Next wave could be NZ's big moment

By SIMON COLLINS

Farming and forestry will be the basis of the "second wave" of New Zealand's $1 billion biotechnology industry, says industry pioneer Dr Jim Watson.

Watson, who heads Genesis Research and Development, told the Innovate conference in Christchurch yesterday that New Zealand's first wave of biotech successes had been concentrated on human health.

He estimated that the country's 23 to 27 start-up biotech companies had a combined market value of over $1 billion.

The Medicines Company alone, which did part of its research in Auckland but had its main office in Boston, had a market capitalisation on Nasdaq of US$300 million ($706 million).

Watson said the sector had combined commercial revenue of about $80 million a year. The Government was spending a further $80 million through its research budget and the universities.

The industry's major problem was that it needed cash to expand rapidly.

When Genesis started in 1994, it targeted a listing on Nasdaq, because that was where the resources were for medical research. Even today, 94 per cent of Nasdaq's value was in health and health-related technologies.

Despite the current slowdown, US investment into biotech had grown from an average of US$8 billion ($18.8 billion) a year from 1994 to 2000 to US$31 billion ($72.9 billion) last year.

But US investors were not willing to invest in Genesis because New Zealand had "very little track record of successful biotech companies".

"We'll get there yet, it's just going to take longer than we thought."

He said New Zealand financial institutions would have to show the way to the larger US investors.

"The biotech revolution is a very real thing. It hasn't just started, and it's not going to fizzle out."

The spread and scale of the development of science and technology were unprecedented in human health and that was where the first big biotech wave had been.

"But I actually think the second wave is going to focus on food and agriculture and the environment."

He said this second wave would play into New Zealand's strength in agriculture, horticulture and forestry.

"If we don't look it in the eye and say, 'We are going to ride this,' then we will miss out altogether."

The model of using small start-up companies might need revision if New Zealand wanted to be in the world league.

He said that a focus on amalgamating some of the different aspects of manufacturing and marketing would help build the New Zealand industry's strength.