Biotechnology Industry Indonesia - Download as PDF

							                MALAYSIA

                 Thailand
                       Cambodia
                            Vietnam
                                        Philippines
                        MALAYSIA
                            Singapore



                        Indonesia




       AN OVERVIEW OF THE
MALAYSIAN BIOTECHNOLOGY INDUSTRY




ICE Kuala Lumpur ( September 2008 )
                            Istituto Nazionale per il Commercio Estero




CONTENTS                                                                 PAGE

Introduction                                                              3


National Biotechnology Policy                                             3-4


Industry Progress                                                         5-6


Focus Areas – Red Biotechnology, Green Biotechnology,                     6-7
              White Biotechnology


BioNexus Investment                                                       7-8


Incentives                                                                8-9


Sources of Funding                                                        9 - 10


International Alliances & Foreign Technology Acquisition                  10 - 11




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INTRODUCTION

In line with global competition, Malaysia is actively building up its biotechnology
sector to spur the industry utilizing its rich resources and pool of skilled workers. In its
transition to a knowledge-based economy, the Malaysian biotechnology industry will
be given special focus during the period 2005 – 2020 guided by the Biotechnology
Master Plan created in the context of the National Biotechnology Policy.

Mainly, the efforts were to lay a strong foundation including developing human
resource to create skilled workers, emphasizing research and development in priority
sectors as well as building technological infrastructure and foster innovation and
industry development.

Since the launch of this policy, the industry has progressed tremendously through the
support and efforts of various organizations including the Ministry of Finance, Ministry
of Science, Technology and Innovation, related agencies including venture capitalists
and BiotechCorp – the leading agency for biotech development in Malaysia.

Quick Glance at the Biotech Master Plan (2005 – 2020)
Indicators                                     Phase I        Phase II        Phase III      Total
                                              2005-2010      2011-2015       2016-2020     Phase I to
                                               Capacity      Science to        Global         III
                                               Building       Business        Business


Investment by private sector and government    USD 1. 6b      USD 2.4b       USD 3.9b      USD 7.9b

Employment                                      40,000         80,000         160,000       280,000

No. of companies                                   25            25             50               100

Total revenue                                  USD 5.3b      USD 21.0b       USD 44.7b    USD 71.0b

Contribution to GDP                              2.5 %           4%             5%               5%
Source – Malaysian Biotechnology Corporation (BiotechCorp)



NATIONAL BIOTECHNOLOGY POLICY

The key development areas under the National Biotechnology Policy are :

    Thrust 1 : Agriculture Biotechnology Development
Transform and enhance the value creation of the agricultural sector through
biotechnology

   Thrust 2 : Healthcare Biotechnology Development
Capitalise on the strengths of biodiversity to commercialise discoveries in natural
products as well as position Malaysia in the bio-generics market

    Thrust 3 : Industrial Biotechnology Development

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Ensure growth opportunities in the application of advanced bio-processing and bio-
manufacturing technologies

     Thrust 4 : R&D and Technology Acquisition
Establish Centres of Excellence, in existing or new institutions, to bring together
multidisciplinary research teams in co-ordinated research and commercialization
initiatives. Accelerate technology development via strategic acquisitions

    Thrust 5 : Human Capital Development
Build the nation’s biotech human resource capability in line with market needs
through special schemes, programmes and training

   Thrust 6 : Financial Infrastructure Development
Apply competitive “lab to market” funding and incentives to promote committed
participation by academia, the private sector as well as government-linked
companies, implement sufficient exit mechanisms for investments in biotech

   Thrust 7 : Legislative and Regulatory Framework Development
Create an enabling environment through continuous reviews of the country’s
regulatory framework and procedures in line with global standards and best
practices. Develop a strong intellectual property protection regime to support R&D
and commercialisation efforts

   Thrust 8 : Strategic Positioning
Establish a global marketing strategy to build brand recognition for Malaysian biotech
and benchmark progress. Establish Malaysia as a center for Contract Research
Organisations and Contract Manufacturing Organisations

   Thrust 9 : Government Commitment
Establish a dedicated and professional implementation agency overseeing the
development of Malaysia’s biotech industry, under the support of the Prime Minister
and relevant government ministries


In the latest scenario, Malaysia and Italy have signed a joint declaration on
agriculture in June 2007 and the two governments agreed to set up a joint committee
to promote cooperation in agriculture. A similar joint business council by the private
sector would also be set up to assist in promoting agriculture-based trade. The areas
of cooperation between the governments will include agriculture, livestock, fisheries,
research and development, and agro-based and food-processing industries.

However, in terms of promoting the industry in general, the National Budget 2008 has
provided a sum of approximately USD 62 million for the biotechnology industry for the
acquisition of technology, development of a Biodiversity Research Centre and a
Biotechnology Commercialisation Centre as well as fund anti-cancer compound
research.




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PROGRESS

Between 2005 and 2007, 42 companies from the following sectors were granted the
BioNexus Status.


Agriculture        15      Plant genomics, animal health, diagnostics and biologics,
                           fertilizer & soil enhancer, plant propagation via tissue culture,
                           animal breeding & reproduction technology, nutraceuticals,
                           tissue culture, orchid tissue culturing

Healthcare         19      Nutraceuticals, medical diagnostics and devices, contract
                           manufacturing organizations, molecular & cell engineering,
                           tissue and stem cell engineering, contract research
                           organization

Industrial             6   Bioremediation, enzymes/catalyst, biodiesel production,
                           contract research organization, microbes technologies,
                           biocatalyst, bioinformatics

Bioinformatics         2
Source – Malaysian Biotechnology Corporation (BiotechCorp)

Through BiotechCorp, the Malaysian Government grants the “BioNexus Status” to
eligible companies where they can enjoy the following privileges under the Bill of
Guarantees as stated below :

Bill of Guarantees :

1. Freedom of ownership
2. Freedom to source funds globally
3. Freedom to bring in knowledge workers
4. Eligibility for competitive incentives and other assistance
5. Eligibility to receive assistance for international accreditations and standards
6. Strong intellectual property (IP) regime
7. Access to supportive information network linking research centres of excellence
8. Access to shared laboratories and other related facilities
9. BiotechCorp as the one-stop agency

In order to achieve BioNexus status, the companies must be able to meet the
following criterias :

• Establish a separate legal entity for the BioNexus qualifying business and
activities
• Be a provider of a product or services based on life sciences, or substantially
using life sciences processes in production or agriculture (mere blending, repacking,
mixing, distributing or trading of biotechnology products shall not qualify)
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•   Possesses research capability and conducts research in thrust areas
•   Employs a significant percentage of knowledge workers in its total workforce
•   Complies with environmental and ethical laws and guidelines



FOCUS AREAS – RED BIOTECHNOLOGY, GREEN BIOTECHNOLOGY & WHITE
BIOTECHNOLOGY

In Malaysia, the biotechnology focus areas are :
1) Healthcare
2) Agriculture
3) Industrial
4) Bioinformatics

Healthcare Biotechnology (Red) and the Target Sectors

Malaysia aims to thrive on the traditional and complementary medicine sector to
develop leads for the pharmaceutical and nutraceutical industries given the country’s
rich resources, biodiversity and local knowledge. Only niche areas will be targeted
since the whole process of discovery and commercialization consume huge
investment.

Other niches that will be developed include contract research and development of
biogenerics, diagnostics and vaccines, particularly for high-incidence diseases.

Target sectors :
Bio-healthcare covers tropical diseases, preclinical contract research, clinical trial,
diagnostics and biomedical instruments/devices, personalised and preventive
medicine, therapeutics, drug discovery, antibodies, recombinant proteins, vaccines
and bioactive compounds for healthcare, herbal products and cosmeceuticals.


Agriculture Biotechnology (Green) and the Target Sectors

The agro-biotechnology sector is actively led by established institutions such as
MARDI (Malaysian Agricultural Research & Development Institute), Malaysian Palm
Oil Board and the Malaysian Rubber Board. New technologies such as genetic
engineering, functional genomics, proteomics and biopharming are part of the efforts
to increase plant and livestock productivity as well as improve their agronomic traits.

Target sectors :
Bio-agriculture mainly includes the production of high yield crops, genetically
modified plant, livestock and poultry, transgenic animal, forestry products, fisheries,
aquaculture, value added products, biofertiliser and ciocontrol, biopesticides, cell
culture technology, feed and additives, hybrid seeds, tissue culture, nutraceutical and
food technology.



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Industrial Biotechnology (White) and the Target Sectors

Industrial biotechnology covers a wide area. The identified areas of growth include
the development of biocatalysts such as enzymes for food and feed preparations,
cleaning products, textile processing and other industrial processes. Bioprocessing is
another growth area which can be applied in the production of biomaterials such as
bioplastics, biofuel, specialty chemicals such as cosmetics ingredients and electronic
chemicals. The third growth area is contract biomanufacturing.

Target sectors :
Bio-manufacturing applies to the development of bio materials, enzymes
(biocatalysis), bio fuel, microbes technologies, biomass, bio-degradable plastics,
oleochemicals, bio-process engineering, fermentation, green chemistry and contract
manufacturing.


Bioinformatics and the Target Sectors

Bioinformatics is developed with the convergence of ICT and biotechnology.

The system provides an important support function to avoid information congestion
and to gather, store, classify, analyse and distribute biological information derived
from gene sequencing as well as functional analysis of research projects. In addition
to being a new source of growth, bioinformatics is making a significant contribution
towards discoveries and product development. Strategic initiatives will be rolled out
for bioinformatics and grid computing to support the country’s biotechnology
development.

Target sectors
Bioinformatics involves in the application of information and communication
technology (ICT) and grid computing in the field of sequence alignment, gene finding,
genome assembly, protein structure alignment, protein structure prediction, prediction
of gene expression and protein-protein interactions, modeling of evolution and bio
chip development etc.
Source :
Ninth Malaysia Plan 2006-2010
Malaysian Biotechnology Information Centre, www.bic.org.my


BIONEXUS INVESTMENT (USD MILLION)

Total investment from 42 companies with BioNexus status between 2005-2007
amounted to USD 246 million with segregation as stated below :

 Healthcare                   USD 67.89 million
 Agriculture                  USD 83.42 million
 Industrial                   USD 91.31 million
 Bioinformatics                USD 3.42 million
 Total                         USD 246 million

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Collaborations and partnerships continue to be strengthened with key learning and
market centers such as United States, South America, United Kingdom, France,
Germany, India, China, South Korea and Japan.

Among the type of products/activities approved were :

•   Plant propagation through tissue culture
•   Animal breeding and reproduction technology
•   Biofertiliser and soil enhancer
•   Medical diagnostics and devices
•   Microbials and probiotics
•   Tissue and stem cell engineering
•   Contract research organization ; and
•   Bioinformatics

The significant projects approved were :

1) Stempeutics Research Malaysia Sdn Bhd, a company focusing on the research
   and development of regenerative medicine using human stem cell technology,
   with a proposed investment of approximately USD 1.63 million.

2) Malaysian Agri Hi-Tech Sdn Bhd, a company involved in R&D and
   commercialization of microbial-based products for application in the agricultural
   sector and environmental care with an approved investment of USD 2.1 million.

3) Profound Vaccine Sdn Bhd, a company involved in the production and
   commercialization of a spray-based intranasal vaccine against Pneumonia
   Pasteurellosis disease in sheep and goats, with an investment of USD 0.7 million.

4) GENERTI Biosystems Sdn Bhd, involved in design, development, fabrication and
   validation of molecular diagnostic kits for the screening and diagnosis of human
   genetic diseases that are expressed in blood with a proposed investment of USD
   2.6 million.

Source :
Malaysia – Performance of The Manufacturing And Services Sectors 2007 - MIDA)
The Biotech Review 2005-2007 (Malaysian Biotechnology Corporation)


INCENTIVES
Tax Incentives

BioNexus status companies may apply for the following tax incentives from the
Malaysian Government :

1. 100% income tax exemption for 10 years commencing from the first year the
company derives profit or Investment Tax Allowance of 100% on the qualifying
capital expenditure incurred within a period of 5 years


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2. Tax exemption on dividends distributed by a BioNexus company

3. Exemption of import duty and sales tax on raw materials/components and
machinery/equipment

4. Double deduction on expenditure incurred for R&D

5. Double deduction on expenditure incurred for the promotion of exports

6. A company that invests in its subsidiary, which is a BioNexus Status company, is
granted tax deduction equivalent to the amount of investment made in that subsidiary
provided that the investing company owns at least 70% of that subsidiary

7. A BioNexus company is given concessionary tax rate of 20% on income from
qualifying activities for 10 years upon the expiry of the tax exemption period

8. A company or an individual investing in a BioNexus company is given a tax
deduction equivalent to total investment made in seed capital and early stage
financing

9. A BioNexus company undertaking merger and acquisition with a biotechnology
company is given exemption of stamp duty and real property gains tax within a period
of 5 years until 31 December 2011

10. Buildings used solely for the purpose of biotechnology research activities is given
Industrial Building Allowance over a period of 10 years

Source : Malaysian Biotechnology Corporation, www.biotechcorp.com.my


SOURCES OF FUNDING

Various funding alternatives are offered to local and foreign investors who are keen
to develop biotechnology related businesses in Malaysia.

Listed below are the various sources of funding and the application stage :

             Agency                                  Fund                      Stage

Cradel Fund Sdn Bhd                  • Cradle Investment                  Pre-seed / Idea
www.cradle.com.my                    Programme

Malaysian Technology                 • Commercialisation of R&D           Seed to
Development Corporation              Fund                                 expansion
(MTDC)                               • Technology Acquisition
www.mtdc.com.my                      Fund
                                     • Non-ICT Fund



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MLSCF                               • Malaysian Life Sciences            Early
www.mlscf.com                       Capital Fund (MLSCF)

BiotechCorp                         • Seed Fund                          Seed / Early
www.biotechcorp.com.my              • Research & Development
                                    Matching Fund
                                    • International Business
                                    Development Matching Fund

In terms of funds from BiotechCorp, BioNexus status companies can apply for
Commercialisation Grants as follows :

•   Seed funding of up to USD 0.6 million ;
•   R&D Matching Grant of up to USD 0.3 million ;
•   International Business Development Matching Grant of up to USD 0.3 million.

As for Malaysian Life Sciences Capital Fund, it targets more on the agriculture,
industrial and healthcare biotechnology sectors. So far, the fund has benefited the
biofuels, bioprocessing and health care markets.


INTERNATIONAL ALLIANCES

Broader efforts in building international alliances in Agriculture Biotechnology
continue to be expanded through investment forums and stakeholder meetings with
leading life sciences and biotechnology companies in the United States, Germany
and India.

In Healthcare Biotechnology, BiotechCorp built partnerships with established biotech
clusters in Kobe, Japan; and London, Cambridge and Oxford, UK – to promote
manufacturing capabilities from Malaysia for the Japan cluster; and collaboration in
R&D and potential platform technology acquisition for the UK cluster. This effort is a
start of similar partnerships planned with established biotech clusters from United
States and Europe.

In underscoring Malaysia’s value proposition in Healthcare Biotechnology,
BiotechCorp conducted content specific roadshows with pharmaceutical multinational
companies in the United States, Argentina, United Kingdom, Brussels, France and
India.

Efforts for initial collaboration in Industrial Biotechnology were largely centered on
biofuel, biopolymer and biofertilizer projects with Singapore, India, Sri Lanka, China
and Brazil. Early discussions centered on investment, commercialization and funding
requirements.

Source : The Biotech Review 2005-2007 (Malaysian Biotechnology Corporation)



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FOREIGN TECHNOLOGY ACQUISITION

In the area of nanotechnology, BiotechCorp has acquired a technology platform from
NANOBIOTIX of France. Further technology assessment is being conducted on the
platform to realize the multiplier effect and commercialise the developments. The
acquisition will enable various applications in the area of healthcare, environment,
agriculture, food and cosmetic. In human capital development, NANOBIOTIX will also
play a role by bringing three researchers from Malaysia who will be selected based
on their competency to work with the company for a short period to gain know-how
and experience on the applications to be developed.

OUTLOOK FOR 2009

The country’s budget allocation of almost USD 4 billion (to enhance healthcare) for
2009 will see a boost to the healthcare biotechnology sector – which includes
increasing the supply of machines, intensifying research and enforcement of
activities.

Significant projects in healthcare biotechnology which will intensify in 2009 include :
• Development of a contract manufacturing facility by Trusgen, USA.
• Development of the Malacca BioCity, by Actis Biologics, USA.
• Development of an integrated biotech facility by Vivo Bio Tech, India.

Further breakthroughs are expected in agriculture and industrial biotechnology in line
with the Government emphasis especially in biofuel and palm biomass, whilst not
forgetting the mapping out of the oil palm genome by BioNexus company : ACGT
(Asiatic Centre for Genome Technology).

Significant industry development effort led by Biotechcorp, expected to escalate in
2009 include :
• Post harvest processing technology by ABCAR Asia & ABCAR, France.
• Biofuel production technology by BioNexus company Success Nexus & Merloni
Progetti, Italy
• Industrial enzyme production by Insect Biotech, Korea

Source : Malaysian Biotechnology Corporation, www.biotechcorp.com.my


SOURCES OF INFORMATION

Malaysian Biotechnology Corporation, www.biotechcorp.com.my

9th Malaysia Plan 2006-2010 (Economic Planning Unit), www.epu.jpm.my

Malaysian Industrial Development Authority (Chemical & Life Sciences Industry
Division), www.mida.gov.my

Performance Of The Manufacturing And Services Sectors 2007, www.mida.gov.my
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