Better laws seen to spur biotech commercialization

Existing myopic legislations and the absence of effective technology transfer rules are emerging as the biggest hurdles local biotechnology advocates have to overcome in pushing for the Philippines to create a niche in the multi-billion dollar global bio-enterprise market.

"We might be losing the opportunity to become an important player in biotech because while the Philippines is one of the first countries to come up with regulations on biotech, most of them are short-sighted. There are just too many loopholes, especially in bioprospecting (research, collection and use of biological and genetic resources for purposes of commercialization) rules that may discourage private sector and foreign investments," said Maoi Arroyo, president and chief executive officer of Hybridigm Consulting Inc., the country’s first biotechnology consulting firm.

Arroyo noted the need to overhaul existing biodiversity laws such as the "Guidelines for Bioprospecting Activities in the Philippines," a joint administrative order (AO) issued in 2005 by the Department of Environment and Natural Resources, Department of Agriculture, Philippine Council for Sustainable Development and the National Commission on Indigenous Peoples.

She cited several provisions under the AO that could put off potential investors. One is that a biotech firm should pay annually two percent of gross sales of the products made or derived from the collected samples for as long as the products are sold in the market. Of the proceeds, 25 percent goes to the National Government and 75 percent to resource holders. A higher amount can be negotiated between parties. The resource user will present an annual gross sales report to signatory agencies for computation of the royalty.

Another provision calls for up-front payments wherein resource users will pay annually to resource providers $1,000 per collection site for the duration of the collection period. These payments are considered as advances from royalties.

Moreover, investors have to pay a hefty $100,000 yearly while awaiting issuance of patents for their products.

"It may be way too much for venture capitalists and other types of investors. There is a need to protect our resources, we all appreciate that, but there is a need to strike a balance because if such restrictive policies remain, it’s either investors will go elsewhere or steal our resources," stressed Arroyo.

"These provisions would also make finished products more expensive, along with royalties. How can you then be competitive in the global arena when your competitors on the other hand, are coming out with incentives to attract investors with the financial muscle to put you out of the game?" asked Arroyo.

Another critical area that needs to be addressed is the lack of legislation that would facilitate technology transfer.

"There are very institutions that have effective technology transfer policies. The DOST has 180 technologies that have not been commercialized and some of these have local and international patents pending."

She noted that while the US through the 1983 Bayh-Dole Act enabled the patenting and licensing of federally-funded research to small scale entrepreneurs and start-ups, the Philippines only has the Biossafety Act that provides extensive guidelines on risk management, but it has no enabling legislation to promote technology licensing.

"The Philippines does a lot of sound biotech research, but it stops there most of the time. We don’t do a lot of development. A lot of universities don’t have technology transfer policies, it’s such a waste. Transferring technology from the academe to the industry is a major bottleneck in biotech development in the country."

Arroyo cited previous missed opportunities by local scientists who were unaware of intellectual property concepts.

The earliest Philippine medical biotechnology discovery was erythromycin, a common antibiotic from Philippine soil bacteria that was commercialized in 1952 by pharmaceutical giant Eli Lilly. The soil bacteria was extracted from samples submitted by Filipino scientist Dr. Abelardo Aguilar.

Prialt Ziconotide is a more recent example of a missed opportunity. Dr. Baldomero Olivera and Dr. Lourdes Cruz isolated and characterized toxins from venoms of hunting snails in 1985. However, another US-based biotech firm, Neurex was working on the same conotoxin and found it could be used as a pain killer. Neurex patented the compound and sold it to Elan Pharmaceuticals for $700 million. Recently-concluded clinical trials shows the drug is 1,000 times more effective than morphine, produces no side-effects, and is non-addictive. On Dec. 29 2004, Elan’s Prialt Ziconotide was approved by the US Food and Drug Administration and sales hit $8 billion.

"This should teach us that merely extracting and characterizing compounds is not enough to capitalize on their value," said Arroyo.

Today, the rapid growth of biotech enterprises worldwide is encouraging developing countries like the Philippines to secure a big chunk of both the domestic and world market.

The market for biotechnology is estimated at $15 billion for the energy sector, the industrial biotech market at $280 billion, biotech good market as high as $12 billion, chemicals at $10 billion, health care at $8.5 billion, agriculture at $8 billion, metal recovery at $4 billion, and pollution control at $400 million.

Arroyo stressed that for Philippine biotechnology to really make a significant headway, stakeholders, the academe, investors, financial markets and concerned government agencies should break their closed networks and start talking.

"What is needed is to connect and harness each of these sectors‚ strengths. An active collaboration is required wherein scientists start learning the basics of intellectual property and technology management, tap advisers that could help them reach access to development funds and investors."

Arroyo’s other prescriptions include requiring research institutions to have practical policies that mandate licensing deals to small and medium enterprises and compensating both the funding body and the inventors while ensuring conflict of interests are avoided.

"If we are aiming to go on a global scale, clear policies through legislation is required. The Philippines with its rich biodiversity is sitting on a gold mine but it is up to the interested parties to take steps to create a coherent direction."