Biotechnology is the use of living systems to make useful products and services. For several thousands years, human societies have used biotechnology in the production of food (beer, bread, yogurt), in agriculture (seed and cattle selection) and more recently in medicine (drug production such as antibiotics). Modern biotechnology, the transfer of genetic material from one living organism to another, appeared after the discovery of the double helix structure of the DNA by James Watson and Francis Crick in the early 1950s in the United Kingdom.
An Innovation Cascade
Modern biotechnology is developing today in a process that the economics of complexity calls an “innovation cascade”, a rapid series of scientific, organisational and technological changes that can profoundly modify or even establish a new industry (Lane, 2011). After Watson and Crick’s landmark discovery, such a positive feedback mechanism was put in place. The original scientific discovery brought new technological novelties (i.e. genetic engineering), which in turn produced organisational novelties (the dedicated biotechnology firm, specialised venture capital companies, and industry-university liaison offices to manage the new intellectual property) and these innovations in turn facilitated the emergence of new scientific and technological novelty. This section provides a summary sketch of the process.
Genetic Engineering
The first major biotechnological landmark occurred in 1973 with the development of genetic engineering by Herbert W. Boyer at the University of California at San Francisco and Stanley N. Cohen at Stanford University. They showed that it was possible to transfer genetic material from one organism to another, thus creating genetically modified organisms (GMOs). In 1976, Boyer associated with a venture capitalist to create the world’s first dedicated biotechnology company, Genentech (Kenney, 1986). This firm created a recombinant human protein in 1977 (somatostatin) and a second one in 1978 (insulin). In 1982, the Food and Drug Administration (FDA) approved this recombinant human insulin for sale. It was the first biopharmaceutical product ever on the market and the first product of modern biotechnology.
By 2012, over 150 new drugs produced through genetic engineering had been approved by the FDA. The first generation of these drugs includes different types of blood factors, erythropoietin, interferon, interleukin, and vaccines. They are used for the treatment of anaemia, leukaemia, hepatitis, cancer, and other diseases. Many of them have already lost patent protection and the new field of biosimilar drugs is now open for generic pharmaceutical companies. Even if the main producers of these biosimilar drugs are companies based in Germany, Israel and Switzerland (Merck Serono, Sandoz and TEVA), pharmaceutical firms based in Argentina, Canada, China, India and other countries are now producing and selling these products.
Genetically modified plants were tried originally in France and the United States in 1986. Yet, China was the first country to commercialise them, in 1992. The European Union and the United States both approved the first genetically engineered plants in 1994. The first GMOs were transgenic tobacco, tomato and a few other plants. But the application of modern biotechnology to plants took off in the late 1990s with the development of the main crops: canola, corn, cotton, soya beans, sugar beet, and sunflower. The main crops attracted large corporations as Bayer, Pioneer Hi-Bred (a Dupont company), Monsanto and Syngenta to biotechnology. Other crops (but also some varieties of the main ones) were developed in different countries including Argentina and Brazil in Latin America, and China and India in Asia.
By 2010, the United States hosted the largest transgenic crop area with 69 million hectares, followed by Brazil (30.3 million ha.) and Argentina (23.8 million ha.). India (10.6 million) and Canada (10.4 million) followed (see Figure 1). Other Latin American countries among top genetically modified crop producers were Paraguay, Uruguay, Bolivia, and Mexico.
Figure 1. Global area of transgenic crops (2010) leading countries (million hectares)
By 2010, the global market value of transgenic crops was US$12 billion (NatureBiotechnology, 2012, p. 207). The 2010 world market for biopharmaceutical drugs was US$92 billion. This market is expected to reach US$ 167 billion in 2015 (IMARC, 2012). Recombinant proteins represented 65% of markets and monoclonal antibodies the rest.