If you are using a microarray anywhere in the world today, there is a good chance the chip was manufactured in the Republic of Singapore. And if you are a microarray researcher in Asia, Affymetrix and Illumina hope to use the small city-state as a launching pad to reach you.
"It's very hard to say you have a growing business in Asia when you really don't have a serious presence, because the customers won't believe you," said Wayne Woodard, senior vice president of global operations at Affy, which, like its chief rival, has opened manufacturing operations in Singapore.
"We probably have somewhere north of 190 people here in [Asia] that can help customers, help our field service people, and help our sales organization," said Woodard. "As we follow the sun, there are between 60 and 70 people in Europe and then there are the US folks," he said. "We truly are on around the clock."
Derric Lee, Illumina's general manager of manufacturing operations in Singapore, agreed: "For any location in this Asia Pacific region, Singapore can provide a delivery in less than 24 hours. It's not just about providing a manufacturing location, but also providing other services that can meet the needs of this part of the world."
Earlier this month, Lee and Woodard gave BioArray News a tour of their companies' respective Singapore facilities.
"Business in this part of the world is growing significantly, and shipping products all the way from the US is probably not always the most efficient way to do things," Lee added.
'The Factory That Never Sleeps'
Of the two West Coast array makers, Affy was the first to select Singapore as its new manufacturing hub. Affymetrix Singapore was founded in 2005, began producing arrays in 2006, and was officially opened in 2007. Last year, for the first time, it produced all of the company's GeneChips.
As of February, more than 160 people were employed on site, which is run 24 hours a day, seven days a week. Choy Kem Wah, vice president and general manager of Affymetrix Singapore, calls it the "factory that never sleeps."
Affy, based in Santa Clara, Calif., originally manufactured its arrays in the US, primarily at its facility in West Sacramento, Calif. That site was closed in 2009 after the company underwent a restructuring that moved all reagent manufacturing to Affymetrix Ohio and array manufacturing to Singapore.
Affy currently ships products to some customers directly through Singapore, while it maintains a distribution center in Louisville, Ky.
While lowering production costs was certainly a factor in Affy's decision to locate the plant in Singapore — the company will enjoy a "tax holiday" through 2017 on profits it makes from selling arrays — Woodard said there were other reasons why Affy chose the country.
"The typical matrix you set up when you do site selection includes intellectual property protection, language, infrastructure, closeness to technology research," Woodard said. Life science firms like Affy ask, "'Is the country a manufacturing-oriented economy? Do they have the workforce that has background skills and experience in the right space?' It is not always about cost. It is about all those aspects in a global economy," he said.
Singapore has historically had a manufacturing-oriented economy. From 1968 to 2005, for instance, it was one of the main manufacturing locations for National Semiconductor. ST Microelectronics, another semiconductor manufacturer, has had a presence on the island since 1970. And Woodard said it is this background that encouraged Affy to invest there.
"Those kinds of environments and those kinds of skill sets were very transferable into the life-sciences space," Woodard said. Affy's employees in Singapore previously "might have worked for Seagate or ST Microelectronics or National Semiconductor," he said. "Now they are finding themselves again in a clean room, but instead of laying down electronic circuits they are laying down DNA and RNA."
Affy and Illumina are "standing on the shoulders of the giants of the past," according to Beh Kian Tiek, director of the biomedical science division for Singapore's Economic Development Board. He told BioArray News during an interview at the EDB's headquarters earlier this month that Singapore began to focus on attracting life-sciences companies in 2000 by pledging to eventually invest 3 percent of gross domestic product annually in R&D.
Singapore aims to fulfill this commitment by next year. As an example of this investment in "intellectual capital," Beh cited Singapore's Biopolis R&D center, which was constructed in 2003 and 2004, and is home to the Genome Institute of Singapore.
But more than just attracting firms that could offer Singapore more manufacturing jobs, SEDB is selling the country as a place where manufacturers can make future investments in distribution and regional operations.
"When you talk to these companies, the first thing they tell you is how Asia is going to be a location they must be in," Beh said. "It's less about tax incentives and government incentives and more about strategically what will help carry them forward as a company for the next 30 years." The EDB's job is to help the companies "upgrade" as they decide to increase their presence in Singapore, he added.
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Choy Kem Wah was Affy's first hire for the Singapore plant five years ago. As vice president and general manager of the site, Choy travels to Santa Clara every three months, and Affy's administrative team typically visits Singapore once a year. According to Choy, it was local enforcement of IP laws that has made the country stand out.
"In many countries, one of the challenges you face is that IP finds its way into other factories and to competitors; not necessarily to a direct competitor, but to someone who copies what you do and recreates it," said Choy. While IP protection laws are on the books in most nations, the difference is that they enforce them in Singapore, he said.
"For example, if you get caught with pirated software in Singapore, they will come into your shop, raid it, suspend your license, and destroy everything," Choy said. "If you look at the world geographically, [Affy] could have put the plant anywhere. But I think in Asia, if you look at Singapore or Malaysia or China, what Singapore stands for is respect for IP, and that matters a lot to Affymetrix."
'A Regional Headquarters'
While Singapore's most recent effort to attract interest from life-sciences companies is a decade old, at the end of the 1970s the country had already begun to lure biomedical sciences firms to its soil.
According to the EDB's Beh, companies that invested early included what is now GlaxoSmithKline, Baxter, and Becton Dickinson. Years later, former employees of these firms have resurfaced in microarray companies. Such is the pedigree of Illumina's Lee, who joined the BeadChip maker in July 2008 after working for years at BD and Applied Biosystems.
According to Lee, although Illumina manufactures its newer BeadChips in San Diego, the company now produces a majority of its BeadChips and reagents at the Singapore facility. The company has also publicly discussed moving other manufacturing to Singapore in the future.
For example, during Illumina's fourth-quarter 2009 earnings call, CEO Jay Flatley said that this year the company will begin "moving a few self assemblies over to Singapore," though it doesn't plan to move full system manufacturing of its sequencers to Singapore this year.
Illumina, based in San Diego, originally manufactured its BeadChips in a facility in that city and maintains sequencing manufacturing at sites in Hayward, Calif., and Little Chesterford, UK. In 2007, the firm leased a 36,000-square-foot facility in Singapore and began transferring is BeadChip manufacturing capabilities there. In the third quarter of 2008, the plant began shipping chips.
As with Affy, Illumina's manufacturing operations in Singapore operate under various tax holidays and incentives that, in Illumina's case, begin to expire in 2018. According to Lee, though, Illumina received other assistance from Singapore's EDB, including help in locating a facility and some refund of training costs for Illumina employees.
According to Lee, Illumina's Singapore operations mirror the development of the company as a whole. "Illumina is growing. Three or four years ago our headcount was less than 500. Today Illumina worldwide is 1,800 employees," he said. He did not discuss headcount at the manufacturing site.
"The business has grown from less than $100 million a few years ago to nearly $700 million, so it has grown tremendously over the last few years," he added. "I would expect that Singapore will continue to grow as well."
The Asian market has been a contributor to that growth, Lee noted, pointing out that the company recently received an order from Beijing Genomics Institute for 128 of its new HiSeq 2000 high-throughput sequencers.
"Every country has its own genome center. Singapore has GIS. In China you have BGI, Korea and Japan have their own. All of these are our customers," Lee said. "China has the world's biggest genome center right now. They don't just do products for Chinese government but they are aiming to serve the world."
It is serving customers like BGI that makes Singapore a "nice location for a distribution center," Lee said, "because Shanghai is probably five or six hours away by plane, India is about seven hours, [and] Melbourne, [Australia], is about seven hours.
"Singapore is well positioned to be a regional headquarters for Asia Pacific," he said. "It is politically very stable, getting in and out of Singapore is highly efficient, and doing business here is very transparent."
Lee said that Illumina sources some raw materials from nearby Malaysia, Thailand, or sometimes China, which has enabled the company to cut down on cost. Labor costs are "certainly lower than the US," while "transportation costs in this part of the world are definitely cheaper, like from here to China or Melbourne," he said. "Overall, it is cost effective to do business here."
While Illumina has benefitted like Affy from access to a skilled workforce, Lee said that one main challenge continues to be getting new workers acquainted with microarray technology. "The technology is quite new. Not many people here in Singapore are trained on it," Lee said.
"If you are talking about manufacturing knowhow, quality control, methodology and things like that, then the people here are quite good at making products, but it takes time to train them how to make these products," he said.
He noted that Illumina continues to manufacture its newer BeadChips in San Diego. "New technology, something that is in development, something that has just been launched, will certainly not be something that you want to move Singapore," Lee said.
While Singapore might be the best fit for Affy and Illumina for now, some of their predecessors in the semiconductor industry have relocated their manufacturing in other locations in Asia. Most notably, when National Semiconductor closed its facility in Singapore in 2005, it transferred those operations to Malaysia and China.
"You are never the only game in town," said the EDB's Beh. "Just as companies will always have competitors, there will always be more than one location. It depends what you are looking for. In this industry, people are looking for quality, intellectual property protection, and these are all factors that play to Singapore's strength," Beh added. "Right now, there is a significant interest in Asia and Singapore is right in the middle of this action."