Who's making money out of biotech?
Not me. In 2003 I started a magazine, Biotech, in the hope that the growing excitement about this hi-tech sector would spill over into media sales. The magazine flirted with success but fizzled out due to a lack of ad support. I made a classic mistake, thinking ‘bleeding edge’ was the same as ‘leading edge’.
It was a forgivable mistake. The industry was beating its chest, promising to be a billion dollar earner with 1,000 companies and 18,000 staff within a decade. It was identified by the government as one of three boom sectors that would drag us into the knowledge economy. Are we there yet?
No. Nine years on the sector’s grossing about $500 million, has only 267 companies and employs about 1,200 people. Venture capital investment has dried up and foreign direct investment is very low. There are few companies with proven products on the market and under our punishing regulatory regime not a single GM trial is underway in New Zealand. The last one, a trial of a GM radiata pine by Scion, was destroyed by activists. At the recent ABIC biotech conference in Rotorua scientists expressed dismay at the prospect of ever seeing their science trialled here. They had to run the gauntlet of protestors just to get the auditorium.
That said, Kiwi biotech’s showing some spine. In the USA, a quarter of all biotech companies disappeared between 2007-2009. Since 2004, the New Zealand sector has more than doubled in size and tripled its profits. Employee growth stands at 36 per cent a year.
According to industry organisation NZBio, patent volume has shown a “significant jump” with 365 patents granted in the past two years. Within OECD countries, we’ve increased our standing and now rank tenth in biotechnology PCT patent applications per capita. Any other industry would be proud of that growth story. But the hype around its launch means these successes could be mistaken for failures.
NZBio CEO Suzanne Bertrand urges patience: “It takes so much longer to launch products than was anticipated when that report was written. Once a company finally registers a patent after years of research it still takes another 10 years to deliver a product.”
One hope the industry has is the size of the opportunity. With growing demand for food from a growing world population you can imagine our bioscience industry, joined at the hip with our primary industries, is poised for growth.
Watch this space, slowly.
Three ways to make money out of biotech
Secure a research grant
There’s almost $96 million of government research funding sloshing about the R&D system at any one time and bioscience takes a good chunk of that. A company like Pastoral Genomics, which is developing GM grasses, has secured more than $20 million of funding in recent years.
Find an angel
It doesn’t happen very often but LanzaTech nabbed investment from a big US angel, Koshla Ventures. The bio-fuel company has a biotech solution to industrial waste. Winner!
Provide a service
The feeding trough around bioech companies is filled with IP attorneys, PR advisors, recruiters and ICT vendors. And get this, the silver sponsor of NZBio and a major supplier to the industry, is private investigation, protection and security firm Thompson&Clark. Biotech is a hazardous industry, you see.
Vincent Heeringa is the publisher of Idealog and reads back issues of Biotech at bed-time.