Hon. Pete Hodgson
Thursday, 18 September 2003, 3.30pm Speech Notes

Growing biotechnology in New Zealand

Good afternoon everyone.

You all know biotechnology is an important part of New Zealand's future. That's why you're here.

I'm here today to tell you about what the Government is doing to help ensure biotechnology grows in this country.

We need that to happen because biotechnology in New Zealand has some very important characteristics.

It is a field in which New Zealand has world-class expertise. It has the potential to grow significantly and rapidly. And it is a technology with applications across many other sectors of the economy, enabling them to grow faster and work smarter.

In February 2002 the Government released a document called the Growth and Innovation Framework. It’s a strategy to help propel New Zealand back into the top half of the OECD leaderboard.

Jim Anderton told you a bit about the thinking behind the framework this morning. So you know that an important aspect of it is that it identified three key growth sectors of the economy deserving special attention from the Government: ICT, creative industries and biotechnology.

Those three sectors share those special traits that biotechnology has: world class scale and specialisation, high growth potential and the ability to contribute to growth across the economy.

For each of those sectors we established industry taskforces, drawing together movers and shakers within their fields. They were asked to identify barriers to the growth of their sectors and recommend ways of overcoming them.

The Biotech Taskforce reported back in May this year. They put forward an ambitious yet achievable 10-year vision for the sector. It is to:

- triple the size of the biotech community, from 350 to more than 1000 organisations;

- increase total cluster employment from around 3,900 to more than 18,000;

- increase the number of core biotech companies from 40 to more than 200; and

- improve the performance of both research organisations and private companies to increase export values to more than $1 billion a year, , from the current base of $250 million.

To help achieve these goals, the Taskforce made 28 recommendations for action.

They were bold recommendations, to match a bold vision. But they were also sensible. The Government endorsed their intent immediately and started working out how best to implement them.

The taskforce gave us a very clear message that partnership between industry and government is essential for success. Of the 28 recommendations, 12 require a partnership approach between government and industry, 12 call for government action, and four for industry action alone.

One key recommendation looked at recruiting and repatriating to New Zealand key scientists and entrepreneurs. We’ve dubbed them ‘rainmakers’ — they are the people with the skills and experience New Zealand needs to grow the industry. We especially need people with expertise at the interface between science and commerce.

The taskforce also recommended increases for both basic research funding and funding for experimental development, or ‘proof of concept’. And it suggested that industry and government establish a dedicated Biotechnology Investment Fund, to stimulate the commercial development of biotech research.

Most of the public money going into biotech goes to Crown Research Institutes and universities. They are therefore significant generators of knowledge and holders of intellectual property. The Taskforce recommended the development of a best-practice programme for the interface between industry and science. The aim was to stimulate market-led biotech research and encourage new start-up companies to emerge from CRIs and universities.

The taskforce told us to reduce some of the complexities and compliance costs associated with New Zealand’s robust regulatory regime. And it recommended that both government and industry do more to promote New Zealand biotechnology overseas and create international networks.

To compete with other biotechnology countries and states, New Zealand needs to be very proactive in its promotion of what we have to offer the world from our biotechnology. Effective branding, presence in international forums, hosting international conferences, and forging new international biotechnology partnerships will all help lift our profile, help attract investment in our companies and build stronger international networks.

An important change within the sector that will help make many of these things happen is the consolidation of the industry's existing organisations into a single body. You need to be able to speak with one voice, to New Zealand and the world.

I congratulate you on your response to this call. The merger of the New Zealand Biotechnology Association with BIOTENZ to form NZ Bio is an excellent move that sets you up well for the future. Our commitment to a partnership with your sector means we are providing some financial support for the establishment of your new organisation.

So you’ve begun to respond. What’s the Government doing?

This week, on Monday, Cabinet signed off on the Government’s response to the Biotech Taskforce report.

Overall, the taskforce's recommendations are a good fit with our existing work programme and policy agenda. The New Zealand Biotechnology Strategy — more by design than by accident, I am happy to say — picks up a lot of the recommended actions directly. This strategy will be a vehicle for the Government to implement its response to the taskforce.

A number of the recommendations for Government align closely with the focus of New Zealand Trade and Enterprise, particularly around the work they do in developing the industry as a whole and promoting the industry.

Since the release of the Taskforce’s report in May, we’ve responded to many of the suggestions through new funding and new initiatives. Some of these were in the Budget, others have been launched through the Growth and Innovation Framework contingency fund or reprioritisation. They include:

- new funds for basic research and proof-of-concept studies of over $10 million a year;

- $6.8 million invested in new contracts with the New Economy Research Fund, focused on new and revised biotech research platforms;

- a new $4.8 million Pre-Seed Fund, of which a significant proportion is likely to have a biotech focus.

- partnership funds for biotechnology-based research consortia of around $5 million a year, with matching private funds for Ovita and an expanded Lactopharma;

- continuing efforts to build productive relationships with pharmaceutical companies, including the investigation of options for developing research partnerships; and

- a new biotech venture capital fund round announced by the Government's NZ Venture Investment Fund, which will have at least $15 million to invest with private sector partners.

Today I'm announcing the commitment of a further $12 million over 4 years for a trans-Tasman biotechnology development fund, which will support joint ventures between New Zealand and Australian companies. This will be set up and run by New Zealand Trade and Enterprise, with the first call for proposals due to be issued by July next year.

The Government will also provide funding of $2.3 million over 4 years for a new programme to foster best practice in commercialising biotechnology research. This programme will concentrate on enhancing the commercialisation of research from CRIs and tertiary institutes, by improving the skills and networks necessary for effective links between science and industry.

Further new funding is being committed to upgrade the statistical information available on the biotech sector, so you and the government can get a clearer picture of how the sector is performing. This will help us track the results of our efforts to encourage growth in biotech, and inform future policy development.

We’re continuing to work on all the barriers to growth that the Taskforce identified. The policy programmes looking at how the regulatory system might be simplified are a good example. New Zealand Trade and Enterprise also continues to refine its plans for supporting sector growth through its various programmes. These work across the spectrum of attracting investment, sector development, provision of market services and regional development.

A key area for further development is New Zealand’s relationship with Australia, because we have similar areas of strength in our biotechnology sectors and we have a better chance of attracting global attention together.

Earlier this year I signed a memorandum of understanding with Premier Beattie of Queensland, formalising an agreement to build closer biotechnology links with that state. The recent CER talks held in Sydney canvassed opportunities for the development of a joint venture capital fund. The new trans-Tasman fund will stimulate new partnerships. There is plenty going on, and the opportunities are exciting.

I believe that biotechnology's contribution to growth in New Zealand will come from a mixture of starting new biotechnology companies and using biotechnology tools and products to make our existing agricultural, horticultural and forestry sectors more productive.

A number of people have commented that the taskforce report focused more on building a vertical biotechnology industry, rather than tackling how we might use the technology for growth by applying it across our existing and traditional land-based sectors.

I was at many of the taskforce meetings and I can tell you that biotechnology as an enabler of growth in other sectors was definitely not ignored. However it is fair to say it did not get a good airing in the report. In that respect the report fell short of the expectations of many of us, perhaps all of us.

The same problem beset the ICT taskforce report and the screen production industry report. The design report, by contrast, showed us how to do it.

However the Growth and Innovation Advisory Board has stepped into the gap – they call it agribusiness – and officials are also tasked with progressing the issue of how modern biotechnology can add still further productivity gains to the engine room of our economy.

So, in short, we’re focusing on biotechnology from all angles.

There are probably people in this room who are advancing biomedical knowledge and medical technologies through biotechnology. Others are likely to be using biotech to develop new products for our horticultural export industry. Some of you may be using biotech to help control pests and introduced species. The possibilities are vast and inspiring.

There are biotech companies in New Zealand that are developing partnerships with the US, Australia and other countries. The Government is developing partnerships as well. We are claiming a place on the world stage.

I look forward to working with you, and your new organisation, to make sure New Zealand biotechnology achieves the growth – and the contribution to New Zealand's growth – that we all know it can achieve.

Thank you, and best wishes to New Zealand Bio.

ENDS

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