Building a biotech enterprise is hard.
Huge costs, high development time, tight regulations, funding crunches and failure to build a viable product are some of the factors that can deal a death blow. And yet, starting a biotech enterprise is even harder in emerging economies as there is a lack of scientific know-how, and risk-averse investors, which are often coupled with scant government support.
Rising environmental concerns, as well as a boost in the demand for consumer-driven biotech products, are now encouraging companies and individuals to dive into biotech. And in the 21st century, it’s hard to not be enticed by the promises offered by the field. After all, this century has been hailed as the “age of biology”.
Ask an average person about biotech, and they’d probably name Big Pharmas like Merck or GSK. But an influx of biotech startups is slowly changing the picture, particularly in the emerging markets of India and China. Tackling problems in areas ranging from environmental remediation to food security and healthcare, these startups are hoping to provide disruptive solutions -- and in the process, come out on top.
In this three-part series, Varshit Dusad, a Data Scientist at LayerIV.com, gives us a comprehensive look at biotech startups from the heart of Asia. This first part will trace the changing landscape of biotech in Asia and outline how such an evolution was achieved.
The shifting sands of biotech in Asia
Biotechnology is now a household term across the globe, including in the developing world. However, this was not always the case. In the second half of the 20th century, developing nations like India and Malaysia were a net importer of biotech-based technologies. Over time, local biotech industries started to arise. Their early products, though, were generic versions of the pharmaceutical products where the patent restrictions no longer applied, including antibiotics like Cefixime and Ofloxacin.
Developed economies also began outsourcing their manufacturing process for the cost-competitive production of drugs. Many homegrown companies in developing countries began as manufacturers of generic versions of branded drugs which were too expensive for the general public. India’s Cipla and Sun Pharm, as well as China’s Shijiazhuang Pharma Group and Wuxi Pharmatech, quickly became major names in this market.
Today, the situation looks remarkably different. The two countries once hosted a hotbed of inflammatory lawsuits between Western and local companies regarding IP conflicts. Now, leading pharmaceutical giants such as AstraZeneca, Bayer and Johnson & Johnson are making massive investments in these emerging economies.
The Government Push
In developing markets, biotech has historically lacked venture capital due to its reputation as a high-risk domain, limiting the growth of new companies. Recognizing the value addition offered by the biotech sector, the governments in these nations have provided numerous incentives to kickstart biotech companies. This has been done via three main roads:
Developing specialized centers and technology parks specifically catered to the biotech industry. Bangalore’s Life Science Cluster is the most predominant area of influence in Indian biotech, is comprised of some of India’s top research institutes such as the Institute of Stem Cell and Technology, National Centre for Biological Sciences as well as C-CAMP, India’s biggest biotech incubator supporting over 100 start-ups. However, China has been paving the way for a new wave of biotech. According to the Chinese government’s official figures, scientific R&D spending topped $291 billion in 2018. Currently, the Chinese government has also built over 100 life science parks. These clusters act as incubating grounds for biotech start-ups providing them with mentorship, consulting from experts, access to capital sources, and access to support services such as legal, regulatory compliance and marketing.
Providing initial seed funding to young bio-entrepreneurs. In India, the Association of Biotechnology Led Enterprises (ABLE) has led bio-innovation competitions and the Indian Government-sponsored Biotechnology Industry Research Assistance Council (BIRAC) annually funds young bio-entrepreneurs to translate their academic research into business ideas. Elsewhere in Malaysia, the government has recently constituted a special status called “BioNexus” for select Malaysian and international biotechnology companies. Under this status, the companies receive fiscal incentives, funds, and provisions for assisted growth.
Developing a welcoming atmosphere for returning citizens. In China, many of its overseas scientists are armed with specialized technical know-how but were historically reluctant to return due to poor career prospects. By creating a welcoming ecosystem for returning many Chinese nationals abroad via its “Thousand Talents Program,” China has reaped great returns. Dr. Michael Yu, Chairman and CEO of Innovent Biologics is one such example. Armed with a Ph.D. from the Chinese Academy of Sciences and post-doctoral training in pharmaceutical sciences at the University of California San Francisco with, he returned to China as a Thousand Talents laureate. Since then he has led the development and commercialization of Class 1 drugs such as Oncorine® and Conbercept® within China. Today, he spearheads Innovent Biologics to develop novel and affordable drugs in China. This strong focus on basic and translational research, readily available capital from both public and private institutions and business-friendly regulations have created an environment so enticing that even foreign scientists have started to plan a career move to China.
Despite its slow start, there’s no denying that the biotech landscape in developing countries is finally coming of age. The second part of the series will touch upon the benefits of building a startup in an emerging region. Stay tuned!
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