HKSTP Biotech InitiativeHKSTP Mini-White Paper Proposal

Report January 2003

Presentation to HKSTP Board of Directors January 15, 2004

Table of Content• Background• The Assignment• The Process• Basic Conditions for a Biotech Cluster• Analysis of Conditions in Hong Kong• Conclusion• Recommendations• Roadmap

Medicon Valley

Satellite photo to be inserted

Medicon Valley3 million people

7 universities

11 university hospitals

6 science parks

71 pharma co’s

110 biotech co’s

125 medtech co’s

20,000 students

The Cluster Network Organisation for Medicon

Valley

In 1997, Medicon Valley Academy began as a university project supported by the European Community

In 2000, Medicon Valley Academy turned into a private, non for profit, member based organisation

In 2003, Medicon Valley Academy has attracted more than 250 members including universities, hospitals and industry

Vision

Create Europe's most attractive bioregion by 2005

Focus areas 2003-04

Create networks within areas of strengths

Provide infrastructure for a regional knowledge platform

Improve technology transfer mechanisms

Strategic information and communication

Knowledge on Knowledge

Create – T

ransfe

r - E

xploit

Development re. Biotech Companies

Development re. Operating VC Funds

0

5

10

15

20

25

30

35

40

1990 1992 1994 1996 1998 2000

A M

atur

e Bio

tech

Clu

ster

The Assignment From HKSTP

Analyse the general and specific conditions in Hong Kong for establishing a successful biotech cluster, including a biotech industry, and thereby position Hong Kong in the long term as a leading biotechnology hub in Asia

Value from Cluster Formation

ConceptionFormation

GrowthMaturity

Knowledge Creation Technology Transfer

CommercialisationClusters & Networks

Industry R & D

Public & PrivateFunding

Universities &Research Institutions

Patents &Licences

Proof of ConceptTesting

Incubation/Research Parks

Venture Capital

Clinical Trials

Collaboration/Partnerships

RegulatoryApproval

Business Planning

Job Creation

IPOs /gazellesLabour MarketProduct Pipeline

Economicsof Scale

RegulatoryEnvironment

M&A Activity

IndustryPartnerships

Basic Conditions for a Biotech Cluster

Research Funding Human ResourcesExcellence in Research

Build-in IncentivesEntrepreneurship

and Creativity

ExperiencedManagement

SufficientRisk Capital

Efficient Tech Transfer

General BusinessConditions

Excellence inBusiness Plans

Biotech ClusterFormation

Academic Institutions

Industry and Capital Market

GovernmentSupport

Research to Business Food Chain

Upstream

Midstream

Downstream

General Conditions for High-Tech in Hong Kong

• World class brand• Excellent infrastructure, sophisticated support

systems and limited geography• International airport and transportation systems

convenient• Bilingual society – international business outlook• Entrepreneurial spirit• Low personal and corporate taxes• International top level education system• Legal system and protection of IP well reputed • The mainland China market, CEPA

Biomedical Science Strength

0

500

1000

1500

2000

1997 1998 1999 2000 2001 2002

Bas

ic p

aper

s pe

r ye

ar (

reta

ined

) MV

CB

OX

EH

HK

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

HK

MV

EH

OX

CB

% PIC 1 % PIC 2 % PIC 3 % PIC 4

Biomedical Science Strength

0

100

200

300

400

1997 1998 1999 2000 2001 2002

Bas

ic p

aper

s pe

r ye

ar

UHK

CHU

UST

HPU

HBU

CUH

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

HBU

CUH

HPU

CHU

UHK

UST

%PIC 1 %PIC 2 %PIC 3 %PIC 4

Prominent Biomedical Research Areas

• Genetics , incl. genetic-related bioinformatics

• Cancer research• Endocrinology (incl. diabetes)• Molecular neuroscience• Organic chemistry• Virology/vaccines, immunology/allergy,

developmental biology, cardio-vascular research

Hong Kong and Mainland China

0

250

500

750

1000

1250

1500

UHK CHU BEI UST FUD THB QMH PEK HPU PWH SYS ZSG MMG HBU CUH SJT GUZ SHA

BEI Beijing UniversityFUD Fudan University, ShanghaiGUZ Guangzhou UniversityMMG First Military Medical College, GuangzhouPEK Peking Union Medical College

SHA Shantou UniversitySJT Shanghai Jiao Tong UniversitySYS Sun Yat Sen University, GuangzhouTHB Tsing Hua University, BeijingZSG Zhongshan University, Guangzhou

Hong Kong and Mainland China

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

FUD

SYS

BEI

CHU

UHK

UST

%PIC 1 %PIC 2 %PIC 3 %PIC 4

0

50

100

150

200

250

300

350

1997 1998 1999 2000 2001 2002

Pap

ers

per

year

UHK

CHU

BEI

FUD

THB

University Trained Resources

2002 / 2003

0

500

1.000

1.500

2.000

2.500

3.000

3.500

Medicine Dentistry Health BioSciences

Academic Category

Stu

de

nt

He

ad

co

un

t (

FT

+P

T )

Other

City-U

Poly-U

HKBU

UST

CUHK

HKU

Human Resources Abroad

Most important factors when considering going back to China

4%

8%

29%

13%

21%

8%

4% 4%

8%

0%

5%

10%

15%

20%

25%

30%

35%

Salary The cityyou w ork

in

Thereputation

of theinstitute orcompany

Job title orposition

Theconditionof yourw orking

place

Theconditionof your

living place

A friendlyw orking

team

A niceboss

Others

Bridging Research and Commercialisation

Idea Business

CommercialViability

Patenting

Product Development

Clinical Trials

DistributionM

arketing & Sales

Design &

Production

Market Survey

Business Plan

Investors

Project Management

Academics in Hong Kong and Biotech Commercialisation

• High degree of entrepreneurial spirit• Especially young scientists are positive• Lack of knowledge on how• Only some universities offer courses• TTOs not perceived as pro-active• TTOs are understaffed and under skilled

Trends for Biotech Start-ups and Biotech IPOs

0

1

2

3

4

5

6

7

1998 1999 2000 2001 2002 2003

Year

Num

ber

Active startups withsignificant R&D in HK

IPOs with significantR&D in HK or China

IPOs with significantR&D in HK

IPOs with significantR&D in China

* Excluding TCM companies

Trends of Biotech Startups and IPOs on GEM Board *

Fundamentals for Attracting Private Risk Capital to Biotech

Co’s has Not Changed 1. World class research

and know how

2. Strong intellectual

property

4. Ability to attract

strong management

3. Large unsatisfied

markets

Integrated technical,

commercial, people &

financial strategy

Private Venture Capital for Biotech in Hong Kong

Number of Biotech Projects/Companies Received Fundings in HK during 1998-2003 *

0

100

200

300

400

500

600

700

800

900

Idea (RGC) Proof of Concept orSeed (ITF & JC)

Series A/B (VC &ARF)

GEM Board IPOs #

Stages of Development

HK

$ (M

)

0

100

200

300

400

500

600

Num

ber

Total Investment

Number ofProjects/Companies

# Excluding CK Life Sciences' HK$2.6 B for simplicity of analysis

* Excluding TCM projects/companies

Summary of Analysis

General conditions for high-tech

Biomedical research

University trained resources

Attitudes to commercialisation

Human resources abroad

Technology transfer

Biotech industry and business exec.

Private venture capital for biotech

Overall Conclusion 

Hong Kong can establish a biotech cluster

 Our overall conclusion is that, if Hong Kong wishes to do so, it can now establish a biotech cluster that includes a biotech industry. We also conclude that it should be done now rather than later so that Hong Kong does not lose the lead it has over several potential competitors.

Recommendation 1 Organise the cluster

CEO and Staff

Board of Directors

GovernmentO rganisations

U niversities Hospitals I ndustry

Medicon Valley Academy Board

Medicon Valley’s International Profile

Recommendation 2Improve Total Technology

Management

G & AF in a n ce

I TA dm in is tra tio n

M arketingT e ch n o lo gy D a ta ba s e

W e b- s ite po rta lP ro m o tio n

Em beddedTechnology O ffi cerC o m m e rc ia l P o te n tia l

E n tre pre n e u ria l C o u rs e s

Em beddedTechnology O ffi cerC o m m e rc ia l P o te n tia l

E n tre pre n e u ria l C o u rs e s

Em beddedTechnology O ffi cerC o m m e rc ia l P o te n tia l

E n tre pre n e u ria l C o u rs e s

Em beddedTechnology O ffi cerC o m m e rc ia l P o te n tia l

E n tre pre n e u ria l C o u rs e s

Em beddedTechnology O ffi cerC o m m e rc ia l P o te n tia l

E n tre pre n e u ria l C o u rs e s

Em beddedTechnology O ffi cerC o m m e rc ia l P o te n tia l

E n tre pre n e u ria l C o u rs e s

Com m ercial ProjectsP ro je ct M a n a ge rs

Special SupportM a rke t A n a lys is

L e ga lI n te lle ctu a l P ro pe rty P ro te ctio n

CEO

Board of D irectors

Pre-seed/ Seed Fund

CEO

Board of D irectors

Recommendation 3Improve Funding for New Biotech

Businesses• Establish a new pre-seed/seed fund• Collaborate closely with the TTM organisation• Provide funding for HK university biomedical

research• Provide funding for biomedical research

pulled in from abroad• Bridge to private venture capital funds • Build an international biotech executive

network together with TTM organisation

Recommendation 4 Improve Collaboration Between

Research and Industry

• Top quality entrepreneurship courses and seminars

• Shared research positions university/industry

• Joint Ph.D program university/industry

Recommendation 5Instigate Regional Business Plans

1. Develop a set of regional business plans which cover

• the prominent research areas in HK• pull potential from abroad

2. Analyse potential in shared production plant for therapeutics

Recommendation 6Amplifying the Effect of CEPA

• Reform the regulatory system

• Upgrade GMP standards

• Contact China SFDA for authorisation of CTC

Recommendation 7Stimulate the Biomedical Research

Pipeline• Implement ten Strategic Biomedical

Research Programmes• Implement twenty Excellent Young Scientists

Programmes• Fund additional modern technology services• Increase RGC funding of biomedical research• Develop a high quality web-based HK

biomedical database

Roadmap for a Biotech Cluster

Key Milestone Activities Year 1

New biotech cluster fully operational

Start -up decisions by the HKSTP Board

1. Decide to establish a cluster network organisation with an initial budget of HKD 25 million

2. Decide to establish a TTM organisation with an initial budget of HKD 50 million

3. Take follow up actions, including hiring of CEO’s for the two organisations

4. Put together boards of the two organisations in coordination with key stakeholders

5. Start strategy work to establish interim mission & vision of cluster network organisation and cluster, respectively

6. Initiate regional business plan project based on prominent research areas with an initial budget of HKD 10 million (to be taken over by TTM organisation)

Year 2 Year 4Year 3

Completion of milestone

Key activities for cluster network organisation

1. Establish the long-term vision & mission and decide on a biotech branding and promotional concept for HK, incl. web-portal

2. Decide on the first annual operational plan3. Drive the implementation of the proposed

biotech pre-seed/seed fund4. Drive the proposed improvements of the HK

regulatory system5. Drive the proposed China SFDA contacts for

approval of HK CTC

IMMEDIATE ACTIVITIES

SHORT-TERM ACTIVITIES

Roadmap for a Biotech ClusterKey Milestone Activities Year 1

New biotech cluster fully operational

Follow-up activities by the TTM organisation and pre-seed/seed fund management

1. Initiate establishment of international biotech executive network

2. Implement entrepreneur courses and seminars in collaboration with universities

Follow-up activities by the joint network organisation

1. Develop biotech cluster relationship with the relevant authorities in PRD

Follow-up activities by cluster network org. in collaboration with other stakeholders

1. Introduce shared research positions equally sponsored by university/industry

2.Drive the proposed implementation of “Strategic Research Programmes”3.Drive the proposed implementation of “Excellent Young Scientist Programme” 4.Drive the implementation of the proposed provision of joint tech service facilities and

post-graduate places and post-doc positions5.Establish a high quality, web-based biomedical research group database for Hong Kong

Year 2 Year 4Year 3

Completion of milestone

SHORT-TERM ACTIVITIES (cont.)

MID- TO LONG-TERM ACTIVITIES

Follow-up decisions by TTM organisation in coordination with others

1. Individual agreements with universities on embedded tech transfer officers and guidelines for collaboration with universities

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