Monday, October 18, 2010

Lilly Singapore Center for Drug Discovery gets the chop

In 2001 the EDB inked a deal with Eli Lilly to set up a research facility for systems biology in Singapore. Along the way the systems biology bit was morphed into a Center for Drug Discovery. Now after 8 years, Eli Lilly has given the Center for Drug Discovery the chop. About 130 jobs will be on the line, although it is not clear how many of these jobs are local jobs, and how many are 'foreign' talents.

The EDB has a mission to bring in big names to 'buzz up' the local R&D environment. For this it has been given a fairly massive war chest. The strategy appears to be to throw money at big named companies to entice them to set up research facilities in Singapore. Create a buzz, has been the buzzword. Eli Lilly was not the only company to have tasted of these low lying fruits. Now after sampling these fruits for 8 years Lilly has decided that it is better off elsewhere, especially after the EDB grants wear off.

I am personally not so convinced of the EDB's strategy to just throw money at these companies for dramatic short term buzzes. I am unsure how much real benefit follow from such extravagance. A high end research facility employing how many locals? Did the research facility really benefit the local research environment; really result in long term enhancement of the local research infrastructure? I am more than skeptical. The money could have been better spent developing real quality in home grown efforts. Methinks this would have had more enduring effects than the printing of glossy annual reports.

Who audits the EDB, I wonder?


Anonymous said...
This comment has been removed by a blog administrator.
gigamole said...

An unnecessarily vitriolic comment has been removed. It is also an opportunity to remind readers that they are free to discuss pretty much anything, but please limit to principles, processes and practices.... I will not allow this blog to be used for personal attacks on individuals. Thanks.

Fox said...

Here are some of the difficulties associated with moving R&D to Singapore:
1. The quality of fresh Singapore PhDs is somewhat inferior to those of well-known research universities in the US. In R&D, unlike manufacturing, it is the productivity that matters more, not the cost.
2. R&D is expensive and what matters most is the productivity. Why take a gamble in Singapore?
3. Getting experienced R&D personnel in Singapore is difficult. You'll inevitably have to recruit from the US but US-based scientists are reluctant to move to Singapore for various reasons, one of which is tax. The US govt taxes the income of US citizens, regardless of where they work. Singapore is one of those countries which does not have a tax treaty with the US to remove the double taxation. Also, if you have to relocate personnel from the US, then the cost savings wouldn't be much.
3. Obama and the US Congress are in favour of introducing research tax breaks.
4. Drug companies already have large established R&D facilities. You better have a good reason to hive off part of those facilities to another country with a 12-hour time difference. R&D works better when different teams are clustered together. More synergy.

This is of course not to say that R&D cannot be outsourced. Software companies do it routinely and IBM and Microsoft have large research units in India and China although I think that it is because costs are MUCH lower in those countries plus software R&D is something that can be outsourced easily.

Fox said...

Let me emphasize the importance of point 1 in my previous post. Where does Sim's Creative Technologies base their R&D unit? No... not in Singapore. In California, a place with very high taxes and research engineers are paid above 100K USD on average. Japanese manufacturers like Toyota and NEC have substantial R&D facilities in the US.

This should give you some idea of how difficult it would be to move R&D work from the US to Singapore.

gigamole said...

The question whether these are fixed problems, or merely a transient as we develop our intellectual capital? Not withstanding the hype in the mainstream media, we are clearly trying very hard to punch above our weight class at the moment and it is uncertain if the weight will eventually catch up.

One assumes the EDB strategy in throwing money at pharma to entice some pharma R&D to move out here is part of an attempt to speed up the maturation of the R&D environment, and in the process ramp up the quality of PhDs in as short a time as possible.

But the pharmaceutical industries are not stupid and are all clearly able to evaluate the the folly of 'moving' part of their research capabilities out here. Which leads one inevitably to the conclusion that pharma companies that move their R&D here aren't really committed to a long term plan, and are perhaps just here to 'play the game' and enjoy the financial incentives for as long as they can.

auntielucia said...

Giga, I saw the comment u removed on an earlier visit. Perhaps it's still somewhere out there in cyberspace. Best to activate yr comment moderation button so that no odds n sods can post their bias at will on yr site...

Fox said...

I think cost savings are easier to compute when you are talking about manufacturing. However, when it comes to R&D, it is something that you need to budget for but difficult to compute what the returns are. Hence, if you have to spend 25 percent of your costs on R&D, you better get the best returns on it. I come from the perspective of R&D in the semiconductor industry. It is better to hire very good people at high salaries than to hire mediocre people at low salaries. It is clear that you usually won't get much out of the latter.

Also, in research, when you team someone who is good together with someone mediocre, the net output is mediocre work. It is easier for the good researcher to lower the quality of his work than for the mediocre one to raise his.

It is not like manufacturing cars where if you replace one part with a cheaper one, you won't affect the quality of the other parts of the vehicle.

Fox said...

"One assumes the EDB strategy in throwing money at pharma to entice some pharma R&D to move out here is part of an attempt to speed up the maturation of the R&D environment..."

Ask yourself this: why would a pharma company want to dismantle its R&D facility and move it to another country in a time zone 12 hours apart?

My own take on this it that they won't. Singapore may be better off developing our own indigenous R&D capabilities. This necessitates the revamp of our educational system to produce the right scientists and engineers, the direct subsidy of Singapore high-tech exports, etc. One possible niche area would be biomedical equipment. Small companies can do nicely in this field without the pressures of high-volume manufacturing. Doing pharma drugs would be difficult because large US companies are already doing that.

Also, the time difference between Singapore and the US means that we shouldn't be looking to the latter for R&D development. Rather, we ought to look into tapping the R&D expertise and markets of Taiwan, South Korea and Japan.

gigamole said...

"My own take on this it that they won't. Singapore may be better off developing our own indigenous R&D capabilities."

Fully agree with you here. Unfortunately this is a painfully slow process. It requires a lot of patience grooming the right people and configuring the right environment. Unfortunately many of our institutional leaders are not particularly gifted with the virtue of patience, and shoot for high visible short term gains.

Another difficulty is the very long lag time and high risks associated with the biomedical industry. Other than instruments and medical devices, it takes an enormous effort to get an innovative product into the marketplace.

Overall I believe if we really want to achieve the excellence we talk about in this area we will need to keep our eye on longer term goals - to as you rightly pointed out, cultivate our own home grown talent and capabilities. The clamour for instant success may produce "impressive" external signs of "making it" but is not only superficial and false, but may undermine the real efforts to build our true foundations of the future success.