[Big read] Is Singapore the ultimate ‘China+1’ biopharma hub?

(Edited and refined by Bai Kelei, with the assistance of AI translation.)

For an industry accustomed to robust figures, Singapore’s biopharmaceutical sector faces a sudden wave of sobering news in the first half of this year.

US pharmaceutical company MSD and German drugmaker BioNTech have announced plans to shut production lines and facilities in Singapore and cut jobs. The sector’s output has also recorded year-on-year double-digit declines for two consecutive quarters.

For many years, biopharmaceuticals have been one of the two pillars of Singapore’s biomedical sciences sector, alongside medical technology manufacturing. Together, they account for 1.9% of Singapore’s GDP.

Singapore now has more than 60 biopharmaceutical plants. Eight of the world’s ten largest biopharmaceutical companies have established world-class manufacturing facilities or research and development (R&D) activities here. The sector employed 9,300 people last year and generated more than S$15 billion (about US$11.8 billion) in output, with value added per worker far exceeding that of the overall manufacturing sector.

But do the recent developments sound an alarm for Singapore’s biopharmaceutical industry? And are US tariff policies targeting specific sectors the main culprit?

Evaluating the US tariff impact

Selena Ling, OCBC chief economist, told Lianhe Zaobao that while the US tariff threat is a genuine medium-term risk, it is unlikely to be the current cause.

Fabio La Mola, a partner at Bain & Company’s Singapore office, also opined that it is difficult to directly attribute the recent decline in Singapore’s biopharmaceutical output to US tariffs or policy changes.

He also pointed out that any impact arising from US trade or industrial policy would not be immediately apparent. Besides, some of the tariffs remain contested in US courts, so major biopharmaceutical companies are awaiting the outcomes before taking major steps to reconfigure their supply chains.

Both Ling and La Mola believe the key indicator of whether biopharmaceutical companies will continue operating in Singapore is profitability.

Ling said, “”Many of the large pharmaceutical companies that operate in Singapore are multinationals (MNCs) and contract manufacturers. The global pharmaceutical sector is highly profitable and gross margins could run into the high double-digit range. For local entities involved in contract manufacturing, which is typically volume-driven, the margins could be lower but still in the healthy range of 13% to 19%.”

La Mola noted that at many Singapore pharmaceutical companies, profitability is in line with global industry standards. He added, “Profitability is typically driven by intellectual property (IP), product differentiation, manufacturing excellence, and global market access.”

La Mola also highlighted that the pharmaceutical industry is inherently volatile as relatively low volumes of high-value medicines can have a significant impact on output statistics.

The rise of China’s biotech

Besides the potential impact of US tariffs, China’s growing biopharmaceutical sector has also caught the eye in recent years with lower costs and faster R&D.

In general, most drug development costs are incurred before mass production, during R&D, clinical trials and application for regulatory approval. The entire process can cost more than US$1 billion and take more than a decade.

Liu Boxiang, an assistant professor at the Department of Pharmacy and Pharmaceutical Sciences at the National University of Singapore Faculty of Science, explained that drug development costs can easily run to US$1 billion to US$2 billion largely because about 90% of drugs ultimately fail after entering phase I clinical trials. He shared, “Doubling the success rate roughly halves the cost per drug.”

Essex Bio-Technology, a biopharmaceutical company founded by Singaporeans, develops, manufactures and sells patented genetically engineered pharmaceuticals. It is headquartered in Singapore and listed in Hong Kong.

Its senior director for commercial strategy and partnering, Ng Choon Peng, told Lianhe Zaobao that R&D is the main cost for manufacturers of branded and patented drugs. Such costs are two to three times higher in the US than in China, and one and a half to two times higher in Europe than in China.

Essex Bio-technology’s R&D teams are currently based in China, Singapore, the US and the UK.

UltraGreen.ai, a pharmaceutical company headquartered in Singapore and listed on the Singapore Exchange, is also exploring the possibility of finding Chinese partners to develop and manufacture indocyanine green (ICG), a fluorescent dye used in surgery, as well as medical devices.

The company currently engages a European firm to manufacture ICG. Its chief commercial officer (excluding the Americas), Fidelma Callanan, and chief business officer (Asia Pacific), Quek Mei Ling, said that Ultragreen.ai was exploring opportunities in China. “The key is diversification and supply chain resilience. Of course, cost is important but quality is our top priority.”

They added that clinical trials must still be conducted in the target markets in order to meet US or European regulatory requirements.

During our interview, Zhang Peiqing, scientific director for genomic medicine at Cytiva, cited a McKinsey report that described Chinese pharmaceutical companies working on novel drugs as moving two to three times faster than global peers when moving from target identification to applying for clinical trials.

He also shared that drug development costs in China are also about a third to half of global best-practice levels. In certain cases, patient recruitment for clinical trials in China is two to five times faster than elsewhere in the world, while clinical costs per patient are lower than in the US and Europe.

Zhang added, “We are seeing more biotechnology and pharmaceutical companies headquartered in Singapore collaborate across borders, including with Chinese partners.”

But he also noticed that many local companies still use a hybrid model. They are established in Singapore, conduct some R&D or clinical trials with partners in China or other markets, and involve multinational partners during the later stages of global development and commercialisation.

La Mola of Bain & Company said that the industry’s globalised nature means that China’s talent pool, supply chain depth and cost advantages have attracted a growing number of MNCs and Asian pharmaceutical companies to carry out R&D, clinical trials and some manufacturing there.

Many drugs intended for the US, European or Japanese markets are currently manufactured in Singapore, Ireland, Switzerland or the US. La Mola added, “Most pharmaceutical companies adopt multi-site supply chain models to balance cost, resilience, quality and regulatory requirements.”

Geopolitics and the ‘China+1’ pivot

One unavoidable consequence is that China has become an increasingly important source of new drugs for US companies. This has sparked debate in the US over whether Chinese biopharmaceutical technologies and imports should be contained in the same way as technology and chips.

Some US lawmakers are advancing policies to restrict collaboration with Chinese biotechnology companies. Should Congress pass such legislation, lawmakers would have the power to monitor and restrict certain agreements between US and Chinese companies. Some US lawmakers have publicly opposed recent deals between US drugmakers and Chinese companies, arguing that they threaten the future of the US pharmaceutical industry.

If US-China rivalry extends into biopharmaceuticals, it may not be entirely bad news for Singapore.

Ng from Essex Bio-Technology noted that Chinese biopharmaceutical companies once preferred to set up their own operations in the US. Now, they are more willing to sell or license their IP to partners that can obtain overseas market access on their behalf for their medicines to be sold in markets such as the US.

OCBC’s Ling said some pharmaceutical companies are using Singapore as a “China+1” de-risking hub to mitigate US policy uncertainty risk.

Competing on trust, not cost

Bain & Company’s La Mola opined that China has become an important player in drug R&D and manufacturing in the global pharmaceutical industry. Nevertheless, the US retains its lead in innovation and venture funding, while Europe combines strong R&D capabilities with advanced manufacturing.

At the same time, Japan and South Korea have strong innovation ecosystems in certain therapeutic areas, while India remains highly competitive in generic drugs and active pharmaceutical ingredients.

As for Singapore, it ranks among the most competitive manufacturing locations for high-value medicines and biologics.

OCBC’s Ling said Singapore is one of the few pharmaceutical markets in Asia with a complete end-to-end value chain and best-in-class multi-modality plant. It does not compete on cost, but aims to move up the value chain. It also leverages its “trust” and “neutrality” advantages in a fragmented and polarised world.

Cytiva’s Zhang cited his company’s 2025 Global Biopharma Index, which ranked Singapore sixth among the world’s leading biopharmaceutical ecosystems, pointing out that the country’s competitive advantages include talent, innovation readiness, manufacturing capabilities and supply chain resilience.

The index shows that the long-term success of a pharmaceutical hub is most closely linked to its overall ecosystem, rather than any single factor such as cost. As biopharmaceutical products become more complex, industry leaders are increasingly prioritising agility, digitalisation, supply chain resilience and workforce capabilities.

Zhang said, “Singapore may not always be the lowest-cost location, but it competes on trust, quality, reliability, advanced manufacturing and ecosystem connectivity. For complex biologics and advanced therapies, those factors are increasingly important alongside cost.”

Bain & Company’s La Mola shared that investment and production decisions in the pharmaceutical industry usually take years to implement due to long product development cycles, stringent regulatory requirements and the complexity of qualifying manufacturing facilities.

Long-term investments signal industry confidence

Between 2023 and 2024, Singapore’s biopharmaceutical sector saw a steady stream of announcements on capacity expansion, investment in new plants and the opening of new facilities. AbbVie, Novartis and AstraZeneca were among the companies involved.

For example, AstraZeneca, the Anglo-Swedish drugmaker which entered Singapore in the 1990s, invested US$1.5 billion in November 2024 to build a new facility in Tuas South. The plant is expected to begin operations in 2029 and employ more than 800 skilled technical workers.

The new plant will manufacture antibody-drug conjugates (ADCs), a next-generation treatment that precisely targets tumours. The site will house one of AstraZeneca’s most advanced biopharmaceutical facilities worldwide and enable the entire ADC production process to be completed at a single location.

Ana Locatelli, site head of AstraZeneca’s Singapore operations, told me that Singapore is a highly attractive venue for high-value manufacturing and innovation activities. Singapore is also the company’s Asia regional headquarters, covering Southeast Asia, India, South Korea and Taiwan.

She added, “Singapore is well placed to further strengthen its role as a leading global biopharmaceutical hub. To remain competitive in an increasingly crowded landscape for such investments, it is important for Singapore to continue building on the fundamentals that have made it successful.”

For Locatelli, these include a pro-business and collaborative environment, streamlined regulations, effective public-private partnerships and policies that promote innovation and reward investment.

In November 2024, French pharmaceutical company Sanofi officially opened its S$800 million Modulus facility at Tuas Biomedical Park.

Koh Liang Hong, Sanofi’s Modulus facility site head, told me that the plant uses an industry-first modular concept that allows rapid switching between manufacturing different next-generation vaccines and biologics. The reconfiguration required to produce another product can be completed in a matter of days instead of weeks or even months.

He said, “The importance of this flexibility became particularly clear during the Covid-19 pandemic when the global pharmaceutical industry faced unprecedented changes in demand, supply chains and manufacturing requirements. The facility’s modular architecture enables the rapid redirection of manufacturing capacity towards critical vaccines or medicines when public health needs change.”

Koh continued, “The facility has significance beyond Singapore. Its location in Asia places it within a strategically important region and strengthens Sanofi’s ability to respond to healthcare needs across regional and global markets.”

Beyond setting up plants, some pharmaceutical companies have even moved their global headquarters to Singapore.

Hilleman Laboratories, which develops and produces affordable vaccines and biologics for low- and middle-income countries, was established in New Delhi in 2009 as a joint venture between US pharmaceutical giant MSD and the UK’s Wellcome Trust. In 2021, it moved its global headquarters to Singapore, where it now has a US$20 million manufacturing plant and an innovation R&D facility.

During our interview at the company’s ACES manufacturing plant along Depot Road, its CEO Raman Rao explained the relocation decision. He said, “We were considering how to expand our business further and looked at the UK and US. But this was during the pandemic, when the world was in lockdown and only Singapore remained open. We also happened to have an opportunity to acquire a laboratory here.”

Hilleman Laboratories completed its relocation to Singapore within a few months. Rao felt that the government’s support was vital. He also listed the country’s R&D talent pool, IP protection and the research ecosystem built around the Agency for Science, Technology and Research (A*STAR) and local universities as attractions.

Building an end-to-end ecosystem

Looking ahead, Cytiva’s Zhang said, “For Singapore’s pharmaceutical sector, the opportunity lies in moving up the value chain. This includes maintaining excellence in advanced manufacturing, expanding translational and process development capabilities, building talent in biologics and advanced therapies, strengthening public-private collaboration and positioning Singapore as a trusted bridge between Asian innovation and global commercialisation.”

Dr Lisa Ooi, A*STAR Biomedical Research Council assistant chief executive, opined that the future of biopharmaceuticals depends not only on scientific discoveries, but by how effectively they are translated into therapies and healthcare solutions that benefit patients.

She said, “Singapore’s advantage lies in its end-to-end biomedical ecosystem. Beyond strong foundational science, it has also built translational and development capabilities that connect researchers, clinicians, healthcare partners and industry players throughout the innovation journey.”

Ooi added, “Together, these capabilities help move promising discoveries from the laboratory towards real-world application. In an increasingly competitive landscape, the ecosystems that succeed will be those that can consistently translate scientific excellence into impact.”

Goh Wan Yee, senior vice president and head of healthcare at the Singapore Economic Development Board (EDB) shared that EDB’s vision is for Singapore to become a leading biopharmaceutical hub in Asia. Beyond supporting new manufacturing investments, EDB partners companies to transform their local manufacturing operations through the adoption of advanced technologies such as artificial intelligence and automation. It also works with companies to develop next-generation healthcare products and solutions here through different innovation models.

Goh said that EDB also works with Singapore’s institutes of higher learning and the industry to develop a strong pipeline of STEM graduates, upskill existing workers and retrain mid-career talent from related industries to equip the local workforce with industry-relevant skills.

She added that Singapore will continue enhancing its biopharmaceutical ecosystem through advanced manufacturing, innovation and talent to ensure that it continues to attract new capacities and serve regional and global markets and patients.

Finally, Singapore also supports its biotechnology companies. Dr Clarice Chen, director of healthcare and biomedical at Enterprise Singapore told me that a growing number of them are developing new treatments, including ADCs, cell therapies and gene therapies. Enterprise Singapore supports these firms at different stages of their growth and works with global pharmaceutical companies to create opportunities for local biotechnology firms to tap their expertise and networks, which helps local companies develop their technologies and head towards commercialisation. Global pharmaceutical companies may also collaborate in locally developed technologies or invest in Singapore biotechnology firms.

This article was first published in Lianhe Zaobao as “产值下跌部分厂房撤离 我国生物制药变局中仍大有可为”.

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