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Friday, September 29, 2006

Melaka state government biotech initiatives

Professor Dr Farida Shah, formerly professor of molecular biology at Universiti Kebangsaan Malaysia (UKM). was for three years the CEO of the Melaka Biotech Corporation, an initiative set up by the state government to build its own biotech industry.

She set up the Melaka Institute of Biotechnology (MIB), which is the first state-owned biotech Institute. The MIB is based on the Karolinska Institute of Sweden where science and business are under one set-up. Our focus is agro-biotechnology, herbal and medicinal plants and pharmacogenomics.

Melaka Biotech Holdings Sdn Bhd (MBH) aims to make the state a growth catalyst for biotechnology.

Lastly, the Melaka Biotechnology Corporation was incorporated and formalised in 2005 with the two entities under its umbrella.

"I set up a committee to develop a biotechnology course for diploma holders at Kolej Teknologi Islam Antarabangsa in Melaka, which will hopefully be the feeder for biotech students in other universities." She said in an interview with The Edge shortly before she resigned.

Melaka are in the process of setting up five companies, two spin-offs from MIB and In Vitro Tech Sdn Bhd, involving plant tissue culture production, and TBE Sdn Bhd (essential oils and herbal extracts) with cooperation from Mara. We signed an agreement with DNAPRo for the production of vaccines, using technology from Cuba, and Healol Malaysia for the production of nutraceuticals. When everything is in place, these companies will be parked in Masjid Tanah Industrial Park.

Bureaucracy,red tape and no communication between state and federal government

In an interview with The Edge. she said "I was not popular with some state government officials because biotech cannot wait for slow government bureaucracy and red tape but fortunately, the chief minister intervened and pushed biotech. " She add "We have had no communication from Malaysian Biotechnology Corp and Malaysian Technology Development Corporation regarding how state initiatives can be beneficiaries of programmes and activities at the federal level."

"the state lacks funds for full biotech development and gets no support from the federal government. We have been working on a very, very small budget."

Graduates not "job ready"

"Most of the graduates we interviewed lacked hands-on experience in spite of the fact that they were supposed to have done a project in their final year. Most were not "job ready". "

Difficulties to competete with Singapore

"Of course, it's difficult to get graduates with MSc or PhD because the salaries are not in line with their qualifications, so most of them prefer to work in Singapore where salaries are higher and scientific working conditions are better. " She add.

Prior to that, in September, 2005. She told The Edge that "Every year, I see some of my students, who are good research candidates, go down to Singapore,” “My ex-colleagues at UKM face this problem as well. We are subsidising Singapore’s human resources.” Even after she has moved on to manage MBH, the spectre of Singapore continues to haunt her. “I wanted to employ these two researchers who came back from the United States,” she says, “but in the end they accepted a better offer from Singapore.” She says the lack of a proper career path for research scientists is hurting the nation. “The government should do a comprehensive survey of where are our students today.

How many of them go into sales and how many go to Singapore or other countries like the US and the UK.” She suggests Malaysia (in September 2005) take a look at what France is doing. “They employ good local researchers and attache them to various research institutes in the country.” The French Centre for Scientific Research (CNRS) is reportedly the world’s largest research body, employing 26,000 staff and 11,600 researchers in 1,300 laboratories.

What groundwork and policies need to be in place

Dr Farida view that We also need to address how the country will benefit in the long run from sustainable development, capacity building, production of knowledge workers, increasing the ratio of scientists per million population, building our own innovations and intellectual property, and so on, which is what real biotechnology development is all about.

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Thursday, September 28, 2006

Malaysia should study Taiwan vaccine venture to avoid failure

Malaysia biotechnology venture has been emphasis on vaccine recently.

First, Universiti Sains Malaysia is now working with Cuba’s Finlay Institute to develop vaccines for tuberculosis (TB) and meningitis. The partners would work on producing a TB vaccine first.

Then, the setting up of National Institute of Natural Products, Vaccines and Biologicals (9BIO) at Enstek Technology Park. Bandar Enstek is located in the Sepang-Nilai southern corridor of the Klang Valley near KLIA and Putrajaya, a project by TH Properties Sdn Bhd.

A partnership between an Islamic country and multinational companies in the production of vaccines. The OIC (Organisation of the Islamic Conference) countries, in particular, have been very receptive to ideato fulfilll the need for halal vaccines around the world.

9BIO, one of the Ninth Malaysia Plan projects approved under the private financing initiatives on a 25.1ha piece of land, consists of a bio-containment research and development facility as well as a bio-manufacturing facility. The cost of the project was estimated at RM350mil. The institute was expected to produce its first vaccines by 2010.

Ekovest Bhd and Faber Group Bhd joint venture to undertake the privatisation of the construction and maintenance of the national institute with the Health Ministry. “It provides Ekovest with an opportunity to make its foray into the medical and healthcare industry as we understand that the market for vaccines and herbal medicine is huge,” Ekovest executive vice-chairman Datuk Lim Kang Hoo said.

This should be the 3rd construction company in Malaysia involve in healthcare and biotechnology industry. First, UEM Group via Faber and Pharmniaga. Second, TH Group Bhd (Note: different from TH Properties above which is under Tabung Haji), a timber extraction company which has diversified to contracting services and construction, acquired NCI Cancer Hospital (NCICH), formerly known as Nilai Cancer Hospital in Nilai, Seremban, via its holding company Asiaprise Biotech Sdn Bhd at the end of year 2003.

NCI Cancer Hospital founded in 1999 by Dr Kim Tan, a leading UK-based biotech entrepreneur, who has been label Dr Biotech and had founded and listed three biotechnology companies on foreign stock exchanges.

Now, Ekovest Bhd, a main board listed construction company, which control another second board listed construction company PEMBINAAN LIMBONGAN SETIA BHD (PLS) and involved in Danga Bay project, a project expected to benefited from South Johor Economic Region (SJER) announced it venture in the industry.

Taiwan has a bad experience in biotechnology industry especially in vaccine venture. Thus, government, private sector and University have to study the experience of Taiwan's government fail venture to avoid making the same mistake. One of the successful biotechnology venture in Taiwan was driven by private sector and not in vaccine.

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Malaysia Agricultural links with Holland

Holland is opening a regional office for Agriculture, Nature and Food Quality here this month (September), to reciprocate Malaysia’s posting of an agricultural attaché to Amsterdam in January. The regional office, which will also cover the Philippines and Singapore.

The Netherlands accounts for nearly a quarter of European vegetable exports and is a major producer and international trader of flowers, meat and meat products, fruits and vegetables, dairy products, chocolate, starch derivatives and seed.

Despite a steady decline in the number of farms over the past 50 years, Dutch production has not been affected due to advancements in yield technology.

Prime Minister Datuk Seri Abdullah Ahmad Badawi said that despite its small size and population of only 16 million, the Netherlands was only second to the United States in food production.

The Malaysian Agriculture Research and Development Authority (Mardi) has signed an MoU with Holland’s Wageningen University and Research Centre, which is one of Europe’s foremost agri-food research centres.

“As of 2005, The Netherlands is the 10th largest importer of Malaysian products and a leading importer of palm oil, palm-oil based products and timber/wood furniture.

“The regional offices (in Amsterdam and Kuala Lumpur) will help to enhance bilateral relations in agriculture and sustainable development,” Dutch Ambassador to Malaysia Lody Embrechts said.

In 2004, The Netherlands had about 12,600 arable farms that employed nearly 26,500 people, and 1,469 organic farms. The predominant arable crops are cereals (especially wheat), fodder crops, sugar beet, table potatoes and legumes.

The total area under arable crops is 820,000ha. Noord-Brabant, Gelderland and Overijssel have the most arable farms. In recent years, rapeseed is being grown in the northern provinces and its oil is processed to fuel cars and ships.

The Netherlands is also often associated with flower bulbs, cheese and eggs.

Unilever, a Netherlands MNC food company has become a household name in Malaysia Malaysia


Friday, September 22, 2006

BioNexus criteria

Malaysia has try to transform from manufacturing base economy to knowledge base economy to compete with new manufacturing countries like China and Vietnam. It has announced MSC status to promoted ICT industry in Malaysia. On biotechnology industry, Malaysia has announced BioValley under Tun Dr Mahithir and BioNexus status under Datuk Seri Abdullah Badawi.

BioNexus status is to catalyse biotechnology industry development in Malaysia by facilitating investments and encouraging more companies to invest in biotech and commercialise research and development. Its comes complete with generous financial incentives, such as hefty tax breaks and a nine-point bill of guarantees.

The excitement had been building in the biotech community, especially over the incentives, and many have expressed interest to apply.

"The full criteria and approval process will be up on our website soon," assures Iskandar Mahmood, CEO of Malaysian Biotechnology Corp Sdn Bhd (MBC), the agency in charge of facilitating the biotech industry. In the meantime, he shares the basic eligibility criteria with The Edge:

  • Provide products/services based on life sciences or significant uses of biotech processes

  • Possess research capabilities in promoted areas

  • Employ a high percentage of knowledge workers

  • Comply with enviromental regulations and guildlines

  • Must be separate legal entity for qualifying activities ( to prevent it from being used as a tax evasion vehicle)

  • Possess a commercially viable business plan
The most important consideration is the commercial viability of the company. "The business plan is the most important thing we look at," says Iskandar. "MBC will go through the plan together with the applicant which is where we can also play a developmental role." Since his sudden appointment to head MBC in April 2005, the former CEO of Malaysian .

Read full report on The Edge


Friday, September 08, 2006

Eng Kah Vs Hi-City Bioscience

Consumers of personal care products may not know the name Eng Kah Corp. But many will have come across the products that it manufactures for major players in the cosmetics and toiletries industry like Johnson & Johnson, Unilever and Avon.

It is an established contract manufacturer of perfumes, cosmetics, toiletries, skincare and household products, and the only one listed on the Main Board.

Last year, the company began manufacturing Reckitt Benckiser's Dettol range of hygiene products. It recently secured contracts from Australian retail chain Coles Myers as well as Alliance Cosmetics, a local agent for brands like Revlon, Avene, Elancyl, Silkygirl and Wet 'N' Wild.

Eng Kah is currently developing higher-margin skincare, hair dye and colour cosmetic products that can engender product loyalty. It also offers its services in the design and packaging of the products.

To clear its backlog of orders, which stands between 10% and 20%, the company recently built a new plant next to its existing one in Bayan Lepas, Penang. When that plant, its fourth, comes on stream by year-end, its manufacturing capacity will increase by 56%. (The company also has plants in Nilai, Negri Sembilan and Shah Alam, Selangor.)

Analysts at Standard & Poor's (S&P) and K&N Kenanga Securities are calling a "buy" on the stock with 12-month target prices of RM3.99 and RM4.10 respectively. The price targets suggest a potential upside of between 17% and 21% from Eng Kah's RM3.40 close last Friday. S&P, which trimmed earnings projections and its target price to RM3.99 in early August, retained its "buy" recommendation as well.

"Eng Kah's profitability remains strong... Its ability to add new customers is positive as it reduces dependence on key customers," it says.

"What sets Eng Kah apart is its ability to offer the entire range of cosmetics and skincare products at competitive prices. Eng Kah now manufactures about 1,000 products for a wide array of long-term customers that include multinational corporations [MNCs], direct-selling companies, trading companies, department stores and beauty salons. Ongoing research and development constantly generates an average 200 to 300 new formulations and improvements per year, giving Eng Kah a steady stream of products to pitch to its clients," says K&N Kenanga in a note dated Aug 28.

"Eng Kah's strong growth prospects have so far only been constrained by capacity. This will be solved by the recent expansion, with its new Bayan Lepas and Nilai plants easing the backlog of orders and allowing for new contracts," says K&N Kenanga.

The brokerage sees Eng Kah benefiting from the Asean Free Trade Area agreement as MNCs look to reap tax savings and other benefits of producing in Asean. The Asean Cosmetic Directive that comes into effect in January 2008 will allow cosmetic products registered or marketed in any Asean country to be sold in all other member states without undergoing stringent product qualifications in each country.

Clinching these MNC clients would mean more than a bottom-line boost for Eng Kah. International labelling policy requires MNCs to list the manufacturer's name in addition to the country of origin.

"It will raise the firm's profile and work as a form of indirect testament to Eng Kah's product quality as an original equipment manufacturer," says K&N Kenanga.

Eng Kah's products are already being exported to countries beyond Asean, such as Hong Kong, Japan, Taiwan, Australia and Saudi Arabia. At present, 75% of its revenue still comes from Malaysia. The local cosmetics and toiletries market, which is worth RM2.2 billion, is growing at about 13% annually, providing ample room for growth.

Another plus for Eng Kah is Malaysia's well-developed palm oil industry, which allows the company to procure 70% of its raw materials like high-quality soap noodles, fatty acids, esters and glycerine from a range of suppliers.

The company's earnings have grown 23.8% from 2002 to 2005, with revenue growing at a four-year compound annual growth rate of 14% over that period. K&N Kenanga expects Eng Kah's earnings to grow 18% to RM17.2 million this year, on the back of a 16% top-line growth to RM91.7 million.

"Eng Kah is in a strong net cash position of RM24.6 million and looks set to continue in that vein. We have estimated an operating cash flow in FY2006 to FY2008 to come in between RM17 million and RM24 million... We have forecast a FY2006 gross dividend per share of 23 sen, based on management guidance," it says.

While Eng Kah's net profit of RM6.95 million for the first half ended June 30, 2006, is only 40% of K&N Kenanga's forecast, the brokerage has maintained its profit estimate as it expects a stronger second half.

Meanwhile, another Penang base manufacurer Hi-City Bioscience Group Bhd managing director Heah Chew Teng @ Heah Kim Teik has reduced his stake in the company after disposing of three million shares representing 3.75% equity recently.

After the disposal, Heah holds another 16.2 million shares or 20.25% direct stake in Hi-City Bioscience.

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Budget 2007 on Biotechnology, Halal Food and Agriculture

The RM210 million allocated for biotechnology under Budget 2007 will be used for the development of major programmes, including technology acquisition through the Biotech Acquisition Programme with a matching grant of RM60 million (although it is not clear where the matching grant will come from), and commercialisation of R&D findings to be undertaken by companies and international corporations under the RM30 million Biotechnology Commercialisation Fund (BCF).

A sum of RM59 million for Research and Development for genomics and molecular biology, production of pharmaceutical and nutraceutical products and to promote agro-biotech activities.
The Biotech Acquisition Programme and Biotech Commercialisation Fund will come under the ambit of Malaysia Biotech Corporation. "All these incentives clearly show the government's commitment and foresight to spur the private sector on," said Malaysia Biotech's CEO Iskandar Mahmood.

The Government has established Inno Bio Ventures to invest and provide trainning in biotechnology while the Bio Innovation Centre in Nilai, Negeri Sembilan, will be set up to provide site facilities and equipment for new biotechnology companies to undeertake commercialisation and bio-manufacturing.

Bionexus companies would be given income tax exemptions for 10 years, beginning from the first year of profitability. The exemptions was beginning from first year of production. After this period, bionexus companies would be taxed at a concessionary rate of 20% for another 10 years.

Carotech Bhd managing director David Ho Sue San welcomed as “positive and encouraging” the incentives for Bionexus-status companies that merge with or acquire biotechnology companies within the next five years. These companies will be given stamp duty and real property gains tax exemptions.

Malaysian American Electronics Industry chairman Datuk S.H. Wong said the RM210mil allocation for developing the biotechnology sector was consistent with the Penang state government's effort to build a biotech hub.

Halal food industry

The Halal Industry Development Corp will be established under Prime Minister's Department with launching grant of RM25 million for the development of the industry.

The Malaysia International Halal Showcase and the World Halal Forum 2006 will be made annual events.

RM50 million to start up halal food parks in Pasir Mas, Kelantan; Gembang, Pahang; Chendering, Terengganu; and Padang Besar, Perlis.

RM20 million allocation to SME Bank to finance entrepreneurs to develop halal products


Dr Kamal Jit Singh, CEO of British Telecom's Asian Research Centre in Cyberjaya noted that the vast gap in allocation between the MSC Grant Scheme (MGS) of RM20 million for ICT research versus the RM193 million for agriculture research was because the focus is now on agriculture and no longer on ICT.

The Government has allocated RM3.6bil for the sector to increase productivity and efficiency in agricultural production and to expand market capabilities.

The Fund for Food will be increased by RM300mil to RM1.9 billion to finance food production and a non-food agriculture credit scheme, with an initial allocation of RM20mil, will be established to encourage farmers to venture into non-food agriculture.

To develop aquaculture, the Government has set aside RM92mil for Ornamental Fish Cluster projects in Penang, Kedah and Perlis and the Freshwater Fishery Research Centre in Negri Sembilan.

A further RM110mil has been allocated to implement livestock projects under various agricultural agencies and RM40mil to implement the Beef Valley project in Gemas, Negri Sembilan.

Khazanah to establish an agriculture fund of RM200mil will be established to provide venture capital to finance new technology-intensive projects.

Another agriculture fund of RM200mil will be set up by Bank Negara for integrated agriculture and livestock projects.


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