3: Enterprise Support

To drive domestic biotechnology start-ups and encourage foreign companies to establish domestic facilities, a country must provide Enterprise Support. In short, this metric quantifies a country’s business friendly features and the availability of capital in various forms. Without Enterprise Support, it becomes so difficult to start and grow a company that it diminishes the value of other components that support biotechnology.

The final Enterprise Support metric consists of an average of four elements. We derived a “business friendly environment” measurement from: Doing Business 2011: Making a difference for entrepreneurs from the World Bank and the International Finance Corporation, which surveyed local experts on a synthetic business case. This approach includes some limitations because it relies on a specific business of a specified size and refers to conducting business in a country’s largest city, with the exception of certain countries such as China. The “biotechnology venture capital” component depends on measurements of venture capital activity in 2009 from the OECD. The “venture capital availability” score comes from an index based on an international survey (Schwab, K. 2010. The Global Competitiveness Report, 2010-2011. World Economic Forum). The last component, “capital availability,” was derived from the Milken Institute Capital Access Index, 2009.

The combined Enterprise Support metric shows that Hong Kong—a new addition to the list of countries—and Singapore top the list. In both places, strong government support for enterprise increases their scores in many components of this category. Nonetheless, Hong Kong and Singapore lack some of the other features necessary for a strong biotechnology industry. So it will be interesting to see if their large investments in Enterprise Support will lead these countries to focus on domestic assets or to focus on attracting foreign companies to establish offices in the region.

Among the top five countries in Enterprise Support in our 2010 edition, Canada dropped from fifth to ninth and the U.S. dropped from first to third, partly due to the addition of Hong Kong. On the other hand, some countries are climbing in this category. For example, China’s Enterprise Support score of 3.95 in 2010 increased to 5.09 this year. Another addition to the 2011 list, Saudi Arabia, took the seventh spot in Enterprise Support—earning a score of 7.22 that puts it just behind New Zealand and Israel.

For all countries, a fundamental question about Enterprise Support is: When investing in a business friendly environment, what is the return? That is, will the investment pay off or will taxpayers simply fund enterprises that provide no value?