A year after transactions involving “research and development in biotechnology” and 26 other “critical technology” industries were made subject to review by the Committee on Foreign Investment in the United States (CFIUS), President Donald Trump’s Administration has signaled a desire to keep an even closer eye on such deals. The new rules could further reduce foreign direct investment in the United States by overseas investors, including Asian firms and wealthy individuals increasingly flush with capital as biopharma has grown in Asia.
The Trump Administration has proposed regulations to implement the Foreign Investment Risk Review Modernization Act (FIRRMA) of 2018 by further expanding CFIUS’ jurisdiction beyond transactions that could result in control of a U.S. business shifting to overseas investors, to also include a noncontrolling direct or indirect investment by a foreign person as spelled out by the U.S. Treasury Department.
The CFIUS expansion appears to explain a drop in Chinese foreign direct investment (FDI) into U.S. biopharmas. According to PitchBook, Chinese investors participated in $725 million worth of venture capital financings for U.S. biopharmas during the first half of 2019—down 56% from $1.65 billion during January–June 2018.
Rhodium Group recorded a 56% drop—from $2.5 billion in 2017 to $1.4 billion last year—in Chinese direct investment in the U.S. “health, pharmaceuticals, and biotechnology” sector. Yet that sector received the most Chinese investment of any sector in 2018, accounting for 27% of total Chinese FDI. Rhodium also recorded a drop in U.S. investment in Chinese biopharmas, to $0.6 billion in 2018 from $0.9 billion a year earlier.
That decline did not slow the growth of biopharma in China, where—as in the rest of Asia—the industry continues the growth trajectory seen last year. As with GEN’s 2018 A-List of top 10 Asia biopharma clusters, Asian countries are ranked on:
- Public R&D spending—Figures for most large nations appear in the Organization for Economic Co-operation and Development (OECD)’s most recent edition of its semiannual Main Science and Technology Indicators, last updated in August 2019. For nations not included in OECD data, typically smaller countries, GEN cited figures published by UNESCO Institute for Statistics on its website, which enables country-to-country comparisons based on purchasing power parity dollars (PPP$).
- Patents—Based on the number of “biotechnology,” “pharmaceutical,” and [as of this year] “genomics” patents issued as of October 12 that list at least one inventor from that nation in the World Intellectual Property Organization (WIPO) PATENTSCOPE database, consisting of some 77 million patent documents, including 3.6 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—Based on figures from a combination of publicly available data sources and company announcements, reflecting substantial IPO activity across Asia.
- 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, including 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. Another source for some nations was the International Federation of Pharmaceutical Manufacturers & Associations (IFPMA), which compiles an annual yearbook that includes employment numbers. Because of differences in criteria, such as inclusion of medical device or hospital patient-care positions, GEN found widespread discrepancies in job figures of several nations.
Two other nations 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.
10. Thailand |
| Thailand’s Board of Investment (BOI), the agency that facilitates foreign direct investment into the “Land of Smiles,” declared its intent to “push the country’s status as a global leader in bio-economy to the next level” on May 28, when it announced the creation of a corporate income tax exemption of up to eight years for medical robotics companies specializing in the manufacture of automation equipment, as well as a five-year tax exemption for the assembling of robots or automation equipment and parts companies. Biopharma is seen as a market for the robotics. And within Thailand’s Eastern Economic Corridor of Innovation (EECi), located in Wangchan Valley, Rayong, plans call for a “Biopolis” biotech research hub where the state-owned oil and gas giant PTT plans to expand into biopharma—by building the country’s first cancer drug production plant, a THB 1 billion ($33 million) facility set to open in 2025. In addition to biopharma, the Thai government hopes to foster at the Biopolis the growth of bioenergy, biochemicals, bioplastics, and nutraceuticals. Thailand has included “agriculture and biotechnology,” “biofuels and biochemicals,” and “health, wellness, and biomed” among industry groups targeted for expansion through its “Thailand 4.0” 20-year national economic growth strategy. The BOI projects Thailand’s “bio-economy” will grow to 2% of GDP by 2022 and 10% by 2037. Thailand ranks 10th in patents (205 listing at least one Thai inventor, according to WIPO) and 10th in R&D funding ($9.114 billion in 2016, according to UNESCO). The nation had no biopharma IPOs so far this year, but placed ninth in companies (“approximately 200”) and in jobs, with figures ranging from 1,500+ “top-echelon experts and researchers” (BOI, October 3) to 48,000 (IFPMA, 2017). |
9. Indonesia |
| Indonesia has had no biopharma IPOs this year or last—but last month the nation revealed its intent to change that, as well as encourage first-time stock offerings by companies in other industries. The government of President Joko Widodo has proposed cutting the corporate tax rate of newly-listed companies to 17% over the first five years following their IPOs. That would bring the corporate tax rate for IPO companies to the same rate assessed by Singapore, and a lower rate than Malaysia, Thailand, and Vietnam. The IPO tax cut is part of a larger tax-cutting program that would reduce Indonesia’s corporate tax rate to 22% in 2021 and to 20% in 2023. Beyond IPOs, Indonesia ranks within the top 10 among Asian countries in R&D funding ($7.72 billion in 2017, according to UNESCO), and companies (ninth with 182 domestic and state-owned companies, 24 multinationals). IFPMA lists the nation as having 64,059 pharma jobs, which would place the nation sixth. However, the nation is only 15th in patents (45 listing at least one Indonesian inventor, according to WIPO). Indonesia in July welcomed its first microalgae-based biotech company when Health Minister Nila F. Moeloek, MD, PhD, joined company executives in inaugurating the Kendal, Central Java manufacturing facility of PT Evergen Resources. Evergen produces astaxanthin (sold under the brand name AstaLuxe) as a raw material for biopharma and other industries. Moeloek told The Jakarta Post that Evergen could help the government’s efforts to reduce Indonesia’s imports of pharmaceutical raw materials. In February, the government postponed to 2026 the “halal” labeling of drugs suitable for consumption in line with Islamic law, following opposition to the measure by the International Pharmaceutical Manufacturers Group (IPMG) and other industry groups. |
8. Malaysia |
| Malaysia’s 15-year National Biotechnology Policy is set to end next year, an economic strategy designed to expand the industry to 5% of GDP. One lynch pin of the strategy was the development of the Malaysian Bioeconomy Development Corp. to oversee that effort. According to a May 22 report in The Independent Singapore, the Bioeconomy Corp. was shifted within Malaysia’s government last November from the Energy, Science, Technology, Environment, and Climate Change Ministry (MESTECC) to the Ministry of Agriculture. The newspaper included a comment from an unnamed source stating that the shift could cost Malaysia billions in foreign direct investment: “Bioeconomy is not only about agriculture. It is also about science, and it is appropriate to keep the agency under MESTECC.” However, 60% of Malaysia’s home-grown “BioNexus” designated businesses were in the agriculture business, 24% in biomedical, and the rest in the bioindustrial sector, Bioeconomy Corp CEO Mohd Shuhaizam Mohd Zain, MBBS, stated last year.. Malaysia ranks highest in number of companies at seventh (282 BioNexus businesses, according to the Malaysian Bioeconomy Development Corp.’s website), and lowest in patents (tenth with 463 listing at least one Malaysian inventor, according to WIPO). In between, the nation places eighth in R&D funding ($12.412 billion in 2016, according to UNESCO), jobs (31,000 as of 2017), and IPOs. For the first time since Bioalpha Holdings raised RM 20 million [$4.8 million] in 2015, a home-grown company tied to biopharma went public this year: CE Technology, a maker of cleanroom gloves whose customers include “the life sciences industry which includes pharmaceutical manufacturing, biotechnology, laboratories, and medical devices,” raised RM 12.48 million (about $3 million) on Bursa Malaysia’s Leading Entrepreneur Accelerator Platform (LEAP) market for small- to medium-sized enterprises. |
7. Singapore |
| Singapore is known for its high concentration of corporate drug developers and tools/technology developers. A good example of the latter is PerkinElmer, which in May opened its largest instrument facility anywhere in the world—a lab instruments and diagnostics manufacturing facility—at JTC MedTech Hub. The country’s drug developer base includes home-grown Aslan Bio, which in May bought full rights to atopic dermatitis candidate ASLAN004 from CSL for $780 million-plus. In June, Singapore formally opened its Experimental Drug Development Centre (EDDC) in Biopolis, a national drug discovery and development venue designed to integrate the Agency for Science, Technology and Research (A*STAR)’s Experimental Therapeutics Centre, the Drug Discovery and Development (D3) clinical development unit, and the Experimental Biotherapeutics Centre (EBC). EDDC will also oversee the new Target Translation Consortium (TTC), designed to coordinate early-stage drug discovery efforts across academia, healthcare institutions, and government agencies. TTC is a partnership of A*STAR, Duke-NUS Medical School, Lee Kong Chian School of Medicine, Nanyang Technological University, National Healthcare Group, National University of Singapore, National University Health System, and SingHealth. Singapore places sixth in patents (2,949 listing at least one Singaporean inventor, according to WIPO), and is seventh in both R&D funding ($10.479 billion in 2017, according to OECD, with Singapore’s government that year spending $1.725 billion for biomedical and related sciences) and IPOs (two companies raising a combined $S19.6 million [$14.3 million]). Singapore ranks lower in number of companies (ninth with “close to 100 local biotech companies,” according to Singapore Economic Development Board [EDB]) and jobs (10th with “around 7,000 people,” according to EDB). |
6. Taiwan |
| Celebrating the launch of a joint training initiative between the state-funded Industrial Technology Research Institute (ITRI) and Merck KGaA on May 7, Taiwan’s Vice President Chen Chien-jen reminded his audience that Taiwan is on course to grow biopharma and medical devices into a combined NT$1 trillion ($32.7 billion) industry by 2025, in part by developing workforce skills. ITRI and Merck have projected they will train 120 research professionals in the first year of the initiative, which Chen said marked a milestone by advancing production of new treatments with precision medicine in mind. Biopharma is among five pillar industries Taiwan aims to nurture through its 5+2 Innovative Industries Plan, launched in 2016 and championed by President Tsai Ing-wen. Another priority for Taiwan is artificial intelligence, for which the nation last year launched an “Action Plan” committing the nation to spending NT$36 trillion ($1.14 billion) over four years. The Plan calls for training 5,000 AI professionals by 2021 and creating four AI centers at universities, one of them a biotech AI center at National Cheng Kung University. Taiwan scores highest in number of companies, where it ranks fourth with 1,188, according to the Biotechnology and Pharmaceutical Industries Promotion Office (BPIPO) of the Ministry of Economic Affairs (MOEA). The nation places fifth in R&D funding ($39.296 billion in 2017, according to OECD), sixth in IPOs (Taiwan Liposome raising $22 million plus plans by REGiMMUNE for an IPO by 2021), seventh in jobs (43,432 in 2018, according to MOEA’s Industrial Development Bureau), and eighth in patents (1,117 listing at least one Taiwanese inventor, according to WIPO). |
5. Australia |
| New regulations that took effect October 8 now allow researchers to use CRISPR and other gene editing technologies as long as they are not creating new genetic material. Until now, researchers were required to obtain biosafety panel approval, a rule the industry said had served to hamstring gene editing “Down Under.” However, biopharma and other tech industries remain concerned about a planned budget cut of A$1.3 billion ($887 million) to government R&D investment, following cuts of A$4 billion ($2.7 billion) in the past two federal budgets, as well as additional clawbacks of millions of dollars in previously approved claims. Longer-term, AusBiotech has been invited by Australia’s Minister for Health Hon. Greg Hunt, MP, to co-lead development of Australian Biotechnology 2030 Vision (the Vision), a decadal framework for the industry designed to address research and development, investment, talent, and regulatory opportunities. Australia’s life-sci industry group was set to release updated statistics later this month. For now, AusBiotech shares figures from its 2017 Life Sciences Sector Snapshot showing the island continent fifth with 876 companies—281 drug developers, 270 food/agricultural concerns, and 325 “medical technology,” a category that includes diagnostics—and in jobs (232,213, of which 69,108 are employed by industry and 65,780 in research institutions). Australia is also fifth in IPOs (three companies raising a combined A$52.25 million [$35.3 million)], and patents (9,384 listing at least one Australian inventor, according to WIPO)—and placed only one position lower in R&D (A$33.062 billion [$22.3 billion] in 2017–18, according to the Australian Bureau of Statistics). |
4. South Korea |
| President Moon Jae-in on May 22 announced a “road map” for growing South Korea’s biopharma sector that calls for creating 300,000 new jobs by 2030, as well as tripling to 6% the country’s share of the global pharmaceutical product and medical device market. That would raise the value of those exports from $14.4 billion last year to $50 billion. The road map calls for fostering an innovation “ecosystem” that includes tax incentives, reduced red tape, and reforms to all phases of drug development from development to approval, production, and market launch. Another provision calls for the government to create a “National Bio Big Data” database with medical data on about one million people by 2029, for use in R&D on precision drugs and medical technologies. “The era will come soon when the pharmaceutical and biotech industries lead our economy,” Moon declared in a speech at the ninth “regional economic tour” held in biotech-rich Osong, North Chungcheong province, according to Chinese state-run news agency Xinhua. In February, Moon’s government said it would invest KRW 3 trillion ($2.5 billion) this year in biotech research and human resources development intended to spur biopharma industry growth. That is set to rise to KRW 4 trillion ($3.4 billion) by 2025. South Korea ranks third in R&D (KRW 2.6 trillion [about $2.2 billion], the government said in May), patents (10,698 listing at least one South Korean inventor), and jobs (760,000 counted in 2016 by South Korea’s Ministry of Health and Welfare). In the absence of a blockbuster offering like Celltrion’s KRW 1 trillion ($842 million) IPO in 2017, the “Land of the Morning Calm” finished fourth in IPOs with two companies raising a total $63 million, and another six companies reported to be planning their own such offerings. The nation placed lowest in number of companies (853 in 2016, according to data released last year by the Korea Pharmaceutical and Bio-Pharma Manufacturers Association). |
3. India |
| Prime Minister Narendra Modi highlighted startups in biopharma and other technologies earlier this month when he visited India’s first university-based research park, Indian Institute of Technology (IIT) Madras Research Park. He said more than 200 startups have been incubated at the park, whose first phase opened in 2010: “All these start-ups should create unique Indian brands which will make their places in the world markets in future,” Nodi stated. Corporate giants have also made news: Thermo Fisher Scientific in May opened a package distribution facility in Ahmedabad domestic tariff area, citing the growing need for clinical trial support focused on local products for the domestic market. Also in May, Goregaon, Mumbai-based Sun Pharmaceutical founder Dilip Shanghvi said the company was shifting its focus beyond generics, with the goal of generating half its revenue from patented drugs. India places second to China in IPOs, with four companies raising a combined $181.5 million (most of it the Rs. 1204 cr. [$174 million] generated by Vidyavihar (West) Mumbai diagnostics developer Metropolis Healthcare, and is also second in jobs (3,000+ pharmas plus “approximately 800” biotechs, according to the Government of India). India ranks fourth in the other three measures, including R&D funding (a projected $83.27 billion in 2018, according to India Brand Equity Foundation), patents (9,549 listing at least one Indian inventor, according to WIPO), and jobs (587,468 in 2017, according to IFPMA). |
2. Japan |
| Just a month after Japan’s 102-year-old RIKEN Institute launched a commercialization subsidiary, RIKEN Innovation announced its first academic-industry collaboration on October 8, agreeing with Bayer to partner on discovering new drugs across undisclosed indications. That day, the Yomiuri Shimbun reported that Prime Minister Shinzo Abe’s government plans to enact a law intended to discourage exports of home-grown biotech and artificial intelligence innovations to foreign companies. Japan’s largest biopharma, Takeda Pharmaceutical, continues to remake itself after completing its £46 billion ($59 billion) acquisition of Shire on January 8. The deal propelled a 41% year-over-year decrease in net profits to Y109.1 billion and a projected net loss for the year ending March 31, 2020, of ¥383 billion ($3.5 billion). On October 15, Takeda disclosed plans to sell off prescription and select over-the-counter drugs in a number of Near East, Middle East, and Africa countries to Acino for more than $200 million. Not all biopharma giants appear to be expanding: Sanofi plans to eliminate 200 Japanese back-office jobs, Reuters reported September 30, citing an unnamed source. Sanofi insists that it is simply carrying out a voluntary retirement program. The “Land of the Rising Sun” still leads Asia in patents (17,300 listing at least one Japanese inventor, according to WIPO), and places second in both R&D ($170.9 billion in 2017 according to OECD) and jobs; workforce figures this decade have ranged wildly up to 878,000, including 172,687 as of 2015 but tallied last year by the Japan Pharmaceutical Manufacturers Association, though IFPMA reported just 91,529 in 2017. Japan’s IPO activity (three companies raising a total $178.867 million so far this year) ranks the company third, as does its number of companies (1,100+, including 591 biotechs as of 2015, according to the Japan Bioindustry Association). |
1. China |
| While Washington continues to tighten its scrutiny of deals involving U.S. and Chinese biopharmas, China continues to encourage foreign as well as home-grown drug developers to expand within its borders. Merck KGaA chairman and CEO Stefan Oschmann told state-run China Daily in April his company will build more innovation hubs in China during the next few years, while AstraZeneca in March agreed to serve as founding partner for the International Life Science Innovation Park in Wuxi, to be built by Wuxi’s municipal government and High-tech District. China restated its support for biopharma by vowing to “foster clusters of emerging industries” in “biomedicine” and other technologies this year in the State Council’s “Report on the Work of Government,” delivered March 5 by Premier Li Keqiang at the second session of the 13th National People’s Congress in Beijing. Asia’s top-ranked country in biopharma extended its dominance over the past year, leapfrogging over South Korea and India in patents to finish second (11,245 listing at least one Chinese inventor, according to WIPO), while retaining its lead in all four other criteria: R&D ($495.981 billion in 2017, according to OECD), number of companies (up to 7,500, according to a 2017 book), jobs (estimates in recent years have ranged from 2,301,534 [IFPMA, 2017] to 2,882,903 [commercial real estate firm JLL, 2018]), and IPOs ($2.56 billion raised by eight companies and up to $2.882 billion-plus planned by 12 more companies that have filed or gained approvals). While the Hong Kong exchange is seeing less activity this year than last year, when it began allowing pre-revenue companies to go public, IPO-minded biotechs have a new alternative as the Shanghai Stock Exchange in July launched its tech-based Science and Technology (STAR) Innovation Board. |
