Biotechnology: Building a future for the country

The potential of biotechnology

There are many problems that face businesses when they try to compete on a global scale. The biggest of these is that our advantages are easily imitated (command of the English language, for one). As a result, businesses are forced to compete on price by sacrificing wages to keep costs low. Put together low salary and a high inflation rate, and you’ll understand why our best and brightest are fleeing abroad at the rate of 2,700 people per day.

But there exists a field, from which an entire industry can be born, where the Philippines is sitting on a gold mine... and we don’t know it. This is biotechnology.

What is biotechnology? Biotechnology is essentially harnessing the machinery of living things to make products or provide services, from making dairy products to the manipulation of DNA and proteins.

Thus broadly defined, the biotechnology sector is currently estimated to account for more than a third of the world’s GDP. Medical biotech is the largest sector worldwide, ranging from 12 to 14 percent of GDP in key markets. Health care and medical research spending in the US is projected to rise to 17 percent within the next decade. The size of other American industries transformed by biotechnology was estimated at $400 billion for chemicals, $800 billion for the food sector, and more than $1 trillion for biomaterials.

As of the end of November 2004, the US biotech industry had a market cap of $372 billion, raised $18.4 billion in private equity financing, and completed over 139 partnerships. The most interesting part is that this industry still has more room to grow, and many more discoveries are still to be made. This is where the Philippines can carve out a niche for itself on the world market, and the best time to act is now.

Should we wait for more stories of lost opportunity due to the lack of coordination between the scientific and business community? Erythromycin, a common antibiotic, was discovered by a Filipino, Dr. Abelardo Aguilar, in our soil. This was the earliest documented Philippine medical biotechnology discovery.

The first Philippine agri-biotech breakthrough came from the work of Dr. Juan Salcedo, who discovered that milled rice mixed with Vitamin B1 was a good cure for Beri-beri (a disease caused by deficiency in Vitamin B1 which can damage the heart and the nervous system).

In 1985, Dr. Baldomero Olivera and Dr. Lourdes Cruz isolated a toxin from the venom of a fish-hunting snail which became the basis for the drug Prialt Ziconotide.

Recently concluded clinical trials have shown that the drug is 1,000 times more effective than morphine, produces no side-effects, and is non-addictive.

Elan Pharmaceuticals, which developed and commercialized the drug, recently enjoyed a $8.2-billion market cap gain, thanks to Prialt Ziconotide.

Think of how much better off the country could have been if someone had financially backed and advised these scientists properly on patents and the like.

A wave of success: Global biotech industries

n Asia, the dominant countries in biotech are Japan, China, India and Singapore. Japan has four distinct types of biotech players – pharmaceutical companies, breweries and food makers with fermentation expertise, electronics firms and local biotech start-ups.

The first three have funded and/or partnered with biotech firms, and the rewards for entrepreneurs have been very fruitful, since the Japanese pharmaceutical market has recently surpassed Europe as the second largest worldwide. It is valued at about $60 billion and accounts for more than 15 percent of global R&D expenditure.

How are the Japanese succeeding? Japanese pharmaceutical companies are actively acquiring technology via alliances with US and UK biotech firms. In addition, the government boosted funds for biotech and nanotech research, and this has resulted in the increase in biotech start-ups.

In Japan, we see the results of cooperation between the public (the government and the academe) and private sectors (entrepreneurs, investors, and large companies).

China and India present very different pictures of biotech industries. China’s biosector has high potential but is still at the birthing stage, whereas India has major pharmaceutical companies but these will have to face up to the sharp transition from manufacturing generics to discovering and developing drugs.

The Chinese pharmaceutical market is valued at only $4 billion, but is expected to grow annually at a 15 percent rate. That leaves a lot of room for investors to join in. The country has 136 biotech firms, mostly traditional medicine therapeutics and enzyme manufacturers.

Meanwhile, India’s biotech sector is relatively underdeveloped, but is still listed as 12th most successful in last year’s Ernst and Young report. The biotech industry is composed of 96 companies and is projected to clear $1.8 billion by the end of this year.

India has many competitive advantages, most notably its low cost innovation and manufacturing base – as low as 10 percent of those in developed markets – and its research infrastructure and biotech incubators.

Singapore is the most successful of all the relative newcomers to biotech in the ASEAN region. Although Malaysia, Taiwan and Korea all offer attractive investment conditions for their emerging biotech industries, Singapore’s trump card is the aggressive public funding by the country’s paternalistic Economic Development Board.

Recent initiatives by the EDB emphasize biomedical research geared toward commercialization instead of publication, promoting start-up formation and to lay the groundwork to make Singapore a regulatory haven for stem cell research.

Singapore’s biggest problem is its continued shortage of entrepreneurial scientists and managers. It is in this area that the Singapore government will meet its greatest challenge – it is difficult to inculcate creativity and entrepreneurial spirit in a population that has become used to an "autocratic democracy." These qualities are difficult to impose, even onto a willing populace.

How can we be confident of the ability to compete in this field on a global scale? It’s because the Philippines has been identified as one of the world’s most biologically rich countries.

Of the 500 known coral species worldwide, 488 are found in our seas. The coral reefs are home to over a third of the 2,300 fish species reported in the country. There is literally an ocean of opportunity in natural products, nutraceuticals and potentially therapeutic natural compounds.

Add to that our brilliant scientists and our culture of entrepreneurship, and we can see that biotechnology is a lucrative high-technology industry where the Philippines can add value, compete and carve out a niche for itself in the global marketplace.

(Coming in Part II: The Philippine niche in biotechnology: Why we have an advantage)

Maoi Arroyo, CEO and president of Hybridigm Consulting Inc., was a member of the inaugural class of the Master’s in Bioscience Enterprise, a joint program between the University of Cambridge, Harvard-MIT Division of Health Sciences and Technology (HST) and the MIT Sloan School of Management. She is a recipient of a British Chevening Scholarship and obtained her first degree in Biology (BS) from the University of the Philippines. E-mail her at [email protected].

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Hybridigm Consulting, the first biotech consultancy firm in the Philippines, in partnership with, Businessmaker Academy Educational Center, is holding the four-day 2nd Annual Philippine Biotechnology Venture Summit. The theme of this year’s summit, which started last Tuesday, is "Trends and Opportunities in Medical and Industrial Biotechnology." PBVS 2006 is held in cooperation with DOST-PCASTRD, Manila Bulletin, Ayala Foundation Inc., DOST-TAPI, Philippine Society for Biochemistry and Molecular Biology, National Initiative for Multi-Disciplinary Bioinformatics Utilization Strategies (NIMBUS), Philippine Entrepreneurship Start-ups Open (PESO), Web Philippines, and the Asia Pacific Student Entrepreneurship Society-Manila Chapter.