Ideas are capital, distance is nothing
Seven hundred biotech companies around the world collectively have annual sales of $70 billion and lose more money than any industry in the history of mankind.
Victoria University%26#39;s new professor of science and technology entrepreneurship, Mark Ahn, says that fact offers extremely exciting prospects.
At 30 years old, the biotech industry is leaping ahead with discoveries and innovation and has already eclipsed the entire market value of the pharmaceutical industry, a natural progression that can only be good for the world community, Dr Ahn says.
%26quot;Only a couple of decades ago, the chairman of Microsoft was questioning whether the Internet would even be a viable business; now we don%26#39;t even think about it. In a way we are earlier in the same phenomenon in biotech, and it is accelerating.%26quot;
The Hawaii-born professor is ecstatic about New Zealand for a number of reasons. He loves tramping and his kids, aged eight and six, have been welcomed into their school unreservedly, something for which he is emphatically thankful.
But as much as a walk up Mt Kaukau and Wellington%26#39;s schoolyard hospitality impress him, the innovation in the country%26#39;s laboratories is just as impressive %26ndash; and potentially lucrative, he says.
Wellington-based Industrial Research has had two wins in the drug market through its chemical research team headed by Richard Furneaux. Collaborating with international drug companies, the team has licensed two drugs from its research; something astounding in Dr Ahn%26#39;s mind.
%26quot;It is like lightning striking twice, to get two drugs. That proves you can operate and compete from New Zealand and from Wellington.%26quot;
The Government%26#39;s efforts to push economic transformation through areas such as information technology, biotechnology and creative industries centres on one small point. %26quot;All of those industries have something in common. The costs of raw materials are very low, and the value of the intellectual property as a percentage of the product price is very high.%26quot;
Dr Ahn says cheap labour was yesterday%26#39;s economic advantage, and even the traditional mass producers such as Asia are leaving it behind. %26quot;Monetising intellectual property is where the edge of leading economies are today.%26quot;
With New Zealand being too far away from the big markets to be competitive in many old-fashioned export industries, it is tantalising to commercialise ideas and intellectual property.
%26quot;It%26#39;s not about physical boundaries any more,%26quot; Dr Ahn says. %26quot;The world is flattening around information-based technologies. Costs are such a trivial amount of what is being sold.
%26quot;This allows New Zealand to be at the main table in competing in generating and exploiting intellectual property. There is no %26#39;we are down here in the southern hemisphere%26#39; type thing, you are there [alongside the rest of the world].%26quot;
The rightness of such a perspective is already apparent in the stories of the top global biotech companies. %26quot;Basically the largest companies get to be large and stay large by establishing alliances. Over 10 years [the top companies] increased alliances and increased the physical distance from their partners.
%26quot;The impact on market value, revenue growth and profitability was positive in terms of number of deals but irrelevant in terms of distance.
%26quot;Proximity doesn%26#39;t matter at all. That is a powerful message for New Zealand because it means everybody is in the game. Global competitiveness, not boundaries, defines winning and sustainability.%26quot;
Dr Ahn says the perfect business model has yet to be discovered. The key to perfecting the business formula mixes money, talent and a collaborative strategy.
Wellington company Magritek, whose ownership is divided equally between two universities and the scientists behind the science, is a stunning example. Magritek%26#39;s nuclear magnetic resonance devices have been breaking new ground in the science of moisture detection that has led to applications in the food and timber industries. Dr Ahn holds Magritek on a pedestal.
%26quot;It%26#39;s a great example of taking Kiwi ingenuity to what is normally a gigantic system, and miniaturising it. Totally cool.%26quot;
The successful mix at the company is exactly where Dr Ahn%26#39;s new programme at Victoria is headed %26ndash; ideas, people and mobilising capital.
There were several ways to make a commercial success out of the sort of technology Magritek had conceived, all of which threw big questions up in front of companies typically run by scientists, Dr Ahn says.
%26quot;How do you value the idea? Will someone give me money? Do you list the company on an exchange? Can you explore a trade sale of the company, selling to a multinational?
%26quot;There%26#39;s no perfect model. That%26#39;s what we are trying to do here at Victoria, to establish a centre of excellence for scientific entrepreneurship in Asia-Pacific to do a number of things: build human capital, build a relevant research toolkit, and enhance the [development] ecosystem.%26quot;
One of the key aspects was putting the right people in the right spots, he says, embarking on a story about a venture capital company working with a scientific tech startup which had to replace the principal five times.
%26quot;That gives you a marker. It is really difficult. The smartest guy in the room with the scientific insight is often not the person equipped to take it through to product. You ask a scientist about how to move the business forward and they say %26#39;I%26#39;ll make the technology better,%26#39; not %26#39;Let%26#39;s build the business%26#39;.
%26quot;Sometimes they are the same thing, but often they are not. Making that shift is difficult for a technologist, but it is poetry when it works right.%26quot;
New Zealand%26#39;s typical entrepreneurial spirit was similar to what Dr Ahn had experienced in Silicon Valley. But being too judgmental of the product of biotechnology %26ndash; genetic modification %26ndash; was becoming an outdated attitude. %26quot;The argument is irrelevant. [Genetic modification] is more eco-friendly. It is not a matter of replacing Mother Nature, but getting the very best out of her.%26quot;
Biotechnology could be the salve for a lot of dire environmental situations the world was facing, and with the advances being made, it was becoming almost like manufacturing hope.
%26quot;When we get to a point where we move people from subsistence farming to where they can feed themselves and a little bit more the world will be a better place to be. If we can redress the things humans are doing to the Earth, and make the world a little bit more sustainable, then that%26#39;s an endeavour that is well worth it.%26quot;
