Spanish biotechnology should focus on food and plant sectors to be more competitive

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Spain and Latin American countries have an opportunity to take the lead in two small biotechnology sectors. Researchers from the University of Valencia (UV), working together with the IDICHUS Foundation, have studied the productive fabric of the Spanish biotechnology industry. Their conclusion is that Spain's food and plant sectors have more clout than those in English-speaking countries. Biotechnology as applied to food and plants has been overlooked by the leading countries in this sector – the United States, Canada, the United Kingdom and the Nordic countries.

For this reason, "Spanish biotechnology should focus on these two fields of specialisation, since it is a growing business sector and a market niche in which Spain could be competitive", Isidre March-Chorda, lead author of the study and a researcher at the Department of Business Management in the Faculty of Economics at the UV, tells SINC.

The purpose of this research, which has been published in the latest edition of the journal Technology Analysis & Strategic Management, was to carry out a detailed study of the behaviour of Spanish biotechnology companies from 2004 to 2005.

The researchers created a database using information from the Spanish Genome Foundation and the ASEBIO Foundation, and identified 102 companies and their economic-financial data and a series of factors to analyse for the study.

According to the study, there are two business models. On one side is the long haul model, or the 'biotechnology of discovery model', which is most important internationally and is the leader in the countries which have been pioneers in this industry (the United States and Canada).

"These companies spend 10 or 15 years developing a new drug. At the end of this time they can sell it to a multinational pharmaceutical firm and recover their investment. They make a discovery that has a major impact on the market", explains March-Chorda.

On the other side is the incremental innovation, service-oriented model, which involves lower levels of innovation and risk. It is used by companies that provide diagnosis services and equipment for the medical, surgical and clinical sectors, and is an environment where there is more competition and less differentiation.

Of all the companies analysed, only 16 had the same kind of characteristics as the predominant model in the English-speaking world (15.7% of the whole sample), showing that very few companies in Spain are driven by invention or discovery.

Since 2001, however, biotechnology businesses that operate along the lines of the first business model have been set up in Spain in the field of human health and the search for new biopharmaceutical treatments.

The funding problem

Spain will have to overcome a hurdle in the next few years – the high cost of developing and commercialising new medicines, which the study says stands at around €700 million.

"In Spain we lack the kind of financing system to fund this kind of initiative, in which the risks are high and the development period is very long. This is not the case in the English-speaking world, though, where they have stock exchanges that accept biotech companies and the whole risk capital industry is more more developed", explains the economist.

The problem is that, because less is spent here on R&D, the products developed are less novel, and their market impact is lower, meaning companies have only limited possibilities for growth. March-Chorda says this could be why Spanish biotech companies have not seen their market value take off within a short period of time "as has happened in the English-speaking world".

He concludes: "If large Spanish companies were prepared to invest in this sector, it is likely that more biotechnology companies would be set up along the same lines as the model used in the English-speaking world".

Source: FECYT - Spanish Foundation for Science and Technology