Modern biotech industry looks for more tucker

New Zealand's infant industry needs a rich diet of capital, Government support and skilled, innovative scientists to progress, reports ELLEN READ.

New Zealand's fledgling biotechnology sector is not getting enough worms.

Like any undernourished nestling, it therefore risks serious disadvantage when it flies out into the big bad world.

For evidence, see a recent Statistics New Zealand report on the results of the first survey into this country's biotech sector.

Statistics New Zealand says red tape, a lack of capital and a scarcity of specialised labour are stunting the developing modern biotechnology industry.

Industry insiders agree, but suggest the infant industry will naturally overcome such obstacles as it grows.

Francis Wevers, executive director of the Life Sciences Network - a grouping of organisations involved in biotechnology research and application biotechnology - says the statistics are two years old.

Although they show good industry growth in the years leading up to their collection, anecdotal evidence suggests continued growth "at a considerable pace" since then.

Statistics NZ surveyed 180 businesses and research institutions involved in modern biotechnology activity - defined as the application of modern scientific techniques to biological materials and processes - in the year to June 1999.

The analysis shows modern biotechnology in New Zealand is concentrated in research and development by scientific and tertiary institutions.

The report also finds: :

* Biotechnology is focusing on developing new products and processes, or adapting existing ones to suit New Zealand conditions.

* In the year to June 1999, the industry's estimated income was $475 million and its estimated expenditure, $405 million. By comparison, the furniture manufacturing industry's total income for the same year was $938 million, and income from all manufacturing in New Zealand was estimated at just over $50 billion.

* Employment in biotechnology represents 0.2 per cent of total employment.

* Forty per cent of modern biotechnology employees have post-graduate qualifications.

* - Biotechnology enterprises had registered 59 patents in the year to June 1999. In the past five years, 156 biotechnology-related patents were issued.

The report says the survey was conducted before the voluntary moratorium on new trials of genetically modified products, which began on June 14 last year.

Respondents clearly rated access to capital as the most serious threat to development.

"The majority of biotechnology processes are being utilised at the research and product processes development phase," Statistics New Zealand says.

"Investors may be reluctant to put funds into research and development given the uncertainty as to whether it will result in a commercial application."

Mr Wevers said the voluntary moratorium on genetic engineering also had dampened the injection of capital.

"Our hope is that once the royal commission reports, and the Government adopts whatever positive aspects the commission reports back, we'll see some leadership from the Government in this area."

Government leadership would renew confidence in the biotechnology industry and help increase investment in it.

Biotechnology Association chairman Selwyn Yorke attributes the dearth of money in the sector to crown research institutes, rather than by private companies, doing most of the work.

As well, modern biotechnology was a new industry here.

As it grew, it would combat many of the problems identified.

Research, Science and Technology Minister Pete Hodgson said the Government's planned seed capital fund would help the industry.

"Biotech is mostly a component of R&D (research and development) and is often the source of innovations with commercial potential.

"Increasing, the supply of venture capital for early-stage commercial development is precisely what the Government's seed capital plans are designed to achieve," he said.

The newly allowed immediate tax deduction for R&D spending would also help ensure continuing growth in biotechnology investment.

Survey respondents tagged regulations as the second impediment to development, and a lack of trained and experienced staff as the third.

Mr Yorke hopes the commission will recommend a review of biotechnology regulations.

The shockingly small and shockingly underfunded industry's lack of a champion in New Zealand had hindered its development in relation to countries such as Canada and Britain, where biotechnology industries enjoyed government incentives such as rates and electricity holidays. Mr Yorke said there had been disincentives for scientists to commercialise their ideas.

"The crown research institutes and universities have limited spin-out potential for their staff.

'They really want to keep their staff within the company.

'Therefore, the scientist does not become the champion - as he would be if he went out into the business area.

"I think that's a very serious problem in New Zealand."

Mr Wevers said New Zealand's modern biotechnology industry was small but also very new.

Its counterpart in the United States arose only in the mid-1980s.

"We're about 0.1 per cent of the global scene, and there's plenty of scope for growth," he said.

"There's work to be done in getting a consolidated industrywide and national vision about the importance of biotechnology to our future.

"That work's absolutely underway."

A positive environment, led by the Government, which recognised the value of science to the economy would encourage people into science-based careers and make it easier to retain and attract skilled workers, Mr Wevers said.

"It's a general thing about confidence in the economy and about having a positive environment for science rather than a negative one."

Identifying and building on the areas in which New Zealand already competed with the rest of the world, rather than branching out, would also benefit the industry.

Mr Wevers cited cattle and sheep genomes, pine trees and forest grass as areas fundamental to New Zealand's agricultural economy and in which we have a competitive advantage.

"We've built up 150 years of scientific knowledge in those areas and that repository of knowledge is a huge advantage.

"The future beckons very brightly, but at the same time we've got to make sure that we focus on those things that we're good at and that we extend beyond those areas with a great deal of care," Mr Wevers said.

There would always be a trade-off between entering a field early and letting others lead and learning from their mistakes.

"I think the view from the industry would be that the strategy should be a bit of both."