Something caught my eye while skimming through the pundits’ New Year reviews and predictions. Trailing a forthcoming US Biotech conference, The Street ruminated over Biotech stock prices during the last 12 months.
Despite an 11% gain across the sector, they summarised that ‘2011 wasn't so great for biotech investors’.
I’m not sure what constitutes a truly great year for them, but, they did concede that the dip at the back end of 2011 was largely due to circumstances beyond the sector’s control:
“Biotech stocks outperformed the broader indices although the second half of the year was largely a nightmare thanks to European economic turmoil and a general loss of investor confidence and interest in the sector. Biotech will always have its small, obsessed investor fan base, but it can't really prosper without participation from generalist investors.”
Viewed from a global perspective, Biotech plants now cover 10% of the world’s entire cropland.
Now, while this may be a broadly accurate synopsis it doesn’t take into consideration two decisive factors. Firstly, the gradual sea change in public opinion which is gradually warming to GM; and secondly, the EU’s ebbing antipathy towards the biotech food sector.
Suddenly, it seems that the tide is turning for investors who hitherto were too timid about dipping their toes into an often uncertain Biotech sector…
The EU policy on GM crops has long been politically fraught, with a majority of European consumers opposed to their introduction. In fact, the resulting headwind from the EU commission have hampered parts of Europe’s most promising Biotech start ups, blocking much-needed investment and holding the companies back.
A recent report from Swedenbio reinforces this criticism: “The analysis clearly shows that Sweden has a strong innovation power and is an innovation-driven economy with conditions suitable for knowledge-intensive industry sectors such as the Life Science industry," Swedenbio conclude.
“Nevertheless, there are a number of indicators and structural changes that need to be taken into consideration, otherwise Sweden will have a declining Life Science industry for its SMEs.”
The non-profit organisation that focuses on the growth and development of the life science industry outlines indicators for Sweden to achieve continuous and innovative growth and suggestions on improving the climate for investment:
- Improvement of citation index for scientific publications.
- More venture capital needed.
- Innovative SMEs need to collaborate to a larger extent.
- SMEs need to be better at taking products to the market and get revenue.
- Innovative companies must increase their market size in an international perspective.
- Stop the “brain drain” and have a policy for “brain gain” within the Life Science sector.
According to Carel du Marchie Sarvaas, EuropaBio’s Director for Agricultural Biotechnology, however, both the EU’s stance and that of public opinion is gradually softening.
“Twenty years ago, before we had experience with cultivating GM crops, it may have been understandable to fear the technology,” du Marchie Sarvaas explains. “But biotech crops are now part of the food landscape and the record is clear: scientific studies by leading scientists and over 2 trillion GM food meals eaten have shown no negative effects for health or the environment.”
“Time has shown negative claims about genetically modified crops to be untrue. All kinds of wild claims have been made about biotech crops over the years since their introduction. But none of the carefully concocted scare stories has ever materialised.”
In fact, going into 2012 the British Coalition government and the Labour opposition were united in their backing of a major re-think on GM food crops across the EU. The two parties rarely agree on anything, so it’s a perfect barometer of the altering mood.
Speaking at an annual New Year farming conference, the Agriculture Minister Jim Paice spoke about sustainable intensification of farming. “In the foreseeable future we'll have nitrogen-fixing wheat – if that isn't going to be a major development I don't know what is,” said Paice.
“GM is not a panacea, but it should be one of the tools at our disposal. It's going to be a big challenge for the industry and consumers as to whether they are prepared to welcome that for the major environmental gains against the concerns people have against GM.”
However, Paice suggested that “supermarkets were the ones that would convince the public that GM food is safe to eat as the public won’t believe the government.”
Shadow environment secretary, Mary Creagh, countered that scientists were responsible rather than retailers for better explaining the benefits of GM to ensure the public have better informed opinion:
“We have to keep an open mind on this. I don't think we should ignore the role science should play in tackling environmental challenges,” Creagh explained. “But we need a sensible debate about how we meet the challenges of sustainability, about the real potential of novel crops.”
In fact, the European Biotech Industry already plays a huge part in the region’s economy. According to figures from EuropaBio - Europe's largest and most influential biotech industry association – the sector generated 13 billion EUR in revenues, up 12% compared on the previous year. Total funding for the European biotech industry in 2010 was €2.9 billion, while venture capital raised in Europe totalled €1 billion in 2010.
Viewed from a global perspective, Biotech plants now cover 10% of the world’s entire cropland. In 15 years from nothing, that’s quite a leap – in fact, it’s been suggested that GM crops are being taken up faster than any agricultural technology since the plough 8,000 or more years ago. But the disconnect is Europe is actually growing 23% less GM than it did in 2008…
However, there is evidence to suggest that the EU’s attitude is altering and warming to new agriculture science. In December, the EU Commission finally approved three genetically modified corn varieties from Syngenta and a biotech cotton variety from Dow Chemical Co. for food and feed use, import and processing. Reports from Bloomburg suggested that the crops were approved after member states failed to provide a qualified majority either in favour or against the approvals.
The annual BIO-Europe Spring conference is the world’s second biggest gathering of its kind. Organised by EBD Group, the event welcomes about 1,800 participants each year and enables biotech companies to find the right partner for growth and success. With CEO’s, business developers, investors and scientists from more than 40 countries across the globe.
It’s imperative that Europe moves forward with the rest of the world, but with the Eurozone already on its uppers, you can guarantee that the EU Commission will be listening intently to what’s being said by the movers and shakers here this year.
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