Vikki Smithem: Industrial biotech's time has come

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As New Zealand considers how best to expand its high-value manufacturing sector as a route to boosting our export returns, one particularly bright spot in that broad category suggests we are headed in the right direction.

That is industrial biotechnology, a diverse sector driven by the twin megatrends of climate change and population growth, and which is in many ways the epitome of value-add.

Spanning the application of sustainable feedstocks to the production of chemicals, plastics, and fuels, to the use of biotechnology and chemical engineering in the manufacture of new materials, foods, pharmaceuticals, cosmaceuticals and nutriceuticals, industrial biotechnology is both limitless in scope, and solid in its underlying science.

Its emergence from the financial crisis largely unscathed is testament to the sound principles on which it is based - that is, the use of sustainable resources to create sustainable value, via the application of focused scientific R&D.

It is an area where continued investment by large, global companies is now paying dividends, and its fortunes look set to rise even further as the technologies underpinning it increasingly move out of the laboratory and onto the production line.

The numbers speak for themselves - internationally, industry revenues are tipped to grow from $220 billion in 2008 to as much as $850 billion by 2020, according to McKinsey, a consultancy.

And new markets worth almost US$300 billion ($405 billion) are expected by 2020 due to the growth of biorefineries, according to the World Economic Forum.

As further proof that industrial biotechnology's time is now, one need look no further than the fact that some of the year's biggest corporate deals fall squarely within this sector.

They include a $6 billion plan by chemical giant DuPont to buy Danish food and biotech company Danisco to secure a position as an industrial biotechnology leader focused on reduced fossil fuel consumption and sustainable food production.

In New Zealand, optimism in this sector is also running high.

Auckland-based Lanzatech, for example, which uses biotechnology to convert waste gases into fuel, has recently struck major deals with some of India and China's largest industrial companies, and is planning a public listing within the next two years.

And at the human health end of the spectrum, Wellington-based Mesynthes is poised to launch its FDA-approved extracellular matrix-based wound-healing product, Endoform, with the aim of achieving between $40 million and $50 million in revenues within five years.

The sector's resurgence is also reflected in the growing fortunes of GlycoSyn, the arm of Industrial Research Ltd (IRL) playing a key role in the establishment of a homegrown, high value pharmaceuticals industry.

GlycoSyn is backed by IRL's world-class Carbohydrate Chemistry group, whose diverse activities include helping NZ coatings company Resene revolutionise the paint industry.

GlycoSyn's growing reputation has seen an increasing number of global pharmaceutical and biotechnology companies seek out its world-class capabilities, with major contracts recently signed with new clients in the United States, Australia and New Zealand.

Recognising the growing need for capability in this sector, IRL is boosting its ability to help the biomanufacturing industry help itself. This includes investing further in the kind of equipment needed to purify high-value, high-purity compounds for the food and pharmaceutical industries.

The increasing importance of biotechnology to many industries is undeniable, a fact clearly demonstrated by the focus of this year's NZ Bio conference in Auckland this week.

Covering all aspects of industrial biotechnology, from agriculture, food and health to the environment and second-generation biofuels, this world-class gathering fittingly takes place in 2011, the International Year of Chemistry.

Chemistry, after all, is both a key plank of industrial biotechnology, and an area where IRL and New Zealand punch above their weight.

* Vikki Smithem is general manager of Industrial Biotechnologies at IRL, a Crown Research Institute mandated to support the manufacturing and services sectors.