The Future of Asia: Forces of Change and Potential Surprises – Supplementary Report

Policy Horizons | Horizons de politiques May 1, 2014

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Bio-manufacturing’s Potential to Reshape Production

What is it?

Genetically modified living organisms, such as yeast, algae, viruses or bacteria, are increasingly being used to produce new or existing substances including pharmaceuticals, plastics, fuels, food products or genetic therapies. This new form of production, bio-manufacturing, is in essence the application of engineering principles to biology. Relying on a strong culture of open source development, bio-manufacturing draws on a number of existing technologies to design and construct new biological systems that produce useful products or serve useful purposes.¹² ³ ⁴

The inputs for bio-manufacturing (such as sunlight, carbon dioxide, nitrogen, etc.) are more widely available and often cheaper than the inputs of competing processes or products (e.g., fossil fuels, rare earths, rare metals). Accessibility and cheap inputs are also encouraging new market entrants. International competitions for new biological systems include high school and tertiary teams. ⁵ The International Genetically Engineered Machine (iGEM) competition is a worldwide competition aimed at promoting the development of tools for engineering biology. While no Asian universities participated in iGEM in 2006, Asia is now leading with 68 out of 204 registered teams. Within Asia, China and Japan are conducting the most research in synthetic biology, the core science supporting bio-manufacturing.⁶

Companies are being pulled to Asia by the relatively cheap cost structures and hubs of bio-innovation but also by the sheer size of the potential market. The McKinsey Global Institute estimates the pharmaceutical market in India alone will exceed $45 billion by the year 2020.⁷ GE HealthCare has installed its first flexible bio-manufacturing platform in Taiwan that is capable of both responding rapidly to local healthcare needs and contributing to the global supply chain.⁸In addition, Novartis recently opened its first biopharmaceuticals manufacturing plant in Asia, based in Singapore.⁹ On the “push” side, companies in Europe and North America are encouraged to outsource their operations to achieve greater efficiencies. Outsourcing to Asia has typically occurred in the areas of validation and testing but more recently in bio-manufacturing.¹⁰

Why is it important?

With an emerging middle class and a growing population, Asia could face resource shortages and continued pressures to reduce pollution. Both are drivers for efficiencies in resource use and renewable solutions. Bio-manufacturing offers the possibility of reducing the ecological footprint of manufacturing through the use of renewable resources in the production of goods. It could also help relieve arable land-use pressures on agriculture as biofuels and some food products (spices, sugars, etc.) are likely to be increasingly made through bio-manufacturing.

A shift from traditional production processes to bio-manufacturing could reshape the world map of production, promoting local production and thus affecting globalization. For Asia, this could impact its status as a world leader in manufacturing. A worldwide bio-based economy where raw materials are replaced by biomaterials would reduce the comparative advantage of some Asian countries endowed with natural resources and agricultural land, and at the same time enhance others. Countries that rely on the export of natural resources to fuel growth could be forced to find alternative markets or develop other strengths. The emergence of a bio-economy could simplify supply chain management for the region and help meet the essential needs of the population at a relatively low cost. This could give some flexibility to decision-makers to redirect the economy down new paths.