Creating a research hub economy in Singapore: 2 models to consider, Part 1

I talked about the less than successful exploits (sic) of Singapore’s investments in science and technology research in a previous post.

This post will deal with some of the challenges I’ve thought about, and which I haven’t see much discussed anywhere in Singapore, even among people whose business is to think about such things. Specifically, I will describe 2 models that are interesting to think about when investing in developing a science and technology based economy.

The first model is the research paradigm of large pharmaceutical firms.

It’s well known that pharmaceutical firms spend a lot of money developing new drugs, in particular so-called blockbuster drugs that can generate enormous amounts of revenue. Examples of such drugs include Viagra, Lipitor and Celebrex. What is less well known is how targeted research spending by pharmaceutical firms is.

It’s a common riff among academic scientists that the day you enter (pharmaceutical) industry is the day you stop doing creative research. Part of the reason for this is clearly that firms are profit-driven enterprises, and cannot afford to spend money on blue-sky or fundamental, basic research [Industry scientists would naturally object to the accusation that their work is not creative, however].

How pharmaceutical firms function then, is that they allow the wider community of academic scientists, drawing on government research grants, to study a multitude of things: diseases, processes, genes, molecules etc. And when academia identifies something interesting, the entire industry’s attention focuses on this interesting discovery. For pharmaceutical firms, an interesting discovery most often takes the form of some molecule, such as a potential chemical compound that is biologically active, a receptor molecule that is overexpressed in cancer cells (and hence represents a target molecule for intervention), or a key signal transduction molecule implicated in some vital metabolic pathway.

The industry then springs into action, throwing vast amounts of money, skilled researchers and management expertise at this interesting new discovery. The goal here is to develop new candidate drug molecules for clinical testing, and then to bring the product to market. Depending on the discovery, the research effort is geared towards different things. If the original discovery had to do with an interesting new compound, firms might try synthesizing analogues that have a more favorable safety or solubility profile, and that might be more effective in treating a certain medical condition. If it’s a receptor that is overexpressed in cancer cells, firms might devote efforts to developing a molecule can target and bind to this receptor and hence halt the development of the cancer. Herceptin is a good example here. For signal transduction molecules, developing compounds that can intervene in a pathway could lead to new drugs, such as Viagra.

The key thing here to note is that while the original discovery that sparked the development of a new technology (the drug) comes from outside the industry, it is only industry that can marshal such vast resources in a single-minded fashion to bring a product to market. No academic lab, even the one that originally made the interesting discovery, can compete with the teams of researchers that pharmaceutical firms put on to develop the drug.

This pharmaceutical model is instructive for a small country like Singapore with limited resources. If the goal of developing a science-based industry can be likened to hitting bulls-eyes on dartboards, then we have two ways of doing this. With a limited supply of darts representing our resources, one way is to hang up a lot of dartboards and throw a few darts at each dartboard.
Alternatively, we adapt the pharmaceutical model: we can hang up just a few of the more interesting dartboards and we throw a lot of darts at each one.

For someone with a lot of darts (like the US government), they can afford to hang up a lot of dartboards and throw a lot of darts at every dartboard.

To a certain extent, the Singapore government understands this. That is why the government has chosen to focus on biomedical sciences, water purification technologies, and renewable energy research.

I would argue that these three areas are still way too broad. The pharmaceutical industry really drills down to just a handful of things to focus on.

Biomedical sciences is too broad a field. Even the entirety of cancer research might be too broad. A narrow enough field that we should focus our energies on might be just stem cell research, or medical diagnostics. And then we make ourselves the world leader in these things.

There are of course caveats to this approach.

In the pharmaceutical model, industry leverages on the wide ranging efforts of the larger academic community that spends government research money. Where should Singapore’s targeted research efforts look to for the original ideas to leverage upon? This is a problem that is not answered easily. Even if you believe that we should be spending research dollars more broadly simply to generate ideas, I would caution that a lot of money would need to be spent, and much of it will need to necessarily lead to nothing. Can Singapore stomach that? Spending on research is such that not every dollar winds up leading to some useful end product. In some cases, something non-research related derails a potential product. Sony spent a lot of money on Betamax, but it still lost the VCR format war.

Concentration of risk. Without diversification, we’ll essentially be putting all our eggs in a few baskets. But I believe that this is a risk that should be taken. Throwing a few darts at each of several dartboards is practically depending on dumb luck to hit a bulls-eye, which is basically substituting a different kind of risk.

The interests of our numerous researchers, PhD scholars and the like. It’s unlikely that every biomedical science PhD wants to work on stem cells. In fact, I would argue that because Singapore’s success in research is contingent on focusing on a few narrow fields of science and technology, this is a prime argument against anyone wanting to take up an A*STAR scholarship. There is nothing more depressing than being interested in working in a certain field, getting trained in that field, but being bonded to work in some other field because that’s where the research funding is (or going to be in four years when the scholar graduates).

Volatility. This is related to concentration of risk and is the flip-side of the pharmaceutical model. Pharmaceutical firms are peculiarly dependent on just a handful of drugs for most of their profits. As a result, such firms can experience feast or famine business conditions depending on how well their drugs perform. Merck was shaken to its foundations when Vioxx was taken off the market.

The problems associated with being too narrowly focused. This last point is interesting and I will discuss it, and the second model I mentioned above, in a future post. Suffice it to say that, while I feel that Singapore’s research thrust is too broad, it is also at the same time too narrow. I know that sounds like a contradiction in terms, but I will explain further in my next post on this topic.