Strong US sales for Genetic Solutions

Two ex-CSIRO scientists who have spent four years quietly commercialising Australian expertise in livestock DNA testing are in the midst of a US sales boom.

Genetic Solutions, founded by Dr Gerard Davis and Dr Jay Hetzel, now generates half its revenues from North America thanks to a sales surge there in the past 18 months.

The US business took off largely through word of mouth but the Brisbane-based biotech is moving to capitalise on its success by opening an office in Colorado this week.

The blue sky for Genetic Solutions is that its North American sales to date have been achieved with no promotional effort.

It believes that establishing an office in Colorado - geographical centre of the US cattle industry - will open the door for annual sales of 10,000 of its GeneStar DNA tests for meat quality.

That is twice the number of GeneStar tests that Genetic Solutions has sold, primarily into the Australian market, since the company was launched.

GeneStar was the first product of its type in the world when it was released two years ago. It tests for one of the genes that influence marbling (intramuscular fat) in beef cattle, a quality prized in consumer markets such as Japan. Testing is done on animal hair sent in by breeders using sample collection kits and costs between $60 and $80 in Australia.

Genetic Solutions' other major product is SureTrak, a genetic testing system that improves quality control for meat processing plant and feedlot operators.

SureTrak uses an animal's unique DNA profile to trace the origins of a packaged meat product back to an individual animal. It consists of a low-cost, patented sample collection process, a secure archiving and storage system, and DNA analysis.

Virtually branded beef programs in Australia use SureTrak and the first sale of the product has been made in the US.

GeneStar produces 30 percent of Genetic Solutions' revenues while SureTrak generates 20 per cent and the remaining 70 per cent comes from genetic information services which help the cattle industry make breeding improvements.

According to Davis, Genetic Solutions has managed "to do things smaller, smarter, faster and cheaper than our competition."

But the company's commercial path until now has been one of slow and patient growth. "We are talking about bringing a conservative industry into the biotech era, so an enormous education effort has been needed," Davis says.

Atypically for a biotech with leading edge technology, Genetic Solutions has relied mainly on its own revenues to bootstrap its growth into a 10 to 15 person company.

"We have funded our growth organically because we had products on the market and managed to generate revenues virtually since day one."

That period may be coming to an end. Although continuing to finance its own growth at the moment, the company will be is looking to expand its funding options "in the very near future", Davis says.

To cope with competition, it will have to keep its R&D pipeline well stocked. It plans to bring out new DNA tests for other desirable meat quality traits such as tenderness and yield at the rate of one or two per year into the foreseeable future.

While its primary focus is beef cattle, the company's products can also be used for sheep and aquaculture.

Its products are based on a comprehensive intellectual property portfolio of DNA and gene marker information developed with research partners Meat and Livestock Australia, CSIRO, and the CRC for Cattle and Meat Quality.