KEY POINTS:
As a subject, the extraction of bovine bile is not your average conversation-starter, but New Zealand Pharmaceuticals general manager Andy Lewis is not one to mince words. That's what his company does and it does it well.
The Palmerston North company, winner of this year's Agritech life sciences
and biotechnology exporter of the year award, collects the bile that is formed in the gall bladders of more than 25 million cows from all over the world, explains England-born Lewis.
It then extracts bile derivatives such as dehydrocholic acid, a digestive aid, and cholic acid, which is used as a key ingredient in the manufacture of drugs to treat liver disease and gallstones.
NZP is one of the top three bile derivatives manufacturers in the world, selling to the likes of pharmaceutical giants GlaxoSmithKline and Japan's Mitsubishi Tanabe.
But the company is aiming for the top in a different area: glycotherapeutics, which involves discovering new drug treatments from carbohydrate materials.
Globally, the glycotherapeutics sector has grown 15 to 20 per cent in the past three years and NZP hopes its new venture will help it increase revenue by 50 per cent over the next five years.
In February it opened a $10 million factory to make carbohydrate products for new drugs aimed at treating life-threatening conditions such as cancer, chronic renal failure and heart disease.
The Government-funded Industrial Research (IRL), a longstanding NZP research partner, will also play a part in the new venture. NZP is IRL's leading manufacturer of carbohydrate products or glycotherapeutics. It's a sector that IRL carbohydrate chemistry team manager Dr Richard Furneaux calls "one of the new science frontiers".
The unravelling of the human genome means scientists are beginning to understand how diseases work and how they can be tackled.
"The important role of carbohydrates in biology is being revealed and that's where new drugs will be coming from in the near future in quite a significant way."
IRL has transferred "quite a number" of technology packages and intellectual property to the company since Furneaux set up his carbohydrate research team in 1984.
The two organisations form a logical connection between research and commercialisation, Furneaux says.
"We need a value-add partner, they need the best research minds in the country working on their strategies. If [IRL is] going to create wealth for New Zealand in the biotech sector then we have to have technologies that can't easily be reproduced elsewhere - then transfer them to industry to create the wealth."
Set up in 1971, NZP was initially a joint venture between a consortium of local meat companies and Tasman Vaccine Laboratories.
Canterbury PhD student Richard Garland was recruited to lead research into finding bile derivatives for the new company. Garland developed the processes for manufacturing what are still the company's core products, cholic acid and dehydrocholic acid.
Increased awareness of BSE or mad cow disease in the 1980s forced the company to diversify from strictly bovine byproducts to plant extracts. Its range included evening primrose seed oil for skincare products, pine extract, used in sports drinks, a kiwifruit enzyme which tenderises meat, and ferritin, an iron supplement derived from horse spleens.
But the market for bile derivatives did not fall as expected and NZP now imports most of the 650 tonnes a year that it needs to keep up with demand.
The company has gone through a number of ownership changes. In 1998 Garland and the other four directors staged a management buyout from British chemical firm ICI, which had been treating NZP more as a cash cow than an investment. Garland took over as managing director.
In 2005, when Lewis came on board, private equity and venture capital firm Direct Capital grabbed a 51 per cent stake in NZP, and he says that since then growth has accelerated. He won't give figures, but says exports have grown by about 15 to 20 per cent since Direct Capital's $100 million valuation of the company in 2005.
Garland has always inspired staff loyalty and is "paternal" towards the company, says Lewis. Employee turnover is reportedly low and more than half the staff own shares in the company, an incentive introduced by Garland after the management buyout. In February the company announced plans to list "within the next 15 months". Listing is still on the cards, but Lewis says the earliest date for an IPO will be late next year.
Japan is the company's biggest market, followed by the US and Europe.
With their fast-growing middle classes, India and Brazil are the next market development targets. It also has its sights on Mexico and Russia.
Since most customers are overseas, NZP has invested heavily in IT systems and studiously monitors website traffic and its Google rating, and ensures emails are answered within 24 hours.
It has also developed rigorous compliance methods to cope with the varying and complex importing regulations for each country it exports to.
Each product batch needs a trail of paperwork "all the way back to the cow and the farm it came from", says Lewis.
A constant source of frustration for any company commercialising science is the delay between product development and its "hit rate", caused by clinical trials, which can take years.
To cope, NZP has increased its bile acid derivatives range and is developing six different bile acid products.
The high exchange rate and the tight labour market have also thrown up challenges. NZP trades mostly in US dollars, giving it a natural hedge, but the soaring kiwi has still taken millions off the company's bottom line this year.
Lewis predicts that finding the chemical scientists and engineers the company needs will be one of the major challenges over the next five years.
NZP staff numbers have increased from 65 full-time staff to just over 100 in the past five years.
In an effort to lure bright young things on to the payroll, NZP sends staff to Massey University to talk about their jobs, and is offering a $10,000 bursary for five years to high school students who want to study chemistry.
And the next, next big thing in biotech? Lewis has high expectations for NZP's investment in Just The Berries, a joint venture between NZP and a consortium of blackcurrant farmers to develop and market blackcurrant products.
Right chemistry
* NZP is based in Palmerston North.
* Employs more than 100 staff.
* Makes extracts from cow bile for use in pharmaceuticals.
* Working with Industrial Research to develop new drugs.
* Valued at $100 million in 2005.
* Sharemarket listing possible next year.
