Malaysia’s grand biotech plans


  • Living
  • Wednesday, 19 Nov 2014

Model Rosie Huntington Whiteley posing for Coca- Cola Life, made with natural sweeteners supplied by PureCircle, the world’s leading manufacturer of stevia sweeteners and one of the global BioNexus companies headquartered in Malaysia. — Filepic

Approaching biotech by building a holistic bioeconomy-based ecosystem.

Special incentive structures lie at the heart of Malaysia’s attractiveness to global biotechnology firms, risk-taking venture capitalists and anyone looking to put their faith in a new piece of technology.

One such structure is BioNexus status, which is awarded by Biotech Corp to qualified companies that are engaged in value-add activities.

This status comes with 10 years’ tax exemption on statutory income, permission to raise capital abroad, and assistance in navigating through red tape.

Once the companies or investors arrive, getting them to stay is part of the wider goal of the Bioeconomy Transformation Programme, which strives for the creation of a bigger-picture bioeconomy.

By paying attention to segments along the value chain such as R&D, raw materials supply, manufacturing and marketing in industries like agriculture, global wellness, chemicals, biomedical and bioindustrial, the idea is to slowly build the foundations for a holistic ecosystem. Once that is in place, the gaps can be filled in with more specific agendas.

Take PureCircle for example; it is the world’s leading producer of stevia, a natural sweetener used in the global food and beverage industry.

It’s a global company with BioNexus status that owns proprietary technologies and supplies major brands like Cola-cola and Pepsi.

It raised capital through a listing on the London Stock Exchange, but is headquartered in Malaysia where it enjoys increased profitability through tax savings.

Its main processing facility is in Bandar Enstek, near the Kuala Lumpur International Airport, and it buys stevia from a farm in Sandakan, Sabah in addition to its main suppliers in China. It will soon be buying supplies from new contract farmers in Johor through Community Development Programmes organised by Biotech Corp.

“Bio-accelerator” programmes like this not only provide long-term job creation, but also help to develop peripheral industries and rural communities. Helping to set up a farming base that allows tighter logistics for companies like PureCircle also meets the wider goals of other growing local industries, such as the herbal supplements industry.

A certain kind of talent pool is needed to have more biotech startups geared towards commercial product generation. Scientists with industry-experience and the confidence to risk venturing out as entrepreneurs is one way. Pictured is a

These, in turn, are stepping stones to higher value markets, such as drug development in the pharmaceutical industry. Right now, diving into pharmaceutical-grade herbal product development is a lofty goal, while making a big impact in the supplements industry, a relatively lower hanging fruit, is not. The market for global wellness products is worth billions, and setting up Malaysian companies to be players in this space indirectly relates to more long-term goals of capitalising on Malaysian biodiversity and our wealth of potential medicinal compounds.

“Once companies like BioAlpha (a local player that has taken a full-supply chain approach in its entry into the herbal supplements market) have built their capital, experience and expertise, they will be stable and (better) able to venture into pure pharma,” said Biotech Corp CEO Datuk Dr Mohd Nazlee Kamal.

Incidentally, starting out in the more easily accessible yet profitable herbal supplements industry will serve to develop a bigger market for third-party support services such as good laboratory practice, or GLP-certified laboratories, the limited presence of which is a limiting factor to pre-clinical research efforts in the country.

“Right now, what we can do is concentrate on getting local companies to develop good revenue, get into the export market and get stronger,” Mohd Nazlee said.

Looking outward

If supporting the growth of a supplements industry in Malaysia is the goal, access to a diversity of raw materials would be useful – and one way of expanding it would be through partnerships with other countries. One of Biotech Corp’s plans calls for sourcing raw materials from farmers in countries such as Sudan, Pakistan, Algeria, Bangladesh and Morocco – in a system modelled on the Community Development Programmes which already exist in Malaysia.

Mohd Nazlee envisioned a scenario where Malaysian companies buy herbs that are better suited to growing in those foreign climates (argan oil, for example, is best grown in Morocco) and use them in locally manufactured products, which can then be sold back to the countries of the raw materials’ origin.

This would create a win-win situation, he explained: “In Sudan for example, they import all their supplements and wellness products from countries like the United States and Britain.”

The advantage would be cheaper Malaysian-made products which support the local economic supply chain, which should incentivise host governments to contribute some of the initial capital investments to for start-up farming operations. The recent World Islamic Economic Forum in Dubai was a great opportunity to put out feelers out to gauge receptiveness, especially from Islamic nations that represent potential customers for Malaysian-made halal products (such as herbal supplements).

Biotech Corp is also leveraging on locally available expertise, Mohd Nazlee said, by partnering with the Malaysia-based research arm of Crops For The Future, an international organisation dedicated to the identification and utilisation of neglected crops and underutilised plants (http://bit.ly/1ErX6Fu).

“We can work with (the organisation) to identify useful plants to work with in other countries, and also to identify opportunities locally,” he pointed out, citing the native Sarawakian fruit dabai (Canarium odontophyllum) as one of the local resources they have been working on.

Aside from developing raw materials supply and new markets, there have been simultaneous efforts to address the two most glaring factors holding Malaysia back: innovation and venture capital.

To create a mushrooming of biotech start-ups geared towards commercial product generation requires a certain kind of talent pool – scientists armed not just with doctorates and research experience, but also industry experience and the confidence to risk venturing out to become entrepreneurs.

Instead of expecting home-grown innovations to mushroom straight away, the focus has been on getting established global companies to invest (see the first part of this focus last week).

Just to zoom in on job creation within BioXcell, a biopark located in the Iskandar region of Johor, there is pharma giant Biocon hiring 85% of its 700-strong workforce from the local talent pool.

Stelis Biopharma, another soon-to-be resident at BioXCell, plans to make 80% of its projected 150-200 employees local hires. Glycos, a bioindustrial firm currently in the design stages of its facility, expects 40 out of its 50 employees to be from Malaysia.

Biocon has already filled half the available positions and sent its staff off for training in preparation for operations to begin next year.

Similar stories will soon be playing out all over the country, with other big firms such as Arkema and CJ Cheil Jedang beginning operations at Kertih Biopolymer Park next year; and US-based renewable sciences company Elevance, which is collaborating with Genting Plantations Berhad to open a biorefinery at the Palm Oil Industrial Cluster (POIC) in Lahad Datu, Sabah.

Feeding off each other

Essentially, the setting up of major biotech players in Malaysia not only means more jobs for locals, but a general increase in the level of experience and skill within our workforce – a precursor to the sort of environment where local entrepreneurs are more likely to emerge and launch startups of their own.

This should also mean an incremental increase over the years in talent available for hire, which further enhances Malaysia’s attractiveness as a viable biotech hub for investors.

The aim is also for more collaboration between the corporate sector and local research institutions, which is in fact already happening. CJ Cheil Jedang has already made contact with Universiti Terengganu Malaysia (UMT); likewise with Biocon and Universiti Teknologi Malaysia (UTM). Both companies have pilot facilities, and are exploring how they can work together with local scientists to use these to collaborate on developmental research.

Model Rosie Huntington Whiteley posing for Coca- Cola Life, made with natural sweeteners supplied by PureCircle, the world’s leading manufacturer of stevia sweeteners and one of the global BioNexus companies headquartered in Malaysia. — Filepic

Aside from anticipating the multiplier effects of large companies, there have been efforts to light a spark in the local biotech startup scene – where one of the major problems is a lack of local venture capital.

“Selling new technology in Malaysia normally is still quite difficult,” Mohd Nazlee pointed out, mainly because our ecosystem (investors and the market) does nopt understand – or is not ready to embrace – the commercial potential of cutting-edge biotech ideas.

“But in San Francisco it’s mature. You can do a presentation or a pitch in the United States, and investors will be more receptive,” he added.

Hence, plans to set up a permanent base for Biotech Corp in San Francisco.

One way this will help is by connecting US-based venture capitalists with Malaysian startups – again, this is where the 10-year tax-free statutory income becomes a powerful attraction.

Another option is actually making San Francisco-based startups aware of the opportunities to set up operations in Malaysia and develop local partnerships.

“This is a model that Taiwanese and South Korean companies have been using. By spreading out operations over two countries, this accelerates the lead time for clinical research,” Mohd Nazlee .

“So for example, you could have an operation in San Francisco and one in Malaysia, funded through a joint venture between a US fund and a Malaysian fund. One lab could be running experiments under certain parameters, and when they close, the other could be running experiments under a different set of parameters.

“At the end of the day, the two operations collate their results, and this could ... shorten time to market. Plus you get to tap the brain power from both places.”

Biotech Corp plans to be the bridge for such opportunities. It’s also going to be focusing more on startup culture on the home front by working with the Malaysian Global Innovation and Creativity Centre (Magic).

So when can Malaysians expect a biotech ecosystem resembling those of the famous United States-based hubs?

Mohd Nazlee doesn’t think a comparison is appropriate. If anything, he thinks it makes sense to gauge our milestones by looking at the targets we set for ourselves.

To date, the target investment amount under Malaysia’s Biotechnology Policy was RM9bil for 2011-2015. We have exceeded that, attracting RM18.52bil in capital investments to date.

Revenue generation, however, is lagging – perhaps owing to a miscalculation of how long it would take for those investments to mature.

The expectation was for revenue to hit RM50bil by 2015, but BioNexus companies are collectively bringing in just RM548.8mil in revenue.

With Arkema, CJ Cheil Jedang and Biocon starting operations next year, this figure will likely get a lot bigger.

Either way, as far as groundwork goes, a lot has been done – and time will tell if Malaysia’s approach to the biotech train will get us to our destination in good time.

SPECIAL incentive structures lie at the heart of Malaysia’s attractiveness to global biotechnology firms, risk-taking venture capitalists and anyone looking to put their faith in a new piece of technology.

One such structure is BioNexus status, which is awarded by Biotech Corp to qualified companies that are engaged in value-add activities. This status comes with 10 years’ tax exemption on statutory income, permission to raise capital abroad, and assistance in navigating through red tape.

Once the companies or investors arrive, getting them to stay is part of the wider goal of the Bioeconomy Transformation Programme, which strives for the creation of a bigger-picture bioeconomy. By paying attention to segments along the value chain such as R&D, raw materials supply, manufacturing and marketing in industries like agriculture, global wellness, chemicals, biomedical and bioindustrial, the idea is to slowly build the foundations for a holistic ecosystem. Once that is in place, the gaps can be filled in with more specific agendas.

Take PureCircle for example; it is the world’s leading producer of stevia, a natural sweetener used in the global food and beverage industry.It’s a global company with BioNexus status that owns proprietary technologies and supplies major brands like Cola-cola and Pepsi.It raised capital through a listing on the London Stock Exchange, but is headquartered in Malaysia where it enjoys increased profitability through tax savings. Its main processing facility is in Bandar Enstek, near the Kuala Lumpur International Airport, and it buys stevia from a farm in Sandakan, Sabah in addition to its main suppliers in China. It will soon be buying supplies from new contract farmers in Johor through Community Development Programmes organised by Biotech Corp.

“Bio-accelerator” programmes like this not only provide long-term job creation, but also help to develop peripheral industries and rural communities. Helping to set up a farming base that allows tighter logistics for companies like PureCircle also meets the wider goals of other growing local industries, such as the herbal supplements industry.

These, in turn, are stepping stones to higher value markets, such as drug development in the pharmaceutical industry. Right now, diving into pharmaceutical-grade herbal product development is a lofty goal, while making a big impact in the supplements industry, a relatively lower hanging fruit, is not.

The market for global wellness products is worth billions, and setting up Malaysian companies to be players in this space indirectly relates to more long-term goals of capitalising on Malaysian biodiversity and our wealth of potential medicinal compounds.

“Once companies like BioAlpha (a local player that has taken a full-supply chain approach in its entry into the herbal supplements market) have built their capital, experience and expertise, they will be stable and (better) able to venture into pure pharma,” said Biotech Corp CEO Datuk Dr Mohd Nazlee Kamal.

Incidentally, starting out in the more easily accessible yet profitable herbal supplements industry will serve to develop a bigger market for third-party support services such as good laboratory practice, or GLP-certified laboratories, the limited presence of which limits pre-clinical research efforts in the country.

“Right now, what we can do is concentrate on getting local companies to develop good revenue, get into the export market and get stronger,” Mohd Nazlee said.

Looking outward

If supporting the growth of a supplements industry in Malaysia is the goal, access to a diversity of raw materials would be useful – and one way of expanding it would be through partnerships with other countries.

One of Biotech Corp’s plans calls for sourcing raw materials from farmers in countries such as Sudan, Pakistan, Algeria, Bangladesh and Morocco – in a system modelled on the Community Development Programmes which already exist in Malaysia.

Mohd Nazlee envisioned a scenario where Malaysian companies buy herbs that are better suited to growing in those foreign climates (argan oil, for example, is best grown in Morocco) and use them in locally manufactured products, which can then be sold back to the countries of the raw materials’ origin. This would create a win-win situation, he explained. “In Sudan for example, they import all their supplements and wellness products from countries like the United States and Britain.”

The advantage would be cheaper Malaysian-made products which support the local economic supply chain, which should incentivise host governments to contribute some of the initial capital investments to for start-up farming operations.

The recent World Islamic Economic Forum in Dubai was a great opportunity to put out feelers out to gauge receptiveness, especially from Islamic nations that represent potential customers for Malaysian-made halal products (such as herbal supplements).

Biotech Corp is also leveraging on locally available expertise, Mohd Nazlee said, by partnering with the Malaysia-based research arm of Crops For The Future, an international organisation dedicated to the identification and utilisation of neglected crops and underutilised plants (http://bit.ly/1ErX6Fu).

“We can work with (the organisation) to identify useful plants to work with in other countries, and also to identify opportunities locally,” he pointed out, citing the native Sarawakian fruit dabai (Canarium odontophyllum) as one of the local resources they have been working on.

Aside from developing raw materials supply and new markets, there have been simultaneous efforts to address the two most glaring factors holding Malaysia back: innovation and venture capital. To create a mushrooming of biotech start-ups geared towards commercial product generation requires a certain kind of talent pool – scientists armed not just with doctorates and research experience, but also industry experience and the confidence to risk venturing out to become entrepreneurs.

Instead of expecting home-grown innovations to mushroom straight away, the focus has been on getting established global companies to invest (see the first part of this focus last week). Just to zoom in on job creation within BioXcell, a biopark located in the Iskandar region of Johor, there is pharma giant Biocon hiring 85% of its 700-strong workforce from the local talent pool.

Stelis Biopharma, another soon-to-be resident at BioXCell, plans to make 80% of its projected 150-200 employees local hires. Glycos, a bioindustrial firm currently in the design stages of its facility, expects 40 out of its 50 employees to be from Malaysia. Biocon has already filled half the available positions and sent its staff off for training in preparation for operations to begin next year. Similar stories will soon be playing out all over the country, with other big firms such as Arkema and CJ Cheil Jedang beginning operations at Kertih Biopolymer Park next year; and US-based renewable sciences company Elevance, which is collaborating with Genting Plantations Berhad to open a biorefinery at the Palm Oil Industrial Cluster (POIC) in Lahad Datu, Sabah.

Feeding off each other

Essentially, the setting up of major biotech players in Malaysia not only means more jobs for locals, but a general increase in the level of experience and skill within our workforce – a precursor to the sort of environment where local entrepreneurs are more likely to emerge and launch startups of their own.

This should also mean an incremental increase over the years in talent available for hire, which further enhances Malaysia’s attractiveness as a viable biotech hub for investors. The aim is also for more collaboration between the corporate sector and local research institutions, which is in fact already happening.

CJ Cheil Jedang has already made contact with Universiti Terengganu Malaysia (UMT); likewise with Biocon and Universiti Teknologi Malaysia (UTM). Both companies have pilot facilities, and are exploring how they can work together with local scientists to use these to collaborate on developmental research.

Aside from anticipating the multiplier effects of large companies, there have been efforts to light a spark in the local biotech startup scene – where one of the major problems is a lack of local venture capital.

“Selling new technology in Malaysia normally is still quite difficult,” Mohd Nazlee pointed out, mainly because our ecosystem (investors and the market) does nopt understand – or is not ready to embrace – the commercial potential of cutting-edge biotech ideas. “But in San Francisco, it’s mature. You can do a presentation or a pitch in the United States, and investors will be more receptive,” he added.

Hence, plans to set up a permanent base for Biotech Corp in San Francisco. One way this will help is by connecting US-based venture capitalists with Malaysian startups – again, this is where the 10-year tax-free statutory income becomes a powerful attraction.

Another option is actually making San Francisco-based startups aware of the opportunities to set up operations in Malaysia and develop local partnerships.

“This is a model that Taiwanese and South Korean companies have been using. By spreading out operations over two countries, this accelerates the lead time for clinical research,” Mohd Nazlee. “So, for example, you could have an operation in San Francisco and one in Malaysia, funded through a joint-venture between a US fund and a Malaysian fund.

One lab could be running experiments under certain parameters, and when they close, the other could be running experiments under a different set of parameters.

“At the end of the day, the two operations collate their results, and this could ... shorten time to market. Plus, you get to tap the brain power from both places.”

Biotech Corp plans to be the bridge for such opportunities. It’s also going to be focusing more on startup culture on the home front by working with the Malaysian Global Innovation and Creativity Centre (Magic).

So, when can Malaysians expect a biotech ecosystem resembling those of the famous United States-based hubs?

Mohd Nazlee doesn’t think a comparison is appropriate. If anything, he thinks it makes sense to gauge our milestones by looking at the targets we set for ourselves. To date, the target investment amount under Malaysia’s Biotechnology Policy was RM9bil for 2011-2015. We have exceeded that, attracting RM18.52bil in capital investments to date. Revenue generation, however, is lagging – perhaps owing to a miscalculation of how long it would take for those investments to mature.

The expectation was for revenue to hit RM50bil by 2015, but BioNexus companies are collectively bringing in just RM548.8mil in revenue. With Arkema, CJ Cheil Jedang and Biocon starting operations next year, this figure will likely get a lot bigger. Either way, as far as groundwork goes, a lot has been done, and time will tell if Malaysia’s approach to the biotech train gets us to our destination.

Related stories: 

Ingredients for creating a biotech hub

Malaysia's biotech landscape finally starting to emerge

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