IKD Workshop 1820th November, 2005

1
Financial Incentives, Innovation and New
Technologies Lessons from Biotechnology Policy
in Singapore and India Sachin Chaturvedi
IKD Workshop 18-20th November, 2005
2
Structure of the Presentation   Dynamics of NIS
and Emergence of NSBI The Framework of
NSBI Biotechnology Strategy for Economic
Development Singapore NSBI and
Singapore Challenges in India Recommendation
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Economic Development and New Technologies Case
of Biotechnology
- Health and Pharmaceutical Sector - Agricultura
l Technology
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• NIS and NSBI
• In National Innovation System (NIS), the role
  of country specific institutional framework in
  light of technological capabilities has been
  discussed at length
• The analysis of innovation system in light of
  emerging technologies is a rather new
  phenomenon.
• Bartholomew (1997) and Senker (2001) have
  attempted to analyze such an innovation system
  for biotechnology.
• Contours for a National System of
  Biotechnology Innovation (NSBI) have been
  developed and defined but for developed
  economies.

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NIS and NSBI Since the late nineties
developing countries have also entered in
biotechnology in an important way. Therefore
NSBI for developing countries may help other
developing countries to draw policy insights
from these experiences. Developing countries
are viewing biotechnology as a panacea for
economic growth. Thus a large number of these
countries are making strides in various sectors
and are making efforts for development of this
technology
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Singapore in the Field of Biotechnology
One of the most aggressive in Asia is Singapore
biotechnology industrys growth target is 6
per cent. Invested about US 20 billion in
research and industrial parks as against US 15
billion by South Korea and US 13 billion by
Taiwan. Unlike its earlier technology policies,
Singapore now supports GRIs to a great
extent. Start-up companies from Singapore are
now eligible for access to a US 20 million
government fund set up exclusively to promote
bio-industry.
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(No Transcript)
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Flow of Knowledge
National Funding of Basic Research EDB
allocated US 600 million to attract leading
international companies to conduct RD
(Biomedical Science Investment Fund)
Formation of Singapore BioInnovations (SBI)
with investment commitments of US 21 billion
for 13 new companies. SBI invested in 3
European 5 Asian 15 US based companies
(Venture Capital Fund)
9
Flow of Knowledge
National Tradition of Scientific
Education Promotion of CROs - rich database of
patients with Chinese Malaya and Indian origin
(Asian CRO market 800 million) Eli Lilly and
National University of Singapore alliance for
clinical research Covance Quintiles
Transnationals Open policy to allow skilled
manpower in biomedical sector Training in
Biotechnology Scheme (TIBS) Short term courses
(3 months, etc.)
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Graduate Students
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• Close Cooperation with Firms
• Financial assistance
• Technology support
• Recently ES Cell International Stem cell
  research (6 of the 64 lines)

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• Stock of Knowledge in Institutes
• Growing RD Allocation for institutional research
• Institutional Flexibility
• Linkages with Foreign Research Institutions

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Growing RD Allocation for institutional research
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Institutional Flexibility   Overcoming
Institutional Inertia Utility and Contribution
of RIs Institute of Molecular Agro-biology
with IMCB Institutional Innovation for
International Excellence(saving from
Institutional Drag or Institutional
Sclerosis) Kent Ridge Digital Lab (KRDL)
Information Technology Institute Institute for
Systems Science Emerged as most dynamic software
lab in Asia with 10 spin offs Launching of New
courses at Universities
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Institutional Flexibility National Economic
Priorities and Matching University Education
Programmes Year Area of Development University
Developments Key National Development 1999 Technop
reneurship NUS A Minor Programme in The US 1
billion technopreneurship Technopremeurship was
Investment Fund was launched to
spur introduced at the under- the development
of the venture capital graduate and graduate
levels. Industry in Singapore NUS Another new
course called Consulting Practicum for High
Tech start-up that allowed students to
under-take research/business strategy. Contd.

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Institutional Flexibility National Economic
Priorities and Matching University Education
Programmes Year Area of Development University
Developments Key National Development 1999- Biomed
ical Sciences NUS New courses introduced 62
million Singapore Genomics 2000 in the year to
train specialized Programme (SGP) S 2 billion
manpower for the workforce investments such
as Master in Pharmacy (Clinical
Pharmacy) Graduate Diploma in
Psychotherapy in Basic
Ultrasonography NTU To establish 465
mill. College of Life Sciences Source
Development Bank of Japan, August 2001
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Linkages with Foreign Research Institutions Pre
ssure for International Publications Over 800
papers from Singapore in five years   Establish
ment of International Molecular Biology Network
Working on Fugu fish genome project. It is on
line of European Molecular Biology
Organization   Several Foreign
Universities/Institutes JHS/Molecular Science
Institute in Barkley etc.   Pressure for
Patents
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Patents Applied in 2000 902 in 1997
500 Patents Granted in 2000 285 in 1997 110
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• Stock of Knowledge in Specific Firms
•  
• Government Role in Technology Diffusion
• Inter-firm RD Cooperation
•  
• Utilization of Foreign Technology

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Share of BioMedical Science (BMS) Industry in
Manufacturing Sector of Singapore ----------------
--------------------------------------------------
--------------------------------------------------
- 2000 1999 Manufacturing BMS Share
Manufacturing BMS Share Sector
() Sector ()   Employment (No) 338,885 5300 1.5
6 338,885 5600 1.65 Output (SM) 130.24
6.4 4.76 133.57 6.2 4.64 Value Added
(SM) 27.52 5.2 18.53 34.92 5.2 14.89 Establishme
nt - - - 3928 36 0.9 Workers - - - 338885 5312 1.6
Direct Exports (000) - - - 85359764 709 8.31 ___
__________________________________________________
______________________________________ Source
Industry Statistics (2001) Economic Development
Board, Singapore. Note Figures are in billion.
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Strength of Indigenous Firms
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Case of Hepatitis B Vaccine in India
Shantha Biotech Bharat Biotech MNC Price of
dosage - - Rs. 150 (before 2003) Price of
dosage Rs. 32 Rs. 35 - (after 2003) Easy
availability, included in public vaccination
programme. No imports. Focus of local firms on
Polio.
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What happened to these Firms!
Pre proof of Concept Proof of
Concept Validation Pilot Stage of Testing and
Development Manufacturing
Small Business Innovation Research Initiatives
(SBIRI) Supports the high-risk
pre-proof-of-concept research and late stage
development in small and medium companies lead by
innovators SBIRI Phase I be treated as a grant
or equity as opposed to a soft loan SBIRI Phase
II, he suggests providing equity funds with
handholding, while creating leverage
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India Looms as RD Centre for the World
RD Expense 2005 2000 Pharmaceuticals 1,536.40 1.
80 Auto ancillaries 1,044.70 0.73 Electronics 2
14.8 1.04 Engg. Goods 314.4 0.61 Non-mineral
pdts 105.5 0.06 Food Beverages 90.2 0.09 Metals
137.8 0.17 Textiles 27.3 0.11 Total 4,024.10 0.28
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Policy Recommendation
  Singapore now has a new approach towards NIS.
A pro-active agenda for RD programmes,
facilitates successful emergence of a domestic
commercial sector. Factors other than RD
system role of public sector and public policy,
international relations, internal organization of
firms, their relations with other firms,
education system and financial system are
important. Evidence from Singapore reflects on
some of the other important determinants for
NSBI. Some economies may exhibit preference for
path dependency model when it comes to sectoral
specialization in a cost intensive frontier
technology like biotechnology. The
institutional emphasis on biomedical sector in
Singapore is a case in point. India and other
developing countries need to identify such areas
for specific policy intervention. Contd..
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Policy Recommendation
The sectoral approach of NSBI has also brought
a change in the concentration of
industry. Industrial locations in Singapore are
linked to a major university or a research
facility. This play an important role in
industrial development. Also helps in improving
the domestic science base and ultimately would
enhance its utility for domestic emerging
start-up firms in this sector. At times,
demand plays as much a stronger stimulator for
innovation than any other factor. It also has to
be acknowledged that there are limitations to the
success of leverage strategies. Fast product life
cycles and higher assimilation probability are
not true with an industry like biotechnology. Wi
der social objection and Demand identification is
the key challenge for policy makers.
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Considerations for Policy Thrust in India
States
Anadhra Pradesh
Karnataka
Maharashtra
Kerala
Punjab
Tamil Nadu
MP
HP
Areas
May 2001 Feb. 2001 Oct. 2001
Nov. 2003 March 2003 Sep. 2003
Oct. 2003 June 2001
Source RIS 2004