Can the biotech industry take off in SA?

Greg Gilbert

Biotechnology may still be considered as a fledgling industry in South Africa, and has yet to make any discernable impact on the local economy. This is attributable to a number of reasons, among them the current nature of the relationship between universities and entities in the sector. For the biotech industry to flourish, sound collaborative projects that incorporate elements of both the public and the private sectors are essential, and these must be actively pursued.

The importance of strong academic departments in the ongoing evolution of biotech cannot be stressed enough. Just like any other industry, universities act as feeders for biotech. Science graduates, if they wish to remain in the field, will often seek jobs in their area of expertise, while some will set up businesses of their own. But the success of these ventures will depend on the kind of training they receive at the tertiary education level.

In order for biotech to work in South Africa, there must be an active engagement with universities and technikons so that the resources of both are exchanged on an ongoing basis. Mining companies, for example, are a good example of this kind of relationship. They have long pumped money into engineering faculties and have reaped the consequent rewards: prospective employees who are appropriately skilled, as well as high-level academic research.

Unfortunately, biotech start-ups invariably lack significant cash resources, which forces them to solve problems in a unique way. By outsourcing research and development to science faculties, start-up biotech companies benefit from both the expertise and the infrastructure, thereby leveraging their start-up capital.

But this does not happen in a vacuum, and adequate government support is indispensable to such projects. Already, a system that encourages collaborations has been established. Through government's THRIP (Technology and Human Resources for Industry Programme) funding initiative, the fund will match the industry's contribution for joint projects on up to a 1:1 matching basis. This benefits all parties concerned. Institutions can use the funding to purchase more equipment and offer bursaries to students, while the biotech companies gain from the research output.

This has worked well with Shimoda's subsidiary, PlatCo Technologies, which has partnered with the University of Port Elizabeth to develop novel and improved platinum based anti-cancer compounds. PlatCo pays for the research while helping to generate a raft of M.Sc's and PhD's.

Nonetheless, a key stumbling block remains the ownership of the intellectual property (IP) generated from the research, which is why many partnerships don't get off the ground. Parties involved in research are always reluctant to relinquish ownership of their research. This problem however, is not insurmountable.

It may be controversial but the answer is simple. When collaborations do happen, IP rights should be ceded to private entities, in exchange for a future royalty or profit share. Biotechnology is inescapably about IP and for companies to commercialise their products, they need to possess the rights to the IP. Although it's not possible to discount the possibility of change, universities are ill-equipped to handle IP portfolios, which are costly to manage. A typical international patent application, for example, can cost in excess of R1 million rand, which has resulted in potential patents not being filed or commercially exploited.

Before partnerships are initiated, biotech companies must manage the expectations of technology transfer officers, whose job it is to manage all IP generated within a particular tertiary institution. Deals must be worked out that will ensure universities are entitled to proceeds, albeit a smaller percentage thereof. Universities and technikons, it must be remembered, are not primarily focused on making money, but rather to act as research institutions and to nurture young scientists.

But blame can't be attributed to any particular party. Biotechnology is still in its infancy and has never had to forge alliances. More and more collaborations are expected to be formed as the sector matures and there are currently a number of collaborative deals in the pipeline. If the example of the Western Cape - where science departments at a number of universities and technikons have entered into private sector partnerships - is anything to go by, the biotech sector looks set for unprecedented growth.

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Greg Gilbert is the CEO of Shimoda Biotech, a Plettenberg Bay based biotechnology company involved in the development of proprietary drug delivery systems and therapeutic compounds.


March 2005