By NISHA RAMCHANDANI

IF SINGAPORE wants to raise the bar for its biotechnology sector, it will need to shift its focus and resources to stimulating home-grown innovation, according to a report.

While Singapore stands out from competitors in areas such as infrastructure, cost competitiveness and strong backing from the government, it needs to do more.

'Cross-country cost advantages tend to be short-lived,' the Ernst & Young (E&Y) Beyond borders: global biotechnology report 2010 said.

The report went on to point out that while Singapore's large tax incentives have made it attractive to multi-national corporations, such incentives may not be sustainable in the longer term.

The report also highlighted that Singapore has made significant strides in growing its research and development strengths in recent years.

For instance, the Singapore Immunology Network - a research consortium under the umbrella of Agency of Science, Technology and Research (A*STAR) - has teamed up with two European biotech companies, Humalys SAS and Cytos Biotechnology, to develop antibodies for viruses that are prevalent in Asia.

And despite the economic downturn that dogged most of 2009, Singapore continued to attract investments from major biotech and pharmaceutical companies last year.

Last September, Swiss group Lonza broke ground for a $40 million cell therapy plant here while Roche Group subsidiary, Genentech Singapore, exercised an option to purchase a Lonza plant for up to US$360 million in August.

Still, while the worst of the financial crisis may be over, companies today worldwide are operating in what E&Y terms 'the new normal', where access to capital remains difficult.

'Companies will continue to face a challenging funding environment for the foreseeable future,' said Glen Giovannetti, E&Y's global biotechnology leader.

In addition to boosting capital efficiency and locating non-traditional sources of funding, companies also need to consider achieving better returns for investors and developing unique products, in order to flourish in this new operating environment.

This article was first published in The Business Times.