New Zealand Biotechnology Strategy

Transcription

1 New Zealand Biotechnology Strategy Public Discussion Paper

2 Published in October 2002 by the Ministry of Research, Science and Technology PO Box 5336, Wellington, New Zealand ISBN This document is available on the Ministry of Research, Science and Technology s website:

3 Foreword New Zealand is a country built on an exceptional ability to add value to natural products by applying biological knowledge. We are fortunate in possessing an equable climate, but we are even more fortunate to possess the know-how to make optimum use of it. And we have been doing it for decades - milk products, kiwifruit and pine trees are just a few examples. More recently, New Zealand researchers have been involved in the creation of world-class human health, pharmaceutical and environmental research, all of which involve biotechnology. As Minister of Research, Science and Technology I have been privileged to visit our universities, Crown Research Institutes and knowledge based companies, witnessing the outstanding and exciting science that is being done in this country. Developments in biotechnology move swiftly. We will need to work hard to keep abreast because those developments will bring great opportunities. They can also carry risks. It is important that a balanced approach to biotechnology is taken so that our economic, social, environmental and cultural values are given equal consideration. That is why we have developed this strategy. The Royal Commission on Genetic Modification recommended the development of a biotechnology strategy and in its report emphasised a theme of preserving opportunities. While biotechnology is much more than genetic modification this strategy is also about preserving opportunities. The Growth and Innovation Framework launched by the Prime Minister in February 2002 also recognises the importance of biotechnology to New Zealand s future. Across many sectors of our economy, including agriculture, forestry, health, justice, industrial manufacturing, right through to environment and conservation, applied biological knowledge will have an increasingly important role to play in achieving our economic, social and environmental aspirations. A biotechnology strategy can help us responsibly use our world-class biological knowledge and technologies to achieve our goals. This discussion paper is your chance to have your say on how this might be done, and I urge you to do so. Pete Hodgson Minister of Research, Science and Technology October

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5 Table of contents How To Make A Submission 6 Introduction 7 What is biotechnology? A Biotechnology Strategy for New Zealand Scope of the discussion paper Relationship to Public Consultation on Improving the Operation of the HSNO Act for New Organisms Part 1 - New Zealand Biotechnology Now 9 Why biotechnology is important to New Zealand International context Key features of New Zealand biotechnology Opportunities and challenges for New Zealand biotechnology Part 2 - Elements of a New Zealand Biotechnology Strategy 20 Vision, Goals and Principles Progress of the Strategy to date The community and biotechnology Effective regulation to manage emerging biotechnologies Growing New Zealand s biotechnology sector Co-ordination of the Biotechnology Strategy and links with other strategy and policy development Annex 1 - Diagram showing the current regulatory framework for approvals for the research, 38 development and commercial marketing of new products. Glossary and Technical Definitions 39 Pull-out Submission Form 43 5

6 How to make a submission Invitation for written submissions Individuals and organisations are invited to make written submissions on this discussion paper. The closing date is 30 November You can post submissions to: Biotechnology Strategy Group Ministry of Research, Science and Technology PO Box 5336 Wellington Or to: biotechstrategy@morst.govt.nz Copies of this paper and associated information on biotechnology in New Zealand can be found at Copies of the paper can also be requested on freephone Format of Submissions To help you make your submission we have included, at the back of this booklet, pull-out pages which set out the numbered questions and space for responses. If you do not wish to use these please ensure that you refer to question numbers in your responses. Please note that the Ministry s policy on disclosure of submissions is to treat any written material given to us as being in the public domain and therefore available to any other person on request, for the cost of photocopying. You should therefore indicate clearly if your comments are commercially sensitive, or if, for some other reason, you consider they should not be made public. Next Steps The Ministry of Research, Science and Technology will summarise submissions and make the summary publicly available on its web site and by hard copy on request. The Government intends to finalise the Biotechnology Strategy in early 2003, after analysing submissions and assessing policy options, including the work of the Biotechnology Sector Taskforce. Please include an address, telephone number and contact address in case we need to get in touch with you to clarify any matter in your submission. If you are making a submission on behalf of an organisation, please tell us: how many people you represent what process your organisation has gone through in order to arrive at the views in the submission. An on-line submission form is available on the MoRST website, which we encourage you to use. 6

7 Introduction What is biotechnology? Biotechnology is a broad term for a group of technologies that are based on applying biological processes. It involves the use of living things or their derivatives to solve problems and make products. Biotechnology has been with us for centuries. Traditional biotechnologies include fermentation applications such as beer, cheese, bread-making and cosmetics, as well as animal and plant breeding techniques. The term modern biotechnology is used to distinguish recent research-based activities. It includes a range of techniques from DNA technology, molecular and cellular biochemistry through to gene technology. Some people mistakenly think that biotechnology and genetic modification (GM) are the same thing. In fact GM is only one specific aspect of modern biotechnology. Examples of modern biotechnology and its current uses are outlined further in Part One. A Biotechnology Strategy for New Zealand Biotechnology opens up the possibility of new developments and applications that can benefit the wealth, health and environment of New Zealanders now and in the future. To realise these benefits in a responsible manner, the Government is developing a biotechnology strategy for the growth and management of biotechnology in New Zealand. The Government has asked the Ministry of Research, Science and Technology (MoRST) to lead development of a strategy that sets out a vision and goals for biotechnology in New Zealand and maps a way forward to achieve a responsible, growing biotechnology sector of which New Zealand can be proud. The strategy will address key themes in biotechnology that have emerged through the Royal Commission on Genetic Modification (RCGM), the former Independent Biotechnology Advisory Council (IBAC) and the development of the Growth and Innovation Framework (GIF) announced by the Government in February These themes include: fostering community awareness and engagement on biotechnology issues harnessing New Zealand s strengths in biological knowledge, research and innovation managing risks and having regard for ethical, cultural and spiritual dimensions strengthening the contribution of New Zealand s biotechnology sector to our economic prosperity and social well-being. The development of the strategy also acknowledges Biotech21, the strategy set out last year by Biotenz, the industry grouping of New Zealand providers of biotechnology. Scope This discussion paper is in two parts. Part One provides background information for the strategy. It examines New Zealand s use of biotechnology and identifies key strengths and issues. Part Two, on which feedback is sought, sets out the strategy framework. It provides a vision, goals and guiding principles for the development and use of biotechnology in New Zealand. This offers a framework to bring together the social, economic, environmental and cultural dimensions of biotechnology in this country. The goals reflect the themes and focus attention on: better connections between New Zealand communities and the biotechnology sector effective regulation to manage the development and introduction of new biotechnologies growing the commercial value of the biotechnology sector. 7

8 The paper identifies and seeks feedback on key issues and challenges related to each goal. It indicates actions that have already been initiated. Broad directions to address the issues and further the first two goals are outlined. Detailed targets and actions for developing and growing the sector - the third goal will, however, come from the Biotechnology Sector Taskforce, established in May 2002, and co-chaired by the Minister of Research, Science and Technology, Hon Pete Hodgson, and Biotenz Chair, Bill Falconer. The framework concludes with an outline of linkages to other key government strategies. This strategy discussion document has been prepared with input from individual and workshop discussions with community and sector participants held earlier this year. Its release now offers stakeholders and the wider public an opportunity to provide feedback on the directions required to achieve a responsible, vibrant biotechnology sector that benefits New Zealanders. Individuals and organisations are invited to make written submissions on this discussion paper by the closing date of 30 November Relationship to Public Consultation on Improving the Operation of the HSNO Act for New Organisms The consultation on the Biotechnology Strategy will partially overlap consultation on the Government s response to recommendations of the Royal Commission on Genetic Modification in relation to the operation of the HSNO Act, as well as consultation on a Ministry of Economic Development discussion paper on bioprospecting. The HSNO amendments cover details related to genetic modification research controls, legislative technicalities and specific GMO issues such as conditional release and liability. Biotechnolgy is much broader than the current debate on genetic modification and will require input from a range of sectors, community groups and individuals. While the differences in stakeholder focus and level of technical detail mean that the consultations are being run separately, officials from the Ministry of Research, Science and Technology, will ensure that the consultations are run in a complementary fashion. 8

9 PART ONE New Zealand Biotechnology Now This part of the discussion paper provides background information for the strategy. It examines New Zealand s biotechnology position now and identifies key strengths and issues for biotechnology in New Zealand. Feedback is not being sought on Part One. 9

10 Why biotechnology is important to New Zealand New Zealand has an economy strongly based on biology. Our wealth has come from applying biological knowledge to add value to agriculture and natural products. Biotechnology applications have also been used in New Zealand in many other areas including health care, forensic testing and environmental management. New emerging applications have the potential to further transform many industries, using biological processes instead of machinery to enhance the quality of life. Examples include improved diagnostic medicine and pharmaceuticals, pest control, industrial processes with reduced waste streams and the development of biodegradable products. Some current uses of biotechnology are: Sector Application Health Diagnostic tools for the testing and treatment of genetic diseases (e.g. cystic fibrosis) New and improved vaccines Research into the causes of serious diseases such as cancer, diabetes and multiple sclerosis New drug development Biosurgical devices and imaging equipment Agriculture Vaccines and diagnostic tests for animal disease Identification of the source of valuable traits in commercial and animal species Confirmation of pedigree livestock such as deer or cattle and plant cultivars such as the Pacific Rose apple Crops which are resistant to disease (e.g. virus resistant squash) Research and screening of safe and effective natural pesticide products from plants Biological control agents to manage pests Improved grape cultivars for wine production Environment Bioremediation of oil, chemicals and heavy metals Conversion of waste to energy Research into the possibility of low methane sheep to meet climate-change obligations Improving water quality Preservation of near-extinct strains through cloning (e.g. the rare Enderby cattle line) Biosecurity and pest management (e.g. improving detection of pests and diseases at the border) Justice/Police DNA fingerprinting and forensics to connect suspects with scene of crime evidence Maintenance of a police database of DNA profiles for use in investigation of offences Food and Screening and identification of natural products for health supplements beverage New foods (e.g. new varieties of kiwifruit) Industry/ New enzymes and biomaterials (e.g. bioceramics) manufacturing Improved production of high-value products (e.g. lipids from milk, biodegradable plastics) Improved industrial processes for dairy and meat industries 10

11 New Zealanders standard of living will be strongly shaped by how effectively we create and use the opportunities presented by new technologies. Biotechnology, like information and communication technology (ICT) and creative industries, will bring developments that open up new opportunities. case study 1 New Zealand s strength is its biological base in agriculture, forestry, fishing, pest and environmental management. We have held our edge in these areas because of sound scientific, research-based and innovative approaches to animal and plant health. These have extended into world-leading human health research and techniques. New Zealand is in a position to build on its strengths. In February 2002, the Government announced a Growth and Innovation Framework Growing an Innovative New Zealand. Prime Minister Helen Clark identified biotechnology as one of the three areas of the economy most likely to have a material impact on our economic growth. For this reason, the Government established the Biotechnology Sector Taskforce to focus effort and momentum on developing high-value, internationally competitive domestic biotechnology businesses. New Zealand is unique: geographically isolated, New Zealand is home to many species of plants and animals not found elsewhere, and has a diverse mix of cultures drawn from people of Maori, Pacific, European, Asian and other origins. This offers special opportunities to use biotechnology but also special responsibilities to do this wisely. International context Biotechnology has been a growth sector in the United States and Europe for more than 20 years. The United States, European and Canadian biotechnology sectors have experienced impressive ongoing growth in both revenue and employment. Many countries, both developed and developing are now focusing on biotechnology as a key sector for their future economic growth. For example, Australia announced a national strategy in 2000 to guide future development of its biotechnology sector. Advances in genetic knowledge, including the sequencing of the human genome, mean the world is on the threshold of a major expansion in the number and commercial value of biotechnology applications. DNA tracking a confidence booster for UK consumers A New Zealand-developed DNA tracking system is allowing British meat buyers to trace the cut they buy right back to the New Zealand processing plant and even the farm it came from. Knowing for sure that their meat came from New Zealand, which is known internationally for its high quality meat and disease-free animals, gives cautious consumers greater confidence in their purchase. Under the easitrace system, blood samples from carcasses going through a meat processing plant are incorporated with details of the farm, and time and date of processing, on a special tag which is then stored for later reference. Wholesalers or retailers wanting to trace a cut of meat can scan the batch label and send back a DNA sample that is then matched to the corresponding DNA sample held back in New Zealand. The easitrace system was developed by AgResearch, a Crown Research Institute, in conjunction with New Zealand meat company Richmond Ltd. We re very pleased with the end product that is fully auditable, robust and cost effective, says AgResearch easitrace scientist Dr Mike Tate. 11

12 case study 2 Keeping abreast of international developments in biotechnology will be critical if New Zealand is to continue to hold a competitive edge in the development of new biologically based products. 12 Methane busting holds economic promise The methane emissions of New Zealand s sheep and cattle have generated their share of jokes, but they are the subject of some very serious scientific research. Methane produced in the rumens, or first stomachs, of sheep and cattle is in fact this country s main greenhouse gas source. In line with its planned ratification of the Kyoto Protocol, the Government has committed itself to reducing greenhouse gas emissions - and so it is important for scientists to look closely at ways of limiting the production of farm methane. The AgResearch Crown Research Institute has found that while some bacteria in the stomachs of ruminant animals produce methane, other bacteria inhibit its production. The compounds produced by these bacteria are now being tested as possible control agents against the methane-producing bacteria. In the future, these compounds may be able to be delivered to animals through slowrelease devices placed in their stomachs. Farmers will benefit from the reduction of methane emissions because the five-ten percent of forage energy presently lost as methane will be channelled into increased animal performance, says AgResearch s Dr Keith Joblin. A reduction in methane emissions would also mean our farmers could sell their meat and wool products as low methane or methane free. This way they can gain a global marketing advantage, he says. Opportunities exist for strengthening New Zealand s expertise by developing international partnerships for collaboration and joint ventures. International linkages could help optimise New Zealand s position and attractiveness by way of regional clustering and joint showcasing, e.g. with Australia. New Zealand can also benefit from looking at how other countries are managing the challenges of modern biotechnology. Certain applications, particularly the commercial use of GM crops and food, and stem cell research, have led to public concerns about aspects of modern biotechnology. These concerns have led countries, including the United States, Canada and the European Union (EU), to review their strategies to ensure arrangements are in place to give adequate consideration to ethical and safety issues. Issues related to biotechnology have been discussed in a number of international organisations and bodies of which New Zealand is a member, and efforts are being made to facilitate international dialogue and cooperation. Forums with an interest in biotechnology include the Convention on Biological Diversity, the Food and Agriculture Organisation, Codex Alimentarius Commission, the International Plant Protection Convention, the Organisation for Economic Cooperation and Development, the United Nations Educational, Scientific and Cultural Organisation, the World Trade Organisation, the World Intellectual Property Organisation and Asia Pacific Economic Cooperation (APEC). Examples of initiatives arising from these discussions include the conclusion in January 2000 of the Cartagena Protocol on Biosafety. The Biosafety Protocol, which has yet to enter into force, addresses the safe transfer, handling and use of living modified organisms that may have an adverse effect on biodiversity, and taking into account risks to human health, with a specific focus on transboundary movements. The Codex Alimentarius Commission has made good

13 progress in developing international guidelines for safety evaluations of foods derived from biotechnology and work is ongoing on the development of guidelines for the labelling of foods obtained from biotechnology. The United Nations has established a working group to consider the need for an international convention against human cloning. While international policy forums have begun discussing a number of specific policy issues arising from biotechnology, this is an area where there is only limited international consensus. To date, countries have exhibited a range of different attitudes to biotechnology issues. In some cases these attitudes have been defined by the absence or presence of significant export interests in, for example, GM crops. In other cases they reflect ethical and religious concerns. National regulatory approaches are at various stages of development worldwide and even the better established systems are in a state of flux. They can be expected to continue to change as regulatory experience and market reaction to new technologies evolve. The international market in which developers, investors and consumers operate is likely to drive pressure for greater harmonisation of international standards and practices. Key features of the New Zealand biotechnology sector Excellent research Most of New Zealand s biotechnology knowledge comes from research in universities, CRIs and a few private research institutes. Government largely funds this research, through grants from a variety of organisations including funding from the Foundation for Research, Science and Technology (FRST), New Economy Research Fund, the Marsden Fund, and the Health Research Council. Overall, in 2001, there was around $186m of government funding on biotechnology-related research. Private expenditure on research and development (R&D) is low by international standards, although it is increasing. It comes mainly in the form of company R&D, venture capital and angel investment. Vialactia, a research arm of Fonterra, is a significant example of privately funded R&D. case study 3 Natural antibiotics offer new treatment options The discovery by New Zealand researchers of natural antibiotics in saliva may offer significant advances in the battle against bacterial infection. The breakthrough follows a quarter of a century of research led by Otago University s Professor John Tagg into streptococcus, the bacteria that can cause throat infections, rheumatic fever and rheumatic heart disease. The Otago team s work revealed that some people have in their saliva beneficial bacteria called streptococcus salivarius K12. These produce protein molecules that fight harmful bacteria. The molecules were christened Bacteriocin-Like Inhibitory Substances, and in 2000 the acronym became the name of a new listed company, BLIS Technologies Ltd, which was created to build on the Otago University research. BLIS has filed international patents and is now marketing throat lozenges containing the beneficial bacteria. The company is also developing a product based on the same process that targets tooth decay, and is working on a number of other BLIS applications. Together these products have the potential to reduce the occurrence of bacterial infections and lessen dependence on traditional antibiotics. They may also prove to be a substantial income-earner for New Zealand. 13

14 New Zealand produces world-class research in aspects of molecular biology. For example, two research groupings were recently selected as Centres of Research Excellence: the Allan Wilson Centre for Molecular Ecology and Evolution (Massey University) and the Centre of Molecular Biodiscovery (Auckland University). Farming and forestry productivity and innovation often drive New Zealand research in biological processes. Human health outcomes are a further significant factor. Most health research is government-funded at the fundamental level. Major multinational pharmaceutical companies are not very active in New Zealand biotechnology R&D. While involvement in clinical trials has declined in recent years, it is important to note the increasing interest of pharmaceutical companies in funding or collaborating with researchers at different stages. Recent examples include the GlaxoSmithKline funding for the asthma research being conducted by Professor Richard Beasley of the Medical Research Institute of New Zealand and the Pharmacia links with the Liggins Institute research programme in Auckland. In recent years there has been an increasing emphasis on more closely linking governmentfunded basic research to commercial applications through initiatives such as the Technology New Zealand Fund, Grants for Private Sector R&D scheme, and FRST promotion of research and industry consortia. This has encouraged the establishment of commercial subsidiaries and start-up biotechnology companies associated with universities (particularly at Auckland and Otago) and research institutes. A key aspect of New Zealand s success in the application of biological knowledge has been the development of regulatory and ethical review processes that create and protect safe, healthy and ethical environments for humans and animals. This can enhance New Zealand s credibility as a place to carry out biotechnology R&D, however, if perceived as overly stringent, it can also decrease New Zealand s attractiveness. Growing range of applications The major industry users of biotechnology in New Zealand are agricultural, horticultural and forestry industries, reflecting the importance of technology-driven primary production to New Zealand. Many commercial developments from biotechnology in these industries to date have been applications based on the production or recovery of high-value, naturally occurring bioproducts, rather than through the use of biotechnologies arising out of genetic modification. Growing knowledge of molecular and genetic structures is providing the basis for growth in the diagnostic sector that services these industries. Other important industries in New Zealand that use biotechnology include environmental and waste management industries (e.g. bioremediation of soil). Crime detection and forensic applications are also significant. The contribution to the human diagnostics and biomedical services sector is one of the fastest growing biotechnology areas in New Zealand, though still small by international standards. Many companies in this sub-sector are start-up companies, associated with and clustered around the universities of Otago and Auckland and also linked to CRIs. Long lead times to commercialisation In New Zealand, as in all countries, biotechnology has commercial characteristics that need to be considered when determining a strategic direction. These include: - the development path for applications of biotechnology discoveries which result in long lead times to commercialisation (typically years from discovery to market) - strict regulatory approvals - the high failure rate of many good ideas, particularly in the biomedical field - the capital requirements are significant at the front-end of some biotechnology projects - the need to attract and retain highly skilled scientists 14

15 - the commercial value lies in the patents and intellectual property associated with the successful products. There is a need to recover enough value through these to reward investors and encourage re-investment. case study 4 Low capitalisation may also have constrained commercial growth. There are only five publicly listed biotechnology companies in New Zealand. Two of these (Genesis and BlisTech) are listed on the main New Zealand stock exchange board; the others are listed on New Zealand s secondary board. The biotechnology sector is underdeveloped relative to its potential New Zealand has gained comparative advantage and strength in dairy, agriculture, forestry and horticulture products through quality farming and smart use of biotechnology. Future wealth and sustainable development is likely to come from applying new biological knowledge and technologies to familiar products and problems; problems like possums, cancer, methane emissions, diabetes and asthma. A benchmark survey of modern biotechnology activity in New Zealand was conducted by Statistics New Zealand in This estimated the income of the modern biotechnology sector in the year to June 1999 to be $475m (compared with, for instance, the furniture manufacturing industry whose income was $938m for the same period). This survey is due to be repeated in High level of public interest The work of the former IBAC and the RCGM has raised the profile of biotechnology issues and stimulated community discussions. The Royal Commission provided an independent forum to address public concerns about genetic modification. New Zealanders have a history of high uptake of technology (especially in fields such as information technology, agriculture and horticulture). There is growing interest in medical applications of biotechnology. Social science research is developing to examine relationships between science and society, and different cultural values. Using science to catch criminals DNA profiling is giving police the chance to eliminate suspects and successfully prosecute hundreds of offenders who might otherwise escape justice. Since the 1996 establishment of the National DNA Databank by the Crown Research Institute ESR and the New Zealand Police, more than 1900 unsolved crimes have been linked to individuals on the database. The Databank has also helped confirm the innocence of many people who were potential suspects. DNA profiling compares genetic information obtained from biological evidence such as blood, tissue or hair found at crime scenes against the DNA of suspects. DNA profiles from individuals and from unsolved crime scenes are stored on the two databases that comprise the National DNA Databank. At present there are DNA profiles from around 26,000 convicted offenders and volunteers, and around 4500 crimes. A reported match between two profiles (crime to crime or crime to person) means there is an enormously high probability that the same person was involved. 15

16 case study 5 New Zealand anti-hiv drug in US clinical trials Auckland company Virionyx is developing a drug that it believes has the potential to make substantial inroads against HIV-Aids. Virionyx founding director Frank Gelder says its anti-hiv drug HRG214 has shown the ability to destroy the HIV virus and prevent further infection of healthy cells. Existing anti-hiv drugs that seek to slow the replication of the virus have not been effective in preventing HIV from attacking healthy cells, he says. The company is currently taking its drug - which is derived from purified plasma extracted from immunised goats - through gruelling US Food and Drug Administration clinical trials. Phase one, designed to test the product s safety, has already been successfully completed at Harvard Medical School. Now the process is moving to phase two, the twice-weekly injecting of 40 US HIV patients over eight months. Opportunities and challenges for New Zealand biotechnology Biological knowledge earns New Zealanders income, for instance, through farming, fishing, forestry and ecotourism, and it keeps our environment and people healthy. Modern biotechnology provides opportunities for us to build on this strong biological base. While recognising the benefits biotechnology can bring, it is equally important to recognise that there are ethical, safety and environmental issues that must be addressed and managed. Successful development of the biotechnology sector will require close and positive connections with communities, explicit ethical principles and robust processes for identifying and managing potential risks to safeguard the community and the environment. Care will also be required to ensure that decisions enhance and support other government policies such as the provision for public health priorities and maintaining New Zealand s biosecurity. Some of the major strengths, opportunities, weaknesses and challenges facing the Government, community, industry and researchers, as identified in our preliminary discussions, are outlined in the following section. These are discussed in more detail under Elements of a Biotechnology Strategy. Further issues may be identified during this consultation and by the work of the Biotechnology Sector Taskforce. From the project s inception to the completion of phase one trials cost Virionyx $NZ18 million and the company is now seeking some $70 million to take the project through to market, possibly in The company s Penrose laboratories have been upgraded so further development and, it hopes, commercial production of HRG214 can be carried out in New Zealand. 16

17 New Zealand strengths in biotechnology Excellent, robustly regulated and ethically guided science, which is world-class and relatively low cost. case study 6 New Zealand has the world s best understanding of sheep breeding and dairy husbandry, as well as livestock free of many of the world s most serious diseases (e.g. no BSE, scrapie or foot and mouth disease.) Genomic research in apples, kiwifruit, sheep, and deer. Primary industries that are well connected to global markets and responsive to consumers. Biomedical research at the discovery end of development. Desirable site for clinical trials. Some natural clustering of companies and science providers. New Zealand, through the RCGM, has successfully conducted a community conversation on genetic modification, with extensive consideration given to the pros and cons. New Zealand weaknesses in biotechnology A culture that tends to be critical of both entrepreneurial success and failure. A poor understanding generally of commercial and venture capital business drivers. Insufficient commercial skills; in particular, lack of sophisticated skills in protecting intellectual property rights. Internationally competitive markets make it difficult to attract and retain top level scientists. A low profile and weak connections to the global biotechnology market. Low critical mass and a risk of fragmented approaches to business development and marketing. A weak venture capital market to expand New Zealand biotechnology. A regulatory system that is perceived by some to be complex, with uncertain timeframes for approvals, thus adding compliance costs. Biotechnology takes good bacteria to new markets New Zealand Milk, a strategic business unit of Fonterra, has found a way of incorporating the best sorts of good probiotic bacteria found in yoghurt into other dairy products such as milk powder and cheese. Over five years a team from the Fonterra Research Centre in Palmerston North looked at hundreds of different strains of probiotic bacteria and finally isolated two with specific disease-fighting qualities that strengthen the immune system. These have been named DR10 and DR20. A health and safety study carried out on DR10 in Taiwan showed that it considerably boosted adult immune systems. The next step was to expand the potential market for products containing probiotic bacteria. Scientists developed two different milk powders containing DR10 and a cheese - Balance Mainland - containing DR20. Investigations into other probiotic bacteria food applications are underway. These sorts of new products have considerable consumer appeal in traditional dairy markets and also mean the benefits of good bacteria can be taken to regions such as Asia where yoghurt is not a popular food. Many in the community do not understand biotechnology or scientific processes. 17

18 case study 7 Opportunities for New Zealand biotechnology Increase competitive advantage by building on biological knowledge to improve productivity of our primary industries. Create new products and new ways of making products that are smarter, more efficient, more environmentally friendly and sustainable. Access the funding for R&D of global companies, such as pharmaceutical companies. Boost biomedical work and capture for New Zealand the intellectual property benefits of related drug discovery. Immobilised enzymes make for industrial cost savings Auckland University s School of Engineering has found an effective way of saving money for industries that use enzymes - biocatalysts - in manufacturing processes. Traditionally, enzymes are mixed into a product - for instance, during the making of hydrolysed milk products for people with lactose intolerance - and then turned off by heating or other processes once the desired changes have taken place. This means that some of the potential of the enzyme is wasted. However, work carried out by Professor Xiao Dong Chen and PhD student Quinn Zhou has led to enzymes being placed into a column similar to a large computer printer ink cartridge. The enzymes are fixed in place on a fibrous core and the milk or other product is passed through the cartridge. The enzymes do not have to be turned off and can therefore keep functioning for their whole natural life, or for as long as they are free from microbe contamination. We are able to show substantial cost savings from the process, Professor Chen says. Immobilised enzymes can be used in the manufacture of milk products, beer and other food and industrial products. Professor Chen says their greatest potential lies in small-scale applications where both the enzymes and the product have high value. Promote business expansion opportunities through the newly established Venture Investment Fund and the New Zealand Stock Exchange s New Capital Market. Foster geographical clusters to achieve critical mass. Strengthen sector networks to disseminate information, encourage collaboration and spread industry best practice. Provide a single branding for New Zealand biotechnology. Develop and foster international partnerships and joint ventures, in particular build on the growing interest in biotechnology partnerships between businesses in New Zealand and the United States. Optimise Australian, Pacific and Asian linkages to build up regional clusters, especially through joint showcasing. High degree of public interest in biotechnology and GM matters provides a basis for strengthening links between the sector and the broader community, and developing community understanding of potential economic, environmental and social benefits and risks. The process has the added advantage over conventional food manufacturing technologies of requiring relatively low temperatures, and in some cases it may allow manufacturing without the addition of foreign ingredients. 18

19 Threats to New Zealand biotechnology Lack of support for a long-term direction could affect New Zealand s capacity to build and sustain a healthy biotechnology sector. Investment may be scared off if biotechnology policy changes every three years. Competition to recruit New Zealand trained scientific talent, especially from Australia (Melbourne, Sydney, Queensland clusters) and Singapore. Commercial vulnerability of small biomedical research and development sector which is generally not well linked to drug delivery. Reliance on enabling technologies owned by major international companies. Risks of selling intellectual property either too early (risk of undervaluing) or too late (risk of competition). Failure to identify and develop key niches. Negative perceptions held by potential overseas investors. This includes perceptions of New Zealand approvals legislation as prohibitive rather than enabling. This may also go hand in hand with poor understanding of access and benefit sharing provisions, especially in relation to Maori. 19

20 PART TWO Elements of a New Zealand Biotechnology Strategy Part Two sets out the strategy framework. It provides a vision, goals and guiding principles for the development and use of biotechnology in New Zealand. This section of the paper identifies and seeks feedback on key issues and directions related to each goal. The paper indicates actions that have already been initiated. Further broad directions to address the issues and further the first two goals are outlined. Detailed targets and actions for developing and growing the sector - the third goal - will, however, come from the Biotechnology Sector Taskforce, established in May The framework concludes with an outline of linkages to other key government strategies. 20

21 A Vision for Biotechnology in New Zealand New Zealand responsibly applies our world-class biological knowledge, skills, innovation and technologies to benefit the wealth, health and environment of New Zealanders, now and in the future. Government goals for biotechnology Three goals support the vision. Build understanding and positive connections between the community and the biotechnology sector. Understanding and positive connections need to be fostered through: community access to quality information about biotechnology developments and their potential benefits and risks active engagement and dialogue between sector participants and the community opportunities to enable and encourage New Zealanders to contribute to public policy issues and biotechnology directions strengthening ways to foresee new and emerging biotechnologies, assess potential opportunities and risks, and consider cultural, ethical and spiritual issues. Manage the development and introduction of new biotechnologies with a regulatory system that optimises opportunities and innovation while safeguarding health and the environment. This requires an effective, efficient and transparent regulatory, ethical and audit framework. Grow New Zealand s biotechnology sector As well as the above, an internationally competitive biotechnology research and production sector must be backed by: resources focused on increasing global connections, attracting and retaining investment and building on world-class niche strengths. Guiding principles for the Biotechnology Strategy The Government will be guided by a commitment to: Benefit for New Zealanders focus on outcomes from biotechnology that benefit the wealth, health and environment of New Zealanders. Sustainable development meet the needs of the present without compromising future generations, through integrating economic growth, social equity and environmental and cultural well-being. Responsibility responsible use and uptake of biotechnology, safeguarding human health and the environment through the identification and effective management of risks and uncertainty. Innovation foster and encourage innovative developments in biotechnology. Biological diversity to protect biological diversity, particularly New Zealand s unique flora and fauna. Ethics development of biotechnology that takes account of ethical concerns. Participation involve citizens in biotechnology public policy and ethical issues, through open information and participation processes that acknowledge the diverse community interests. Treaty of Waitangi - respect for the principles of the Treaty of Waitangi. capability in science education, research, enterprise and commercial skills productive investment in basic research and strong links between research and industry clarity about access to and use of genetic and biological resources effective identification and use of intellectual property 21

22 Enhanced wealth, health and environment of New Zealand Vibrant and responsible biotechnology sector Community understanding and connection Futurewatch Information Ethics Participation Demonstration of benefits Effective Regulation Safeguards health, environment, and social values Optimises opportunities Efficient and transparent Growth Education, research, and business skills Basic research Capital investment IP management Global connections 22 Progress of the Strategy to date The Government has announced a Growth and Innovation Framework in which the biotechnology sector is identified as one of the three key sectors targeted for growth. A Biotechnology Sector Taskforce has been appointed to address barriers to growing the sector. A Bioethics Council is being set up to advise and promote dialogue on the ethical, spiritual and cultural aspects of biotechnology. A Royal Commission of Inquiry has been held to consider strategic options for New Zealand with respect to genetic modification (GM). The Commission recommended a precautionary approach that preserved options for the future. The Government has endorsed this approach. The Commission considered that New Zealand s regulatory system and institutions provided an appropriate framework for controlling the use of GM but recommended some changes to improve the system. Government actions on these are detailed in the section on the regulatory framework. The Government has set in place a constraint period (expiring October 2003) during which no applications (with limited medical exceptions) for release of genetically modified organisms will be considered by regulatory authorities. During this constraint period, in addition to implementing many of the Royal Commission s recommended policy and legislative changes, the Government has adopted the Royal Commission s recommendation for an enhanced research programme. Work is being undertaken on a number of projects, including horizontal gene transfer and the co-existence of GM and non-gm farming. A new $450,000 per annum fund (in Vote RS&T) has been established, aimed at supporting and enhancing dialogue initiatives around new and emerging areas of science. Government research funding is being more strongly focused on biotechnology research. FRST and HRC have recently announced funding for research projects with a strong emphasis on biotechnology, including research examining social and cultural aspects of biotechnology. Two of the five recently announced Centres of Research Excellence have a focus on using modern biotechnology as a research tool. A Venture Investment Fund (VIF) of NZ$100m has been established which will be combined with private local and overseas venture capital. Negotiations are currently being conducted with five fund managers to establish the combined private/public VIF Seed Capital funds. These funds have the capability of identifying commercial opportunities out of New Zealand s research, much of which is focused in biotechnology and agritechnology.

23 The Government amended the taxation regime from April 2001 to align more closely the taxation treatment of R&D expenditure with accounting treatment. The changes allow businesses to make an immediate tax deduction for R&D expenditure that is expensed for accounting purposes. The changes make this area of tax law clearer and more certain, and underpin growth in high-value, high technology industries. GOAL 1 The community and biotechnology There is increasing understanding internationally that a well functioning society is one that balances social, economic and environmental considerations instead of according undue weight to one over the others. Achieving this ideal will come through commitment to the first goal of the Biotechnology Strategy, which is to: Build understanding and positive connections between the community and the biotechnology sector. Biotechnology has given us powerful tools that are now part of our everyday lives. With their power comes the potential to do much good, but also responsibility for ethical and safe use. Modern biotechnology is a relatively young field, and, as with any new technology, its long-term effects can be uncertain or unknown. The risks and benefits will occur unevenly throughout society on a case-by-case basis. The impact of the products of modern biotechnology on society and, critically, on what it means to be human, challenges us to develop clear values about our responsibilities to wider society and the environment. Biotechnology research and development needs to be considered in partnership with broader society. It must go hand in hand with an informed, inclusive approach to decision-making about its uses and take into account factors beyond those of individual choice. It is therefore essential that consumers and the community have information and opportunities for discussion in order to: understand and assess the benefits and risks associated with the application of particular technologies have confidence in regulatory mechanisms have the chance for effective input to the policymaking process. It is also important that the biotechnology sector: seeks out and takes account of the views of the community helps to bring issues to the attention of the public early on in the development of potential new products and processes. Key challenges Experience in New Zealand and overseas points to a number of factors which are important in building a better relationship between the community and the biotechnology sector: Trust - Trust between broader society and the biotechnology sector is essential. Trust can be built and maintained by information sharing and honest debate, open processes, mutual understanding and responsiveness, early attention to issues and an appropriate and rigorous regulatory system. Diverse perspectives - Broad and diverse skills and knowledge need to be brought to bear on decision-making processes and sector development. Approaches that rely on narrow technical expertise have significant shortcomings. The ability to integrate knowledge from other disciplines, work across cultures and world views, meld facts with values, and communicate to non-scientific audiences need not be a requirement of every individual scientist, but should be present at the institutional level. Community engagement seen as an opportunity not just a cost - Engagement with society can provide useful insights into problem definition and the development and use of biotechnologies. Debate about the wisdom and value of technological applications can be healthy and is often the precondition for confidence and trust. The key is to channel the debate in constructive directions towards overall benefit and find effective and efficient ways to manage engagement processes. Developing stronger and more positive connections between the biotechnology sector and broader society is in everyone s interest because of the enormous potential biotechnology has to keep on changing our everyday world. It is particularly important in New Zealand to ensure that Maori are well connected and play a key part in biotechnology development, bringing to bear Matauranga Maori concepts together with specialised biological knowledge. 23