Before we go any further, let us review why the IT boom in the US fizzled out (Recommended link: Does IT matter?). In my opinion it was simply because of cost reductions in:
- Hardware
- Software
- Bandwidth
So with these major changes, it didn't matter where your IT folks were. As long as they are connected to the Web, they could be anywhere. "Telecommuting from literally anywhere on the planet".
This radical change in our economic and information system caught almost everyone by surprise, even countries like India, since no one expected the scale and speed. In fact it was not something that was driven by Indian companies at all. Basically market forces worked in all their glory, facilitated by evolution of technology platforms.
However, this has now made many countries aware of how this model can be transported to other sectors of economy. I wrote previously of how Dubai is trying to become the next Silicon Valley. What's next? Plastic surgery in Columbia or Brazil? Education in Australia? Drugs from Canada?
Why biotech boom may not happen in America?
- Our policies, rules, and regulations are restricting research in some of the hottest areas of science, e.g. stem-cell research.
- We rely very heavily on private investment to fund research. I support this model but biotech is never a sure bet. You can sink billions into something and nothing might come out of it (it is estimated that over $60 billion has been lost in biotech investments worldwide during last 10 years). Few venture capitalists are ready to take that type of risk. Therefore, without government funds it may not be possible to research areas which do not seem highly promising. That is why countries like Singapore (with its Biopolis project and $2 billion funding) and South Korea (with tremendous support from government) are moving forward at a much faster rate.
- Our cost of labor is still very high putting us at a cost disadvantage.
I agree that some of the biotech work may not be done outside America (though Singapore is an exception; because of the huge investments being made, they are also building some of the best infrastructure in the world for R&D), we might be left with a scenario similar to IT: the chiefs might be in Cambridge, MA but the Indians could be anywhere (though this time they are more likely to be in Singapore or Seoul rather than Banglore).