The Edge, December 03, 2007

From packing to DNA fingerprinting

BY TOH MEI LING

It is surprising that Malaysia despite being one of the most bio-diverse countries in the world, has not fully tapped its heritage. So far, it seems that we have only studied plants and herbs from the ground and yet, there are thousands available, not including those that may grow on the canopy of our forests.

Dr Abdul Reezal Abdul Latif, founder and CEO of KL Biotech Manufacturing (KLBM) aims to change that. As one of the first seven biotechnology companies in the country to be granted BioNexus status, KLBM is focused on nutraceutical research in local herbs. Prior to this, Reezal was ensconced at Universiti Putra Malaysia.

There is no denying that biotechnology is a challenging industry to be in, largely because of its knowledge-intensive nature, but KLBM has grown slowly but surely since its inception in 2002. In October 2006, the company moved to its new premises with its own manufacturing facility at the Selangor Science Park in Kota Damansara.

“Previously, we outsourced the manufacturing of our products to a third party while we only did sales and marketing. Margins were not good with the outsource model, so we decided to have our own manufacturing facility to cut out the middleman. We have al ways been the formulator of our entire range of products,” says Reezal.

KLBM produces 10 variants of herbal tea under its Biohealth label and an antioxidant supplement called Actemax Maxplus.

Things have been looking up for KLBM now that its teas and supplements have hit the shelves of Tesco, Giant and Carrefour, expanding beyond independent distributors and pharmacies. Reezal admits that getting shelf space in the hypermarkets was not easy - it took the company almost a year before its products got placement. But it has been worth the struggle he says as profits have improved by more than 50%. KLBM is now looking to move into overseas markets.

The timing is right for such a move because Reezal wants to recoup some of the initial investment before putting more money into KLBM s manufacturing equipment. Even though the company recently received a RM2.5 million grant from Malaysian Biotechnology Corp (BiotechCorp), the manufacturing equipment was bought with internal funds.

“We will be using the grant money to upgrade two of our Misai existing products - the Misai Kucing and Hempedu Bumi teas standards – to international.

There will be an increase in R&D spending and A&P. Moving forward, R&D expenditure will be at least RM1 million per annum. Previously, we didn’t spend much on R&D, probably between RM100,000 and RM200,000, because the money spent cannot be recouped. With the grant we can now increase the allocation,” explains Reezal.

KLBM has opted to focus its improvement efforts on its Misai Kucing tea to take advantage of the herb’s international popularity. The herb is marketed overseas as Java tea by Indonesian companies and is well accepted. Hempedu Bumi, on the other hand, is indigenous to equatorial countries like Malaysia and Indonesia. It cannot be found in Thailand or any country further north of the Equator. Reezal points out. Already, both products are KLBM s top sellers at local hypermarkets.

KLBM’s products are currently available in Singapore and the Middle East, but Reezal intends to move into bigger markets like Australia and Europe soon. Because of the higher standards that regulators expect in these markets, KLBM will be focusing its R D efforts on DNA fingerprinting. This refers to the use of techniques to distinguish plants based on polymerase chain reaction. In layman’s terms, it is a method of standardisation that will ensure the consistency of herb-based products. This consistency is lacking in Malaysia and stands as a barrier to local herbs and natural products reaching overseas markets.
“The problem with herbal products in Malaysia is that there is no consistency. For instance, how do you know if this cup of Misai Kucing tea contains the same amount of herbs as the next one? There are standards for Indian ayurvedic herbs and Chinese ginseng. Now we want to do the same for these two Malaysian herbs,” says Reezal.

Due to its plans to enter developed markets, KLBM’s challenge in the near future is to ensure that its products conform to stringent standards. Reezal adds that between RM1.5 million and RM2 million has been allocated to purchase the equipment needed to test products to meet these requirements.

Aside from DNA fingerprinting, KLBM recently tied up with US-based Nanobio Farms to conduct joint nanobiotechnology research in Malaysian herbs. In terms of collaboration with local universities, the company works directly with the researchers themselves, depending on their respective expertise through a consultancy-based approach. There is no need to tie up with the universities as KLBM does not use their facilities, says Reezal.

At present, there are only six people on KLBM’s R&D team. “It is hard to find really good talent as most of them are already comfortable where they are. Most of the resumes that we get are from fresh graduates and not experienced talent. I used to do a lot of the R&D myself but we started recruiting when we started our own lab. The R&D culture here still needs to be improved,” explains Reezal.

Overall, things have become easier since the incorporation of BiotechCorp, Reezal says, especially when it comes to oiling the wheels to bring in skilled expatriates and improving access to grants.

“As a start-up we cannot afford to make big mistakes as our resources are limited. BiotechCorp really lessens our burden as we can concentrate on what we are good at without having to worry too much about red tape,” he notes.