Deputy First Minister Ieuan Wyn Jones and Health Minister Edwina Hart have unveiled the architect's plans for the new research centre at the event to mark the start of work.
The Welsh Assembly Government is providing £10 million towards the cost of the research centre.
The second phase of the Institute will also receive £12.8 million from the European Regional Development Convergence Fund, £6.4 million from Swansea University and land to the value of £1 million from Abertawe Bro Morgannwg University Health Board.
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The new seven-storey, 6,000 square metre building will include clinical research and play a major role in developing new products and services for the healthcare industry. It will triple the space available to grow related businesses.
The first phase of the Institute, which opened in 2007, has laboratories researching areas such as cancer, obesity and diabetes.
The development is expected to create 650 jobs.
Ms Hart said: "This significant investment demonstrates the importance the Welsh Assembly Government places on medical research and development. I want Wales to be are the forefront of this innovative research so we can reap the benefits.
"The developments that are devised here could transform the way we care for patients. This centre will also be the home to first state-of-the-art NanoHealth facility of its kind in Europe and will develop cutting-edge technologies and devices for the benefit of patients everywhere."
(CD/GK)
