Monday, June 4, 2001
Japan has never appeared to possess the attributes usually
associated with building a biotech sector, in particular the risk-taking entrepreneurialism
that requires a willingness to abandon secure jobs, to throw large sums of money
at unproven ideas, and to fail and try again. Nevertheless, a handful of companies
has sprung up.
This beginning is fragile, as much of the new management lacks
experience; venture funding is limited and many VCs lack the expertise to evaluate
new companies; and the service infrastructure of attorneys, accountants, management
consultants and other support functions is virtually non-existent.
In addition, the inevitable attrition of these early players
will test the staying power of the risk-averse Japanese investor.
Nevertheless, many Japanese pathfinders say that good science
at university and government laboratories can be unlocked over time to feed
the interest of entrepreneurs and investors who will become more seasoned and
increase in numbers over time.
While Japan may be seeing its first crop of biotech seedlings,
Shingo Kano, manager of the life science group at Nomura Research, pointed out
that Japan took a crack at biotech once before - in the 1980s. "The first biotech
boom happened because of genetic engineering, recombinant proteins," he told
Hiromichi Kimura, president and CEO of HuBit Genomix Inc. (Tokyo),
a startup focused on SNP analysis of the Japanese population, noted that U.S.
biotech successes in the late '80s, such as Amgen Inc. (AMGN) and Genentech Inc. (DNA) stimulated interest in biotech among flagship Japanese conglomerates,
who were enjoying an economic bubble and were looking for ways to diversify.
"Everyone at that time had three areas of focus; biotech, new materials and
electronics. Unfortunately, they could not recruit the right people in a timely
manner," he said.
The companies did not have flexible compensation systems, and
their job offers were not attractive to good scientists with academic positions,
Kimura said. "Also, many of their projects, mainly biopharmaceuticals, were
killed when they found that the outcomes of these projects were already patented
by the Americans. They underestimated the risk of preceding patents, and this
defeated their programs and quickly cooled the biotech fad among Japanese,"
Although estimates vary, Japan's new wave of interest in biotech
has spawned about 20 biotech companies, many formed in the last two or three
years as attitudes toward entrepreneurship and enthusiasm over new economy business
have improved. Kano put the number of companies at 18, two of them independent
and the rest spinouts from laboratories or large companies (see "Getting
Ichiro Nakatomi, president and CEO of Nanocarrier Co. Ltd.
(Kashiwanoha, Japan), a drug delivery startup established in 1999, estimated
that five or six of the companies are developing drugs, while others are producing
chips or other genomics enabling devices, or performing services such as SNP
and protein analysis. For example, Dragon Genomics Co. Ltd., a subsidiary of
Takara Shuzo Co. Ltd. (Kyoto), does gene sequence analysis, while Helix Research
Institute Inc. and Protegene Inc. (both in Kisarazu) do cDNA analysis.
"Biotech is a tiny world in Japan. The venture business is
so young, and the science is so raw. Companies are few in number and not well
capitalized, and there are limited managerial resources," noted Susan Clymer
of NichiBei Bio Inc. in San Francisco, which does development consulting for
U.S. companies doing business in Japan.
One of the critical issues for the formation and survival of a Japanese biotech sector is management, as the traditional Japanese corporate culture is widely seen as a polar opposite of the methods and mindset for building a biotech industry.