Presentation on theme: "The Biotechnology Paradigm. Challenges and Opportunities in Latin American Countries Graciela E. Gutman CEUR-CONICET Summer School The Role of Social Science."— Presentation transcript:
The Biotechnology Paradigm. Challenges and Opportunities in Latin American Countries Graciela E. Gutman CEUR-CONICET Summer School The Role of Social Science in the Construction of Knowledge-based societies: Latin American and European perspectives FLACSO-MEXICO, EULAKS August 17 to 30 2009
Graciela GutmanFLACSO-México, EULAKS, August 17-30 2009 2 Agenda The New Biotech Paradigm Market Structure, Competitive Strategies. Innovative Trajectories in Health and in Agri-Food Systems (AFS) Main countries and firms. MNF strategies
Graciela GutmanFLACSO-México, EULAKS, August 17-30 2009 3 The New Biotech Paradigm: a new Science based Regime Strong interplay between basic science and technology; Convergence and synergies with other key technologies (information technology, nanotechnology); Generic and transversal character, reaching different productive sectors and services (diversification strategies of large incumbents, the life science industries) Various degrees of complementary aspects and ruptures with existing sectoral technologies (i.e., bioprocesses, conventional breeding) –MB plays different roles: core technology, key functions, support technology –Until now, human health has been the most important sector of application, followed by agriculture and food industries –Private investments in R&D explains the disparities observed in the different sectors of application –Strategic alliances, networks
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Graciela GutmanFLACSO-México, EULAKS, August 17-30 2009 6 Costs and time for biotech commercial developments Different, complex and highly expensive stages: –From Science to Technology –From Technology to Innovation –From innovation to production and commercialization Times and costs: –In the health sector (institutional markets): 10 to 12 years for the different phases (identification and validation of the objective, preclinical developments, human clinical trails – 3 phases- and regulatory approval); 400 to 800 million dollars; only five in 5000 compounds tested in the preclinical development, arrive to the clinical phases and only one is finally approved) – for a GM crop development, 8 to 10 years for the development, and 100 million dollars; regulatory cost represent almost 30% of total costs
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Graciela GutmanFLACSO-México, EULAKS, August 17-30 2009 9 Innovative trajectories in the US biopharmaceutical industry The Know-How Market. The monetization of intellectual property Public Research Organizations (Universities, laboratories, institutes ) (Knowledge base) Public Research Organizations (Universities, laboratories, institutes ) (Knowledge base) Pharmacy Multinationals (incumbents) Pharmacy Multinationals (incumbents) Dedicated Biotechnological Firms DBFs Dedicated Biotechnological Firms DBFs Institutional Context: IPRs Regulations Venture capitals, public investors Government Financing Complementary Assets (Productive, commercial, financial)
Graciela GutmanFLACSO-México, EULAKS, August 17-30 2009 10 Main actors in the US know how markets Public Research Organizations (PROs), such as universities and public technology centers, blurring the distinction between basic and applied science Dedicated Biotechnological Firms (DBFs), universitiy spin-off, which explore new scientific opportunities for drug discovery, translate basic knowledge into technological knowledge (and sometimes if they are successful into commercial knowledge), and offer specialized technological services to large firms (incumbents). Venture capitals specializing in providing financial and managerial support to DBFs in their early stages, and other financial resources such as the National Health Institute (NHI). Incumbents, large companies specializing totally or partially in MB, with complementary manufacturing and regulatory capabilities, R&D investments in biotechnology and associated technologies, but with limited capabilities in faced with the growing complexity of the new paradigm.
Graciela GutmanFLACSO-México, EULAKS, August 17-30 2009 11 Main Institutional changes in the US The Diamond vs. Chakrabarty court ruling (1980), which extended intellectual property rights (IPR) to areas that were previously excluded (life forms) to uphold a patent on a GM bacteria The Bayh-Dole Act (1980) permitting universities to file patents with the results of publicly funded research, and to transfer these patents to firms (priority US firms) in the form of exclusive licenses, or the creation of joint ventures with these firms; (lead to an explosion of biotech patenting, and the creation of DBF, limiting the scope of open science) The Stevenson-Wylder Technology Innovation Act (1980) making technology transfer a priority at the federal laboratories (permitting R&D arrangements with industry) the complementary creation of new financial markets specializing in the commoditization of IPR, with the change in NASDAQ regulations that authorizes the market entry and listing of firms operating at deficit on the condition that they have considerable intangible capital (patents), which lead to the monetization of IPR and the creation of secondary markets of S and T ( Orsi and Coriat, 2006, Arundel et al., 2006, Malerba and Orsenigo, 2002; Orsenigo, 1999; Pisano, 2006, Cimoli and Primi, 2007.
Graciela GutmanFLACSO-México, EULAKS, August 17-30 2009 12 Trends in the health sector New drugs associated with the high speed of scientific developments (pharma- genomics, IVD, gene therapies) Strengthening of the regulatory contexts Big pharma-s patents expiration Personalized medicine (shift from eficacy to eficiency; scale economies less important) Globalization
Graciela GutmanFLACSO-México, EULAKS, August 17-30 2009 14 Biotechnology in Agro-Food Systems Source: Gutman, Lavarello, Cajal Grossi (2006) in Bisang et al. (2006).
Graciela GutmanFLACSO-México, EULAKS, August 17-30 2009 15 Innovative trajectories in Agri- Food Systems Greatly based on previous researches in the pharma-chemical industry (enabling technologies) High Importance of complementary assets Industrial Organization –In agriculture DBF, large pharma-chemical firms (life-science firms), seed industries; Concentration and centralization in the input markets: diffusion of a technological package ; Coexistence of different Intellectual Property Right Systems (patents, breeders rights, trade secrets, others) –In food industries High barriers to entry for DBFs; important presence of large food MNF; Strategic role of food ingredient firms for MB diffusion Development of new products and enabling technologies since late 90s
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Graciela GutmanFLACSO-México, EULAKS, August 17-30 2009 17 Modern Biotechnology Techniques for plant breeding Actual –molecular markers; –GM crops: input traits, first and second generation; stacked genes; output traits); –plant micro-propagation –seed inoculants Future developments (depending on regulatory frameworks, societal acceptance; evolution of commodity prices; MNF strategies) –new generation of GM crops, nutraceuticals; (second and third generation of GMO) –biomass for industrial uses
Graciela GutmanFLACSO-México, EULAKS, August 17-30 2009 18 Market Structure, Competitive Strategies Developments driven by a small number of mega firms (MNF), in few countries, with strong public support and specific regulatory and institutional contexts; Firms of different size and technological bases: Large agrochemical and pharma firms, DBF, seed industries. Importance of previous technological capacities Expansion through M&A, globalization; asymmetric alliances with other firms, public and private institutions Strong barriers to entry: high R&D investments; strategic complementary assets; management of IPR; regulatory costs and times
Graciela GutmanFLACSO-México, EULAKS, August 17-30 2009 19 The importance of Complementary Assets in Agri-food Systems Upstream: problem definition and solution –Scientific and Technology Base –Knowledge Market –R&D financing Downstream: production and marketing –Traditional fermentation or breeding capabilities –Distribution networks –Regulatory capability and lobbying
Graciela GutmanFLACSO-México, EULAKS, August 17-30 2009 20 MNF strategies. Different phases Two phases with important restructuring processes: From the mid-1980s to the mid-1990s: strategic alliances between agrochemical firms, DBFs, and pharma-chemical multinationals to develop GM seeds From the mid-1990s to the present: consolidation; absorption of complementary assets, search for complementarities between seeds industries and agrochemicals; R&D planning for the construction of new biotech platforms Three main strategies: High number of Acquisitions (Monsanto, Dupont/Pioneer) Investment in the new technologies (Zeneca, Novartis) Based in the agrochemical business (Basf, Bayer) ( Chateway et al 2003)
Graciela GutmanFLACSO-México, EULAKS, August 17-30 2009 21 Global Area of Biotech Crops in 2008, by Main Countries (Million hectares) Countries Area (million hectares) Area (percentage) Main Biotech Crops USA 62.550%soybean, maize, cotton, canola Argentina 21.017%soybean, maize, cotton Brazil 15.813%soybean, maize, cotton Canada 7.66%canola, maize, soybean, sugarbeet India 7.66%cotton China 3.83%cotton, tomato, poplar Paraguay 2.72%soybean South Africa 1.81,4%maize, soybean, cotton Uruguay 0.70,6%soybean, maize Bolivia 0.60,5%soybean Total Area (15 developed countries and 10 industrial countries) 125.2 100,0% Source: CliveJames, 2008 Total Area in 1996: 2.8 million hectares; in 2000: 44 million; in 2003: 68 million
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Graciela GutmanFLACSO-México, EULAKS, August 17-30 2009 24 Seed Sales on Total Sales. Selected MNF (percentages) MNF 20082003 Main Seeds Syngenta 27%20% corn, soybean Bayer CropScience 8%10% cotton, soybean, canola Dupont/Pioneer 60%50% corn, soybean Monsanto 50%35% soybean, corn Dow Agroscience n.a. corn, cotton, soybean R&D Expense as % of Sales Selected MNF MNF 2008 Syngenta 8% Bayer CropScience 10% Dupont/Pioneer 9% Monsanto 13% Dow Agroscience n.a. Average selected firms 10% Source: Own estimate, based on firm data