Iain Gillespie

Head of Science & Technology Policy

27 September 2010

1

The Bioeconomy:Why it matters and

lessons for BRCs in

delivering it

WE LIVE IN CHALLENGING

TIMES…..

Infectious diseases globally

Projected World Population

Growth

IBIOTECHNOLOGY

DIVISION

Drivers for Agriculture–

World population in 2030

Source: Salim Sawaya, based on medium variant of the UN Population Division’s “World Population Prospects: The 2006 Revision Population Database”

Projected Global Temperature

Change

Outlook for World Total

Primary Energy Supply

Strong economic downturn…..

-30

-20

-10

0

10

20

30

1970 1975 1980 1985 1990 1995 2000 2005

Annualised quarter on quarter growth in world trade (%)

Source: OECD. 8

.. accompanied by a strong decline

in capital availability(Venture capital investment in the United States, index: 2005 Q1 = 1)

Source: OECD, based on PricewaterhouseCoopers and NVCA.9

Decomposition of cross-country differences in GDP per capita into their determinants, 2005

(United States = 100)

GDP PPP per capita TFP Human capital Physical capital Employment

United States 100.0 100.0 100.0 100.0 100.0

Canada 83.5 72.0 103.3 105.8 106.0

Japan 72.6 52.6 100.4 130.7 105.1

China 9.8 13.6 57.3 105.2 119.5

India 5.2 12.7 47.7 98.3 87.1

Brazil 20.5 29.3 70.1 103.1 96.8

Russian Federation 28.6 31.5 84.9 97.4 99.3

EU27 + EFTA 64.7 67.8 91.2 114.1 91.3

Total World 22.8 27.9 64.2 104.2 95.8

Source: OECD.

• The Potential for growth - Key determinants

of differences in GDP

THE CHANGING NATURE OF

INNOVATION

Innovation is key to growth...

Contributions to labour productivity growth, 1995-2006, in %

* Investment in intangibles and multi-factor productivity growth

account for between two-thirds and three-quarters of labour

productivity growth.

-1

0

1

2

3

4

5

6

Intangible capital MFP Non-ICT capital

ICT capital Tangible capital Labour quality

Biotech reliance on Science…

Reliance of patents on science citations

(biochemistry papers cited by pharmaceutical patents)

57.7

64.8

48.6

58.8

30.7

58.9

81.9

9.0

6.3

11.7

21.7

18.4

28.0

6.6

17.6

22.7

15.4

10.4

9.8

6.0

4.3

3.9

5.4

14.3

8.4

14.1

13.3

7.6

0% 20% 40% 60% 80% 100%

United States

Japan

United Kingdom

Germany

France

China

Korea

Higher education Government Industry Non profit

Hospital Other NA

New global players have

emerged …Contributions to growth in global R&D, 1996-2001 and 2001-2006

(in billion constant US PPP and %)

37%

16%

23%

15%

7%

13%

10%

13%

11%

30%

12%

13%

0

20

40

60

80

100

120

140

160

180

1996-2001 2001-2006

Other non-OECD (2)

China

Other OECD (1)

Japan

EU-27

United States

Note: (1) Australia, Canada, Iceland, Korea, Mexico, New Zealand, Norway and Turkey

(2) Argentina, Brazil, India, Israel, Russian Federation, Singapore, South Africa, Chinese Taipei

Source: OECD.

How the BRICS stack up…

15

0

1

2

3

4

5

6

7

8

China Russian Federation

India Brazil South Africa

1996

2005

Global R&D, percentage share

Science is increasingly

international….

16

Canada

Korea

Italy

Netherlands

Switzerland

India

BelgiumSweden

Russian Federation

Poland

Australia

Brazil

Spain

United States

Germany

France

China

Japan

United Kingdom

1998 2008

Canada

Korea

Italy

Netherlands

Switzerland

India

BelgiumSweden

Russian Federation.

Poland

China

Japan

Australia

Brazil

Spain

United States

Germany

France

United Kingdom

Source: OECD (2010) Measuring Innovation: A New Perspective

Co-ownership of Innovation is growing

Between Businesses and PROs…numbers of co-owned patents

0

200

400

600

800

1 000

National International

Innovation increasingly happens across

borders

18

0,0

5,0

10,0

15,0

20,0

25,0

30,0

Share of patents with foreign co-inventors (%)

1993-1995 2003-2005

Source: OECD Patent Database.

19

Receipts from international licensing(billions of USD)

Source: OECD

Number of biotechnology alliances

, 1990 to 2006

0

100

200

300

400

500

600

19901991199219931994199519961997199819992000200120022003200420052006

Total United States Europe Japan Other

Source: OECD (2009), OECD Biotechnology Statistics 2009, OECD, Paris, available at: http://www.oecd.org/dataoecd/4/23/42833898.pdf

Note: Other: non-triad (alliance partners outside of the United States, Europe or Japan).

To Recap so far…..

1. Science …Innovation…Growth2. Science is globalising3. Innovation is increasingly networked4. Intellectual property provides the network

glue5. Businesses also are increasingly linked6. Knowledge is increasingly tradable

THE BIOECONOMY?

The Bioeconomy – harnessing the

latent value in biological systems

• OECD review of Bioeconomy to 2030 (2009)

23

Global Context:

Challenges & the Life Sciences

The Biotechnology Advantage

Biopharmaceuticals All other drugs

Highest rating All indications All indications

Evaluation Class N % N % N %

Major therapeutic progress 5 9.4% 9 8.7% 35 2.4%

Important improvement 13 24.5% 22 21.4% 52 3.5%

Moderate improvement 12 22.6% 18 17.5% 96 6.5%

Minor improvement 8 15.1% 9 8.7% 105 7.1%

No improvement (“me too”) 11 20.8% 40 38.8% 1139 77.2%

Judgement reserved 4 7.5% 5 4.9% 49 3.3%

Total 53 100% 103 100% 1,476 100%

Source: OECD, based on HAS data.

Note(s): (1) Includes therapeutics but excludes diagnostics and vaccines.

(2) Analysis excludes generic drugs.

Haut Authorité de Santé evaluations of the therapeutic value of biopharmaceuticals and all

other drugs (Jan 2001– December 2007)

Bio-NME products expected to reach

registration, by year

Source:OECD, based on data from PHARMAPREDICT.Notes: (1) All results exclude formulations.

Sequencing Output

Source: MR Stratton et al. Nature 458, 719-724 (2009) 27

Number of publications identifying a

drug-gene relationship (3yr running avg)

Source: OECD, based on PharmGKB database as of December 10, 2007.

Regulation has had a major

impact on public researchGM field trials by public research organisations in Europe and North America

0

50

100

150

200

250

300

350

400

Europe North AmericaSource: OECD, based on the UNU-MERIT field trial database.

0

50

100

150

200

250

300

350

400

Europe North America

30

GM crop plantings 2008

Source: Salim Sawaya, based on data from James (2008). Notes: (1) Countries planting less than 1,000,000 hectares in 2007 include: Australia (200,000 ha), Bolivia (600,000 ha), Burkina Faso (<50,000), Chile (<50,000),

Colombia (<50,000), Czech Republic (<50,000), Egypt (<50,000), Germany (<50,000), Honduras (<50,000), Mexico (100,000 ha), Philippines (400,000 ha), Poland (<50,000), Portugal (<50,000), Slovakia (<50,000), Spain (100,000 ha), Romania (<50,000), and Uruguay (700,000 ha).

31

32

Concentration and small market crops

Share of GM field trials by Firm type: 2005 - 2008

Large market crops

Small market crops

Large firms 82.1% 23.6%

SMEs 17.9% 76.4%

100.0% 100.0%

Number of GM trials

3 870 229

By 2030, emerging econmies will

become the world’s bread basket• Strong evidence that European agbio R&D has slowed

down significantly

• Developing country activity has increased

– Of the 8 countries planting more than a million ha of GM crops, 6 are non-OECD countries

– Over 550 biotech field trials have occurred in 47 non-OECD countries

– Major agricultural biotechnology programmes

Country Agricultural biotechnology R&D spending (in USD PPP)

Brazil 350 million per year over next 10 years

China 120 million per year (24 million going to GM rice)

India 100 million per year

Green Innovation

Pollution

(e.g., CO2 , toxic

chemicals)

Economic Growth (e.g., employment, GDP)

Conventional

technology

Sustainability via

green innovation

Den Haag, November 2009 35

Biofuels: Number of GM field trials in OECD of potential

2nd generation biofuel crops: trees and grasses

0

20

40

60

80

100

120

140

160

180

200

1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007

Private company

Public institution

Note: Three year running average. Public includes private non-profit

36

Bioethanol from wood,

grasses etc.• Using 25% of NZ landbase

would be needed to produce 100% of NZ’s liquid fuel needs (softwood plantations).

• 1% of NZ liquid fuel needs could be met from current wood wastes

– Trevor Stuthridge, SCION NZ

Algal biofuelsAlgal biodiesel could

provide 100% of global

demand using 0.9% of

the Earth’s surface at

33% of predicted

maximum efficiency.

Best conditions are

desert locations near

the ocean – W Australia,

Mexico, Chile, NW

Africa, etc.

Problem: scaling up,

contamination, strain

selection

38

Where is the money?Potential OECD

market (billion

USD GVA) in

2005

Share of total

business biotech

R&D in 2003

Health (pharma

manufacturing &

medical devices)

350 87%

Primary production

(ag, forestry, etc)

680 4%

Industry ~ 1,100 2%

Source: OECD & EUKLEMS. GVA = Gross Value Added

38

Where does this get us…

1. Revealed biotech advantage in health – but networking and access to materials and information essential

2. Food security needs biotech – but Europe is on the margins for the foreseeable future. Understanding diversity will drive progress.

3. Biotech can drive decoupling and green growth but rapid ramp up of investment is critical.

SO, WHO ARE THE PLAYERS?

Technological and non-technological innovation

unevenly distributed Patents and trademarks per capita, 2005-07

Average number per million population, OECD and G20 countries

AustraliaAustria

BelgiumCanada

Czech Republic

Denmark

FinlandFrance

Germany

GreeceHungary

Iceland

Ireland

Italy

Japan

Korea

Luxembourg

Mexico

NetherlandsNew Zealand

Norway

Poland

Portugal

Slovak Republic

Spain

Sweden

Switzerland

Turkey

United Kingdom

UnitedStates

EU27 OECD

World total

BRIICS

Argentina

Brazil

China

India

Russian Federation

Saudi Arabia

South Africa

0

1

10

100

0 1 10 100

Cross-border trademarks per capita (log)

Triadic patent families per capita (log)

Share of countries in biotechnology PCT patent applications, 2006

15,14,0

11,9

27,441,5

0 10 20 30 40 50

Other countriesBRIICSJapanEU27

United States

%

0,10,10,10,10,20,30,30,3

0,50,60,80,90,9

1,1

1,31,31,4

1,41,51,7

1,92,1

2,83,03,2

3,6

4,57,0

0 2 4 6 8

South AfricaHungary

PolandPortugal

IrelandNew Zealand

NorwayBrazil

FinlandSingapore

Russian FederationIndia

AustriaSwitzerland

BelgiumSpain

SwedenItaly

IsraelDenmark

ChinaAustralia

NetherlandsKorea

CanadaFrance

United KingdomGermany

%

Source: OECD (2009), OECD Biotechnology Statistics 2009, OECD, Paris, available at: http://www.oecd.org/dataoecd/4/23/42833898.pdf

Notes: Patent counts are based on the priority date, the inventor’s country of residence and use fractional counts on PCT filings at international phase (EPO designations).

BRIICS refers to Brazil, China, India, Indonesia, Russian Federation and South Africa. Regional allocation of PCT filings is based on the inventor’s address, according to OECD’s

territorial grids (see Maraut et al., 2008).

Revealed technological advantage in biotechnology, 2004-06

0,0 0,5 1,0 1,5 2,0

TurkeySouth Africa

FinlandCzech Republic

ChinaKorea

MexicoGermany

NorwaySwedenHungary

ItalySlovenia

IrelandJapan

FranceAustria

EU27Switzerland

BrazilNetherlands

Russian FederationUnited Kingdom

IndiaIsrael

United StatesSpain

PolandAustralia

New ZealandCanada

SingaporeBelgium

Denmark

Total = 1

2.4

Source: OECD (2009), OECD Biotechnology Statistics 2009, OECD, Paris, available at: http://www.oecd.org/dataoecd/4/23/42833898.pdf

Note: Patent counts are based on the

priority date, the inventor’s country of

residence and use fractional counts on PCT

filings at international phase (EPO

designations). BRIICS refers to

Brazil, China, India, Indonesia, Russian

Federation and South Africa.

1. Share of PCT biotechnology patent

applications out of the total PCT patent

applications for each country relative to the

share of all PCT biotechnology patent

applications out of the total number of all

PCT applications. Only countries with more

than 250 PCT patent applications between

2004 and 2006 are presented in the chart.

Developing collaborative knowledge

networks & markets (KNMs)…

• KNMs encompass a number of differentmechanisms, or marketplaces, where buyers andsellers exchange a variety of knowledge intensivegoods and services.

• E.g.: IP exchanges, patentpools, networking, matching or

• Brokering

• services

- models to ensure optimal outreach of STI networking - decisions on agendas and priority setting - involvement of stakeholders (governments, academia, private sector, civil society)

Outreach, Agenda and Priority Setting

I

- institutional arrangements - treatment, access and utilisation of knowledge generated through multilateral STI co-operation

Institutional and Access Arrangements

II

- promising models to strengthen capacities in emerging economies and developing countries

- role of FDI- transfer of equipment and infrastructure

Capacity Building and Technology Transfer

IV

- contribution of stakeholders to the budget, amounts, trends-traditional vs. non-traditional funding schemes, public andprivate sources

- dynamism and responsiveness of funding

Funding and Spending Arrangements

III

- mechanisms to deliver outcome of multilateral STI co-operation into practical use

- balance of supply and demand, products not only accessible but also affordable and actually used?

Putting Research into Practice

V

Governance Dimensions

LESSONS FOR BRCS

(AND POLICY MAKERS!)

New York Times Op-Ed

October 17, 2005

Ray Kurzweil and Bill Joy

“The 1918 flu genome: Recipe for

Destruction”

“This is extremely foolish. The genome

is essentially

the design of a weapon of mass

destruction.”

Key Lessons

1. The bioeconomy is a reality – biological resources are its foundation

2. Science and knowledge is globalised like never before

3. New networks and markets for knowledge are emerging – these complex systems are well beyond one-to-one deals

4. Knowledge brokering services are essential to facilitate this transition

5. And a new model of governance for cooperation, access and exchange is critical.

A GBRCN?

1. Quality matters – but inclusiveness and networking matter perhaps even more.

2. You cant get value of what you don’t own– secure the IP.

3. But to get value you need to trade – fast, often and pragmatically.

4. A GBRCN need to bring concentration to disperse resources and help broker value.

5. And it needs to happen now.

Contacts: www.oecd.org/sti/innovation

www.oecd.org/biotechnology

Iain.Gillespie@oecd.org

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