Manufacturing output was down by 1.7 per cent year on year in December following a drop of 1.5 per cent in November.
The latest figures released by Singapore's Economic Development Board (EDB) showed that growth from other industrial sectors was wiped out by the biomedical cluster, where manufacturing output in December contracted by 34 per cent compared with December 2006.
The steepest decline came from active pharmaceutical ingredients (APIs), with production 36 per cent lower year on year.
The EDB blamed shutdowns for plant maintenance as well as changes in product mix.
The medical technology sector also had a slow month: manufacturing output fell by 18.0 per cent year on year due to reduced delivery of medical appliances to the US market, the EDB reported.
The picture was hardly better in November, when biomedical manufacturing output was down by 33.4 per cent against the same month last year.
With production of some APIs halted, pharmaceutical production dived 35.6 per cent year on year, while lower demand from Europe and the US led to a 15 per cent decline in medical technology output, the Board said.
For the whole of 2007, manufacturing output from Singapore's biomedical cluster dipped by 0.6 per cent against the previous year, with API production falling by 2.5 per cent but medical technology rallying with an increase of 15.4 per cent Total manufacturing output in the city state was 5.8 per cent higher in 2007 than in 2006.
Pharmaceutical production has been an important component in the diversification of Singapore's manufacturing output, accounting for an estimated 10% of the island's non-oil exports.
Favourable business conditions have drawn a number of big hitters to Singapore, such as GlaxoSmithKline, Lonza, Merck & Co, Novartis, Pfizer, Sanofi-Aventis and Schering-Plough.
Novartis gave Singapore a crowning vote of confidence last October when it announced plans for a $700m (€476.7m) biotechnology facility, to be built alongside the company's new solid-dose manufacturing plant on the island.
The project, which is expected to be completed by 2012, represents Singapore's largest ever vertically integrated investment and the most Novartis has ever splashed out on a single manufacturing facility.
This kind of commitment will help to ease concerns that the year-on-year declines in biomedical manufacturing over the last few months are anything more than a temporary blip.
The figures suffered in comparison with a strong 2006, when the biomedical sciences industry lifted its manufacturing output by 30.2 per cent to S$23 billion (€11bn).
The sector is also regarded as volatile, since manufacturing facilities are prone to temporary shutdowns as production switches from one drug to another.
Manufacturing output of both APIs and medical appliances was expected to decline in the last quarter of 2007 and analysts are generally optimistic that production will rebound this year.
Last October an EDB survey of business expectations for the six months to March 2008 found that a net weighted 22 per cent of companies in the biomedical manufacturing cluster thought the outlook would improve over that period, compared with just 10 per cent at the end of the second quarter.
Further data from the Economic Development Board reveal that fixed asset investments (FAI - i.e., capital investment in facilities, equipment and machinery) in biomedical manufacturing were S$0.9 billion in 2007, the same as in 2006.
However, that made up a shrinking proportion of overall manufacturing FAI commitments by industry in Singapore - 6 per cent of a total S$16.1 billion commitment in 2007, compared with 10 per cent of a US$8.8 billion investment in 2006.