What follows is the second portion of a keynote presentation I gave at the World Congress on Biotechnology and Bioprocessing in Orlando, Florida, in April, 2005. Because of its length, I’ve split this presentation into parts. This was the conclusion of the presentation, in which I drew conclusions about what was and should happen within the biotechnology and bioprocessing industries today.
Before the biotechnology and bioprocessing industries can fulfill their promise, they will have to confront and overcome a range of obstacles and threats. The first, and most obvious threat is the potential for adverse public opinion produced by a new ‘frankenfoods’ public-relations disaster. Worse, some careless organization may actually create an ecological disaster, unleashing a bioengineered organism equivalent in destructive power to the introduction of rabbits to Australia, or kudzu to North America. The industry would be well-advised to continue to devise and self-police voluntary controls and safeguards before they are imposed on you by lawmakers who are ignorant of the science involved, but well-versed in appeasing public sentiment.
You can’t afford a major mistake. Remember what Janet Jackson’s ‘wardrobe malfunction’ during the 2004 Superbowl has done to the broadcast industry in the U.S., or the impact of the Sarbanes-Oxley regulations as a result of irresponsible corporate management practices around the turn of the century.
The next danger is political lobbying by well-established opponents. Yours is an industry in its infancy, and therefore has very few heavy-hitting friends and allies to lobby for you, which means you need to develop a proactive and far-sighted association for education, public relations, and lobbying in your respective countries. But be careful that you have more going for you than just lobbying; look at how well lobbyists ultimately did (or didn’t do) for the tobacco companies and asbestos manufacturers in the United States, where they spent fortunes on lobbying Congress. Dueling lobbyists are not a solution to all problems.
As an example of how political lobbying threatens the future of biotechnology, much is made by companies such as Iogen of Canada about its introduction of Ecoethanol™ to replace gasoline in automobiles. Ecoethanol is made from waste cellulose, such as straw, and has the potential to dramatically reduce automobile tailpipe emissions. Moreover, if you extend this by looking at what the Department of Chemical Engineering and Materials Science at the University of Minnesota has done in taking ethanol and converting it into hydrogen, and then converting that to electricity in a power plant you could install in the average house, factory, or office building, then you have an intriguing and potentially win-win story about renewable resources. This is a great story – but now imagine it in the hands of spin doctors anxious to keep ethanol from cutting into gasoline sales by companies that see themselves as ‘oil companies’ rather than energy companies, or power utilities that still see themselves as natural monopolies.
This transition is going to be difficult, and I believe some oil companies will fight a rear-guard action to maximize the return on their existing petroleum assets, and dragging their feet (and their knuckles) until they have no choice. Others, such as BP and Shell, already consider themselves ‘energy companies’ which is where the future lies. In the meantime, I can easily see a well-funded campaign to raise doubts about the environmental safety of ethanol, and to insist that ethanol be taxed to the same extent as gasoline ‘to be fair’ (ignoring the fact that oil production receives major tax write-offs through depletion allowances). And then think about legislators reacting to job-losses in their districts resulting from a switch to ethanol from gasoline, and local power generation away from utilities
This will be particularly interesting to watch in Alberta which is both the largest oil producer, and the major grain producer in Canada. But here in the States, imagine Texas going up against Kansas or Indiana in Congress. Whom would you pick as the winner?
Opposition to lower cost production and environmentally sustainable solutions from biotech may sound far-fetched to come, but it is already happening. In October of last year [2004], The Economist magazine reported that ‘[Genetic Modification’s] foes are many, and they can be unscrupulous with the facts. … [with the result that] GM needs skills, and courage, in its public relations no less than its laboratories or finance departments.’ (Oct. 9th, 2004, Special Report on Non-Food GM, p. 66).
In dealing with these kinds of tactics, it will be best to be proactive. For example, dealing with the issue of job losses in traditional industries like oil refining, you should make sure you trumpet the job benefits of large scale biorefineries in a rapidly growing market sector. In Iowa, for instance. BIOWA (the state’s biotechnology agency) estimates that the 10 biorefineries built in Iowa have created more than 22,000 jobs having an $11.6 billion annual economic impact on the state’s economy, and increasing Iowa’s tax base by $367 million a year.
The next threat is access to capital – or rather, lack of access. If you’re in the United States, then be aware that venture capitalists tend to follow the crowd, not lead it. They rarely have the expertise to properly assess new biotechnology projects, and many of them therefore follow the enthusiasm of other VCs for particular industries. The industry is rife with examples of companies that got funded that shouldn’t have because their industry was hot, as well as companies that didn’t get funded that should have because the VC had a bad experience with a company in superficially similar area.
However, the risks in this area are not unique to biotechnology; markets run hot and cold, and whether you happen to be in the right place when the market is hot for what you are doing is often purely a matter of luck and timing. When venture money’s on the table, you have to have a strong reason not to grab it. However, to be successful at getting the money to the table in the first place, you need to speak the language, and know the expectations of venture capitalists if you are expecting to play their game. Preparation, presentation, and a strong management team are key.
If you’re outside the U.S., then your chances of finding true venture capital drop dramatically; the U.S. has the deepest and most sophisticated VC industry in the world, despite the disparaging remarks I’ve just made about it. In most other countries you will either have to find government funding, or a strategic partner – someone in the industry that understands what you’re doing, and is interested in seeing you succeed.
The next danger is the rise of developing countries, especially China and India. Both are industrializing quickly, both have large populations of well-educated researchers, and both are determined not only to reap as many manufacturing jobs, but as many high value R&D jobs as they can. Both are taking aim at genetics, and industrial biotech applications are not far behind. And neither country is as likely to introduce legislation blocking certain kinds of genetic or biotech research as are North American or European governments. Accordingly, you should be watching them: they are going to be world-class competitors. Moreover, I would caution you to be fully briefed on intellectual property laws in developing countries, especially in China. The Chinese government in particular has shown a very hit-or-miss respect for intellectual property.
But information overload is both the greatest challenge, and the greatest opportunity in the field, for whoever figures out how to assess and make sense of information most effectively will win. Industrial biotechnology is based on using complex biological processes effectively. It takes advantage of natural efficiencies that have been ‘debugged’ by millions of years of evolution. It’s flexible and has built-in feedback controls, but it is complex, and requires insight, creativity, and persistence to harness. As we decode the ‘instruction manual’ of these natural mechaisms, the quantity of relevant data is growing, both in volume and in the number of inter-related fields, so that data are accumulating dramatically faster than today’s techniques can manage. And not only is the rate at which we are falling behind accelerating, but the rate of acceleration is increasing. Because of the explosion of data, computing resources are cheap, and high-bandwidth communications covers the world, change is now starting to move at computer speeds rather than in vitro speeds. Whoever makes most effective use of these resources will have huge economic and business advantages. They will be faster to market, experiend fewer failures, and will able to respond faster to changes. Living entirely within your own silo, and being unaware of both potential threats and potential opportunities outside is a significant danger, and one that you need to address in a systematic fashion. Let me give you a couple of examples of how different groups are devising new ways of dealing with information.
The first example is the Calgary Automatic Virtual Environment (or ‘CAVE’) in the Sun Centre for Visual Genomics at the University of Calgary. CAVE is a virtual reality room where someone with goggles can walk through a projection of a molecular model of a new drug, a chemical reaction, or the interior of the human heart. The value of this is that humans evolved to integrate enormous quantities of data visually, and this is still a far more efficient way of absorbing the massive quantities of data involved in complex biological systems. As Marshall McLuhan observed, ‘For the artist, information overload becomes pattern recognition.’ And in the field of data absorbtion, we are all artists, not technicians.
Next is a new means of researching data spaces. I’m about to tell you about a company called Genetics*Squared of Ann Arbor, Michigan, but in the interests of full disclosure, I must also tell you I have worked with this company, and own shares in it, which is also how I know so much about it. Genetics*Squared is a ‘dry’ biotech company that analyzes clinical trial data to produce diagnostics predicting who will respond to a given therapy or pharmaceutical. They use genetic algorithms to search a given data space. Such algorithms mimic the techniques of evolution to find solutions when other approaches don’t work, and which can make those solutions accessible for further analysis and development.
Genetics*Squared has already shown that a drug that was discarded as being ineffective by one of the largest multinational drug companies might be rescued if potential patients were screened to determine which ones would respond positively. Genetics*Squared is now under contract to research two more drugs for this multinational.
It has also worked with data from the University of Southern California to identify the specific stages in the progression of bladder cancer by better use of existing data rather than trying to invent better lab tests. Here, Genetics*Squared is looking at combinations of markers rather than looking for a single factor, producing rules like: ‘IF Protein X is 5 times Protein Y THEN Stage 3 cancer exists’. This kind of information would radically improve the survivability rates of cancer, especially for such sneaky killers as ovarian and pancreatic cancers.
So computers are revolutionizing drug and diagnostic research, and opening new possibilities that never existed before. But a related genetic algorithm has also been used outside the medical field by an associated company in a surprising range of industries, and their tale has some important implications for the industry as a whole. This genetic algorithm was used to create a crop optimization model for Pioneer Hybrid. It created a one line function that characterized the kinetics of jet fuel combustion for NASA that was more than 2700 times faster than the differential equations NASA had been using. And finally it was used to develop a dynamic controller for weaving paper products for a major consumer products company. In each case, the cheaper, faster solutions that genetic algorithms produced were rejected because they looked too easy – which, of course, is the obvious consequence of a superior means of searching a data space.
There are two morals to this story. First, the tools you invent in one area in industrial biotechnology will probably have applications in many other areas, and tools invented outside your industry may be of value to you, but if you stick only to your own silo, you may never suspect the threats and opportunities around you. And second, not only does the world not beat a path to the doorstep of someone who invents a better mousetrap, but it may instead beat the inventor to death. Don’t expect the people whose work you are replacing to be happy about it.
Finally, let me offer a selection of problems that will need to be tackled, and for which biotech may offer the best solutions:
• The world needs an inexpensive means of turning contaminated water into potable water as we are rapidly running through our stocks of fossil water from acquifers.
• We need a means of converting waste – especially landfill – into valuable resources. As another futurist once said, “one car wreck is an eyesore; a million are a resource.”
• It’s time we found a way of turning our landfills safely into reclaimable resources.
• Then there’s the Kyoto Accord. Finding a way to eliminate greenhouse gases through biotech may be the only way that most nations will be able to meet their international commitments – if it’s possible at all.
• The generation, storage, and distribution of energy to feed the world’s steadily growing appetite is another critical problem, especially our growing appetite for electricity. In particular, a breakthrough in the storage of energy would produce dramatic energy savings.
• Dealing with the coming tidal wave of diabetes because of the aging – and fattening – of rich country populations.
• Agricultural techniques that are less energy intensive, and require less fertilizer, pesticides, water, and are less polluting of ground water. Agriculture in rich countries, like those of North America and Europe, will need to constantly advance into new areas and pioneer new technologies, such as biotech, because the farmers of developing countries are going to blossom as fierce competitors, producing sizable surpluses in traditional crops.
There are, of course, many more, but these are merely a few to get you started.
by futurist Richard Worzel, C.F.A.
© Copyright, IF Research, May 2005.
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