Singapore is revamping its economy as China and other nations over take it as a source for consumer electronics. The city-state is now investing in a new growth sector in a bid to create 15 world-class biotech companies by 2010.
Singapore's biomedical manufacturing sector grew 16 percent in 2003, and at least six of the world's top pharmaceutical companies have opened facilities there.
The Singapore Economic Development Board (EDB) has worked hard to attract investors and talent through tax breaks, grants and other financial incentives.
Nicholas Dean, head of Singapore operations of the California-based biotech company Isis Pharmaceuticals, says Singapore is on track to reach its goal of becoming a major biotechnology center. He says the funding provided by the EDB has given his company greater opportunities than it had at its home base.
"It's really allowing us to develop a larger research program than we would simply be developing here in San Diego," said Mr. Dean.
Last year, at a cost of $300 million, the EDB opened a high-tech complex of research buildings, with a capacity for 2000 scientists, known as Biopolis.
Recently, top scientists, including Scotland's Alan Colman, who helped clone Dolly the sheep, moved to Biopolis to get better funding for research.
Despite this level of talent, analysts say venture capitalists and other investors are still shying away from Singapore's biotech industry.
One reason is stiff competition. Nitin Naik, with the Singapore office of the market consulting company Frost and Sullivan, says India, for example, has lower research-and-development costs.
"Look at a country like India, which is mammoth in terms of low-cost R&D and availability of scientific resources. From that perspective, Singapore becomes a slightly unattractive option," said Mr. Naik.
But analysts say the main reason investment is slow is because it usually takes about 10 years before biotech research can be translated into commercial profits.
Still, Singapore is not discouraged. Beh Swan Gin, Director of the EDB's Biomedical Sciences Group, says venture capitalists are simply leery of investing in biotech because the industry is new to them.
"Hopefully in the future [they will] take the lead in investing in biotech ventures. I think this is an education process. It will take some time," said Mr. Beh.
Mr. Beh says that to rouse investor interest, the EDB started its own biomedical sciences venture capital fund, called Bio*One Capital. The fund manages more than $600 million and provides seed capital for Singapore's biotech startups.
Biotech companies also have taken steps to promote the industry in Singapore, by creating a networking association named BioSingapore.
BioSingapore chairman, Steve Fang, says biotech companies in Singapore are aware of investor skepticism, and have therefore put much effort into managing investment risk.
"Instead of the 10 years' wait, a lot of these companies, ourselves included, are trying to offer an investment proposition where the number of years of return are much shorter," noted Mr. Fang. "The market is currently not too receptive to biotech, but it would change as we see companies evolving their business strategies."
Singapore's Nanyang Technological University is working with the government to encourage talented students to pursue research careers in biology by granting scholarships and stipends. The university's Professor K.C. Lun explains the reason behind this aggressive recruitment.
"This is really looking at the long-term manpower skills development for Singapore, to support the life sciences investment industry," said Mr. Lun. "We're starting the kids young. To start them young in terms of thinking skills, in terms of having a research mindset."
The EDB's Beh Swan Gin says tiny Singapore may not be able to compete with the United States in biotechnology, but it will aim for U.S. standards.