Thailand’s efforts to move up the value chain into high-tech sectors took a small step forward this month with a little help from communist Cuba.

On October 6, Siam Bioscience Company Ltd, the country’s first producer of bio-similar drugs, and CIMAB S.A., a Cuban biotech enterprise set up by Abinis Co Ltd, entered a joint venture licensed to produce six biopharmaceutical products for the Thai market and export to the region, with launches of the new drugs expected to start in 2020.

The joint venture (JV) is significant on several fronts. Abinis became the first company to receive special tax privileges under Thailand’s revised Board of Investment (BOI) privileges passed this year to promote investments in research and development (R&D) high-tech sectors including biopharmaceuticals.

Abinis received a ten-year tax holiday from the Board of Investment (BOI), compared with the usual five-year waiver, which is extendable by another three years based on the ratio of its R&D spending to earnings, as allowed under the new legislation.

The revised BOI privileges were pushed through to encourage private sector investments in R&D, traditionally amounting to about 0.1% of Thailand’s gross domestic product (GDP). The government aims to boost that to 1.0% of GDP as part of its so-called “Thailand 4.0” strategy, a catch phrase for transforming the kingdom into a “value-based” economy.

Thai kindergarten students at a demonstration of a science experiment during the event ìThe 2017 Little Scientistsí Houseî, on the 4th floor of Chamchuri Square. The event was being held simultaneously in four regions nationwide. BANGKOK POST PHOTO/Chanat Katanyu
Thai kindergarten students view a science experiment at an event held at Bangkok’s Chumchuri Square shopping mall. Photo: AFP Forum/Bangkok Post/Chanat Katanyu

Secondly, the joint venture has established Siam Bioscience’s position in Thailand, if not the entire Association of Southeast Asian Nations (Asean), as the leading pioneer of bio-similar production, or generic biopharmaceuticals whose original patents have expired.

Siam Bioscience is 100% owned by CPB Equity Company Ltd, an investment arm of the Crown Property Bureau – the institution that manages the property and assets of the Thai monarchy. CPB is a major shareholder in other well-known, well-run Thai companies such as the Siam Cement Group and Siam Commercial Bank.

Thirdly, Abinis secures CIMAB’s position as a key player in Asia’s bio-pharmaceutical market. CIMAB, a state enterprise under Cuba’s Center for Molecular Immunology (CIM) holds 30% of the 3 billion baht (US$90.3 million) joint venture, which it will contribute to in terms of technology inputs. Siam Bioscience holds the remaining 70%.

The state-run CIM was established in 1994 to conduct R&D in biotech to assure the Cuban market access to high-value pharmaceuticals that were otherwise unavailable due to prohibitive costs or the US’s trade embargo on the communist island.

CIMAB currently exports bio-pharmaceuticals to 30 countries worldwide and has set up joint ventures in Brazil, China, India, Japan and Singapore. The state enterprise is also conducting clinical trials with the US-based Roswell Park Cancer Institute in Buffalo, New York, which could develop into a JV, US politics permitting.

“In Cuba, we don’t have many financial resources so we come in [JVs] with our intellectual property,” said Ernesto Chico Veliz, CIMAB’s business development manager. “We offer rights to develop or commercialize our patents in certain territories, and we bring in people to assist in this.”

Cuba-CIMAB Headquarters-Biotech-September 2017
CIMAB’s headquarters in Havana, Cuba. Photo: Courtesy of CIMAB

In China, for instance, CIMAB established the Biotech Pharmaceutical Company Ltd in the Beijing Economic and Technological Development Zone, in 2000 to produce biopharmaceuticals to treat head, neck and ear cancers.

The JV is currently in consultations with the Chinese government to include their drugs under a new universal health scheme for the country of 1.38 billion people.

CIMAB’s modus operandi is to offer different licensed patents to its different JV partners. Abinis has licenses to produce six biotech products to treat breast cancer, colorectal cancer, rheumatoid arthritis and non-Hodgkin’s lymphoba. Itolizumab, a product in the CIMAB pipeline to treat psoriasis and rheumatoid arthritis, will be co-developed in Thailand as a new bio-similar.

“We know our position,” said Songpon Deechongkit, managing director of Siam Bioscience. “We want to advance the bio-pharmaceutical field in Thailand, but if we were to start with innovative products right away it would be an uphill challenge, so we have started with generics.”

Siam Bioscience, launched in 2009 with a two-billion baht (US$60.2 million) investment, has already developed in collaboration with the local Mahidol University two generic bio-pharmaceuticals products for treating anemia and boosting the immune system for patients undergoing chemotherapy.

Distribution of both products began on the Thai market last year, with sales earning an estimated 100 million baht (US$3 million).

Thailand-Apiporn Pasawat-Siam Bioscience – October 2017
Siam Bioscience chairman Apiporn Pasawat at the company’s Bangkok headquarters. Photo: Peter Janssen

Apiporn Pasawat, executive committee chairman at Siam Bioscience and a former executive at the Siam Cement Group, was aware of Cuba’s advances in biopharmaceuticals and approached CIMAB in 2014 as a potential partner. “They didn’t know anything about Thailand. Taiwan they asked?” Apiporn said.

“After two years, I convinced them about the good potential of the Asean market, 600 million people, and they agreed to license the products here because our philosophy is similar to Cuban philosophy: to produce medicine for the people as a social benefit.” Siam Bioscience has set a target of providing bio-similars on the Thai market at 50% below the price of imported drugs.

For CIMAB, Siam Bioscience was seen as a strategic partner to do clinical tests, and develop and produce its patented drugs for the Asean market. “The development of a drug sometimes needs to be done region by region,” said Chico.

CIMAB already has a JV in Singapore, Asean’s leading medical research hub, where it is conducting some clinical trials but Thailand offered different opportunities. “This is the first JV we have set up to really manufacture in the [Asean] area,” he said of Abinis.

CIMAB takes a long-term view on drug sales, in part because bio-pharmaceuticals differ from chemical drugs in their usage. Developed from living cells in proteins, they target cancer cells specifically, unlike chemotherapy that kills all cells randomly and weakens the entire immune system.

FILE PHOTO: Pharmaceutical tablets and capsules are arranged on a table in a photo illustration shot September 18, 2013. REUTERS/Srdjan Zivulovic/Illustration/File Photo
Pharmaceutical tablets and capsules in an illustration portrait. Photo: Reuters/Srdjan Zivulovic

“Bio-tech medicines are less toxic, so the patient can be treated long-term,” said Chico. “In doing so, our hope is to stabilize the cancer tumor and to try to switch the cancer from a terminal illness to a chronic illness.”

While the joint venture provides some hope for the government’s “Thailand 4.0” ambitions, observers say much more needs to be done than just providing BOI tax incentives if the kingdom is to become a viable medical research hub.

Somkiat Tangkitvanich, president of the Thailand Development Research Institute (TDRI), a think tank, says Thailand needs to provide funding to companies to work with public research institutes, recruit world class researchers and scientists, and develop a talent pool through scholarships and trainings.

“In this area Thailand should learn from Singapore,” he said. “It’s not just about tax incentives.”