New Zealand Plays To Its Strengths

IT'S NOT AS THOUGH New Zealand is a complete stranger to world-class science. After all, Ernest Rutherford, who received the Nobel Prize for Chemistry in 1908, was a New Zealander.

But the country is only now gaining entry into the big leagues of biotechnology by broadening science originally directed at natural resources and agriculture to include wider human-health applications.

The country's biotech industry is still relatively small, contributing roughly $200 million to $280 million a year to the country's economy, according to a report published last month on New Zealand biotechnology. But its importance is growing, said the "New Zealand Biotechnology Industry Growth Report."

The report was commissioned by the Ministry of Research, Science & Technology; New Zealand Trade & Enterprise; and NZBio, the country's biotechnology industry body. It was compiled by consulting firm L.E.K. It notes that spending on biotechnology in the country increased by 20% to $442 million from 2004 to 2005 and that biotech exports increased by 30% over the same period.

Government funding for biotechnology R&D and commercialization totaled $135 million in 2005, a 44% increase from 2002, when the last such report was done. That is a particular help, the report notes, because securing funding remains a stumbling block for the industry.

The situation is improving, however. More venture capital funds are being made available, the report says, and there has been an increase in the number of public offerings by start-up companies. This, in turn, has led to the creation of the SciTech index on the New Zealand stock exchange. There is also an increasingly fluid exchange of investing between New Zealand and the country's larger neighbor, Australia.

About 41% of biotech spending focuses on agriculture, forestry, and horticulture, the report points out-not surprising as these sectors account for 35% of the country's overall industrial employment. Medical devices and diagnostics represent 23% of biotech spending; human-health applications, 17%; and industrial applications, 19%. Roughly 2,200 people are now employed by the 126 private- and public-sector entities making up the industry in New Zealand.

NZBio Chief Executive Officer Brian Ward says the new report "demonstrates the growing quality, activity, critical mass, and increasing internationalization in partnerships and business development activities." In fact, the report notes that 75% of collaborations and alliances have been international.

One of the most recent international agreements was signed by government-owned research institute Industrial Research Ltd. (IRL) and Singapore's Institute of Molecular & Cell Biology (IMCB). The project aims to create new drugs for bone healing.

Under the agreement, IMCB will provide IRL with carbohydrate molecules that have been identified as being important in the differentiation of stem cells. Richard Furneaux, a lead scientist in IRL's chemistry area, says IRL houses one of only a few chemistry teams in the world with the carbohydrate chemistry expertise to work in this field.

Government initiatives encouraging investment in New Zealand are aiming particularly at companies that can help round out the needs of the drug discovery industry in the Southern Hemisphere.

For example, the Welsh company NuPharm, a contract service firm specializing in drug development from formulation through clinical testing and batch manufacturing, decided in 2004 to build facilities in New Zealand. Among the reasons the company gave at the time were an attractively low cost base—government statistics indicate that R&D costs are about half those of Europe and the U.S.—and a growing biotech industry.

THERE IS ALSO a benefit from concentration, suggests Margaret A. Brimble, a professor of chemistry at the University of Auckland. "The smaller size of New Zealand makes it easier for us to pool our resources and work together on projects using New Zealand's best scientists," she says. Her group currently includes undergraduate students from Australia and Ph.D. students and postdocs from Europe, Asia, and Canada.

Brimble does medicinal chemistry work for Neuren Pharmaceuticals, an Auckland-based biotech company traded on the Australian stock market. Her team designed and prepared two promising compounds for Neuren. One is in clinical trials for traumatic brain injury in partnership with Walter Reed Army Research Institute in the U.S., and the other is being developed to treat Parkinson's disease.

She also has three Ph.D. researchers in her lab working on other medicinal chemistry projects for Neuren, the New Zealand company Protemix, and IRL subsidiary GlycoSyn Technologies. "This sort of partnership is helping New Zealand combine its resources in the universities and the commercial sector, as drug development is very expensive," she points out.

Collaboration has become a way of opening new possibilities for New Zealand Pharmaceuticals (NZP), observes Selwyn Yorke, market development manager at the company. His firm started out in nature-derived materials such as bile acids, a product of the meat industry. They are made under current Good Manufacturing Practices as pharmaceutical intermediates to treat liver diseases.

MORE RECENTLY, though, the company has turned its sights on chemical synthesis, especially of carbohydrate derivatives. "Chemical synthesis came up because of our steroids work in niche areas making derivatives," Yorke says. NZP has forged a relationship with GlycoSyn, which has nearly 50 carbohydrate scientists, to offer combined services. GlycoSyn is particularly valuable, Brimble points out, because it possesses a scale-up manufacturing facility that is a "great asset for New Zealand biotech companies."

Many of NZP's early products were of animal origin, Yorke continues, but that sector has been hit by concerns over, for example, bovine spongiform encephalopathy, known as mad cow disease. The concern helps explain why NZP is expanding to plant- and marine-derived materials and broadening its synthesis capabilities, he says.

For example, it is currently manufacturing a marine-derived polysaccharide under contract for an Australian company. And NZP is working with the fishing industry, Yorke says, to see if any natural coproducts can be derived from fish waste.

In the horticultural field, researchers at the government-owned Horticulture & Food Research Institute (HortResearch) last summer reported that they have worked out a way to determine which genes create the individual flavors and fragrances found in fruits and flowers. Combined with traditional biofermentation techniques, the institute's researchers said, their new technology should enable the reproduction of natural tastes and aromas.

The HortResearch work highlights the ability of New Zealand scientists to adapt traditional agricultural know-how into technology for human applications. As NZP's Yorke puts it, New Zealand's underlying chemistry "is very strong, especially in the agricultural and horticulture areas. It is research into applied sciences" that gives New Zealand a particular expertise.

The country may indeed have a low cost base, but it is the strength of the research that is its main selling point, according to Yorke. "We are competitive beyond cost," he adds.