In highlighting biotechnology in its "Growing an Innovative New Zealand" strategy, the Government emphasised its direct relationship to the country's strength in the primary sector, "the only sector in which New Zealand currently has world-class scale and specialisation."
It went on to say that "focusing innovation effort on biotechnology ... is a way of levering New Zealand's comparative advantage in the primary sector to add more value to our products ... Although the biotechnology sector itself represents only about 1 per cent of GDP, it has an impact on much more."
Statistics New Zealand's first comprehensive survey of the sector - Modern Biotechnology Activity in New Zealand - estimates that enterprises it questioned spent around $405 million in the year to June 1999. The private sector's spending was $276 million and the public sector's $129 million.
Survey respondents estimated biotech annual income at $475 million, of which the private sector made up $326 million.
Industry pioneer Dr Jim Watson, chief executive of Genesis Research & Development, estimates that the country's 23 to 27 start-up biotech companies today have a combined market value of more than $1 billion.
Watson says the sector has combined commercial revenue of about $80 million a year and the Government is spending a further $80 million through its research budget and the universities.
The industry's major problem is that it needs cash.
Most of it has to come from overseas, as local institutions are not comfortable investing in high-risk, early-stage biotech.
Hooking venture capitalists from Europe and the US presents challenges.
Few are prepared to invest in seed opportunities beyond their immediate geographic area and while there are fewer obstacles at later stages of funding, the odds are stacked against companies making it that far.
Biotech companies that do secure seed funding burn through capital at rates that would scare away all but the most stout-hearted investor.
The jury is still out on the worth of the Venture Investment Fund, the Government's partnership with private investors aimed at providing more funds for early-stage companies, including biotech.
Watson says the model of using small start-up companies may need revision if New Zealand is to be world-class. He says a focus on amalgamating some aspects of manufacturing and marketing will help build the local industry's strength, presenting a more attractive and manageable face to overseas investors.
"Brave political leadership is needed to demonstrate that biotech is a core part of New Zealand's future," says one of the country's leading medical researchers and biotech practitioners Professor Peter Gluckman. March 7 patent laws and continued threats from the anti-GM lobby also spell trouble. "We need to address all these issues or the industry will be in difficulties. It won't have a future."
