1. HKSTP Biotech Initiative HKSTP Mini-White Paper Proposal Report January 2003 Presentation to HKSTP Board of Directors January 15, 2004

2. Table of Content Background The Assignment The Process Basic Conditions for a Biotech Cluster Analysis of Conditions in Hong Kong Conclusion Recommendations Roadmap

3. Medicon Valley Satellite photo to be inserted

4. Medicon Valley 3 million people 7 universities 11 university hospitals 6 science parks 71 pharma co’s 110 biotech co’s 125 medtech co’s 20,000 students

5. The Cluster Network Organisation for Medicon Valley In 1997, Medicon Valley Academy began as a university project supported by the European Community In 2000, Medicon Valley Academy turned into a private, non for profit, member based organisation In 2003, Medicon Valley Academy has attracted more than 250 members including universities, hospitals and industry

6. Vision Create Europe's most attractive bioregion by 2005 Focus areas 2003-04 Create networks within areas of strengths Provide infrastructure for a regional knowledge platform Improve technology transfer mechanisms Strategic information and communication Knowledge on Knowledge Create – Transfer - Exploit

7. Development re. Biotech Companies

8. Development re. Operating VC Funds 0 5 10 15 20 25 30 35 40 199019921994199619982000

9. A Mature Biotech Cluster

10. The Assignment From HKSTP Analyse the general and specific conditions in Hong Kong for establishing a successful biotech cluster, including a biotech industry, and thereby position Hong Kong in the long term as a leading biotechnology hub in Asia

11. Value from Cluster Formation ConceptionFormation Growth Maturity Knowledge Creation Technology Transfer Commercialisation Clusters & Networks Industry R & D Public & Private Funding Universities & Research Institutions Patents & Licences Proof of Concept Testing Incubation/ Research Parks Venture Capital Clinical Trials Collaboration/ Partnerships Regulatory Approval Business Planning Job Creation IPOs/gazelles Labour Market Product Pipeline Economics of Scale Regulatory Environment M&A Activity Industry Partnerships

12. Basic Conditions for a Biotech Cluster Upstream Midstream Downstream

13. General Conditions for High-Tech in Hong Kong World class brand Excellent infrastructure, sophisticated support systems and limited geography International airport and transportation systems convenient Bilingual society – international business outlook Entrepreneurial spirit Low personal and corporate taxes International top level education system Legal system and protection of IP well reputed The mainland China market, CEPA

14. Biomedical Science Strength

16. Prominent Biomedical Research Areas Genetics, incl. genetic-related bioinformatics Cancer research Endocrinology (incl. diabetes) Molecular neuroscience Organic chemistry Virology/vaccines, immunology/allergy, developmental biology, cardio-vascular research

17. Hong Kong and Mainland China BEI Beijing University FUD Fudan University, Shanghai GUZ Guangzhou University MMG First Military Medical College, Guangzhou PEK Peking Union Medical College SHA Shantou University SJT Shanghai Jiao Tong University SYS Sun Yat Sen University, Guangzhou THB Tsing Hua University, Beijing ZSG Zhongshan University, Guangzhou

18. Hong Kong and Mainland China

19. University Trained Resources

20. Human Resources Abroad

21. Bridging Research and Commercialisation Idea Business Commercial Viability Patenting Product Development Clinical Trials Distributio n Marketing & Sales Design & Production Market Survey Business Plan Investors Project Management

22. Academics in Hong Kong and Biotech Commercialisation High degree of entrepreneurial spirit Especially young scientists are positive Lack of knowledge on how Only some universities offer courses TTOs not perceived as pro-active TTOs are understaffed and under skilled

23. Trends for Biotech Start-ups and Biotech IPOs

24. Fundamentals for Attracting Private Risk Capital to Biotech Co’s has Not Changed

25. Private Venture Capital for Biotech in Hong Kong

26. Summary of Analysis General conditions for high-tech Biomedical research University trained resources Attitudes to commercialisation Human resources abroad Technology transfer Biotech industry and business exec. Private venture capital for biotech

27. Overall Conclusion Hong Kong can establish a biotech cluster Our overall conclusion is that, if Hong Kong wishes to do so, it can now establish a biotech cluster that includes a biotech industry. We also conclude that it should be done now rather than later so that Hong Kong does not lose the lead it has over several potential competitors.

28. Recommendation 1 Organise the cluster

29. Medicon Valley Academy Board

30. Medicon Valley’s International Profile

31. Recommendation 2 Improve Total Technology Management

32. Recommendation 3 Improve Funding for New Biotech Businesses Establish a new pre-seed/seed fund Collaborate closely with the TTM organisation Provide funding for HK university biomedical research Provide funding for biomedical research pulled in from abroad Bridge to private venture capital funds Build an international biotech executive network together with TTM organisation

33. Recommendation 4 Improve Collaboration Between Research and Industry Top quality entrepreneurship courses and seminars Shared research positions university/industry Joint Ph.D program university/industry

34. Recommendation 5 Instigate Regional Business Plans 1.Develop a set of regional business plans which cover the prominent research areas in HK pull potential from abroad 2. Analyse potential in shared production plant for therapeutics

35. Recommendation 6 Amplifying the Effect of CEPA Reform the regulatory system Upgrade GMP standards Contact China SFDA for authorisation of CTC

36. Recommendation 7 Stimulate the Biomedical Research Pipeline Implement ten Strategic Biomedical Research Programmes Implement twenty Excellent Young Scientists Programmes Fund additional modern technology services Increase RGC funding of biomedical research Develop a high quality web-based HK biomedical database

37. Roadmap for a Biotech Cluster Key Milestone ActivitiesYear 1 New biotech cluster fully operational Start-up decisions by the HKSTP Board 1.Decide to establish a cluster network organisation with an initial budget of HKD 25 million 2.Decide to establish a TTM organisation with an initial budget of HKD 50 million 3.Take follow up actions, including hiring of CEO’s for the two organisations 4.Put together boards of the two organisations in coordination with key stakeholders 5.Start strategy work to establish interim mission & vision of cluster network organisation and cluster, respectively 6.Initiate regional business plan project based on prominent research areas with an initial budget of HKD 10 million (to be taken over by TTM organisation) Year 2Year 4Year 3 Completion of milestone Key activities for cluster network organisation 1.Establish the long-term vision & mission and decide on a biotech branding and promotional concept for HK, incl. web-portal 2.Decide on the first annual operational plan 3.Drive the implementation of the proposed biotech pre-seed/seed fund 4.Drive the proposed improvements of the HK regulatory system 5.Drive the proposed China SFDA contacts for approval of HK CTC IMMEDIATE ACTIVITIES SHORT-TERM ACTIVITIES

38. Roadmap for a Biotech Cluster Key Milestone ActivitiesYear 1 New biotech cluster fully operational Follow-up activities by the TTM organisation and pre-seed/seed fund management 1.Initiate establishment of international biotech executive network 2.Implement entrepreneur courses and seminars in collaboration with universities Follow-up activities by the joint network organisation 1.Develop biotech cluster relationship with the relevant authorities in PRD Follow-up activities by cluster network org. in collaboration with other stakeholders 1.Introduce shared research positions equally sponsored by university/industry 2.Drive the proposed implementation of “Strategic Research Programmes” 3.Drive the proposed implementation of “Excellent Young Scientist Programme” 4.Drive the implementation of the proposed provision of joint tech service facilities and post-graduate places and post-doc positions 5.Establish a high quality, web-based biomedical research group database for Hong Kong Year 2Year 4Year 3 Completion of milestone SHORT-TERM ACTIVITIES (cont.) MID-TO LONG-TERM ACTIVITIES Follow-up decisions by TTM organisation in coordination with others 1.Individual agreements with universities on embedded tech transfer officers and guidelines for collaboration with universities

39. Basis for a New Biotech Cluster