The latest figures for activity in the global biotech and pharmaceutical markets show that they are both in rude health, with some interesting locations emerging as significant successes.

According to data from fDi Markets, between January 2011 and January 2013 there were 154 FDI projects in the biotech industry with a total capital investment of $1.98bn. In the pharmaceutical sector there was a total capital investment of $8.31bn in 488 FDI projects over the same period.


Motivations for investment

Proximity to markets or customers was a key motive cited by biotech companies for 35.9% of projects. This was followed by industry cluster/critical mass and skilled workforce availability. For pharmaceutical companies, the main reason for investment was the domestic market’s growth potential, followed by skilled workforce availability and the regulatory or business climate.

Out of a total of 34 destination countries, for biotech firms the top five – the US, China, UK, India and Singapore – accounted for almost two-thirds of projects. Others that were highly rated include Spain, Germany, France, Ireland and the Netherlands.

It was a similar picture in the pharmaceutical sector: out of a total of 79 destination countries, the top five – the US, China, UK, Ireland and Spain – account for more than two-fifths of all projects, with India, Germany, Russia, France and Canada rated highly.

Recent biotech projects in the US include UK-based Oxyrane’s investment in a design, development and testing scheme in Burlington, Massachusetts. In the pharmaceutical sector, Australia-based Swisse Vitamins has established its North America headquarters in Chicago, Illinois, and plans to create 95 jobs this year. But there have been some notable shifts in investment and, while the US remains the most important destination, other countries are getting in on the act. 


Although Germany is not one of the top five destinations for FDI in the past couple of years, it exported pharmaceuticals worth €50.4bn ($64.7bn) in 2011. Gabriel Flemming, senior manager of healthcare at Germany Trade and Invest, told fDi: “Germany’s ‘bioregions’ act as platforms for industrial development, facilitating organic interaction between corporate and institutional actors. Each region boasts its own research capabilities, and a clear and defined commercial orientation. They also co-operate with each other as part of a network designed to harness their respective individual strengths. Germany boasts more than 30 industry-relevant clusters, the largest of them around Berlin, Munich, the Rhine Neckar triangle (Heidelberg), Frankfurt and Cologne.”


Scotland is one of the UK’s prime places for life sciences, with a community of around 650 organisations employing 32,000 people in the sector. It continues to attract investment including the European Lead Factory, a major new pharmaceutical drug discovery initiative centred at BioCity Scotland in Lanarkshire, in partnership with the University of Dundee. Life sciences companies are broadly distributed across Scotland and closely aligned with their research base, with favourite locations including Dundee, Glasgow, Lanarkshire, Edinburgh, Aberdeen and Inverness.

“We have a clear and focused life sciences strategy that aims to double the sector’s economic contribution to Scotland by 2020, and identifies key areas of strength, such as medical technology and diagnostics, pharmaceutical services, stem cell research and regenerative medicine,” says Rhona Allison, life science and chemical science director at Scottish Enterprise. “We also have the support of the Scottish government, world-leading academic institutions and the NHS in Scotland.”

Life sciences experts in Scotland work for the likes of Mölnlycke, Sigma Aldrich, BASF Pharma and Life Technologies. “That pool of talent is growing all the time with the ongoing development of talent through world-class universities. In fact, life sciences account for more than half of the funding in Scottish universities, and around 11,000 undergraduates and postgraduates are studying life sciences disciplines across the country,” says Ms Allison.


Singapore is proving to be popular for manufacturing, research and development, and locating headquarters. US-based Amgen has announced plans to build a $200m manufacturing facility in the city’s Tuas Biomedical Park area. “Singapore is an ideal location to further our manufacturing efforts based on its rich talent pool and friendly business environment,” says Madhu Balachandran, executive vice-president of operations at Amgen.

“It has become an attractive base for companies interested in accessing the pan-Asian market beyond China or India,” says Kevin Lai, director of biomedical sciences at the Economic Development Board of Singapore. “This is thanks to its reputation as a trusted, stable and convenient location. It is also one of the most connected Asian cities with excellent logistics and trade links. Companies are using Singapore as a hub to manufacture and distribute goods effectively into global markets, including Asia. For example, Novartis has invested more than $1bn to manufacture pharmaceuticals and eye care products in Singapore.”

“Singapore’s biomedical manufacturing output has increased almost fivefold from $6bn in 2000 to around $29bn in 2012,” says Mr Lai. “We have made significant inroads in biologics manufacturing, with Novartis, Baxter, Lonza, GSK and Roche announcing they are investing S$2.2bn [$1.8bn] in capital expenditure to set up major biologics facilities.”


India is also rapidly becoming a magnet for life sciences firms. In December 2012, Royal DSM opened a new Shared Services Centre in Hyderabad for the pharmaceuticals sector. The facility is the company's global financial transactions centre, including accounting services, and aims to employ 250 people by 2015.

According to Invest in India, the country’s biotech sector is growing steadily. It says: “Keeping up the growth momentum of previous years, the Indian biotech industry registered 18.5% growth in the 2012 financial year. The country’s pharmaceutical sector is also expecting to see good growth, with a compound annual growth rate of 14% to 17% between 2013 and 2016.”

The Indian government has issued criteria for the establishment of manufacturing zones under the national manufacturing policy. “Units located in the National Investment and Manufacturing Zones [NIMZs] will be exempt from capital gains tax on sale of plant and machinery,” says Invest in India. “NIMZs will be eligible for ‘viability gap funding’ – government support to make projects commercially viable – of up to 20% of the project cost.”

A number of life science location hot spots are now emerging in the country, with biotech parks and incubation centres established in Lucknow, Uttar Pradesh; and at the Alexandria Knowledge Park in Hyderabad, Andhra Pradesh. Other biotech incubation/pilot plant projects have been approved for Himachal Pradesh, Karnataka and Kerala.

There are 19 dedicated pharmaceutical special economic zones in India at various stages of development. These include Jawaharlal Nehru Pharma City in Visakhapatnam (Andhra Pradesh), Pharmez (Gujarat) developed by Zydus Infrastructure; and PhaEZ Park (Gujarat) developed by Cadila Pharma. Invest in India says the prime locations for pharmaceuticals are Gujarat, Maharashtra and Andhra Pradesh. Others favourites include Karnataka, Himachal Pradesh, Punjab, Madhya Pradesh and Tamil Nadu.