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 / Winter 2007 / Issue 49(originally published by Booz & Company)


Best Business Books: Biotech

The third difficulty: The rapid pace of change inhibits cumulative learning over time across the bio­technology industry. In contrast to the free flow of ideas characteristic of the scientific method practiced elsewhere, biotech’s patent-and-license structure actively discourages tapping knowledge that belongs to someone else. To incorporate someone else’s idea, a company has to purchase access to it. That often means giving up a portion of company equity, which is a serious dis­incentive to cumulative learning. Here, too, modified industry structures would facilitate the growth of the sector’s knowledge bank and memory.

“Thirty years into biotechnology,” Pisano writes, “we are still learning what such science-based enter­prises might look like, how they will work, and what kind of management skills will be needed to lead them.” But he is optimistic, offering detailed recom­mendations for different business models, funding mechanisms, and institutional arrangements under which the “business of science” could prosper and produce better medical solutions. He advocates, for instance, a much higher degree of transparency throughout the developmental process, arguing that it is in the companies’ own interests.

Pisano applauds the new surge toward medical “venture philanthropy” through organizations such as the Michael J. Fox Foundation (founded in 2000), the Bill and Melinda Gates Foundation (2000), and Accelerate Brain Cancer Cure (2001), which may help enormously in funding translational research to turn discoveries into products. He also cites the long-term relationship between Roche and Genentech. When Genentech stumbled, Roche bought a controlling interest — but left Genentech a separate company, operating under a carefully defined, arm’s-length relationship. So, although still a public company, Genentech is free to pursue its deep research somewhat insulated from the short-term vagaries of the stock market, while Roche can benefit from Genentech’s discoveries. That’s one giant step, in Pisano’s view, toward turning biotech into a productive, profitable, and sustainable business field.

Unsafe for Any Seed
Whereas Pisano’s case — that the risks of biotech have not paid off from a business profit or productivity perspective — is disappointing, Denise Caruso’s argument is downright distressing. She says that biotech development is putting human health and safety at risk in the name of progress.

Concerns about genetically modified organisms (GMOs) have been with us since the first recombinant DNA experiments in the 1970s. For just as long, these concerns have seemed overblown, with whole populations, especially in Europe and Africa, rejecting GMO foodstuffs as if they were poison, branding them “Frankenfoods.” If these foods actually were as toxic as some perceive them to be, a lot of people would be dead by now, as the acreage of GMO crops has spread rapidly across the globe. Most of us (especially in the U.S.) consume significant quantities of GMO foodstuffs without even knowing it.

Yet the cartoonishly Luddite nature of the reaction may blind thoughtful people to the reality of the problem. Caruso is concerned because many prominent scientists are deeply concerned, and their concerns — expressed in many a peer-reviewed paper and debated at many a rarefied scientific conference — are not leading to serious public debate and good public policy, especially in the United States.

As far as we can tell, no one has died from eating GMO foods, because as far as we can tell, they are not, in themselves, toxic. And transgenic plants such as GMO corn or soy modified to survive weed killers are intentionally made sterile to keep them from propagating their modifications to other plants. But the ability of these modified genes to escape the place they were planted and wander far afield has been repeatedly demonstrated — as has the ability of genes to be exchanged across species, even asexually, sometimes through processes we do not yet understand. So what happens if, for instance, the genetically engineered properties of weed killer–resistant corn go feral? What if it escapes as part of a genetic package that helps its recipients outcompete others of their species, yet in ways that we cannot predict?

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