With the news of the successful mapping of the human genome, we can truly say that we have entered the biotech age. But what is biotech? Biotechnology is the development and manipulation of genetic material to produce improved products such as insect resistant crops or synthetic blood. It has applications in industry, medicine and agriculture.
Over the last ten years, the biotech industry has almost entirely been funded by the public sector û charities, governments and universities. In contrast, the internet and communications industries have largely been funded by the private sector û equity, debt and capital markets. This has largely been because of governmental concern over the ethics of biotech, and a general reluctance to hand control of something so important over to the private sector. Yet now that the genome has been mapped there should be no reason that further development of biotech should remain purely in the public sector.
In Asia, there are several factors that encourage the commercial application of biotechnologies. Asia has a long and noble tradition of taking technologies developed elsewhere and then creating better commercial applications of them. You only need to look at the post-war Japanese electronics explosion of the present application of mobile communications to see how well Asia makes money out of the latest technology. There have also been far fewer dissenting voices over the use of biotech in Asia, which suggests that there is a more widespread acceptance of the use of biotechnologies here.
Biotech blooming
And encouragingly there are already signs of activity in the region. In the Philippines, the Philippine Rice Research Institute (PhilRice) is working with the government and farmers to develop the commercial use of new hybrid rice seed called F1, which yields 15% more than traditional rice seeds.
In Taiwan, the China Development Corporation has been funding many small biotech companies for many years. In Korea, several companies including Samsung, Hanwha and SK have announced plans to invest into the research and development of new biotech businesses. Samsung has announced that it will invest W300 billion ($280million) into the sector in the next three years alone.
In Australia, the State of Victoria has announced that it will spend $250 million for the creation of a new biotechnology precinct in Melbourne to be called Bio21. Making the announcement, the State Treasurer, John Brumby, said that biotech was ôthe driver of the next major global economic transformation.ö
And so it comes back to finance. The mapping of the genome can be compared in many ways to the development of the Internet Protocol, or IP. IP, in itself, has not really made anyone any money. But countless companies have made fortunes on the application of IP and the use of it in their businesses. Experts predict that the same will be true with the human genome.
If Asian investors and bankers embrace the new biotech age with the same gusto as they have embraced the internet age, then finance should be forthcoming. If that is the case, you can expect to see all the property companies in Hong Kong change their names again. E-BioPropHK.com will replace Golden Tycoon Rich Holdings and Bioport will be built at Stanley.
