There’s little doubt that biotechnology – or biotech as it’s known – will be at the heart of the future of medicine and agriculture, as well as several other industries. The question is, will it be at the centre of British industry?
This July the European Court of Justice delivered a body blow to biotechnology researchers in the EU by ruling – against much expectation – that the new technique of genome editing is subject to the EU’s 16-year-old directive on genetically modified plants.
It’s a ruling that pushed into the spotlight the little-understood world of biotechnology, where biological techniques are used to produce new pharmaceutical and agricultural products as well as biofuels and new biodegradable plastics. It also underlined once again why advanced industries are being hamstrung by the EU. The phrase “better off out” has never seemed so apt.
The case had been brought by a French agricultural union representing small farmers and a string of anti-biotech campaign groups including the French arm of Friends of the Earth. But the judgement will hand the initiative over to Europe’s giant pharmaceutical and biotech concerns because they now become the only ones who will be able to afford to develop products based on the new technology.
The details of the case are technical, but the essentials are simple. The European Court has ruled that all genome editing (see Box, opposite) – and not just of plants – comes under the scope of EU legislation on genetically modified organisms (GMOs), even if the technologies involved have been developed since the directive was conceived and agreed. In other words, the EU is dictating that the future must be constrained by the past.
The irony – the scandal, actually – is that even the Court acknowledges that there are plenty of products on the market whose genomes have been changed without introducing genetic material from another species. For decades crop developers, for instance, have randomly bombarded seeds with massive doses of radiation to see what variants come up, while the new techniques of genome editing rely on replacing one known section of DNA with another, with highly predictable precision.
‘The ruling slams the door on new techniques.’
So the ruling exempts what are loosely described as products that have been conventionally used “in a number of applications and have a long safety record”. But it slams the door on new techniques.
The Royal Society, which represents a science community enamoured of the EU, responded with a muted statement describing the decision as “disappointing”. But its conclusions point up the destructive impact of the ruling, pointing out that “new genetic technologies that the UK is at the forefront of developing now come under a regulatory approach that effectively prohibits their use”.
The word “effectively” is no understatement. According to a German expert Sarah Schmidt from the Max Planck Institute for Plant Breeding Research in Düsseldorf, a trial to “prove” (to the satisfaction of the EU) the safety of a new product obtained by genome editing would now cost around $35 million. That amount of money is out of reach for all but the largest multinationals, and even for them is a significant deterrent.
Speaking to Science magazine, Schmidt called the ruling “a death blow for plant biotech in Europe”. Thankfully, Britain will not be subject to the directive – and the Court’s ruling – when we leave next year.
That is particularly good news for British biotechnology, because the industry here, though large and thriving, is composed mainly of innovative small and medium-sized companies. Out of the EU, they will be able to afford to invest in new techniques and new products.
But the government’s approach to Brexit is causing concern in the industry, as well as among researchers. People involved in biotechnology want to be free of EU restrictions (whatever else they might feel about Brexit). And on 13 September signatories representing 33 organisations wrote an open letter to agriculture secretary Michael Gove expressing their great concern over the impact of the EU ruling.
The spread of organisations is startling. It ranges from Britain’s world-leading agricultural research institutes such as the John Innes Centre and Rothamsted Research to the National Farmers’ Union and the Tenant Farmers Association, from Northern Ireland seed company Germinal to multinationals like Syngenta and Bayer.
And the detail of the letter is political
dynamite. It’s not so much that they point out how the ruling goes against Gove’s stated commitment to developing innovative technologies. This coalition of academia and industry openly implies that it is concerned about the idea of a “common rulebook”, one of the central pillars of the government’s Chequers plan.
“The public and private research community and the agri-food industry need clarity from government…”
“The public and private research community and the agri-food industry need clarity from government on how it will manage the implications of the EU approach to gene-editing alongside its proposals for a common rulebook between the UK and EU as put forward in the White Paper [the Chequers plan] published 12 July,” the letter says.
Since then, one of Gove’s junior ministers, George Eustice, has denied that the common rulebook will be a problem for gene editing – but that’s merely an assertion (with no detail), and one that goes against the clearly stated intention on page one of the Chequers proposals: “The UK and the EU would maintain a common rulebook for all goods including agri-food…”
The likelihood, then, is that the government will encourage research – but that researchers might not be able to translate their findings into new products, even if they are sold only in Britain. But you can expect the research community and industry to campaign vigorously to ensure that they can continue to function.
Freedom from the EU will be a big step forward, but it is only one step. In the long run, Britain needs to use the full resources of society – including big state funding – to ensure that the industry can develop its potential.
On the surface, all seems fine in British biotechnology. Last year saw new biotech companies launching on the stock market raising twice as much money as in 2016, according to an industry report. That same report also noted that Britain has more products in development than any other country.
But look closely and it becomes apparent that British finance capital is still failing to invest. Of the money raised in stock market flotations, 90 per cent came from the US Nasdaq rather than London’s FTSE or AIM markets. (The problem is not particular to Britain – German biotech looks to the US for funding.)
Investment is a problem that has dogged the development in Britain of innovative industries of all kinds for decades. One brief ray of light came in 1980s with the launch of Celltech, with strong support from the National Enterprise Board. But by 2004 it had been sold to a Belgian company, leaving Britain without a world-ranking biotech company.
Another major British biotech company – like Celltech, emerging from work at the Medical Research Council’s Laboratory for Molecular Biology in Cambridge – was Cambridge Antibody Technology. But two years after Celltech that, too, was sold, to AstraZeneca. (One of its founders, Greg Winter, has just won a share of the Nobel Prize for Chemistry.)
That just about sums up biotechnology in Britain. Despite an outstanding research base, successful companies are few and far between – and those that really get established are then snapped up by the huge multinationals.
The lack of investment is coyly referred to as a “market failure” – the term economists like to use when they don’t want to criticise capitalism itself. Take the UK Bioindustry Association: “The early stages of drug development are considered high risk, which limits sources of finance typically to specialist investors and increases the necessity for government support to address market failures.”
Politicians have responded by tinkering around the edges. In the 2017 autumn budget, the Chancellor announced moves to encourage more of what is curiously termed “patient capital” (yes, really) – as opposed to the normal mode of capitalist funding, which is decidedly impatient. But the size of the government investment, a £2.5 billion fund via the British Business Bank, will do little to solve biotech’s funding issues.
And money is only part of the problem. The funding woes result not just from the short-termism of British finance, but also its fragmented nature. At several steps in their development, innovative companies have to find funding from largely separate financial markets.
‘Valley of Death’
As a result, many companies disappear in the so-called “Valley of Death”, the period after the creation of a promising concept but before commercial success can be guaranteed. Others stumble in the face of new demands for regulation and marketing.
Tinkering won’t cut it. We don’t need a British Business Bank, or any other kind of specialised financial instrument. We need a financial system dedicated to supporting innovation rather than making a quick buck.
“The public and private research community and the agri-food industry need clarity from government…”
Biotech is not a huge employer – but it is hugely important to Britain. An estimate from 2015 for the Biotechnology and Biological Sciences Research Council suggests that around 8,800 people work in biotech, spread over 255 firms. But it generates sales of around £2.9 billion a year, and exports of £1.5 billion a year.
It is also an industry for the future – particularly because of Brexit, rather than “despite” Brexit. A report on Britain’s biotechnology industry by Pharma Intelligence for the UK BioIndustry Association mentions Brexit “uncertainty” a few times, but actually 2017 was a good year for the industry.
“It’s very positive to see that [stock market launches] and follow-on financing were stronger than last year,” the report notes, adding, “and this shows that uncertainty around Brexit has not had a detrimental impact on the public markets.”
More significantly, the industry is chock-full of products under development – in the biomedical field it has more than three times as many candidates under preclinical development than Germany and well over double France’s total. At the other end of development, large-scale public trials, Britain also has more potential products than anywhere else in Europe.
The ‘golden triangle’
Inside Britain, the heart of life sciences biotech is to be found in London, although both Oxford and Cambridge (the other two components of Britain’s scientific “golden triangle”) also make hefty contributions. Between them, the three cities draw in two-thirds of Britain’s investment in the sector. But in terms of investment, the capital city dwarfs anywhere else in Europe.
Since 2015 (when one French company had a big tranche of investment) London biotech companies have seen capital investment of almost £1.3 billion, more than Paris, Berlin and Madrid put together, according to MedCity in a report in January this year.
But everything is relative, and in biotech size is relative to the US. The biotech hubs in San Diego and New England each draw in more money and support more activity than all the countries in the EU combined. That includes huge investment into the US from Chinese venture capital funds – in the first nine months of 2018, Chinese investment accounted for 30 per cent of the US total, according to a report on forbes.com.
The US has a vast and established biotech industry, with world-leading universities. China has publicly declared it wants to be the industry’s world leader by 2025. Forget the EU (happy thought!). If Britain is to compete into the future, leaving the EU can only be the starting point. Such a vital industry cannot be left to the vagaries and failures of “the market”: as a country we must control all the levers of economic and financial power.
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