Like most Latin America countries, Chile faces an almost overwhelming challenge when it comes to boosting its biotechnology sector. The country suffers from low levels of investment, barely any participation from the private sector, and a shortage of specialized academic centers. Moreover, it lacks a critical mass of researchers. Because of geography, Chile is far from global centers of high-tech development. Moreover, recent negotiations about trade deregulation have not addressed biotechnology, so Chile has missed out on a chance to use trade deregulation to bridge the gap with richer trading partners.
The alarm bells went off last month when more than 1,000 representatives from throughout the world met in Concepción (in southern Chile) for the first Global Biotechnology Forum, sponsored by the United Nations. “Developing countries and poor nations must strive to enact biotechnology projects that allow them to compete in a globalized world that is becoming more and more demanding,” researchers, officials and business leaders concluded in a joint statement.
They urged developing nations to make a greater effort to mobilize their resources and improve their biotechnology skills. Countries need to take a fresh look at the repercussions of their ways of providing access to intellectual property, they concluded. Their goal should be to promote the development and use of biotechnology in developing countries.
Orphan of the Trade Pact
Biotechnology has been almost absent from current negotiations on trade deregulation and economic integration, according to a report issued at the Forum. As a result, less developed countries have less opportunity to obtain benefits from greater economic integration with advanced countries and the mutual deregulation of their markets. Moreover, developing nations suffer because developed countries are the most important source for generating new technologies.
In June 2003, the government of Chile revealed a national plan for developing biotechnology. Its time-line has a horizon of 2010 – the bicentennial of Chile’s independence. The goals outlined in the plan include the development of new businesses; finding new ways to finance biotech research and development (R&D); training personnel; developing a new regulatory framework; and creating a governmental institution that coordinates public participation.
Chile has made significant strides diversifying its base of producers and exporters in recent years. However, Chile’s economic development continues to be based on the exploitation and commercialization of its natural resources. In this context, biotechnology can become a very useful tool for improving the competitiveness of the country’s most productive sectors.
The Strategy: Creating Centers and Consortia of Biotechnology Developments
The commercialization of biotechnology in Chile began at the end of the 1980s with the production of diagnostic kits, largely for the local market, by a company called Bios Chile. Even today, however, the biotech sector remains barely developed. The combined annual sales of the 31 Chilean companies in this sector amount to a mere $8 million to $9 million. About 70% of sales are biotech products or services in the strictest sense of the term. Most companies are involved in the veterinary and medical diagnosis sectors, or in production of refined chemical products and enzymes usually produced from natural resources.
According to CORFO, the state-owned development organization, 19% of Chilean biotech companies are mid-sized; 67% are small firms; and 14% are small businesses. This contrasts sharply with Brazil, where a study by the Biominas Foundation identified 354 biotech companies and a market worth $3 billion in sales in 2001.
Officials, academics and researchers agree that Latin America urgently needs to create centers or consortia for biotechnology research that are tied to each country’s most productive export sectors. In the case of Chile, such efforts are being promoted by companies engaged in copper mining, fruit growing, winemaking, salmon production, and forest products.
Developments in Latin America
These initiatives follow steps taken in Brazil and Argentina. In Brazil, biotechnology clusters have already been created. For example, in Minas Gerais state, some 60 companies generated combined biotechnology revenues of $228 million in 2000 at the Biominas cluster. In Rio de Janeiro state, two biotech companies recently joined forces with the state government to develop a center in the city of Rosario. One of those companies was Bio Sidus, which became famous when it produced Pampa, the first cloned cow.
When it comes to developing biotech centers, the important thing is “to maintain focus and speed,” says Pablo Valenzuela, a researcher at the Catholic University of Chile and Andrés Bello University. “You have to focus on the main areas where the country is exporting,” says Valenzuela, who founded Bios Chile. “Biotechnology must be managed to meet the clear needs of markets that have demand. We cannot focus on an industrial sector where we aren’t active, or on something that does not have an obvious payoff in the future.”
According to Valenzuela, biotech companies will flourish in developing companies under the aegis of major companies that already exist there. Companies will get involved in research in their current fields, much like biotechnology research that has taken place at U.S.-based multinational pharmaceutical and agro-business firms. “When enough research and development has taken place in those areas that have greatest potential, opportunities will appear for biotechnology entrepreneurs.”
Before opportunities can open up, Chile must reach a critical mass in its research and development – both in basic science and applied technology, according to Juan Asenjo, director of the Center of Biochemical Engineering and Biotechnology at the University of Chile. “You have to create incentives for entrepreneurs, while providing funds to strengthen researchers. It is crucial to use researchers who have doctorates; they are rare in Latin America. The specialists who graduate from centers such as ours will have what it takes to develop applications that will be useful for their respective countries.”
According to Asenjo, new applications are always welcome as a byproduct of research, even when they are not the primary goal of academic institutions. His institution is in the process of acquiring patents in the United States for two projects carried out in Chile. One project aims to revolutionize the global market for detergents. His team has discovered a dirt-eating enzyme in the entrails of krill, a small crustacean that lives in the waters of Antarctica and has a high level of activity at low temperatures. Doing this will permit the production of detergents that can wash away dirt at 20 degrees [Centigrade]. The enzymes in products currently available begin to work only when the water temperature reaches 50 degrees. “This will mean a significant savings in energy,” notes Asenjo. “Once the patent is up and running, we are going to offer this product to multinational companies.”
International Cooperation = Rapid Access to the Latest Biotechnology
A biotechnology consortium is also a good place for research and evaluation into the supply of global technology and for identifying and enabling international collaboration, says Valenzuela. “This is crucial for having quick access to the latest technology. If we promote international cooperation with centers that have ties to technologies in areas we want to develop, we will move ahead more quickly.”
One good example of international cooperation is a company called BioSigma. It was established two years ago through Genoma Chile, a government-run project.
BioSigma is owned equally by state-owned Codelco – the world’s largest copper manufacturer – and Nippon Mining and Metals, a Japanese company. This Chilean-Japanese joint venture has $5 million in initial capital. Its goal is to give a boost to copper mining, which continues to be the mainstay of Chile’s competitiveness, despite recent diversification of the country’s exports.
“This is a totally innovative, first-world company,” says Ricardo Badilla, general manager of BioSigma. “Its mission is to develop mining biotechnology, by which we mean genomics; proteomics (which identifies and characterizes groups of proteins and their interaction with given species); and bioinformatics. Our goal is to develop patents and applications of technology that recover copper from base minerals.”
BioSigma is involved in a broad range of activities. These days, only 2% of the world’s copper is produced from processes involving bioleaching of minerals. Moreover, the so-called primary minerals – those formed by chalcopyrites – “are not subject to recovery by traditional processes because of the high cost [of doing so],” explains Badilla.
Badilla is certain that BioSigma will make some sales this year. “There is a clear consensus that one of the main opportunities for the mining business is generating new technologies, using bio-mining. We are aiming at achieving effective solutions in that area. That will improve the global balance in mining companies, because it will allow us to optimize existing tasks and generate new technologies for base-mineral resources that are sustainable from an environmental and economic point of view. That, in turn, will raise the value of the reserves owned by companies.”
According to current estimates, if bioleaching is applied to Chile’s entire copper production, it will reduce production costs by 50% and quadruple the percentage of Chile’s copper reserves that can be economically exploited.
Another key, according to Badilla, is to register patents for these processes and guarantee that developers derive economic benefits. “If you compare the number of patents in Latin America with the figures in the United States and Japan, we are insignificant. However, in the mining sector Chile enjoys a clear advantage. First, because the resources are in this country and second, because this is an essential technology for us. We are happy to see other countries invest in areas of great importance for humanity, including health. But we don’t have any competitive advantage in that sector, and we have few financial and human resources in comparison with the major global players.”
Chile, on its Way to Producing and Exporting Genetically Modified Fruits
For the moment, the commercialization of biotechnology for global agriculture is focused mostly on achieving higher yields and lower costs, by boosting resistance to insects and viruses, and tolerance to herbicides – mainly in soybeans, corn, cotton and cinnamon. These advances have been achieved through the controversial technology known as transgenics. This method involves introducing genetic material from one organism into another, to modify microorganisms or achieve genetic improvements in plants and animals that would be impossible using traditional techniques.
According to a report from the commission that created Chile’s national plan, the role of developing countries in transgenic agriculture has grown from 17.8% in 1999, to 27.1% in 2002, measured by cultivated land area. During the 2002 season, between 5.5 million and 6 million farmers sowed transgenic crops. China had the highest annual increase in area in 2002, up 40% from 2001.
Until recently, Brazil had very little capability in genomics. This involves using the molecular characteristics and cloning the entire genome of a cell or organism to understand the structure, functioning and evolution of its genes. However, Brazil recently became the first Latin American country to achieve the sequencing of the genome in a living organism – the Xillela fastidiosa bacteria that attack citrus fruits.
For their part, Chilean researchers and entrepreneurs want to go further. At the Forum in Concepción, they announced that Chile, the Southern Hemisphere’s largest exporter of fresh fruits, will cultivate transgenic crops by 2008. The goal is to patent and then plant new species of genetically modified grapes, nectarines and peaches for sale in international markets.
Valenzuela views this project as a priority for Chile, Inc. However, he adds, the country must always keep an eye on opposition to producing genetically modified foods on the part of those people who fear possible damage to their health and the environment. As a result, Valenzuela calls for separating research efforts from commercialization projects. “In those markets where [genetically modified organisms] are not accepted, it would be foolish for us to try to sell them. However, doing the research is another story. We need to be prepared for the time when genetically modified organisms are [universally] accepted. I have no doubt this will happen; the antagonism will collapse. In the United States, for example, almost 300 million people have spent nearly ten years consuming genetically modified foods, without any adverse effects. Moreover, the European Union has just decided to end its moratorium for genetically modified corn. That move did not seem likely, not long ago. It shows that the train has already left the station, and it cannot be stopped. On the contrary, the train is gaining speed.”
The Chilean government’s commission has made up its mind, taking a cue from such international organizations as the FAO, WHO, national academies of sciences, and regulatory agencies in several countries. According to the commission’s report, “There is a high level of consensus: the cumulative scientific evidence conclusively demonstrates that transgenic [or “genetically modified”] foods are as safe for human health as their conventional counterparts – assuming that there exist adequate institutions, regulations and procedures for permitting the evaluation of such risks.”
Chile produces a range of natural products to which it must add value. According to Valenzuela, if Chile does not deploy transgenics technology, Chile will not be able to compete with other food-producing nations such as South Africa, New Zealand, Australia, and some European countries, which are all working with transgenics. “Many of them are not yet in the marketplace, but I am sure that they will be in the coming years. The worst thing would be for us to remain behind in a technology that is tremendously useful, and have to pay enormous sums for using patents [developed elsewhere] later on.”
As global markets open to genetically modified foods, researchers who have university, government or private backing are looking for niches to occupy, to give Chile a competitive advantage in the global marketplace.
In one such initiative, the University of Chile and the country’s association of exporters are trying to achieve improvements in certain exported fruits – mainly, corn on the cob – that may be in poor condition by the time they reach foreign markets. This is a typical problem for Chile, because the country is so far from its markets in Asia and the Northern Hemisphere. The goal here is to use the tools of genomics and proteomics to improve the post-harvesting process of peaches and nectarines, which remain for prolonged periods in storage and/or in transport. If so, Chile’s exports of such fruits could grow in value by $140 million.
Another new project has great importance for Chile’s wine producers. Chile is the world’s seventh-largest exporter of wine. This initiative aims to identify, sequence, and characterize the various genes on vines that correspond to specific viral infections. Among other goals, this project – which brings together the Catholic University and Bios Chile – hopes to correct those genes that permit diseases to appear in plants. The long-term goal is to produce species that are immune to disease.