EMERGING IP RIGHTS
COUNTRY REPORT - MALAYSIA
ASIAN PATENT ATTORNEYS ASSOCIATION 15TH
General Assembly
17-20 November 2007
Adelaide, Australia
T. Kuhanandan
BADRI KUHAN YEOH & GHANDI
Advocates & Solicitors (since 1986) Registered Trademark,
Industrial Design & Patent Agents Intellectual Property (IP)
IT, Corporate & Commercial Attorneys
Suite No 44-2, TK & G Chambers
44, Jalan Kemuja, Bangsar Utama, 59000 Kuala Lumpur,
Malaysia
Tel: 603 22834145 / 22828246
Fax: 603 22835284
Email: bkyg@bkyg.com
Website: www.bkyg.com
Emerging IP Rights - APAA, Adelaide 2007
Country Report – Malaysia
T Kuhanandan
17 -20 November
Biotechnology and Development
As Malaysia is one of the 12 mega bio-diversity countries in the world, one of
the core technologies identified to turn it into a developed nation is
biotechnology. Biotechnology work centres on the needs of the nation like
improving food production while ensuring the safety of humans, animals and
plants. As local companies are raring to use genetically modified organisms
(GMO) regulation of the biotechnology industry is imperative.
In its varied forms biotechnology combines the genetic elements of two or more
living cells by using the techniques of gene splicing with recombinant DNA
technology where lengths of DNA are taken from one organism and placed into
another organism and injecting nucleic acid into cells causing the fusion of cells
beyond their taxonomic group. By such the Malaysian Agricultural Research
and Development Institute (MARDI) modified rice to resist the tungro virus;
papayas to resist the ring spot virus infection besides having a prolonged shelf
life; pineapples to resist the black heart syndrome, bananas and papayas to
delay ripening and chili for virus resistance. Palm oil produces value added
products such as high oleate and stearate oil, nutraceuticals (Vitamin A and E]
besides being genetically engineered to produce biodesel and bioplastics.
The Malaysian Palm Oil Board (MPOB) collaborating with PETRONAS
researched into palm biodiesel since the 1980s. A technology developed in 1983
transforms crude palm oil through the process of transesterification into palm
methyl ester oil as a diesel substitute. The product was tested for efficacy
through laboratory assessment, stationary engine testing and field trials on
taxis, trucks, cars and buses. Commercial buses with Mercedes Benz engines
completed 300,000 km each, the life span of each engine. The field trials proved
advantages of no modification to the engines, good engine performance, cleaner
exhaust emission and fuel consumption comparable to diesel. Temperate
countries had a pour point problem of palm biodiesel, pour point = 15ºC due to
the weather. The winter season necessitated the installation of a heating device
in trains running on palm biodesel. MPOB developed a process to produce low
pour point, -21ºC-10ºC, palm biodesel that does not require the device. This
Palm biotechnology was licensed to several local companies producing biodesel
mainly for the global transport and agriculture market besides exporting the
technology to a company in Korea.
The palm biodesel could be used on its own or blended with petroleum diesel in
any proportions. The new palm biofuel blends 5% processed palm oil with
petroleum diesel to cover a mileage of about 850 000km. It provides a safety net
for the Malaysian palm oil industry when there is a glut in the market by
removing the excess stock thereby increasing the price. A mere 10% palm oil
allocated for the biofuel project stimulates the local palm oil industry and
stabilizes the palm oil price in the global market. Palm biodesel could produce
carotenes, pro-vitamin A, tocopherols and tocotrienols - Vitamin E, co enzyme
Q, phospholipids, phtosterols and squalene to generate more revenue.
Operating in a state of ignorance
Although transgenic crops through biotechnology maybe grown with less use of
pesticides and herbicides, experts are concerned about the transfer of genetic
material through cross-pollination and impact on other species. Ministry of
Natural Resources and Environment (MNRE) secretary general Datuk Suboh
Mohd Yassin in expounding the socio economic impact said GMOs could lead to
the loss of biodiversity by displacing naturally occurring wild species and
contaminating crops. While not commercially producing GMOs yet, Malaysia
imports GMOs in animal feed and food for humans. The NGO Third World
Network biosafety coordinator Lim Li Lin opined Malaysia was operating in a
state of ignorance as there was nothing legally binding people to declare GMOs
neither was there anyone testing for GMOs.
However, a central scientific committee known as the Genetic Modification
Advisory Committee (GMAC) staffed by the Agricultural Research &
Development Institute, MNRE and Ministry of Science, Technology and
Innovation (MOSTI) besides legal personnel deals with the application and
approval of GMOs but it operates on a voluntary not binding basis. Risk
assessment was conducted in reference to The National Guidelines for the
Release of GMOs into the Environment in regard to regulation, assessment and
management of risks. UM law professor and a member of the committee Gurdial
Singh Nijar pointed out due to its voluntary basis GMAC was bypassed in
several cases. If for instance part of a shipment of GMO animal feed or food
being imported was contaminated they would not be able to get to the
particular consignment to minimize risk to people and animals.
Quarantine, health and agriculture laws at present do not deal adequately with
GMOs he explained. Even with the Regulation on Genetically Modified Foods
(GMF) requiring GMFs that are to be imported must be marketed in the country
and overseas and prepared for sale in line with stipulated provisions including
labeling which has to be approved by the Director General of Health. The
stipulated provisions based on the Codex work on GMOs, in which Malaysia
participated is mainly labeling requirements for GMFs under the Codex
Committee on Food Labeling and the Principles for the Risk Analysis of Foods
Derived from Modern Biotechnology and Guidelines for the Conduct of Food
Safety Assessment of Foods Derived from Recombinant-DNA Plants and
Recombinant-DNA Microorganisms.
Another issue concerning the industry is the stem cell banking business which
has to be regulated. Stem cell storage companies like StemLife collect and
preserve umbilical cord blood stem cells from newborns. Stem cells are claimed
to be able to replace damaged cells and to treat heart disease, thalassaemia,
blood cancers and chronic wounds. Currently these companies operate the
business without any regulation but StemLife finance director Michael Lim
urges regulation for companies to operate credibly. The issue arose when
StemLife was ordered by the Medicine Advertisement Board (MAB), under the
Ministry of Health’s Pharmaceutical Services Division to withdraw its
advertising material as they did not comply with approved content matter for
advertisements. Reviewing applications for advertisements relating to services,
appliances and remedies with medical claims, the MAB found advertismental
matter on cancer treatment fell under its ban list.
Upon removal of the offending material and submission of new material the
approval was still held back as MAB stated StemLife needed a licence to operate
this business. As there was no legislation which regulated stem cell banking,
StemLife insisted they didn’t need a licence for the business. However, they
applied for a licence under the Private Healthcare and Facilities Services Act
which came into force in 2006 but their application is pending as the Ministry
sorts out the regulation for stem cell banking. The MAB verbally approved the
new advertisement materials with StemLife planning to carry on advertising
about its business.
Another example of the lack of regulation of the biotechnology industry was the
curtailment of officials at ports of entry in carrying out their duties for
identification of products with GMOs unless they are for planting. Further, once
in the country there was no required labeling of products. Malaysia raised the
issue of biosafety in 1991 during negotiations for the Convention on Biological
Diversity (CBD), passed in 1992, with ratification of the Cartagena Protocol on
Biosafety 2000 in 2003. The international acknowledgment of that which
Malaysia initiated necessitated The Biosafety Act to be in place, Nijar said,
instead of lagging behind the European Union, several countries in Asia Pacific
and Africa which already have laws covering the release and marketing of
GMOs.
The Bio Safety Bill tabled for debate frameworks managing bio safety and bio
security issues, for genetically modified (GM) products. Prime Minister Datuk
Seri Abdullah Ahmad Badawi expressed concern for the country’s level of
preparedness in addressing bio safety and bio security elements linked to
biotechnology development. The Bill ensures technology development does not
compromise human and environmental safety. Asians as they race to obtain a
share of the lucrative biotechnology market may not be vigilant to set in place
precautionary and preventive measures Badawi stressed.
Administrative procedures available to ensure safety of GM products was
ineffective without the appropriate tool of the law to enforce them read Home
Affairs Minister Datuk Seri Mohd Radzi Sheikh Ahmad from Badawi’s speech at
the Biosafety and Biosecurity Asia 2007 Conference. Biosafety comprising safe
practices in handling biological agents, managing the risks of food chain
contamination and promotion of safety standards in research must concord
with Biosecurity. Bio security involved efforts to protect the population and food
sources from epidemics whether occurring naturally or from the use of
biological weapons. Measures included monitoring patterns suggesting
emerging epidemics, having sufficient stockpiles of suitable vaccines in case of
outbreaks besides intensifying public health education.
With the Biosafety legislation any food product, animal feed, crop or animal
containing GM organisms, which Malaysia does not intend to ban, would be
approved by a government panel comprising experts. Malaysia imports
genetically modified soya, corn, rice, animal feed and fruits but generally no
labeling was required. In a related development Minister of Natural Resources
and Environment Datuk Seri Azmi Khalid said the government will not back
down from its position to make labeling of products containing GMOs
mandatory under Section 61 of the Bio Safety Bill. US biotech companies have
been pressuring Malaysia to drop the clause, which was reported to be one of
the 58 contentious points on the US-Malaysia FTA. Furtherto, MNRE’s principal
assistant secretary K. Nagulendran clarified GM food in which genes have been
tinkered with such as a tomato being modified with organisms could affect the
environment, health and religious practices as to whether it is ‘halal’ (kosher) or
not. As the Bill is still being fine tuned at the time of writing it is not sure when
it will eventually be passed. In 2006 MNRE and the UN Development
Programme launched a 4 year US5.2 million (RM19.5 million) biosafety project
to fortify existing regulations, to assist future board assessors to prepare
manuals on obligations of private companies to manage risks.
Budapest Treaty on the International Recognition of the Deposit of
Microorganisms for the Purposes of Patent Procedure (1977) is a source of
regulation of the biotechnology industry, which Malaysia was supposed to ratify
but to date there is no information on its status.
MyIPO Guideline on biotechnological innovations
The local Office was supposed to inform the public on such a guideline to
assess biotechnological innovation but to date there is no information.
Data Exclusivity Act
Another piece of legislation being drafted by the Ministry of Health which is
relevant to the biotechnology industry but there is no information or very little
on it.
However, in relation to it Malaysia recently set conditions in agreeing to the US
request for data exclusivity (DE) for new pharmaceutical products in the
bilateral free trade agreement (FTA) negotiations said Health Minister Datuk
Seri Dr Chua Soi Lok. The conditions being the DE was for a 5 year period
effective from the time a product obtains a DE from its country of origin and it
can only be granted by Malaysia’s National Pharmaceutical Control Bureau
(NPCB). “The US wants DE for 5 years for pharmaceutical products and 3 years
for new clinical information,” he added.
The DNA database
The Chemistry Department is the ASEAN reference centre for GMO testing and
is equipped to begin monitoring once the Biosafety Bill is passed and enforced.
In the works is the DNA database which would ease investigation work by the
police, Health Ministry, Customs Department, Department of Environment and
Domestic Trade and Consumer Affairs state offices. When the DNA
Identification Bill is passed it is a mode of reference as civil liberties are
concerned with the Department testing samples in criminal cases for drugs,
murder and rape with the evidence to be adduced in court.
New Plant Varieties
Agriculture and agro-based industry Minister Tan Sri Muhyiddin Yassin in
explaining the National Agriculture Policy (1998-2010) said quality planting
materials are requisites for the sustenance of productivity and competitiveness
of the agriculture sector. Consonant with this approach the government
encouraged breeding new varieties of plants which required investment of time,
skills, labour, material resources and capital by providing exclusive rights to
plant breeders to reap the benefits of their efforts and innovative skill. To carry
out its obligations under the Trade Related Aspects of Intellectual Property
Rights Agreement (TRIPs) Malaysia had to provide intellectual property rights
protection for new varieties of plants by a patent, by a sui generis Act or a
combination of both. The result was The Protection of New Plant Varieties Act
2004 which came into force in 2007.
The Act protected contribution by farmers, local communities and indigenous
people in the creation of new plant varieties. It encouraged investment in the
development of the breeding of new plant varieties by the public and private
sectors. The main provisions of the Act was based on the Union for the
Protection of New Plant Varieties (UPOV) models with reference to the
Convention of Biological Diversity and intellectual property rights systems in
Japan, Australia, India and Thailand.
Legal practitioners in IP identified the need for clarification on the Act
pertaining to two issues – a) the test for new plant variety as opposed to an
essentially derived plant variety. The Act does not state how the test is to be
applied and the criteria for a plant to be registrable as a new plant variety; b)
the test to distinguish a registered plant variety that is new, distinct, uniform
and stable from a new, distinct and identifiable variety. While Section 32(1) of
the Act provides for 20 years registration for a new, distinct, uniform and stable
plant variety (stable variety] and 15 years for a new, distinct and identifiable
variety [identifiable variety], the test in Section 14 of the Act to distinguish the 2
remains unclear.
Nanotechnology
Nanotechnology deriving from Greek with nano referring to ‘dwarf’ is the next
technology to push Malaysia to industrial status. As all matter is derived from
atoms, by manipulating atoms or molecules nanotechnology produces
materials, devices and machines. Through science foundations, health
institutes, ministries of defence, environment protection and many others the
government spends funds in Research & Development operations. Malaysia
launched the National Centre for Nanoscience with amongst others University
Malaya under the Combinatorial Technology and Catalysis Research Centre
looking to develop high performing nanocatalysts; University Teknologi Malaysia
undertaking research in nanochemistry and Sirim under its Advanced Materials
Research Centre (Amrec) works on nanocomposites.
Ranging across varied disciplines nanotechnology effects novel foods, medical
devices, chemical coatings, personal health testing kits, sensors for security
systems, water purification units for spacecraft, displays for handheld
computer games and high resolution anemia screens. The beauty business is
not left behind with nano enhanced skin creams and suntan lotions besides the
sports world with nano improved products like tennis balls with better bounce.
Nanoelectronics is supposed to innovate a multitude of consumer and
industrial applications like computers and transistors with better power
reception in telephones, cars and domestic appliances. In the case of health,
nano research produced the development of biosensers, biomaterials and a new
breed of biochips for treating life threatening conditions including cancer and
heart disease. Bioengineered devices in the form of body implants like stents
deliver drugs to repair damaged tissue is being manufactured in the country.
Nano structures yield materials with new and improved properties to be used in
solar panels, anti-corrosion coatings, tougher and harder cutting tools,
chemical catalysts and other applications for the transport and energy
industries. It includes developing textiles with changing functional properties:
keeping one cool in summer and warm in winter. Also in the works are
materials that are highly resistant and light to make cars which use much less
energy but last longer.
Partnering global firms to Build a Biotechnology Industry
To roundup the status of emerging rights as Biotechnology and Nanotechnology
it is necessary to look at some of the aspects of development currently
undertaken. Malaysian Biotechnology Corporation (MBC) was established to
generate economic activity by commercialization of biotechnology innovation
through network collaboration with companies and suppliers that create money
spinning opportunities. The biotechnology value chain centers on meeting
customer expectations by way of motivating industry players with incentives
like grants further supported by funding mechanisms like banks with private
equity and capital besides developing a framework to sustain intellectual
property rights. However, the country needs to be wary in selecting the right
biotechnology investments due to safety issues including mitigating risks as
there are many foreign pseudo technology companies intent on getting rich
quickly.
Instead of following a neighbouring country which brings a company to set up a giant
manufacturing plant then gets into the import and export business MBC plans to build the
country’s own biotechnology industry, said CEO Datuk Iskandar Mizal Mahmod. Hoping
to collaborate with other countries to add value to the healthcare, agriculture and
industrial service sectors, MBC, plans to expand the BioNexus status companies to 70
from the current 36 by the end of the year. Such status earns companies tax breaks and
grants for research. So far, MBC distributed RM10million of the RM100million it
handles in seed funding, loans and other grants over a 5 year period.
Developing the biotechnology industry requires efforts from the private and
public sectors. One BioNexus status company is Inno Biologics owned by the
Ministry of Finance Inc and Malaysian Industry Government Group on High
Technology (MIGHT) operating a RM100 million biopharmaceutical plant in
Nilai, Negeri Sembilan. It signed a US$2million (RM7million) deal with Indian
biotechnology company Avestha Gendraine Technologies, a biotechnology and
bioinformatics integrated company focusing on blending food, pharmaceuticals
and clinical genomics to treat degenerative conditions, metabolic disorders and
infectious diseases. The group plans to invest the amount over the next 6
months as the firm contracted Inno Biologics to manufacture salines. Inno
Biologics produces generic drugs for other companies to substitute expensive
imported drugs. It expects to generate revenue up to RM100million annually
mainly from the 500 million ASEAN population. The Avestha deal was
important as it is one of the first few clients to use up Inno Biologics entire
capacity.
Another instance of such collaboration was property developer TH Properties
that inked an agreement with China’s Xian Hi Tech Industries Development
Zone (XHTZ) to lure its aviation and biotechnology companies to their 317ha
industrial park at Bandar Enstek. It aimed to have the largest biotechnology
cluster in Malaysia with an investment of RM1billion to emerge as a leading
centre for aviation maintenance, repair and overhauling operations disclosed
CEO Syed Mohamed Ibrahim. Besides a Halal complex, the biotechnology
cluster would develop the Health Ministry’s Institute of Natural Products,
Vaccines and Biologicals. With its companies XHTZ could use the technopark
as a gateway to reach the Muslim countries through the Organisation of Islamic
Conference (OIC) in which Malaysia is involved. Investors could also build on
the park’s natural resources, skilled human capital and connectivity to beat
their global competition.
The medical device industry targeted for promotion and development in the
Third Industrial Master Plan (2006-2020) is another potential. About 3% of the
gross domestic product is allocated to healthcare as it is a priority of the
government, with the government setting aside RM5.4billion under the 9th
Malaysian Plan (2006-2010) to build new hospitals and upgrade existing
facilities. Between January and November 2006 exports of medical devices and
products amounted to RM5.8billion against RM5.3billion in 2005. Malaysia has
170 locally owned medical device manufacturers in the country with the
majority involved in the production of surgical and examination gloves while
major foreign-owned companies produce higher value products like catheters,
intravenous cannulae and needles, orthopedic products, medical electrodes,
dialysers and contact lenses.
One of the selling points for Malaysia is its strategic position that allows its
manufacturing and research development resources to serve the Asian markets.
Research development, opined experts like Massachusetts Medical Device
Industry Council (Mass Medic) president Thomas J. Sommer was of world class
standard which gave the country an edge in the business. Malaysians were
comprehensive in their approach to build up the economic apparatus to develop
the industry compared to countries like the US. Malaysia employs reasonably
low costs to produce quality innovative products he noted. This was also unlike
Singapore which is big on the biotech industry but not visible in medical
devices, Japan with the requisite manufacturing development but into cost
costing measures and China though vast in capabilities lags in regard to
quality.
Other efforts by the government included increasing its pool of experts by luring
foreign based Malaysian scientists through allowing them to own up to 80% IP
rights in their innovations.
Cutting Bureaucracy by harmonizing InterMinisterial Efforts
Unlike the IT industry biotechnology due to safety consideration is complicated
by a web of requirements and regulations. There needs to be a pushing forward
together by:
- The Ministry of Health with its resource base of clinicians, pharmacists,
technical support staff and patient pool conducting clinical trials, drug
approvals, regulation and enforcement. Its related bodies like the Institute of
Medical Research, National Research Council, Drug Control Authority and the
National Institute for Natural Products, Vaccines and Biologicals aid the
commercialisation aspect;
- The Ministry of Agriculture and Agro Industries as biotech featured
prominently in agriculture. Related agencies like MARDI and a slew of state
agricultural bases invest in R & D including ways to commercialise products;
- The Ministry of Higher Education monitoring Universities where R & D is
conducted including efforts to increase the generation of income;
- The Ministry of International Trade and Industry’s acumen of the global
marketplace and what is necessary;
- The Ministry of Finance as biotechnology like other industries rests on the
base of finance;
- The Ministry of Natural Resources with its Forest Research Institute of
Malaysia that is active in the sphere of biotechnology.
By getting rid of interministerial bureaucracy it enables biotechnology to
achieve the 5% GDP target by 2020. Boosting the morale of staff and cutting
friction across ministries will progress biotechnology if all involved including the
scientific community, fund managers, exporters and importers and the related
move in tandem with the government’s initiatives as biotechnology is a complex
industry unable to function speedily due to the safety and risk mitigation
aspects which no country should compromise on.
Reference
1. Regulate Industry says StemLife by Doreen Leong, The Edge
2. www.fao.org/DOCREP/MEETING/006/AD699E.HTM
3. www.nbbnet.gov.my/BioArticle/2006(Sept12).html
4. Bright Prospects for the Biotech Products Industry by a Senior Research
Officer in the Malaysian Institute of Economic Research (MIER)
5. mpob.gov.my/html/issue/issue08.htm
6. News excerpted from The New Straits Times, The Star, The Sun and The
Edge 2006 - 2007