Beyond Borders: Global biotechnology report 2010

Malaysia year in review
A strategic focus on biotech
Malaysia’s budding biotechnology industry
has been a key strategic focus for the
nation’s policy-makers and business
community in recent years. Like many
emerging markets, its strategy has often
hinged on leveraging areas of competitive
advantage, such as its extraordinarily rich
biodiversity. These strategic investments
continued in 2009.
Government investment
The Malaysian Government has allocated
RM 2 billion (US$571.4 million) under the
Ninth Malaysian Plan (2006–10) to fund
the development of the industry. Between
the launch of the National Biotechnology
Policy (NBP) in 2005 and late 2009, the
Government estimates that the industry
has received cumulative investments of
RM 4.5 billion (US$1.3 billion), of which
58% came from the Government and the
remainder from the private sector. The
industry continues to attract strategic
investments, with the Government
allocating RM 1.3 billion (US$371.1
million) for biotechnology development
under the First and Second Stimulus
Packages in 2008 and 2009.
Malaysian Biotechnology Corporation
(BiotechCorp, the lead agency responsible
for implementing the NBP) estimates
that the number of biotech companies
has increased threefold since 2005, with
41% of existing companies involved in
agricultural biotechnology (reflecting
the country’s traditional strengths in
agriculture), followed by 38% in medical
biotechnology and the remaining 21% in
industrial biotechnology.
Sustainable funding
It is no secret that bringing biotechnology
products to market is a long, expensive
and high-risk process. In the West, there
has traditionally been a thriving ecosystem
of investors that provide multiple rounds
of funding as companies move along the
biotechnology industry value chain. In
Malaysia, however, existing private funds for
biotechnology are inadequate to meet the
developmental goals set out in the NBP.
While there are approximately 38 VCs
that identify biotechnology as one of
their focus investment areas, only two
firms — SpringHill BioVentures and First
Floor Capital — have invested actively in
biotech companies. In total, the VCs have
invested close to RM 251 million (US$71.7
million) in life sciences during the last
three years (2006–08), but life sciences
50 Beyond borders Global biotechnology report 2010
investments as a share of investment
across all industries declined from 24% in
2006 to 18% in 2008. Furthermore, only
31% (US$22.6 million or RM 79 million) of
the investment between 2006 and 2008
went to Malaysian companies. Attracting
venture capital clearly remains a challenge
for Malaysian biotech companies. And this
is especially so when it comes to secondround
funding for pre-commercialization
and commercialization activities.
The Government is attempting to increase
investor confidence and attract greater
private-funding participation. This includes
continuing to allocate funds for soft loans
and proposing a new venture fund that
would aim to attract greater participation of
foreign VCs specializing in biotechnology.
Deals
In late 2008 and early 2009, Malaysia’s
Holista Biotech acquired CollTech Australia,
a Perth-based company listed on the
Australian Stock Exchange, through a
reverse takeover. As part of the transaction,
CollTech issued 770 million shares to
Holista, giving Holista shareholders about
70% of the voting rights in CollTech and
making Holista a subsidiary of CollTech. The
two companies have strong synergies on the
product front — CollTech specializes in ovine
collagen products, and Holista focuses on
natural products such as collagen.
BiotechCorp spearheaded the acquisition
of four platform technologies with the
intention of boosting innovation: two
platform technologies acquired for health
care, the nanotechnology platform from
Nanobiotix and the DotScan antibody
microarray diagnostic platform technology
from Medsaic; the Marker Assisted Selection