International Business Opportunities in the Biotechnology Industry

The world has witnessed extraordinary advancement in biological science over the last few decades. One particular area, within the subject of biology, which has witnessed such advancement and growth, is biotechnology. Biotechnology is the industrial application of living organisms and/or biological techniques, developed through basic research. In terms of industrial application, the three major industries with significant application of biotechnology include: health care (medical), agriculture, and the environment. Biotechnology consists of a combination of such disciplines as genetics, molecular biology, biochemistry, embryology, and cell biology, which are simply academic branches derived from the core subject of biology.

The benefits of biotechnology, today and in the future, are nearly limitless.

Biotechnology has created more than 200 new therapies and vaccines, including products to treat cancer, diabetes, HIV/AIDS and autoimmune disorders. Unfortunately, even with such significant accomplishments made possible via the use of biotechnology, the industry is relatively small in comparison to other industries of similarity (particularly the pharmaceutical industry), indicating that the power of biotechnology is yet not being exploited to its fullest potential.

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However, the industry is growing rapidly, and in fact, setting record highs. In April 2007, for example, the collective market capitalization (number of shares multiplied by the shares outstanding) of the 360 publicly traded biotechnology companies listed on the NASDAQ and AMEX, and monitored by Burrill & Company, soared above $500 billion for the first time in its history, closing that month at $507 billion. According to Steven G., CEO of Burril & Company, a San Francisco based company, which is a global

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leader in life sciences merchant banking, focused exclusively on companies involved in biotechnology, ".

..growth is even more remarkable when you take into account the fact that we have seen several leading biotechnology companies, with multibillion dollar market caps, being acquired by big pharmaceuticals and their market cap value removed from the industry's collective total." Clearly, the numbers indicate a rapidly growing industry, and fortunately, for Canada, a country with a large intellectual capital (e.g. sum of knowledge, information, talent, and experience), as a result of leading expenders on research and development within the industry, they are bound to prosper in the near future.

One of the most beneficial industries of biotechnological applications is the agricultural industry. Using the techniques of modern biotechnology, genes can be transferred to various crops to impart new character and traits in order to, for example, increase yield. The increase in yield would ultimately be a result of reduced vulnerability of the crop to environmental stresses as a result of insertion of genes that enable the crop to withstand certain biotic and abiotic stresses. For example, drought and excessively salty soil are two significant limiting factors in crop productivity. One of the latest developments is the identification of a plant gene, At-DBF2, from thale cress (a tiny weed- often used for plant research). When this gene was inserted into tomato and tobacco cells, the cells were able to withstand environmental stresses like salt, drought, cold and heat, much more extensively than regular cells.

Thus, if these preliminary results were to prove successful in larger trials, then the At-DBF2 genes can help in engineering other crops that can also better withstand such stresses. Researchers have also created transgenic rice plants that are resistant to the Rice Yellow Mottle Virus. In Africa, this virus destroys a significant portion the rice crops and leaves the surviving plants more susceptible to fungal infections. Other applications include the modification of proteins in foods to increase their nutritional qualities. For example, proteins in cereals may be transformed to provide amino acids essential for the human body. In addition, the use of modern biotechnology can be used to slow-

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down the process of spoilage so that fruit can ripen longer on the plant and then be transported to the consumer with a still reasonable shelf life. This improves the taste, texture and appearance of the fruit. Theoretically, the benefits of biotechnological applications within the agricultural industry are limitless. As a result, Canada is in prime position to benefit from the application of biotechnology. Approximately 2% of the Canadian labor force (translating to roughly 600,000 people) is focused in the agricultural industry, and the nation itself plays a vital role in the global agricultural market. However, being one of the leaders in biotechnological research and application provides Canada an absolute advantage to international competition as the products in theory, can be modified to much more superiority to the competition. Therefore, that small market share can be foreseen to grow much larger and bring further prosperity to peoples within the agricultural sector. Similarly, the Canada can also benefit from servicing its expertise within the industry to countries whom rely more heavily on agriculture as their economic backbone.

Biotechnology has the potential to give Canadians and the global society, a wide variety of new and important medicinal solutions that could be helpful in preventing diseases, treating illnesses, and improving health in general. Biotechnology-based health products can consist of drugs and other products such as: conventional viral and bacterial vaccines; recombinant proteins including, blood products, hormones, growth factors and enzymes; gene therapy and cell therapy products; pharmaceuticals regulated as chemical drugs (e.g. antibiotics and enzymes). In addition to all of the possibilities listed, modern biotechnology can also be used to manufacture existing drugs more easily and significantly cheaper. For example, in 1978, Genetech, a multinational corporation, considered to be the founder of the biotechnology industry, focused on using human genetic information to discover, develop, manufacture and commercialize biotherapeutics that address significant unmet medical needs, developed an humanized insulin by joining an insulin gene with a plasmid vector which was later inserted into the bacterium Escherichia coli for administration. Insulin, a hormone produced by the pancreas of the human body, responsible for

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regulating a constant blood-glucose concentration in the bloodstream, and widely used for the treatment of diabetes, was previously extracted from the pancreas of bovines and pigs to treat patients diagnosed with diabetes. However, extracting insulin from bovine and pigs was quite expensive and often useless since it elicited unwanted immunogenic responses. However, with the resulting genetically engineered bacterium by Genetech, the production of large quantities of human insulin at lower costs was enabled. The application of biotechnology is acclaimed for association with not only the landmark breakthroughs treating diabetes, but as well as hepatitis B, hepatitis C, various cancers, arthritis, multiple sclerosis, and cardiovascular disorders. From a business perception, biotechnology is one of the most research-intensive industries in the world. Unfortunately, this leaves Canadian companies to compete with other industrialized countries whom also are heavily investing in the industry. However, since the majority of the industry is concentrated within specific developed countries only (primarily Canada, the US, and Japan), this creates potential business opportunities within developing countries such as China and India.

For example, China holds the title of being the fastest economically growing nation in the world with a robust growth rate sustained well over 10.0% in recent history. Due to the astonishing rate of economic growth, the total number of the middle class citizens in China has risen to one-fifth of the entire country's population (translating to approximately 260 million peoples), and those earning a middle-class income in China have risen to 19 % of the whole population. As China continues to post double digit growth year after year, ultimately its populace prospers, and thus, people can afford sophisticated and desire more effective medical care. Therefore, theoretically, this would create additional markets for Canadian companies to enter instead of primarily focusing on North America and Europe. An another additional benefit to expanding middle-class of such countries is the fact that since the populations are so large, plentiful space exists for Canadian companies to enter the Chinese and Indian health care industries.

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Biotechnological applications are also beneficial to the environmental sector. Biotechnology has tremendous potential to promote sustainable and environmentally friendly industrial development. For example, plantations of genetically improved trees will increase fiber availability and reduce wood costs, as a result strengthening the forest sector's competitiveness. This, in fact, would be very beneficial to Canada, since Canada is one of the largest exporters of wood and wood products, and has an abundant quantity of this natural resource. On another note, with advances in biotechnology, new biotechnological based techniques of waste treatment also create more efficient and developed methods to treat contaminated soil and water, and contaminated air flows and off-gases. For example, with the use of biotechnology, hazardous waste can be cleaned more efficiently with more effective results by simply harnessing pollution-eating microbes and eliminating the use of acidic chemicals which provide less effective results. Other applications of biotechnology have environmentally friendly effects as well.

Certain newly synthesized enzymes can reduce by 50% the use of chlorine-based bleaching agents used in pulp and paper production. Similarly, other applications can be used to clean up contaminated sites containing environmentally abusive substances, extracting and processing minerals in the mining industry, developing alternatives to petroleum-based feedstocks (e.g. ethanol, biodiesel), developing the next generation of pollution monitoring/detection technologies, and also contributing as a potential solution to the global issue of climate change via the use of synthesized enzymes which will produce cleaner burning fuels. On the other hand, one of the most serious consequences associated with the rapid economic growth of developing nations (particularly India and China) has been their significant contribution to the increased pollution and degradation of natural resources globally. Specifically, in the case of China for example, apart from being the leading producer of green house gases, as consequence of its "pollute now, clean later" business analogy, public health within the country has been increasingly declining. In fact, pollution has made cancer China's leading cause of death. Air pollution alone is blamed for hundreds of

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thousands of deaths each year. Nearly 500 million people lack access to safe drinking water and only 1% of the country's 560 million city residents breathe air considered safe according to the European Union. However, apart from the significant damages these countries create upon their own homeland, the additional impact on the global environment of their environmentally unfriendly business strategies has created international concern and pressure. Therefore, very profitable opportunities can be foreseen in the near future as these countries will eventually have to deal with their degrading environment but, unfortunately, lack the ability to do so with efficient and modernized methods (via the use of biotechnological applications).

Canada is in a prime position to benefit from the rapid international awareness of biotechnological applications and their usefulness within various business sectors, and as well as the rapid growth of the biotechnology sector itself. Canada's early realization of the technology and its potential and the heavy financial expenditure into the industry that followed, has created an intellectual capital within the sector ready to compete fiercely with any other nation. As certain developing nations post rapid economic growth and their peoples prosper, huge markets are forming for biotechnology. Canadians and Canadian companies, armed with a large intellectual capitals and years of early expertise of the application of the technology, are set to prosper from the internationally expanding biotechnological industry.