Biotechnology sectors as shaped by different government approaches to investment
By Jimmy Yu.
Supervised by Dr Chih Wei Teng
Introduction
The Covid-19 pandemic has exposed the vulnerability of many countries' resources, particularly critical medical supplies like facemasks and vaccines [1-3]. Reliance on imports comes with long waiting times and uncertainty, leaving the whole country on edge. The shortages and long waiting times for PPE and medicine-related imports during Covid-19 had resulted in the suffering of many people [4-6].
Australia's medical supply heavily relies on imports and requires building trustful relationships with other nations, including manufacturing hubs including China and Singapore. However, during the pandemic, China halted exporting facemasks to other countries, highlighting the importance of domestic manufacturing of medical supplies. Hence, Australia should have its own onshore research, manufacturing, and commercialisation of medicine [7, 8].
Countries that responded better during the pandemic showed good, coordinated efforts to deal with the crisis between different government agencies and departments. In preparation for another pandemic to force collaboration in the development of vaccines and medicines, Australia should take this opportunity to adopt a unified approach between various government agencies and departments to handle crises. Known as the "whole of government approach," this can improve Australia’s readiness after the pandemic. Embracing this approach can help Australia become more self-sustainable in research, manufacturing, and commercialising medicine onshore, avoiding breakdowns in the supply chain or stockouts of critical medicines.
Singapore
A prime example of a ‘whole of government approach’ is Singapore's proactive attitude towards the life sciences and biotechnology space since 1991, with significant investments in critical infrastructure for manufacturing, research, education and attracting foreign direct investment. As a result, Singapore has become one of the world's largest pharmaceutical and biologics manufacturing hubs, with about 18 biopharmaceutical manufacturing plants operational in 2019 contributing about 20% of the country’s total manufacturing output just from the sector alone [9].
Singapore's whole-of-government approach in the biomedical sector is characterised by significant co-investments with universities and industry, sizeable investment in land and real estate, legal frameworks, and different ministries, including Trade and Industry and Education.
Critically, the coordination and collaboration involving the Economic Development Board (EDB), the Agency for Science, Technology and Research (A*STAR), the Ministry of Trade and Industry (MTI), the Ministry of Education, the Ministry of Health (MOH), and other sectors has led to the establishment of policies, resources, research, and educational architecture that fosters the growth of the sector [9-13].
In 1991, Singapore prioritised the biomedical sector for economic development. It created the Biomedical Sciences Initiative (BSI), offering tax incentives and funding to attract pharmaceutical companies to establish operations and develop a skilled workforce. The Biomedical Sciences Industry Development Plan (BMS IDP) launched in 2000 focused on biomedical research, industry, and talent development. This included infrastructure investment in the Biopolis research hub, industry development support, and the Biomedical Manufacturing Cluster (BMC) for manufacturing activities [14, 15].
The Ministry of Trade and Industry (MTI), Ministry of Education (MOE), and Ministry of Health (MOH) have been heavily involved in developing policies and initiatives to support the biomedical sector, including the Biomedical Sciences Industry Partnership Office (BSIPO) which was established in 2007 to facilitate partnerships between the government, academia, and industry in the biomedical sector and the Health Sciences Authority (HSA), which regulates the import, manufacture, and supply of medical devices and pharmaceuticals in Singapore [10, 12, 13].
To encourage foreign investment, the Singapore Government has provided significant funding for research and introduced favourable tax regimes and free trade agreements. The EDB played a pivotal role in promoting investment and attracting global companies, offering generous tax incentives including the Pioneer Service Companies (PSC) scheme and Development and Expansion Incentive (DEI). These organsiations offer a concessionary tax rate of 5% for 5 and 10 years, respectively. Efforts to attract foreign investment and talent have been very successful, with more than 30 multinational corporations, including Glaxo SmithKline, Novartis, and Pfizer, basing their operations in Singapore [9, 11, 12, 16].
The Singapore Government further supported startups and businesses to access new avenues of growth, build differentiated market offerings, and accelerate time to market through initiatives such as the Open Innovation Network (OIN). Singapore's emphasis on collaboration between clinicians and academics has led to significant venture capital investments and the development of advanced medical therapies [17-21]. The Biopolis and Jurong Innovation District are advanced laboratory facilities and industrial estates designed to facilitate collaboration between academia, research organisations, and industry. Additionally, Singapore's Changi International Airport and shipping ports provide convenient access to a global network of ports, connecting Singapore-based companies to a global supply chain that links to over 100 countries [9, 10, 17, 22].
In 2011, the government launched the Research, Innovation, and Enterprise (RIE) 2015 plan, which aimed to build on the achievements of the BMS IDP and focus on developing new technologies and products. The RIE 2015 plan provided funding for research and development in the biomedical sector and emphasised the importance of collaboration between the public and private sectors [23]. An updated RIE 2020 plan allocated a further $19 billion to establish I&E (Innovation & Enterprise) platforms and promote technology commercialisation.
The success of previous initiatives, such as the RIE 2015 plan, paved the way for introducing the RIE 2025 plan in 2021. This allocated an additional $25 billion in funding to support local enterprises further and advance innovation and entrepreneurship. These efforts were channelled through Innovation & Enterprise (I&E) platforms, aiming to drive innovation and foster collaboration in line with the RIE 2025 plan's goal of building an innovation-driven economy [13, 14].
The I&E platform, created by the Enterprise division of A*STAR, plays a pivotal role in driving innovation, facilitating collaborations, and supporting entrepreneurship across various industries. Doing so contributes to Singapore's aspiration of becoming an innovation-driven economy [24]. The success of these efforts has led to Singapore's biomedical manufacturing output more than tripling from S$6.3billion in 2000 to S$21billion in 2009, and the sector now represents 10% of the country's manufacturing output [25, 26]. In 2018, Singapore's biomedical manufacturing sector contributed 4% of GDP, generating $15.7billion in manufacturing output and S$9.4billion in value-add [9]. Singapore’s success is not solely based on industry investment but through its comprehensive approach and the country’s overall focus on innovation and research, which created an entire ecosystem for growth in the biomedical sector.
Australia
Australia’s tradition of collaboration between government, industry, and academia has led to successful outcomes in areas such as medical research [27]. However, its federal system of government, with power divided between the national government and the states and territories, has made it more difficult to achieve a coordinated whole-of-government approach. Nonetheless, the government has played a crucial role in developing the biomedical sector in Australia since the 1980’s [28]. Establishing grants that promote private-public partnerships, such as the Cooperative Research Centres (CRC) Program in 1987, has encouraged collaboration between industry, research institutions, and government agencies to solve complex industry problems and develop innovative solutions [29].
The Australian Government's lead investment vehicle in health and medical research comes from the National Health and Medical Research Council (NHMRC), and its continued investment in the biomedical sector paid off in the early 2000’s with the development of new drugs and medical technologies, including the world's first cervical cancer vaccine, Gardasil [28]. The government's support for the growth of the biomedical sector includes several key departments, such as the Department of Industry, Science and Resources, which provides support for businesses and entrepreneurs in the sector and oversees the Biomedical Translation Fund (BTF), providing funding for early-stage biomedical research projects [30].
The Department of Education and Training develops education and training programs and offers funding for research and scholarships. The Department of Foreign Affairs and Trade promotes and establishes international collaborations. The government has provided several benefits and tax incentives for companies to invest in R&D, including the Research and Development Tax Incentive (RDTI), offering up to 43.5% tax offset, and the Early-Stage Innovation Company tax incentives providing a non-refundable carry-forward tax offset of 20% and CGT exemption for investors [31]. The government provides further significant support for R&D, with a particular emphasis on promoting collaboration between industry, universities, and research institutions through initiatives such as the Medical Research Future Fund (MRFF), a $20 billion investment fund established in 2015, aimed at supporting cutting-edge medical research and technology [32]. Other examples include The Australian Regenerative Medicine Institute (ARMI), a $153 million medical research-based infrastructure established at Monash University in 2009, which is a joint investment between Monash University and the Victorian government, focusing on the discovery and delivery of regenerative medicine. ARMI is at one of the world's largest regenerative medicine hubs for research and publication, with strong commercialisation potential [27].
As a result of these efforts, Australia has laid a robust foundation and resulted in groundbreaking therapies, including the world's first cochlear implant, the pioneering cervical cancer vaccine Gardasil, and the world’s first Spray-on-skin, all originating from Australia. These pioneering innovations exemplify the nation's commitment to pushing the boundaries of scientific advancement [33, 34]. Australia has been ranked in the world’s top ten for output of top-quality research articles, and the medical sector has seen significant patent application filings, demonstrating a thriving research and development environment [33]. Notably, venture capital investment in the Australian regenerative medicine sector has been steadily increasing, with AUD 173 million in funding raised between 2016 and 2020, with notable companies such as Cynata Therapeutics, Mesoblast, and Avita Medical raising significant funds [35].
Comparing the two government approaches
Australia and Singapore have taken very different approaches to developing their biotech industries. While Singapore has implemented a whole of government approach, prioritising manufacturing and commercialisation of biotech products, Australia has placed more emphasis on academic research and innovation. This has resulted in significant differences in the growth and success of their biotech sectors.
Singapore's government has made substantial investments in infrastructure and established an attractive environment for foreign investments, leading to the exponential growth of its biomedical manufacturing sector. Singapore's approach involves a long-term plan, developed over several five-year RIE plans, and the government takes a whole-of-government approach where the different ministries understand their role and contribution to developing the biomedical sector. The Singapore government has achieved this through working cross-domains. The RIE 2025 plan shows cross-domain capabilities, including using AI, MEMS, digitalisation in the aviation and maritime sectors, improving air traffic management, and additive manufacturing, including 3D printing [14]. Singapore has focused on creating an attractive place for companies to invest and operate out of, such as through favourable tax incentives. It has emphasised the importance of commercialisation over research and innovation. This focus has made Singapore an attractive place for venture capital, leading to a high ratio of VC to GDP and a ranking of 8 out of 131 countries on the global innovation index, the highest in the East Asian region [13].
In comparison, Australia’s approach has focused on academic research and innovation, with less emphasis on manufacturing and commercialisation, as the government potentially assumes good research development will lead to investors taking on the commercialisation role. Therefore, most of Australia’s grants, regardless of whether it promotes advancement towards research, manufacturing or commercialisation, will have a university attached to them. While the government has introduced programs such as the RDTI and the modern manufacturing initiative (MMI) to incentivise global companies to invest in R&D, the focus still requires a strong focus on academic collaboration vs commercialisation. Australia's academic culture of 'publish or perish' mindset, which prioritises publication over commercialisation, has reinforced the fact that researchers typically use grants/university funds to invest in projects with limited long-term utility and may not contribute significantly to commercialisation [36, 37]. At the same time, Australia is seen as a favourable place to conduct basic research and incentivise industry-university collaboration on early-stage technologies.
Conclusion
In conclusion, both Australia and Singapore have recognised the potential of the biotech sector, and each country has taken a different approach to foster its development. Singapore has focused on the coordinated efforts of its ministries in creating a favourable environment for foreign investment and establishing itself as a sovereign manufacturer in the field. In contrast, Australia has prioritised collaboration between universities and industries, supporting R&D initiatives. To progress towards being a global competitor in the regenerative medicine sector, the Australian government needs to provide a stable and competitive business environment for innovative companies and incentivise global investment in R&D. By taking inspiration from Singapore's whole-of-government approach, Australia can develop strategies involving coordination and collaboration among various Departments to establish a strong research, manufacturing, and commercialisation ecosystem.
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