T Essop: BioBiz Conference

17 September 2007

Minister Mangena, the national Minister of Science and Technology
Line Matthiessen-Guyader, Director-General Research in the European
Commission
JB Iain Cloughley of United Kingdom Trade and Investment
Chief Executive Officers of the Biotechnology Regional Innovation Centres
(BRICs)
Chief Executive Officers of companies
Finalist of the Student Biotechnology Competition
Ladies and gentleman

Welcome to Cape Town and the Mother City.

On 26 April 2006 President Thabo Mbeki spoke at our Freedom Day celebrations
of 'the age of hope'. He also said that the 'Age of Hope' is a 'struggle to
freedom' in which we should be 'united in a national effort for a faster and
shared growth' by this he challenged South Africans to 'define for ourselves'
and what we want to make of our shared destiny. As we celebrate Heritage Month,
I would like to add to what the President spoke of by mentioning a very
powerful quote from the murdered Black Consciousness leader Steven Biko who
said that, "In time, we shall be in a position to bestow on South Africa the
greatest possible gift a more human face".

As South Africans we know that should we fail to address the issues of
poverty and inequality then we seriously run the risk of jeopardising the
dividends that our young democracy has yielded.

The challenge for us, in our age of hope, is how do we marshal all of our
collective efforts to deliver on our commitments? The world that we find
ourselves in is changing everyday: technological discovery creates new
commercial opportunities, it finds solutions to problems that we have yet been
unable to solve yet it struggles to deliver solutions to problems that we were
previously unaware of such as severe acute respiratory syndrome (SARS), bird
flu, climate change, tuberculosis (TB) and HIV and AIDS. As a provincial
government we asked ourselves two questions.

* Can biotechnology and innovation help us deliver new solutions to
eradicate poverty, reduce the plight of the poor, improve social advancement
and generate economic growth?
* Can biotechnology be a potential contributor to national priorities such as
to better healthcare, food security, job creation, environmental protection and
help deliver our Accelerated and Shared Growth Initiative for South Africa
(AsgiSA) target of six percent economic growth.

Department of Economic Development was instructed to conducted research into
the matter and we established the following:
* the biotechnology in the Western Cape is till in its infancy
* it is challenged at every step of the value chain, from the laboratory to the
factory gate, and this is a capital intensive process
* there is a very limited pool of money for pre-seed activities
* it requires perseverance to take an idea or product of research through
the various stages of laboratory testing to proof of concept
* amongst our first class scientists and other practioners in the sector few of
them have the expertise to commercialise or patent their bright ideas
* there is serious competition for funding and that domestic private equity
most probably does not yet see the commercial opportunities in this
sector
* the Western Cape is a substantial knowledge based economy yet there is
fragmentation amongst the pockets of excellent scientific research at Higher
Education Institutions and the 400 research groups in the biotech sector
* but we also accepted that the sector held significant opportunities for
improved human and animal health, agriculture, aquaculture, environmental and
industrial processes
* and that our province has a rich indigenous biodiversity (that is the fauna,
floral and marine bio-systems) as well as a genetically diverse human
population which is critical to medical discovery.

After establishing these conclusions we realised that a response was
required from the Provincial Government Western Cape.

We also knew that our response had to dovetail with the National Research
and Development Strategy (NRDS), the National Biotechnology Strategy (NBS) and
the Advanced Manufacturing Technology Strategy (AMTS) as a driver to build
capacity and address the requirements for a strong provincial biotech industry.
It is interesting to note that South Africa is one of the few African nations
to have developed a national biotechnology strategy.

We also decided that we needed to support the Biotech National and Regional
Innovation Centres (BRICs) and other incubators as we believed that they were
the instruments for growing and facilitating a bio-economy in our province.

Today, in the Western Cape, we have a number of incubators and innovation
centres which are funded by the Department of Science and Technology and Small
Enterprise Development Agency (Seda), such as the:
* Cape Biotech Trust
* Acorn Technologies Business Incubator
* Medical Research Council Innovation Center
* National Bioinformatics Network.

In December 2001, we launched the Cape Biotech initiative with nearly R4
million rand of provincial money and this has now become the Cape Biotech
Trust. We premised our support on these entities in the belief that there
should be a complementary vision between national and provincial government and
at the operational level there should be a highly synergetic relationship and
spirit of co-operation amongst the incubators.

The recent Kopano LifeSciences initiative, which means 'getting together' in
Tswana, initiated between the Medical Research Council Innovation Center (MRC
IC), Cape Biotech Trust (CBT) and Acorn Technologies (AT) is testimony to this
vision.

The majority of private sector biotechnology companies in the Western Cape
are heavily reliant on donor funding, the reasons for this are numerous, and
the most apparent are the long lead times to mature and the production of
revenue generating products or services and especially the high risks
associated with the sector.

Setup costs can run into several millions of Rands and ongoing operational
costs can easily match this. The most recent audit of South Africa's nascent
biotechnology industry which was commissioned by the department of science and
technology, in 2003, found that 47 companies that defined their core business
as biotech activities were primarily in human health (39%) and support services
(13%).

Most of these firms are based in Gauteng (41%) and the Western Cape
(37%)
None of these companies are listed on the Johannesburg stock exchange, less
than half employ more than 20 people, and three quarters make less than R10
million per annum.

As part of the provincial Micro-Economic Development Strategy (MEDS) and the
research that we have conducted on the bio-technology sector we will seek to
influence the course of these incubators to meet our economic and social
development needs, we will also seek to mobilise private sector funding and
develop measures of strategic performance such as R&D output, measures of
commercial success and job creation.

Our MEDS programme of research commenced in the first half of 2004 with
eight studies, six sectors and two cross-cutting activities. In 2005, a further
ten studies were added, eight sectors and two crosscutting activities, and as
part of this policy formulation process we have classified Biotechnology as a
secondary sector.

Allow me to mention a few achievements in the bio-industry cluster in the
Western Cape:
* R140 million invested over three years by national government
* Cape Biotech has made14 investments into companies ranging from vaccines,
drug delivery, diagnostics, nutraceuticals and technology platforms
* Over 250 jobs have been created, the higher portion in the upstream biotech
sector and has resulted in a downstream multiplier effect
* The establishment of the Centre for Proteomic and Genomic Research (CPGR) at
University of Cape Town, provides access to state of the art facilities for
high throughput services to the greater biotech community regionally and
nationally
* Kapa Biosytems: direct foreign co-investment with bio-entrepreneurs from the
United States of America
* Biovac Institute: State of the art laboratory, formulations and filling
facilities for vaccines (Extended Programme of Immunisation vaccines)
* Tuberculosis Research: Investments in commercialising drug discovery,
diagnostics and vaccines from the SA TB research initiatives.

We are also extremely excited by the launch of the International Centre for
Genetic Engineering and Biotechnology (ICGEB) at the Groote Schuur Hospital.
This centre is the first of its kind on the African continent and is one of
only three international biotechnology laboratories in the world.

President Mbeki said at the launch event that the centre which will ensure
collaboration across 47 countries is 'an eminent example of how humanity can
put together limited individual resources within nation states to create a
substantial international force for the good of all'.

In conclusion, I would like to say that we all still have much work to do.
We need to investigate new ways of mobilising private sector funding,
especially for pressed activities; we need to engage on the role of the public
sector, especially with regards to funding, we need to upscale the
bio-technology skills development programme which includes a business
cross-over component, we must develop stronger project pipelines, we need to
develop the next level of our clustering methodology and finally we must link
into the work that is being conducted on establishing a national innovation
system by Co-operation Framework on Innovation Systems between Finland and
South Africa (Cofisa).

In this age of hope we need to continue in a united national effort so that
the fruits of your hard labour, scientific discovery and innovation can help us
discover new tools to deal with the scourge of disease and poverty, new tools
that can drive the development of a world class bio-economy and new job
creation so that we will, as Steve Biko said, 'be in a position to bestow on
South Africa the greatest possible gift, a more human face'!

I thank you.

Issued by: Department of Environment, Planning and Economic Development,
Western Cape Provincial Government
17 September 2007
Source: Western Cape Provincial Government (http://www.capegateway.gov.za)