Global FDI in the biotechnology sector fell by 20% in 2011 – yet it remains highly sought after by locations keen to bolster their credentials as biotech hubs. The sector consists of companies in medical biotechnology, agricultural biotechnology and industrial biotechnology. Medical biotechnology accounts for the largest number of biotech companies in the US and in Europe. Competition is fierce for a dwindling pool in projects; how do the top competitors in this space compare? An fDiIntelligence evaluation sheds some light.
The US is the leading recipient of greenfield FDI projects in biotechnology between 2003 and 2011, according to data from greenfield investment monitor fDiMarkets, followed by the UK, China, India and Germany. Among the cities, Singapore has received the largest number of greenfield FDI projects in the biotechnology sector with 37 projects, followed by Shanghai (20), London (14), Bangalore (14) and Boston (13).
Quality and cost
The cities have been evaluated for their attractiveness for biotechnology FDI using location assessment tool fDiBenchmark, based on the quality (general business environment, labour availability and quality, presence of an industrial cluster, infrastructure and accessibility and living environment) and cost data. Tokyo is the most attractive city for biotechnology FDI, despite its high cost. Beijing and Shanghai follow Tokyo as the top ranking locations. San Diego, Singapore and London are also all high quality locations for biotechnology investment. The Indian cities of Bangalore and Hyderabad have the lowest costs of all locations in the analysis.
The biotechnology sector is focused on development of new products and technologies. The number of patents registered in each city is indicative of the extent to which innovation is taking place. US cities lead the way in terms of patents granted in biotechnology between 2003 and 2011; San Diego (1363) has more than three times the number of biotechnology patents as the third ranking city (Boston, 425). Tokyo, Cambridge (UK) and London all have more than 100 biotechnology patents granted.
Intellectual property (IP) is one of the most valuable assets for emerging biotechnology companies. The strength of IP protection in the locations in the analysis is shown in our tables. Singapore has the highest level of protection for IP rights with a score of 6.1 out of 7, while Denmark, France, the UK and Ireland all have strong regulatory environments for IP.
Beijing has the largest industry cluster, with more than 6000 companies in commercial, physical and biological research. Shanghai is second with more than 2500 companies, followed by London (1244), Singapore (1061) and San Diego (680).
Accounting for the size of each location, Cambridge has the most specialised industry cluster. There are 355 companies in commercial, physical and biological research in the UK city, which corresponds to more than 300 per 100,000 persons; four times the number of companies per 100,000 persons of the second ranking location, Beijing.
R&D intensity (gross expenditure on R&D as a percentage of GDP) of each location is shown in our tables. Boston is the most research-intensive location with an R&D intensity of 6.15%, followed by Copenhagen, Cambridge and San Diego.
Boston’s high R&D intensity is linked to the presence of top-ranking universities for life sciences within its boundaries, with Harvard University and Massachusetts Institute of Technology (MIT) ranked first and second respectively in the top 100 universities worldwide for life and agricultural sciences. Both are located in Cambridge, within the Boston metropolitan statistical area. The University of Cambridge in the UK is ranked third.
The availability and accessibility to funding is an important consideration for biotechnology FDI, particularly in the medical sub-sector, as drug R&D is capital intensive and innovative projects may be high risk. Ease of access to venture capital in the top biotechnology locations is shown in our tables. Singapore and Hong Kong are rated as the most attractive locations for innovative biotechnology projects requiring venture capital.
Corporation tax is an important factor for high-capital biotechnology projects. Dublin has the lowest corporation tax rate at 12.5%; Hong Kong (16.5%) and Singapore (17%) also have a competitive tax regime, whereas Dubai, San Diego and Tokyo are the most expensive locations, with corporation tax rates of in excess of 40%.
The leading US states and Canadian provinces for biotechnology FDI, by project numbers, are shown in our tables. Almost half of all greenfield biotech investments in the US are concentrated in the states of Massachusetts (25%) and California (22%). Maryland, Washington and New Jersey complete the top five states for biotechnology FDI.