Six multinational companies have powered ag biotech through its first decade, resulting in 1.4 billion acres of biotech crops planted by 9.3 million farmers in 22 countries.
Now, Wall Street is taking notice. But that doesn’t mean investors will line up to buy those same six companies, biotech stock analyst Sano Shimoda told Tuesday’s plenary session of ABIC 2007 in Calgary.
Instead, the next few years will see huge opportunities for nimble new companies that can deliver the benefits of value-added biotech traits from the farmgate down-stream to processors and consumers.
“Downstream links are the challenge,” said Shimoda, founder of California-based BioScience Securities. “That’s what investors will look for.”
The global focus on ethanol has helped convince urban investors that agriculture can do more than supply food, Shimoda said, and he believes those investors will fuel a surge in investing in ag biotechnology that will see it even surpass medical biotech.
To get a thumb’s up, however, ag biotech companies will need to demonstrate that they can build alliances and partnerships.
“It’s easy to deal within a company,” Shimoda said. “It’s hard to deal with other companies.”
The business of biotechnology is on the brink of a potential sea-change, ABIC speakers said this week. In part, that’s because biotechnology is moving beyond its initial successes with input traits, such as herbicide and insect resistance, and now is preparing to market output traits that deliver benefits to non-ag processors and manufacturers. Success with any of those traits will require downstream bridges.
Equally important, more international programs are jumping into biotech research. The big six multi-nationals spend about US$1 billion a year on biotech research, pointed out Clive James, chair of the International Association for the Acquisition of Agri-Biotech Applications, a non-profit group seeking to help the developing world gets access to biotech traits.
However, China is boosting its biotech research and now spends an equal amount. Brazil is developing a public-private initiative to spend $I billion too, and India is spending $250 million a year on biotech research.
“The big six are no longer the only sources of new traits,” James said.
Added Shimoda, “Ethanol right now is like the dot.com movement. It’s in the early stages. It’s money chasing money, but out of that will come technology development that will drive costs down.”
“Ag biotechnology is in the early stages too. It’s like the day after the Wright brothers flew at Kitty Hawk,” Shimoda said. “But it is on its way to becoming a mega market.”