by Professor Albert Cheung-Hoi Yu, Ph. D.
Chairman, Hong Kong Biotechnology Organization; Vice Director of the Neuroscience Research Institute, Peking University, Department of Neurobiology, Peking University Health Science Center; Chief of the Laboratory of Translational Medicine, Institute of Systems Biomedicine, Peking University; and Chairman and Chief Executive Officer of Haikang Life Corporation Limited.
Email: achy@haikanglife.com; achy@hsc.pku.edu.cn; achy@hkbio.org.hk

The biotechnology industry has been growing steadily since the first biotech startups in the 1970s. Nevertheless, biotech research and development (R&D) is high risk and capital intensive, and the recent global financial crisis has caused a major decrease in biotech investment in the US and Europe, dropping from 29 billion USD in 2008 to 22 billion in 2010. The biotech sector of Asia, however, was able to weather the storm. In fact, the Chinese life sciences industry had its strongest year ever in 2010, with venture capital investments, initial public offerings, merger and acquisition deals and government funding all reaching new highs. Venture capital investment in China life sciences exceeded 1 billion USD for the first time in 2010, a three-fold increase from 2009. Two-thirds of this funding was allocated to biopharmaceutical enterprises and the remainder was split between service and medical device companies. The drug market in China is expected to continue its rapid growth. Sales totaled 33 billion USD in 2007, increased to 61 billion USD in 2010, and are predicted to reach 126 billion USD by 2015. Hong Kong is the largest provider of both direct foreign investment and direct overseas investment into mainland China, accounting for 51% (46 billion USD) and 63% (35.6 billion USD), respectively in 2009.

The current economy of Hong Kong is highly reliant on the service sector, which accounts for 92% of the total GDP. The financial, trading and logistics industries, in particular, make up 50% of the GDP and 30% of the employment. The Hong Kong government, recognizing the need to expand and diversify the economic base, has identified six new key industries to ensure the continual growth of the region and advance the development of Hong Kong’s knowledge-based economy. These key industries are: testing and certification, medical services, innovation and technology, environmental industry, education services and culture and creative industries. Biotechnology, being closely linked to the first five of these initiatives, has tremendous potential to revolutionize Hong Kong’s future. The biotechnology sector offers remarkable opportunities for local and national development, such as certification services, pharmacogenomics, medical surveillance and diagnostics, environmental monitoring and sustainability, food security through increased agricultural production and yield, and the manufacture of medical devices. Biotech will also play an important role in bringing Traditional Chinese Medicine into the mainstream, providing accreditation and improving the standardization of this important resource. Biotech can deliver employment generation, intellectual wealth creation, expanded entrepreneurial opportunities and augmented industrial growth.

Mainland Support

The Five-Year Plans (FYPs) of the People’s Republic of China are a series of economic and social development guidelines, strategies and indicators that have catapulted China’s economy to the second largest in the world. The Twelfth FYP (2011–2015) includes an entire chapter on Hong Kong and Macau, emphasizing Hong Kong’s role as a center of international finance and supporting Hong Kong’s six priority industries. The Plan also deepens the economic co-operation between Hong Kong and mainland China through the “Framework Agreement on Hong Kong/Guangdong Co-operation” and continues the implementation of the Closer Economic Partnership Arrangement (CEPA), a free trade agreement in place since 2003. The good news for the biotech sector is that the government has committed to spending 2.2% of the GDP on R&D by 2015 and to turn coastal regions from the “world’s factory” into hubs of R&D and high-end manufacturing. The latest FYP also continues to identify biopharmaceuticals as one of the seven strategic emerging industries and the government expects to invest 40 billion RMB in this industry over the five-year period.

Joint Programs

Financing and jobs are flowing freely between mainland China and Hong Kong, fully supported by the Central Government and the Government of the Hong Kong Special Administrative Region. The CEPA agreement has been joined by the Mainland and Hong Kong Science and Technology Co-operation Committee, the Guangdong / Hong Kong Technology Cooperation Funding Scheme and the Shenzhen / Hong Kong Innovation Circle to promote cooperation. In fact, Hong Kong companies provide employment to over 11 million mainland Chinese in the Pearl River delta region.

Hong Kong Initiatives

Biotechnology in Hong Kong is an emerging sector with steady growth and is receiving increasing support and recognition from the Hong Kong government, which established the Innovation and Technology Commission (ITC) in 1999 to promote the advancement of Hong Kong’s innovation and technology. The ITC developed the Innovation and Technology Fund, which has financed almost 2500 biotechnology-related projects, amounting to a total investment of almost 6 billion HKD, since its establishment. There are about 300 biotech companies in Hong Kong, 70 of which are listed on the Hong Kong Stock Exchange and Growth Enterprise Market. Forty biotech companies have set up their R&D centers in the Hong Kong Science and Technology Park and its Industrial Estates. They include medical biotechnology, plant biotechnology, Traditional Chinese Medicine, food and agriculture, and veterinary biotechnology ventures.

To coordinate the various academic, industrial and government aspects of the Hong Kong biotech business, an independent non-profit organization, the Hong Kong Biotechnology Organization (HKBIO) was established. HKBIO was founded by reputable industry and esteemed academic representatives, supported by academicians, government and industry leaders. HKBIO acts as a platform to encourage and advance biotechnology in Hong Kong, endorse Hong Kong as the biotech hub of Asia and promote the advanced biotech services and products of Hong Kong to local, mainland and global markets.

The initiatives taken by HKBIO to promote the growth of the biotech sector in Hong Kong have allowed local biotech industry players to gain better ideas on global trends as well as given international biotech companies a valuable opportunity to better understand biotech development in Hong Kong and Asia. The organization has facilitated future collaborations, created new jobs and spurred further technological developments in biotech on a local and global scale. Promoting Hong Kong as a biotech hub in Asia has also attracted international talent to join the local industry and enhanced the qualifications and experience of Hong Kong’s biotech manpower. The basis for Hong Kong’s top performance in innovation is the intensified teamwork and exchange of knowledge within a network of institutes, universities and private companies and a highly qualified multilingual workforce. This transfer of knowledge and ideas takes place mostly through personal relationships among researchers, and HKBIO has cultivated and enhanced these relationships. HKBIO strives to continuously drive the development of the biotech industry in Hong Kong through elevated exposure of the local biotech industry to the international biotech scene and facilitation of the exchange of knowledge and experience among scientists and biotech entrepreneurs on a global scale.

In just the past year, HKBIO has organized and sponsored a number of very successful events that highlighted the substantial potential of Hong Kong biotechnology. The activities included: i) a delegation to Copenhagen, Denmark, to promote Hong Kong’s technology industry development as a whole and Phase III of the Hong Kong Science and Technology Park in particular; ii) a meeting with the Wuhan Delegation of the East Lake Hi-Tech Development Zone to explore the possibilities of collaboration and mutual communication; iii) participation in the Biomedical Engineering Roadshow at Jinan University, South China University of Technology and Sun Yat-Sen University, Guangzhou; iv) international collaboration discussions with the British Consulate-General of Hong Kong and the Cabinet Secretary for Education and Lifelong Learning of the Scottish Government; v) a Zhanjiang Exchange Tour, which provided a platform to facilitate communication and knowledge exchange, and discuss future collaboration and development of technology, between Zhanjiang and Hong Kong; vi) leading the Hong Kong delegation to the BIO2010 International Convention in the USA, the largest global event for the biotech industry which showcased to an international audience how Hong Kong’s technology, products and services supply the world; and vii) organizing a Hong Kong Sector for the Hong Kong delegates to present at the BioBusiness Asia Conference 2011 in Taiwan, where Hong Kong participated in this important international conference for the first time. HKBIO is extremely grateful to its members, sponsors and the Government of Hong Kong, especially the ITC and the Trade and Industry Department, for their continuing support. HKBIO will continue to promote and encourage all aspects of biotechnology in Hong Kong and support collaboration with China and cooperation with international organizations.

Positioned as a bridge between mainland China and the international market, Hong Kong possesses unique competitive advantages and currently has an exclusive opportunity to become Asia’s biotech hub and promotional center. With world-class talents, extensive technology for offering testing and authentication services and products, experience in commercializing new and innovative technology for industrial application, branding and marketing, highly reputable quality control and assurance, an established legal framework for intellectual property and accounting standards and a sound financial and banking system with an excellent fund raising platform, the future of biotech in Hong Kong is very bright.