Australian biotech hears the tiger's roar

David Binning finds a wealth of opportunities for Australian integration with other Asian biotech industries.

With the biotech hubs of Singapore and Japan firmly established, and with India, China and Korea emerging as potential powerhouses, Australian biotech is now viewing unprecedented opportunities to deepen its ties throughout the region.

"In the last five years, Asia has moved ahead enormously so Australian companies and researchers will be advantaged by moving there," says AusBiotech chairman, Prof Simon Carroll. "Activity in Asia has increased by two orders of magnitude over the last five years.

"The driver is that the larger markets will be Europe and the US for the foreseeable future, but we are positioning ourselves to capture the benefit of the Chinese and Indian economies, and to that end you have to start building the links now."

The recent Aichi World Expo 2005 hosted Australia's largest ever biotechnology mission to Japan -- more than 20 organisations. Helped by Austrade, they also went to BioJapan in Yokohoma.

Janelle Casey, Austrade's national biotechnology manager, said Asia has traditionally been an important area of focus for the Australian biotechnology industry. "Austrade is building bridges between both scientific and commercially focused biotech communities across Asia," Casey says. AusBiotech 2005 and Aichi BioJapan are recent examples.

While Japan, the world's second largest biotech market, is naturally a priority, Austrade is mindful of other emerging opportunities such as in Taiwan which is seen as a wealthy market for Australian plasma and oncology treatments. China is of major interest "although Australian firms remain cautious of entering this market," Casey says. "Austrade is also keeping a watchful eye on other markets such as Korea, India Thailand and Vietnam -- the latter two especially in agbiotech.

Austrade administers the Export Market Development Grants scheme, which provides Australian businesses with partial financial assistance for exporting. It is sponsoring an international business lounge at AusBiotech 2005, which will support Australian companies seeking to be matched with Asian-based firms.

Non-profit research group Neurosciences Victoria (NSV) has identified huge opportunities in Japan. It currently runs a joint research facility in Kobe with German pharmaceutical company Schering, looking at regenerative treatments. It is also in separate agreements with various other Japanese biotech entities.

NSV recently won the Victorian government's best 'Emerging Exporter' award and was a runner-up and commendee in the 'Services Industry' category for its efforts in taking neuroscience know-how and IP to Germany, America, Japan and China.

Last month its CEO, Assoc Prof William Hart, led a Victorian government biotechnology mission to Aichi Expo in Nagoya, Japan. The group then travelled to Kobe to visit the Port Island biotech precinct where there are new institutes located including the Schering/NSV operations, and also Riken, Japan's version of the CSIRO, among others.

One of Hart's key observations was that Japan's biotech sector is in the midst of heavy consolidation at the moment after what many view was a slow start for such a heavily industrialised nation. "They [Japan] have the view that it is coming into the second wave of biotechnology," Hart says. "I think they feel that they missed the first."

Japan now boasts world-class medical, diagnostic, and drug discovery research with substantial pharmaceutical players such as Sankyo, Takeda and Shionogi. It is also heavily involved in nutraceuticals, functional foods and agribiotech with companies such as Meiji, Kikkoman and Suntory.

This is likely to present major opportunities for Australian organisations in Japan, while it is also expected that more Japanese companies will establish a presence in Australia. A number of Japanese biotechs, including Nisho Iwai, already have done so.

"We haven't as yet closed a definitive drug discovery contract with a Japanese company but it's only around the corner," Hart says. "They [Japan] are very interested in Australia as a partner."

NSV also has a joint development agreement with China's NHWA Pharmaceutical Corp, whereby the Australian group conducts preclinical development of drug candidates in Melbourne with the Chinese company taking the baton and eventually marketing drugs on the mainland.

"This is further evidence that Asian companies are becoming very active in drug discovery," Hart says. But, he adds, there remain numerous commercial and cultural differences to be considered, most notably the old chestnut of IP protection in certain parts of the region. "Many people are concerned as to whether IP is safe in China," he says. But China now recognises that it will never be taken seriously as a world trading nation if it doesn't do something about it.

"We believe that the potential for the pharmaceutical and biotech industry in China is immense and we need to be part of it and create some partnerships."

Victoria has a sister-state relationship with the eastern Chinese province of Jiangsu, designed to foster greater collaboration on research and trade. And Hong Kong-based CK Life Sciences has in recent years also committed significant funds to agricultural and therapeutic projects in Victoria, including a collaboration with Swinburne University and the Burnet Institute to study the efficacy of traditional Chinese medicine for treating HIV/AIDS.

AusBiotech's Carroll sees Korea as a real sleeping giant. "We're talking about an advanced nation of only twice our population and yet their products are household names in the electronics sphere," Carroll says. "Korea is an untapped market."

This sophisticated industrial base, coupled with top-class university research, is projected to deliver big returns for Korea -- and Australian companies that can successfully tap in.

Agenix CEO Don Home projects that his company will derive 50 per cent of its business from Asia within the next five years, up from around 15-20 per cent today. While reporting extremely positive experiences with Singapore, these two countries in Home's view are still very "inwardly focused... they both want to do things on their own terms and on their own turf." The Singapore government, on the other hand "is interested in offering support to us that will ultimately be of benefit to Singapore".

Nextec Biosciences CEO John Grace says India's staggering rate of economic growth ensures that it will be a biotech hothouse over the next few years. Crucially, India has managed a transition from outright rejection of Western patenting laws in the mid-1970s, to world's best practice in IP protection today. Ironically, this legacy of patent infringement has played some part in enabling India to become one of the biggest drug producing countries in the world. The boom in India's economy has also engendered a sense of national pride, helping India to shed its dependence on Western handouts.

"Their position now is if they do a deal they want to be partners as opposed to receiving aid," Grace says. The Indian government's head of biotechnology, Prof Surya Bahn, recently threw down the gauntlet, offering to match any Australian biotech firm that would bring $US500,000 to the table.

Mervyn Thomas, formerly CSIRO's director of bioinformatics, now director of small statistical consultancy and services company Emphron, recognises the huge changes that are taking place across Asia, especially India. "The days when people turned their noses up at Indian engineering are well and truly gone," he says. "It's high quality and it's very cost effective."

Emphron recently announced a joint development agreement with Bangalore-based Polyclone, which Thomas views as an important first step. "For me it's key to get in there [Asia] because my bioinformatics market is pretty well saturated in Australia."

But it's no cakewalk. "Moving into Asia is not something that happens without significant strategic thinking and capital investment," Thomas says. "There are real challenges and real costs involved." For instance, he says, being a small, services-based company makes it hard to attract enough VC support to fund even a short-term presence in somewhere like Tokyo.

Thomas is currently negotiating what would be a "major deal" to integrate Emphron solutions with a significant platform technology in Singapore. Facilities like the almost-complete Biopolis, coupled with the Singapore government's unrivalled generosity towards both its indigenous as well as foreign biotech interests, continues to lure Australia interests to the Island state and Thomas is excited about opportunities there. "The degree of strategic investment that's going on in Singapore compared with Australia is just astounding."

According to Dr Beh Swan Gin, director of the Biomedical Sciences Group, Singapore Economic Development Board, Singapore has well and truly earned its position as a truly international hub for biotechnology.

A key part of this, he believes, is to foster better ties with Australia. "The challenge is to go beyond MOUs and good intentions, and facilitate collaborations and partnerships between companies and scientists from our two countries."

Beh also praises Australian science, citing examples such as ES Cell International (ESI), the Singapore-based company whose genesis was in Australia, and our most recent Nobel laureates.

Another positive sign for Australia is the fact that Singapore companies have expressed confidence in our capital market -- Rockeby Biomed and Cygenics are both listed on the local bourse.

"Singapore can also be a launch pad into Asia and a hub for Australian biomedical companies to commercialise their products," Beh says, citing the example of pSivida, which undertook clinical trials at the Singapore General Hospital on the use of BrachySil, a brachytherapy treatment for inoperable primary liver cancer. "Companies can capitalise on our scientific, medical and business infrastructure, and also our international connectivity that now includes a network of free trade agreements."

Singapore has made good on its promise to be a world leader when its comes to cooperation, a position which has garnered massive benefits for its biotech industry and others in the region including Australia's, helped by easy access to research facilities, visas and tax breaks that eclipse our hospitality many times over.

Nevertheless, recent events in the region such as the avian flu outbreaks are expected to have a longer-term positive effect on collaboration throughout the region, as will programs such as those of the UK-based Wellcome Trust biomedical research charity, one of the world's richest medical charities. Wellcome recently joined with the governments of Australia and New Zealand to undertake 11 studies aimed at tackling endemic diseases throughout Asia.

"The idea is to co-locate private and public laboratories to foster close links and stimulate collaboration and cross-disciplinary research," Beh says. "The physical proximity of private and public labs also aids better use of resources through the sharing of common facilities. When talents meet, discoveries are born."

-- David Binning is a NSW-based freelance writer