB (2001c).Note: * Figures are in billion.

Industry capabilities will go up several times once the proposed task-force is set up to look into the establishment of a biomedical grid thatwill facilitate the sharing of data and computing resources, and enhancingcollaboration and cooperation among biomedical research organisationsin Singapore. The proposed grid is a sophisticated IT infrastructure facilitythat will enable biomedical information to be shared and distributed alonga secure data network linking high-performance computing resources.

Inter-firm R&D Cooperation

Apart from the factors listed, the NSBI has another important determinant,namely, the demand for various biotechnology products and services. TheSingapore economy has created an important position for advance tech-nology goods. This growing demand has strengthened the supply chainup to the level of innovation in a major way. Singapore aims to be thehome of fifteen world-class biomedical sciences companies and to become


the region’s centre for clinical trials and drug development. Aventis, GlaxoSmithKline, Merck, Schering-Plough, Pfizer, Wyeth-Ayerst, Baxter andBecton Dickinson are some of the world-class companies that haveestablished global manufacturing plants in Singapore (Lee 2001). Table 5provides a detailed list of major investors in BMS in Singapore. Some ofthem, like S*Bio, are major domestic players. Though investment figuresfor all companies are not readily available, the table does refer to theirarea of working. Figure 4 gives further break-up of the activities of thesecompanies, especially in light of their R&D endeavours. Actually severalEDB initiatives are evident from Table 6, which shows the relative shareof TNCs and domestic companies in R&D in Singapore. In case of lifesciences, domestic companies have a share of 63 per cent in the total pri-vate sector R&D expenditure in Singapore, which is very close or in somecases even higher than their share over well-established older industriesin Singapore like engineering (45 per cent) and electronics (67 per cent).

TABLE 5BMS in Singapore: Investments and Objectives of Major Companies

Company

Pfizer (US)Schering-Plough (US)

Aventis(France, Germany)

Wyeth-Ayerst (US)Mallinckrodt (US)

Schering-Plough (US)Schering-Plough (US)

Hoffman-La Roche(Switzerland)

SmithKline Beecham(UK), now GlaxoSmithKline

Merck, Sharp &Dohme (MSD) (US)

Applied Biosystems (US)

3M (US)

Investment

S$ 600 millionS$ 630 million

$ 60 million

US$ 250 millionUS$ 2.6 billion

S$ 170 million$ 170 million

–

–

–

–

–

Purpose

Chemical bulk active plantChemical bulk active plant; a secondarymanufacturing plant and a chemicalprocess R&D centrePharmaceutical bulk-actives facility

Hormone replacement therapy productHealth care company in respiratory care;diagnostic imaging and analgesicpharmaceuticalsBiological drugsAdditional plant to produce biologicaldrugsRegional diagonostics centre known asRoche Diagnostics Systems RegionalCentreAsia Pacific clinical research anddevelopment headquarters

Bulk chemical plant

Fully automated polymerase chainreaction machinesInnovation centre

(Contd)


Company Investment Purpose

Siemens MedicalInstruments(Germany)

Sysmex Corporation(Japan)

Becton Dickinson (US)PE Corp (US)

Biosensors (SG)

S*BIO (SG)

Optimer (US)

ES Cell International(SG)

Cell Transplants (US)Oculex Asia

Pharmaceuticals (US)Covance (US)

International MedicalCentre

ReasonEdge Techologies(US)

Pharmacia & Upjohn

Schering-PloughResearch Institute (US)

Parkway Group (SG)

–

–

––

–

–

–

–

––

–

–

–

–

–

–

Manufacturing and logistics for itshearing aids business

Hematology analysers

Asia Pacific R&D centreInvestments to enhance the capabilitiesof R&D and manufacturing capabilitiesA local minimally invasive surgicalcompany has gone into the research ofdeveloping its own stents for peoplewith cardiovascular diseases; this isone of the more innovative of localmanufacturing capabilitiesFully integrated drug discoverycompanyProprietary technologies to discovercarbohydrate-based drugs for cancerand infectious diseasesDevelops and commercialises humanembryonic stem cell technologiesPilot production facilityPost-cataract inflammation treatment

Central laboratory to provide clinicaltrial testing; data management and drugdistribution serviceTo provide high-quality patient care,initially in the field of oncology;conduct cutting-edge research in drugdevelopment; clinical educationprogrammes and degrees, inconjunction with the NUH and NUSTo develop advanced decision analysistoolkits for knowledge management;business intelligence in the health careand pharmaceutical industriesForty-person Asia Pacific clinicaldevelopment centreClinical research centre in Science Park II

Gleneagles Clinical Research Centre

(Table 5 contd)


TABLE 6Foreign Companies’ Share of Industry R&D Expenditure (1997)

Total R&DForeign majority- Local majority- spending byowned companies owned companies industry Share of

Industry group ($mn) (1) ($mn) (2) ($mn) (3) (1) in (3) (%)

Manufacturing 727.24 382.85 1,110.09 65.51Electronics 424.25 201.59 625.84 67.79Chemicals 168.54 34.09 202.63 83.18Engineering 94.78 113.92 208.70 45.41Precision

engineering 74.62 74.2 148.82 50.14Process engineering 7.77 4.33 12.10 64.21Transport

engineering 12.39 35.39 47.78 25.93Life sciences 36.81 21.53 58.34 63.10Light industries/

other manufacturing 2.86 11.72 14.58 19.62Services 76.60 127.84 204.44 37.47IT and communications 47.69 86.85 134.54 35.45Finance & business 12.61 15.8 28.41 44.39Other services 16.30 25.19 41.49 39.29All industry groups 803.84 510.69 1314.52 61.15

Source: NSTB (1997).

FIGURE 4Private Sector’s GERD by Industry Clusters


Utilisation of Foreign Technology

As an outcome of the adoption of new technologies in pharmaceuticalresearch and an ongoing race for related IPRs, firms have been exploringoptions for reducing time lag in drug development. Pharmaceutical com-panies have started outsourcing discovery research and development. Thedevelopment part itself has several stages, including pre-clinical andclinical testing. Apart from this, drug companies have realised that ethnicsensitivities and profiles of endemic diseases have also to be looked intobefore drugs are finalised for the region. As a result, several CROs havecome up at the global level. These centres provide health care supportservices in terms of full clinical trials, including a full spectrum of productdevelopment and commercialisation. Thus, these companies or centrestake over from where pharmaceutical or biotechnology companies leavethe chain of product development. As the US, Japanese and Europeanfirms move on to focus more specifically on drug development and geneticR&D, more CRO work is likely to be generated. On average, about 30per cent of worldwide R&D expenditure on clinical development areoutsourced to CROs (Far Eastern Economic Review 2001). WorldwideCRO has grown into a US$ 5 billion industry. The market for contractdrug development is expected to grow at approximately 18 per cent peryear over the next few years. R&D efforts in life sciences will furthergrow with the excitement of the impending completion of the humangenome project. Singapore has established itself as a major CRO in theAsian region. The market turnover of CRO activity in Asia is close toUS$ 500 million (ibid.).

Summing Up

It is clear that Singapore now has a new approach towards the NIS. It in-volves not only a proactive agenda for R&D programmes, but also facilitatessuccessful emergence of a domestic commercial sector. Bartholomew(1997) has discussed important components of the NSBI, namely, R&Dsystem, role of public sector and public policy, international relations,internal organisation of firms, their relations with other firms, educationsystem and finally set-up of the financial system. The evidence fromSingapore reflects on some of the other important determinants for theNSBI.

The evidence shows that some economies may exhibit a preferencefor a path-dependency model when it comes to sectoral specialisation in


a cost-intensive frontier technology like biotechnology. The institutionalemphasis on the biomedical sector in Singapore is a case in point. Thedetailed study of the biomedical sector in Singapore proves that the gov-ernment’s response in meeting the emerging demand pattern and relatedemphasis on domestic capability building shows that in a frontier tech-nology, sectoral focus of innovation is equally relevant and useful in ex-plaining the dynamics of economic growth.

This sector-specific institutional set-up and the structure of productioninfluence the innovation performance of firms to a great extent. R&Dinstitutions in the biomedical sector are being encouraged in Singaporefor manpower development. Liberal budgetary allocations are being madefor their programmes. The EDB and NSTB are acting as major forces inguiding the growth of a frontier technology to the advantage of each ofthe constituents of the manufacturing sector, namely, electronics, ICT,medical and diagnostics. This is a novel experiment in the developmentof a new technology, tapping it for growth and development of a countrythat is oriented towards the world market. The EDB encouraged foreigninvestors for positive spillovers through fiscal measures like grants and taxincentives, and at the same time made efforts for enhancing the domesticpool of skilled manpower. The liberal policy of allowing foreign univer-sities and research institutes is also to facilitate technical upgradation ofmanpower skills and import of talented scientist and engineers. Almostseven foreign universities have opened their branches in Singapore. Inboth these cases, the medium- and long-term expectation is that theseskills learned in foreign countries would be transferred to Singapore. Atthe IMCB there is great pressure to increase Singapore’s share in inter-national papers and citations. This shows how effective the national systemof biotechnology innovation may become in terms of bringing togethernational science base and domestic firms. The timing of these two meas-ures is extremely important. The growth of the biotechnology sector inSingapore shows that these measures would be most efficacious if thetime gap between them is minimal. Such measures may make TNCs trans-cend national boundaries.

The sectoral approach of the NSBI has also brought a change in theconcentration of industry, as seen earlier. Now industrial locations inSingapore are accompanied with and linked to a major university or a re-search facility. This may play an important role in industrial development.This may also help in improving the domestic science base and ultimatelyenhance its utility for domestic emerging start-up firms in this sector. Ithas also become clearer that the environment within which NSBI operates


is important. At times demand plays as much a strong stimulator forinnovation than any other factor. It also has to be acknowledged thatthere are limitations to the success of leverage strategies widely adoptedby almost all the NICs (Mathews 2001). Whereas the semiconductorindustry, electronics and IT are characterised by many competitors, fastproduct life cycles and higher assimilation probability are not true withan industry like biotechnology.

NOTES

1. Singapore’s economic transformation has primarily been driven by its twin enginesof growth—manufacturing and finance, and business science.

2. NICs like South Korea and Taiwan used advanced technologies along withsophisticated managerial skills for successful catching up (Kim 1997; Stiglitz 1996).

3. This was adopted on January 1998.

REFERENCES

Bartholomew, Susan. 1997. ‘National System of Biotechnology Innovation: ComplexInterdependence in the Global System’, Journal of International Business Studies,28(2): 241–66.

Chaturvedi, Sachin. 2002. ‘Status of Biotechnology in Singapore’, RIS Occasional PaperNo. 65, RIS, New Delhi.

Development Bank of Japan (DBJ). 2000. ‘Fostering Research & Development andTechnopreneurship in Singapore’. Report, Representative Office in Singapore, DBJ,September.

———. 2001. ‘Knowledge: The key to National Development’. Report, DBJ, August.Economic Development Board (EDB). 2001a. Singapore Investment News: Biomedical

Sciences Supplement. July.———. 2001b. ‘Biomedical Sciences Industry Fact Sheet’. EDB, Singapore, September.———. 2001c. ‘Creating the Future: 40 Years of Economic Development’. EDB,

Singapore, September.Far Eastern Economic Review. 2001. 8 February.Johnson, B. 1992. ‘Institutional Learning’, in B.-Å. Lundvall (ed.), National Systems of

Innovation: Towards a Theory of Innovation and Interactive Learning. London:Pinter Publishers.

Kim, L. 1997. Imitation to Innovation: The Dynamics of Korea’s Technological Learning.Cambridge, MA: Harvard University Press.

Lee, James. 2001. ‘Gene-makers, Dream-makers Entrepreneurs Hope to Ride the LifeScience Wave’. Asian Business, September.

Mani, Sunil. 2002. ‘Government, Innovation and Technology Policy: An InternationalComparative Analysis’. Paper presented at the DRUID Summer Conference,Copenhagen, 6–8 June.


Mathews, John A. 2001. ‘Catching up Strategies in Technology Development: WithParticular reference to East Asia’. Background paper for World Industrial Develop-ment Report, UNIDO.

McManus, Joanne and Trish Saywell. 2001. ‘The Lure to Cure’, Far Eastern EconomicReview, 164(3): 32–37.

Mitchell, Mark. 2000. ‘Industry Asia’s Next Hi-tech Boom’, Far Eastern EconomicReview, 163(5): 33–37.

National Science and Technology Board (NSTB). 1997. National Survey of R&D inSingapore, Singapore: NSTB.

Nelson, R.R. 1993. National System of Innovations: A Comparative Analysis. Oxford:Oxford University Press.

Patel, Pari and Keith Pavitt. 1998. ‘National Systems of Innovation Under Strain: TheInternationalisation of Corporate R&D’, in R. Barrel, G. Mason and M. Mohony(eds), Productivity, Innovation and Economic Performance. Cambridge: CambridgeUniversity Press, pp. 25–50.

Straits Times. 2001. ‘Singapore Team Finds New Way to Grow Stem Cells’, 21 September.Senker, Jacqueline. 2001. ‘European Biotechnology Innovation System (EBIS): Analysis

of the Biopharmaceutical Sector’. Project Report submitted to the European Com-mission Directorate General XII, Brussels.

Shulin Gu. 1999. ‘Implications of National Innovation Systems for Developing Countries:Managing Change and Complexity in Economic Development’. INTECH DiscussionPaper #9903, UNU, Maastricht.

Stiglitz, J.E. 1996. ‘Some Lessons from East Asian Miracle’, World Bank ResearchObserver, 11(2): 151–77.

Further Reading

Institute of Molecular and Cell Biology (IMCB). 2001. Annual Report. Singapore: IMCB.Wong, Poh-Kam. 1999. ‘National Innovation System for Rapid Technological Catch-up:

An Analytical Framework and a Comparative Analysis of Korea, Taiwan andSingapore’. Paper presented at the DRUID Summer Conference on NationalInnovation Systems, Industrial Dynamics and Innovation Policy, Rebild, Denmark,9–12 June.

———. 2000. ‘From Leveraging Multinational Corporations to Fostering Technopre-neurship: The Changing Role of S &T Policy in Singapore’. Centre for Managementof Innovation and Technopreneurship, National University of Singapore, Singapore.

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