New Zealand feature: primary industry backs NZ biotech

By Melissa Trudinger
Friday, 12 July, 2002


If biotechnology is as old as agriculture, then biotechnology in New Zealand has been around for as long as the nation. New Zealand is a country that relies on its strengths in its primary industries - dairying and sheep, horticulture and forestry. It has a thriving natural products industry and a reputation as clean and green. Its geographical isolation and strict quarantine laws means that it is largely disease free - no foot and mouth disease, no scrapie, no BSE.

But New Zealand is a relative newcomer to the biotechnology industry, bearing more than a passing resemblance to Australia's own burgeoning industry. "New Zealand has a tradition of world-class science, good ethics, good pattern of regulation, and can pursue science with confidence," said Bill Falconer, Chairman of Biotenz, New Zealand's biotechnology industry group.

Like Australia, New Zealand's government has recognised biotechnology as one of the growth industries of the future. Plans are afoot within the government to bolster the industry and develop a biotechnology strategy for moving forward. A report released by Industry New Zealand in June last year, An Initial Survey of the Biotechnology Industry in New Zealand, concluded that biotechnology in New Zealand had several weaknesses:

  • Intellectual property is being trapped by the science providers -- the Crown Research Institutes and the universities.
  • A lack of people with the appropriate financial, legal and business skills is hindering effective access to international markets.
  • The industry is fragmented and poorly networked.
But among the industry's strengths, the report listed New Zealand's
  • Highly developed agricultural industry.
  • High quality of academic institutions.
  • Desirability as a site for clinical trials.
Industry New Zealand has recently hired a sector director for Biotechnology, Peter Lennox, as part of its push for the industry. It has also established a Biotechnology Sector Taskforce to assist the government in developing its biotech strategy. The Biotechnology Sector Taskforce is composed of 10 members from across the sector, including representatives from biotech companies, the academic sector, business and finance. Its mandate is to examine practical ways to stimulate and develop New Zealand's biotechnology sector.

"Traditional strengths in biology are spawning new developments in biotechnology, but it is ad hoc, piecemeal. Much more than networking is required," said Falconer, who co-chairs the Taskforce along with Minister Pete Hodgson. "Commercialisation of new technology is a new thing for New Zealand. We have to find a way of establishing international links."

Falconer said that among the key issues, access to venture capital is crucial. He believes more is needed and that the government needs to encourage it. In addition, he doesn't think the current infrastructure is large enough for commercialisation.

Others in the biotechnology community agree. James Watson, CEO of New Zealand's largest biotechnology company, Genesis Research and Development Corporation, argues that the investment community needs to be educated about biotechnology, to understand the long-term nature of the investment. "I think the major problem for growth in Australia and NZ is convincing investors that their investment is long term, and will pay off but not immediately," he says.

Genesis R&D listed on both the New Zealand and Australian stock exchanges in September 2000. Watson says the main reason for the listing was to build the company's cash reserves to allow faster commercialisation. The company chose to list on both the Australian and New Zealand exchanges to increase the pool of available investors.

"The business infrastructure is not as sophisticated as the American infrastructure, where they are more used to investment in high-risk ventures. Angel and development capital are non-existent," says Paul Atkinson, general manager of science at AgResearch, New Zealand's largest Crown Research Institute. "It may take some time for NZ to get the faith the US investors have in good science discovery."

One recurring theme among biotech professionals in New Zealand is a perception that the country's biotechnology sector is off the radar when it comes to major markets like the USA. Dr Tony Conner, from Crop and Food Research, one of the Crown Research Institutes, says that larger companies often don't take New Zealand biotechnology seriously overseas.

Jo McEvoy, account manager for life sciences at Trade New Zealand, says that the size of the industry in New Zealand and the distance from the major markets both play a factor. She explains that Trade New Zealand is involved in raising the profile of the industry overseas, by participating in forums such as Bio 2002 in Toronto and its associated events.

"If you aren't in the US, you get ignored. Being on the southern rim of the Pacific is a disadvantage," AgResearch's Atkinson said.

Another report, Bio-Pharmaceuticals - A Pathway to Economic Growth, released recently by the Researched Medicines Industry, representing New Zealand's pharmaceutical industry, looks at the need for a strong relationship between government and the pharmaceutical industry. New Zealand's strict regulatory environment and close control of pharmaceutical pricing are of concern to some in the biotechnology industry.

"At the moment, major pharmaceutical companies are trying to understand the regulatory environment. It isn't an obstacle in itself, it is just very stringent," says Watson, from Genesis R&D.

Biotechnology in New Zealand has naturally started to cluster, with hubs developing on both the North and South Islands, especially around Auckland and Dunedin, where a lot of academic activity is centred.

"Traditional areas where we have been strong are in primary industries - dairy, nutraceuticals, ruminants, forestry," says Peter Hosking, President of the New Zealand Biotechnology Association.

According to Sara Darby, a trade development executive at Trade New Zealand's Melbourne office, there are several key areas of activity in the industry, including agricultural biotech, molecular 'pharming' in transgenic plants and animal, bioprospecting, nutraceuticals and functional foods, and environmental applications as well as biomedical approaches.

Agricultural biotechnology is arguably the strongest biotechnology sector, building on the agricultural strengths of the nation. Among the Crown Research Institutes, AgResearch, HortResearch, Crop and Food Research and ForestResearch all have extensive involvement with biotechnology. Several of the universities are also strongly focused on agriculture, including Massey, Lincoln, Canterbury and Waikato.

"In terms of plant biotechnology, the strengths are in pasture genomics, horticultural genomics and forestry," says Gavin Ross, from HortResearch. "We want to exploit what NZ is already doing well."

HortResearch is actively engaged in gene discovery for major horticultural crops including apples and kiwifruit, and Ross explains that scientists are seeking genes for disease control as well as flavour and other quality traits. Both HortResearch and Crop and Food Research scientists work closely with the breeders to develop new varieties using marker assisted breeding methods as well as transgenics.

More than 50 per cent of the research conducted at AgResearch is biotechnological in nature, according to Atkinson. "We've defined our strategy as a life sciences strategy," he says. AgResearch is mostly focused on agriculture, because of its history as an agricultural institute, but has been venturing into the use of transgenic animals to produce human therapeutics. "Animal tissues can make complex proteins which can't be made properly by in vitro systems," explains Atkinson.

AgResearch is a world leader when it comes to animal reproductive technologies including cloning, where they have the best success rate in the world. In addition they are world leaders in sheep and bovine genomics.

All three institutes are getting more involved in commercialisation. AgResearch has set up Celentis as its commercial arm, while Crop and Food Research has set up a Singapore-based vehicle for commercialising its IP. HortResearch is also working on a range of means to commercialise its discoveries. They all have other collaborations with industry too, both in New Zealand and overseas.

"CRIs are paid for discovery, not development and commercialisation," says Atkinson, pointing to the difficulties faced by the institutes in getting the most out of their research.

Small country, big variety

Among New Zealand's biotechnology companies there are a variety of products being developed. Some of the higher profile companies include:

  • Protemix: developing diabetes therapies and in phase II trials for a drug to treat cardiovascular complications of type 2 diabetes.
  • NeuronZ: protection of acute neurological conditions including stroke and head trauma, as well as treatment of chronic neurological conditions like Parkinson's, Epilepsy and Alzheimer's.
  • Genesis R&D: one division focuses on health issues such as immunology, inflammation, cancer and infectious disease, while the other division is involved with developing plant biotechnologies.
  • Virionyx: development of drug targets for infectious diseases, including HIV, hepatitis C and herpes.
  • A2 Corporation: production of A2 casein milk products lacking beta A1 casein (linked to childhood diabetes and heart disease).
  • BLIS Technologies: commercialisation of bacteriocin-like inhibitory substances including Salivaricin B, which can be used against Strep sore throats, dental caries, cow mastitis and food pathogen control.
  • BioDiscovery New Zealand: bioprospecting activities.
  • ViaLactia Biosciences: biotechnology products and services for the dairy industry.
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