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Low Costs, Proximity to Asian Markets Drive Singapore's Growth as LC, Mass Spec Production Hub


By Adam Bonislawski

In October, Agilent Technologies announced it had shifted production of several liquid chromatography/mass spectrometry systems to its Singapore manufacturing facility.

With the move, which affected the company's 6100 Single Quadrupole, 6200 Time-of-Flight, 6400 Triple-Quadrupole, and 6500 Quadrupole Time-of-Flight machines, Agilent became the latest of several major instrument vendors to choose the island nation as a base for the manufacture of LC and mass spec equipment.

With an educated workforce, well-developed infrastructure, open trade policies, and strong intellectual property laws, Singapore has long been a desirable manufacturing location. Agilent, in fact, has operated there for more than 40 years.

More recently, the country has managed to secure significant business producing high-end life sciences instrumentation. Waters, for instance, currently produces its Alliance HPLC line there through an agreement with Singapore-based manufacturing firm Flextronics and is in the process of shifting all production of the Acquity H-Class UPLC platform to Singapore from its Milford, Mass., facility.

AB Sciex manufactures all of its mass spectrometers in Singapore. It began moving production of the instruments there from its Toronto factory in 2005 and completed the shift in 2009. In May, the company launched its TripleTOF 5600 system, marking the first time it had brought a new mass spec platform to market from its Singapore facility.

A desire for lower production costs has certainly factored into these shifts. According to AB Sciex chief operating officer Andy Boorn, the savings generated by moving operations to Singapore are "significant in the short term."

The most powerful driving force, though, has been the growing importance of the Asia-Pacific market.

"Asia-Pacific represents 37 percent of Agilent's revenues, and it's our fastest growing region," Gustavo Salem, vice president and general manager of the company's biological systems division, told ProteoMonitor. "It's important for us to continue to put manufacturing confidence in that area. It just gives us better access to that market."

"Short term, there's the economic benefit," AB Sciex's Boorn told ProteoMonitor. "But over time as costs go up in Asia, that becomes less and less of a factor. The mid- to long-term rationale is that China and India and the other Southeast Asian markets are the fastest-growing markets for life sciences products, so in the long run it's much better to be closer to these markets, to be able to supply them on a very timely basis and have a greater mass of knowledge and people in the region."

With regard to production costs, the majority of savings come not from cheaper labor in Singapore, but from the ability to source less expensive components from surrounding areas like China, Malaysia, and Indonesia, Boorn said.

"It's not a big difference from a labor [cost] standpoint, but the labor content of our instruments is relatively small," he said. "Most of our product [cost] is materials. So that's really where you make it up – in machine parts, in the production of printed circuit boards, areas like that. [Components] can be half or a quarter of the cost that you'd pay in North America."

Lining up these suppliers was perhaps the biggest challenge AB Sciex faced when it began transferring production of its mass spectrometers to Singapore five years ago, Boorn noted, saying the company has "had to work with a lot of the suppliers in Asia to get them to the levels of quality and specification that products like mass spectrometry require."

While AB Sciex now manufactures all of its mass spec platform in Singapore, at the beginning of operations it confined production to its ABI 4000 line – a choice made because that product "was relatively well understood and had high volume," Boorn said.

Waters' ongoing move of its Acquity H-Class product line stems from a similar logic. According to Gene Cassis, vice president of investor relations, the company considers Singapore a prime manufacturing site for established high-volume, regulation-driven platforms like Alliance and Acquity. Newer products and lower-volume, research-driven instruments, on the other hand, it plans to keep near its R&D sites in Milford and Manchester, UK.

"Proximity to our R&D groups facilitates a better new product integration process," Cassis told ProteoMonitor. "The strategy we've had is to take our liquid chromatography products that are manufactured in high volume and manufacture those in Singapore while continuing to manufacture our new chromatography products at our headquarters in Milford."

Waters' practice of keeping newer products close to its R&D centers means it's less likely to move mass spec production to Singapore from its current hub in Wexford, Ireland, Cassis said.

"The product cycles in mass spectrometry have historically been shorter than the product cycles in chromatography because mass spec is used more as a research technique, while chromatography has moved into highly regulated markets [like pharma QA/QC]," he said. "We have seen and think we'll continue to see that there's a lot of value to having our mass spectrometry manufacturing close to our R&D site in Manchester."

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Cassis did note, however, that Waters envisions future "instrument systems that include mass spectrometry technology that could be used in regulatory applications and manufactured in high volume," and that "there's no reason to think you may not see complete instrument systems that include mass spectrometry technology manufactured in Singapore."

Since 2000, biomedical research instrumentation has risen from 4 percent of Singapore's manufacturing output to 10 percent. Key to the country's growth as a life sciences manufacturing center has been its development of a skilled labor pool capable of producing such instruments.

"The kinds of products we've chosen to put in this new facility are high-end mass spectrometry products," Salem said. "They do require a highly skilled labor force, and Singapore was chosen in large measure because of the ongoing development and investment in that labor force."

In particular, the country's Economic Development Board is "a huge resource" in terms of "helping to locate talent, helping with recruiting efforts, making sure local universities and colleges are tailoring their training programs to support" the life sciences industry, Boorn said.

AB Sciex considered both India and China when planning an Asian manufacturing center for its mass spectrometers, but, Boorn noted, while those countries would have been lower-cost locations, Singapore's labor pool and its well-developed infrastructure and more familiar business and legal culture won out.

A further advantage, he added, is the Singapore EDB's decision over the last several years to focus on the life sciences industry.

"Everything in Singapore is very planned, and the life sciences area is [the EDB's] current focus," Boorn said. "They've recently started a life sciences instruments working group of sorts where they invite representatives of all the life sciences companies in Singapore to come share their progress, share their concerns, share what could help the industry continue to flourish."

"They're able to be almost a facilitator for getting things, for getting you set up, for helping you understand the region," he said. "They're really a very sophisticated organization in terms of understanding our industry."

Have topics you'd like to see covered in ProteoMonitor? Contact the editor at abonislawski [at] genomeweb [.] com.

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