NZ lagging in biotechnology: report

By SIMON COLLINS

"Islands of excellence" in New Zealand's biotechnology sector are not getting the backup they would get in other countries, a new study says.

The study, by Waikato University economist Dan Marsh, has found that local biotech entrepreneurs are not supported by a strong web of links with universities, research institutes and other firms.

Some are scathing about biotech work in crown research institutes and universities.

One businessperson, "Interview C," is quoted as saying that the research institutes and universities "operate on a completely different time horizon."

"The difference between commercial reality and university and Government research is so wide that most people cannot understand that what they are doing never actually achieves a desired outcome," "C" said.

Mr Marsh concluded that there was "little evidence of a well-functioning innovation system for biotechnology."

Instead, he said, there were only "islands of excellence," such as Auckland-based Genesis, which has developed a new drug for the skin disease psoriasis and other products, and Arborgen, a joint venture involving NZ and US forestry companies which is "the world's leading forestry biotechnology company."

His study, presented at the world research and development conference in Wellington last week, estimated that about 40 NZ organisations used modern biotechnology, employing around 1250 people.

The 40 organisations included 20 private companies, seven of the country's eight universities and eight of our nine crown research institutes.

"Indeed this spread of activity has been argued to be a serious waste of resources by some who believe it would be more efficient to concentrate biotech research into a smaller number of sites," Mr Marsh said.

About 10 of the private sector firms employed about 300 people on "DNA-based technology" such as genetic engineering and genomics - mapping gene sequences.

Mr Marsh said one of the "islands of excellence" was mapping the genes of sheep, which has been used to understand sheep fertility.

He said the Government spent $100 million a year on biotech-related research, ranging from genomics to processing natural products.

About $18 million of this went into research involving genetic modification.

This compared poorly with Australia, where the federal Government spent $A250 million ($309 million) a year on biotech, more than three times as much per capita.

However, NZ researchers registered only eight modern biotech patent applications for every million people between 1997 and mid-2000, compared with 12.1 per million people in Australia and 15.4 per million people in 12 other small, high-income countries.

Denmark topped the table with 44 biotech patent applications for every million people.

Genesis alone, and its partner Fletcher Challenge Forests, accounted for 37 per cent of NZ biotech applications in the period. Other private companies and universities also had higher patent rates than the research institutes.

The study found very little interchange of people between organisations.

Staff turnover at HortResearch was reported to be just 3-5 per cent a year, with "limited cross-CRI transfers and just a few people moving on to universities or polytechnics."

It also found that entrepreneurs were frustrated by delays of up to 18 months in getting approval for research projects from the Environmental Risk Management Authority (ERMA).

"By the time you get approval to do it, it is a whole new world, literally," said a business person cited as "Interview A."

Mr Marsh said New Zealand's fragmented biotech sector contrasted with many other countries which have coordinated strategies to promote biotechnology.

A "national biotechnology strategy" in last May's Australian budget provided $A31 million ($38 million) in extra funds over the next four years, including $A20 million ($25 million) for the "pre-seed" stage of developing a product to the stage where outside investment can be sought.

Canberra's "innovation package" last month added a further $A46.5 million ($57 million) over the next five years to support "a centre or centres of excellence" in biotechnology, with an operator or operators to be chosen through a competitive process.

Last June, Singapore announced a $S1 billion ($1.3 billion) state fund for investment in private sector research and development in life sciences, aimed at making Singapore "the strategic hub for the pharmaceutical, biotechnology and health care industry in Asia."

In the United States, 1283 biotech companies spent $US9.9 billion ($22.5 billion) on research and development in 1999, employed 153,000 people and earned revenue of $US18.6 billion ($42 billion).

Mr Marsh said the fragmented situation in New Zealand was not likely to change before the Royal Commission on Genetic Modification reports this year.

In the meantime, Statistics NZ is soon to provide initial results of a comprehensive survey of the country's biotech industry to the Research, Science and Technology Ministry.