by Dr. Hsien-Hsien Lei
Posted March 19, 2008 in Business of DNA, DNA Around the World
Here’s one more sign that companies involved with personal genomics may be tightening their belts. Gene chip makers Affymetrix and Illumina are both outsourcing manufacturing from the U.S. to Singapore.
Affymetrix president Kevin King:
Affymetrix is consolidating its manufacturing operations to further increase operational efficiencies, enabling us to remain more competitive in the marketplace. Our recent manufacturing advances have enabled us to produce more (GeneChip) array volumes with a smaller manufacturing footprint.
One of the Affymetrix products to be manufactured in Singapore is the new Genome-Wide Human SNP Array 6.0, which can analyze more than 1.8 million DNA markers.
Affymetrix has already begun laying off workers in their West Sacramento, California manufacturing plant and will be making the move to Singapore by the end of 2008 where they opened a 150,000-square-foot manufacturing plant in 2006. Possible reasons for outsourcing genetic test manufacturing to Singapore include:
- Cheaper labor costs – production workers in Singapore averaged $8.55/hour in 2006 compared to $23.82 per hour in the U.S.
- Lower tax rates
- Faster-growing demand for arrays in China and India make manufacturing in Singapore more cost effective
China’s genomic biotechnology is definitely on the rise. At the beginning of this year, the Beijing Genomics Institute (BGI) announced the complete sequencing of the fourth human genome in the world. BGI also formed a partnership with whole genome sequencing company, Knome. In terms of the local personal genomics markets in China and India, there may be great potential but not for the vast majority of people. For the time being, only the rich and famous in developing countries will have access and the chance to be “exploited” like the rest of the elite, according to Jesse Reynolds at The Cutting Edge News.
In the end, it’s all about the bottom line. Affymetrix chief financial officer John Batty:
I think from an economics standpoint, we have an incentive to get it to at least 50 percent [of Singapore plant capacity] because we can shield half of our revenue from the U.S. tax rate by manufacturing arrays in Singapore and shipping those to non-U.S. customers.
I have no doubts about Singapore producing high quality products for use in genetics/genomics. On the other hand, when outsourcing extends to China and other countries with a less educated workforce, it would be worth remembering that standards of quality control vary between countries. For proof, check out what writer James Fallows observed with airplane refueling techniques in Japan vs. China.
Hey, whatever gets the job done, right?
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