Issue Date: May 22, 2017
Thailand embarks on life sciences push
Thailand has a lot going for it. The appropriately nicknamed Land of Smiles is a country of lush greenery, white-sand beaches, aromatic tropical fruit, and deep Buddhist spirituality. And to the many foreign visitors who are there on extended stays far from home, Thailand also offers the reassuring presence of a network of world-class hospitals.
What Thailand is not known for is innovative products. The hundreds of foreign companies that operate plants in the country overwhelmingly produce items—be they cars, electronic components, or chemicals—based on technology developed elsewhere. In the life sciences in particular, precious few Thai or foreign firms conduct any innovative R&D in the country.
This dearth of innovation is something the government wants to change. Under a new policy named Thailand 4.0, Thailand wants to transform itself into an innovation-driven country where life sciences and industrial biotechnology play important roles.
Thailand’s emerging biotechnology sector
▸ Biodiversity: Thailand boasts a variety of unique plants and animal life.
▸ Incentives: Biotech investors benefit from tax holidays of up to 15 years.
▸ Track record: Thailand has managed to attract foreign manufacturers from numerous industries.
▸ Costs: Office space, food, and residential rent are cheap.
▸ Workforce: Thailand’s workforce is known for its diligence and motivation.
▸ Quality of life: Thailand is a prized posting for international professionals.
▸ A new sector: Thailand’s biotech sector is, at best, emerging. Companies have to train employees, and venture capital is a work in progress.
▸ IP protection: Thailand has for 11 years been on a U.S. watch list of countries that do not sufficiently protect intellectual property rights.
▸ Education: Thailand’s public education system does not support a “knowledge economy.” From elementary to high school, education ranks poorly in international surveys.
To help promote the new policy outside Thailand, the Thai Board of Investment recently invited a group of reporters to see what the country has achieved so far in fostering innovation-based life sciences. The five-day trip revealed how Thailand could plausibly become home to a flourishing life sciences sector. It also highlighted the significant financial, educational, and legal hurdles that stand in the way.
The Thai government professes optimism that knowledge-based industries like the life sciences will flourish in Thailand in the same way that manufacturing did a few decades ago.
“We had no chemical industry to speak of in Thailand 30 years ago,” recalls Ajarin Pattanapanchai, deputy secretary general of the Board of Investment. “We now have a very well-developed industry led by Dow Chemical, which has invested $3 billion in our country—more than they did in China.”
In recent years, Pattanapanchai adds, homegrown chemical firms such as PTT and Siam Cement have been investing in materials made from biobased resources. Industrial biotechnology is in fact another sector that the Thai government aims to further develop.
To spur the growth of such science-based industries, Thailand is implementing policies that resemble ones it adopted decades ago to attract foreign auto and chemical manufacturers.
Companies setting up R&D centers and high-tech manufacturing facilities in Thailand can be entirely exempted from paying taxes for as long as 15 years if the research or manufacturing they conduct meets certain criteria. And just as Thailand set up industrial estates throughout the country to provide manufacturing infrastructure to local and foreign investors, it is now establishing a network of science parks providing research infrastructure.
The government has also been increasing its funding of public universities and research institutes. According to Nares Damrongchai, chief executive officer of the Thailand Center of Excellence for Life Sciences (TCELS), building up government and academic research labs will provide foreign-educated Thai scientists with viable career options in their home country. This publicly funded increase in the size of the research community will have a positive impact on the growth of biotechnology in the private sector, he argues.
TCELS is the main funding agency for biotechnology research in Thailand. One of its main focuses is to develop regenerative medicines based on research done in the country’s many modern hospitals. Another focus is to create natural-products-based pharmaceuticals that make use of research already performed by Thai scientists.
“Thai researchers have published a lot on natural products but seem to lack the ability to turn their basic ideas into products,” Damrongchai says.
Some of the research done in Thailand is already cutting-edge. One prominent scientist is Suradej Hongeng, a Thai- and U.S.-trained professor of pediatrics at Mahidol University in Bangkok who specializes in hematology, oncology, and bone marrow transplantation. He also directs a drug discovery center of excellence that opened last summer at the university-affiliated Ramathibodi Hospital.
Hongeng and his team are conducting in Thailand a clinical trial for a treatment they developed that is based on chimeric antigen receptor T-cell (CAR-T) therapy. Using the same platform, they are currently developing a treatment for neuroblastoma.
With its 12 principal investigators, the TCELS-funded drug discovery center is the most sophisticated in Southeast Asia, Hongeng claims. The center was formed after he and his colleagues—also returnees from foreign countries—successfully argued to government officials that Thailand has what it takes to conduct innovative medical research.
One of the center’s strengths, he says, is a TCELS priority: the screening of natural products for their potential to cure tropical diseases. The research team of Suparerk Borwornpinyo, the center’s chief operating officer, is working on a compound from herbal sources that would eradicate the malaria virus from patients rather than just control the disease.
“The government now has a clear policy to encourage R&D,” says Sittiwat Lertsiri, dean of science at Mahidol University.
The current administration assumed power in 2014 when the Thai military overthrew the country’s democratically elected government after three years of intermittent protests, at times violent, in the streets of Bangkok. Although technically a dictatorship, the government allows critical press coverage and is considered to be more enlightened than many other autocratic regimes.
Since taking charge, according to Lertsiri and several prominent Thai scientists, this unelected government has been trying to earn public support by appointing experienced technocrats to run key departments. One of the new administration’s first decisions was to dissolve a price support program for rice that had made farmers happy but cost the country tens of billions of dollars.
Thailand Science Park, near Bangkok, is one of the beneficiaries of the new national priorities. The government launched the park in 2002 to support the development of R&D in Thailand. Already home to several government laboratories as well as private labs belonging mostly to Japanese firms, the park was vastly expanded over the past three years. The expansion included a new complex dubbed Food Innopolis in which research focuses on technologies for the food industry.
“We are now developing ‘siblings,’ which will be smaller science parks throughout Thailand,” says Janekrishna Kanatharana, the park’s director. Although some of the foreign companies established in the park engage in merely customization of products developed elsewhere, they will over time initiate more basic research, he predicts. “The Japanese, especially, they like the lifestyle in Thailand, so they will think it’s a good place to do research,” he says.
Thai Otsuka Pharmaceutical, a Thai-Japanese joint venture, is one of the companies that have accepted the government’s invitation to conduct R&D at the science park. The venture, which already employs nearly 900 people in Thailand, produces amino acids, intravenous solutions, and specialty foods.
“Thailand is a major producer of sugar, rice, coconut, and other food that the country exports without any value added,” says Shinsuke Yuasa, president of Thai Otsuka. “So perhaps we can support the government’s plan to use food to create higher-value items.”
By conducting its research in the science park, Yuasa says, his company will be able to collaborate with academics from several nearby Thai universities while enjoying generous tax breaks.
In addition to investing in research infrastructure, Thailand’s government has been funding the launch of companies as part of its efforts to develop a life sciences sector. Created in 2009, Siam Bioscience is one of the few producers of biosimilar drugs in Southeast Asia. Currently employing 140 people, it is owned by the public investment fund CPB Equity. The history of Siam Bioscience provides a window into the difficulties that life sciences companies can face in Thailand, even ones that are government owned. Notably, managers at Siam Bioscience and other firms acknowledge that the country struggles to educate a workforce with the skills needed to succeed in the life sciences.
“We are pioneers in this country,” says Songpon Deechongkit, the company’s managing director and a former Amgen researcher. This means that initially, many of the people that it hired had no drug manufacturing experience and needed extensive training, Deechongkit says.
The experience of Siam Bioscience is one that executives at BioNet, a Thai-French vaccines maker, can relate to. Founded in 2001, BioNet initially had to hire inexperienced graduates and tutor them in the art of mass manufacturing vaccines. “We had to train, sometimes by having foreign experts come for various lengths of time,” recalls Hong Thai Pham, the company’s French CEO.
But Siam Bioscience and BioNet persevered, and today, both consider themselves success stories. Siam Bioscience now has two products on the Thai market—biosimilars of the Janssen anemia drug Eprex and Amgen’s neutropenia treatment Neupogen—that researchers at Mahidol University helped Siam Bioscience launch. And earlier this month, the Thai company launched a joint venture that will develop new products with Cuba’s Center of Molecular Immunology.
Siam Bioscience’s business received a boost in 2014 when Thailand implemented regulations for biosimilars that clarified the legal status of the firm’s products. The standards are compatible with those of other countries, Deechongkit notes, making it easier to export to Europe and other foreign markets.
BioNet has also left its struggling early days behind. Now employing 300 people, it exports 90% of the vaccines it makes, Pham says. One of its main products is one it developed: an adult booster shot for pertussis that is in high demand in Western countries, he says. The company is developing several other vaccines, in particular one that could be the first in the world effective against dengue fever.
Over at Greater Pharma, one of Thailand’s oldest generic pharmaceutical firms, Managing Director Chernporn Tengamnuay concurs that Thai universities should produce more scientists. The company started business in 1947 as a neighborhood drugstore. It now employs 300 people who produce generic drugs and develop health care products including mouthwashes and hygienic masks.
Lack of trained staff is making it difficult for Greater Pharma to expand in some areas of interest, Tengamnuay laments, one of them being regenerative medicines based on stem cells. On the other hand, the business-friendly and pro-innovation policies of the current government are helpful, he says.
“The Board of Investment has generally given us much support, and the government has provided funding for our research,” he says. One of the company’s newest products aligns particularly well with the government’s concept of adding value to Thailand’s agricultural products, he notes. It’s a hygienic mask coated with a mangosteen tree fruit extract that, according to some research, may protect the wearer against the flu.
Industry’s criticism that Thailand does not produce enough scientists to support an innovation-based life sciences sector points to a more general flaw in the country’s high-technology aspirations. A well-educated workforce is one of the cornerstones of innovative industries. Yet in surveys of public education systems around the world, Thailand ranks relatively low.
The country faces other challenges to its ambitions. For instance, the Food & Drug Administration of Thailand has little experience in reviewing and approving new drug applications. This is a capability that Thailand will need to develop if it is to become a player in innovative drug development. Separately, biotech startups in Thailand cannot rely on venture capital for funding because the country does not have a well-developed venture capital sector staffed with life sciences industry professionals.
The Board of Investment’s Pattanapanchai recognizes that Thailand faces an uphill battle. “Setting up incentives and providing infrastructure is the easy part,” she says. Reforming education will take longer, she acknowledges, but work is under way. As for the small number of venture capital firms in Thailand, she notes that biotech start-ups can seek funding from Thai industrial conglomerates that are now looking to diversify.
TCELS’s Damrongchai says the country’s small base of scientific talent is an old problem. In the past, he recalls, Thailand would send young graduates on scholarships to prestigious universities abroad to get advanced training. But if they returned to Thailand there were no jobs making use of their knowledge.
“It’s a chicken-and-egg problem,” he says. The government’s ambition is now to develop scientists and scientific jobs at the same time. And it is determined to succeed, he contends. “The current government wants to leave a legacy behind. Otherwise, they will just be another one of Thailand’s failed governments.”
Success in turning Thailand into a scientific and innovation hub would most certainly be welcomed by scientists around the world, including Thai citizens now working abroad. It would add a new source of business and career opportunity in a country that today is better known as a tourist destination.
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