Bénézech -
Simpson
biotechnology consulting
Introduction
The beginning of a new millennium gives cause to reflect on past progress and future possibilities. It is arguable that the emergence and generalisation of technology has been the most important phenomenon of Europe's last 1000 years. Man the toolmaker has come most decisively to form the planet that gave him birth.
France has played an important part in Europe's past 1000 years and French contributions to science, philosophy and technology, played a very significant role in shaping the past 300 years. Perhaps the roots of the human genome project can be traced to Diderot's encyclopaedists, who attempted to catalogue all knowledge while the storm of the French revolution howled.
Twenty years ago the first issue of the American journal, Genetic Engineering News, reported that gene sequencing was now moving so fast that in December 1980 some 349,807 bases of DNA from a variety of bacteria and viruses had been sequenced. In 2001 that represents a day's work for a sequencing project. Almost 99% of the human genome has already been sequenced.
Other areas of knowledge have grown in parallel. Quantum computing is set to become a reality that breaks through the speed limits of current information processing components. Biological molecules and principles may form an integral part of such new technology. High speed computing is already being applied to the problems of handling the enormous bulk of information that is the human genome. DNA itself has been enrolled as an analogue computing system capable of handling massively parallel calculations faster than a silicon-based supercomputer.
As biotechnology became a buzzword 20 years ago, so France took its first faltering steps towards responding to the challenge of American dominance. Reports were written and, belatedly, a concerted programme of competitive biotechnology was established.
Today the success of that programme is underlined by the fact that France has some 270 "biotechnology" companies. Biotechnology has now become a part of the box of tools which comprises modern drug discovery. Despite the objections from organic food purists, biotechnology has already made huge contributions to agro-food production - even when the products are not themselves gene-altered foods.
France has a globally competitive position in genomics and agro-food biotechnology. What changes have occured in the last year or so?
Probably four major headings can summarise those changes:
Public Opinion
Scientific Progress
Government measures for:
Entrepreneurial
liberation
Encouraging
scientific development
New companies emerge
These themes will be developed in the coming lines. What has been unusually stable has been France's political climate. Prime Minister Jospin has enjoyed a reputation for integrity in office, although his right hand man in the Ministry of Finance, Mr Strauss-Kahn has been forced to resign over unproven corruption charges. This has been a serious blow as Mr Strauss-Kahn has a reputation for honesty and has been a real force in renewing the French economy. Allegre too has gone from Education, although his replacement, Jack Lang is a popular choice. Lang is keen on science. On the political side of biotechnology little has changed and little that was announced has not come about - this is in itself surprising. Mr Allegre's and Mr Strauss Kahn's package on encouraging entrepreneurship was voted through parliament in 1999 and the impact of those changes has been felt, most noticeably in the number of new company start-ups.
And the future. Where is France going next with biotechnology?
Ministerial commitment has not - yet - been matched by the liberation
of substantial new funds and the diminution of the bureaucratic
process. However, as we enter 2001, the Régions are waking up
to the importance of biotechnology. Rhône-Alpes, my own region
(see the links section), is taking major
strides to tell the world about the attractions of this area for
inward investment in biotechnology. Next month the BioVision
conference underlines the regionís prominent position and
long-term ambitions.
Public Opinion
Management of Public Opinion by both government and industry has, in the past two years, been devoid of any clear strategic orientation. Government has attempted to placate voters, not to instigate any real programme of education and information in the area of hypothetical hazards due to gene modified crops, British beef or other issues generating political headlines. As we prepare for new elections it is to be expected that headline themes rather than real concerns for infrastructure will dominate political thinking. Industry has been conspicuous by its lack of a coherent response to public concerns. This must change.
In France the position of the public is interesting, for in the area of healthcare there is almost blind acceptance of any innovation - be it gene modified or otherwise. In agriculture a deep conservatism has made any kind of progress difficult to apply. In the public perception, gene modified crop species and spongiform encephalopathies and British beef are understood to be linked in some vague conspiracy imposed on "us" (the consumers) by "them" (the nebulous "they" which includes government and an "uncaring" industry).
Given the volatility of public opinion and the bias of government to obtaining votes (at the cost of coherent policy), companies in the healthcare sector would do well to note the tribulations of their colleagues in the agro-food sector.
Scientific progress
In France as in the rest of the world phenomenal progress in genomics has rightly dominated all perceptions of this field. However it would be wrong to ignore the very important new developments in proteomics. Proteomics is a somewhat vague concept which marries intermediary metabolism, identification of the associated proteins and the related genes. Proteomics is, however one reacts to the neologism, very important. In the past twenty years gene sciences have exploded, while the chemistry of the cell (metabolic pathways or intermediary metabolism), has been almost ignored. We have a vast framework of genes with no associated protein function to clothe that framework. Proteomics seeks now to redress this omission. We are beginning to adopt a holistic approach to the living cell.
The combination of genomics and proteomics is going to facilitate the application of our new genetic knowledge in areas such as gene therapy for disease, or protein yield improvement in crop species.
Whereas any application of gene technology in food or agriculture is now regarded with great suspicion, gene therapy has made great advances both in technology and in public acceptance. In the past few months French scientists have participated in an apparently successful application of gene therapy.
A technological advance which contributes much to genomics and (soon) proteomics is that of array technology and ìbiochipsî. Europe has made huge progress in this area and while France has arguably one of the most advanced companies (Grenoble-based LETI, see links), it is generally not sustaining its competitiveness in an area where the UK and Germany are establishing a lead.
Government measures
The passing of bills to ratify the proposals made by Strauss-Kahn and Allegre in 1998 took place in the summer of 1999. However, even before this, the fruits of the 1998 commitment were being realised by an unparalleled growth in the number of biotechnology companies.
Why has there been this explosion in entrepreneurism?
Entrepreneurial liberation:
liberalisation of stock options
destigmatisation of failure
new exit opportunities for
investors
Academics and others can now benefit from the future promise of shareholdings in companies they set up. Companies can be established on the basis of work conducted in public sector laboratories, although appropriate accords must be established. This has played a very major role in incentivising both scientists and businessmen to become engaged in new entrepreneurial venture of all kinds, from biotechnology to "dot-com" companies. Academic scientists are offered a safety net of five years during which they can be re-integrated into their public sector function. Academics can also remain in their functions and serve on the boards of commercial ventures, although there are clear guidelines on any remuneration for such tasks, such as a 5% limit on any shareholding in the company.
Almost every time I listen to the radio or watch the TV news in France, someone is talking about the need to destigmatise business failure. Entrepreneurs who have failed are paraded on the TV screen as they show off their second or subsequent success story. There is much talk of obliging banks to look again at their policy of rejecting loan applications from business persons who have failed once. I have formed the clear impression that this destigmatisation has become government policy and that all the media have been pressured to carry stories on this theme. It takes time to undo long-held prejudices, but this action is manifestly changing opinion.
The opportunities for early stage investors to exit have increased greatly with the growing maturity of the Nouveau Marché and EASDAQ.
Perceived negative factors:
poor investor
confidence
35 hour week
high cost of employment
in France
Biotechnology suffered from poor investor confidence in 1999, however this does not appear to have deterred start-up activity in France. 2000 was a very good year. The down-side of poor confidence is that many start-ups were of limited size, low financial liquidity, and possibly limited long-term viability. Now that confidence seems to be growing in the biotech sector, this is changing. Already employment in the sector is rising very rapidly.
In addition to the perceived burden and costs of the 35 hour working week, France has a reputation for being a high-cost labour base. This ignores the many incentive schemes, particularly for start-ups, small and medium sized enterprises, that can offset the social charges and even the salary element. The strength of the French economy, the fall in unemployment and the increase in taxation revenues all imply that the social charges element of employer costs may be up for review in the near future.
Tax credit for research, 1999 law reform
This measure, worth 3 billion francs per annum, was renewed in 1999
for 5 years. It covers reduction of tax - up to 50% - on R&D
investments in the first year and 50% of investment growth in
subsequent years. Almost 8000 companies have participated, of which
32% have less than 20 employees.
Encouraging scientific development
To complement the series of measures for entrepreneurial liberation
the Interministerial Committee on Scientific Research and Technology,
CIRST, has outlined its key themes for research in the current and
future funding periods. Claude Allegre himself outlined some of these
priorities at a press conference in June 1999.
France is one of the few European countries with commitment to fundamental as well as applied research. The various science funding agencies and the ministries responsible for both science and industry have recognised that a strong basic research base is a competitive advantage.
Life sciences are specifically mentioned as France's number 1 priority. Emphasis has been placed on biomedical sciences and agronomics. There is acknowledgement of the excellent research base but concern that too much internal repetition wastes resources and erodes the competitive edge. The government has initiated a review of past performance with a view to identifying strengths and weaknesses of the system.
Calls for propositions have been launched to cover the main areas
addressed by the CIRST Report. These address
Bioresources and
traceability of gene-modified products
Impact of
genetically modified organisms
Genopoles
Telemedicine and
health technologies
Micro and
nanotechnologies
Food quality
safety
The response has been very enthusiastic.
Technologies-clés 2005 - Key technologies 2005
This new exercise culminated in a report published last year and will focus on three main questions:
what technologies are important for French industry?
what is the competitive position of France in these technologies?
in consequence, what should be technological priorities?
and two concerns:
to help French companies to choose essential technologies for implementation, development and mastery in-house. For SMEs without global vision such analyses are indispensable.
to help the public
administration to better define and implement a national technology
policy.
50 Key Technologies have been identified as critical for the 5-10 year future of French technology competitiveness. Among them the following 20 are of relevance to biotechnology.
Health and life science
Recombinant DNA derived medications
Pharmacology based on cellular exchanges
Blood substitutes
Recombinant protein production systems
Gene therapies
Environment
Decontamination and rehabilitation of polluted soils
Environmental monitoring
Modelling and pollutant impact
Information and communication technologies
Massively parallel architectures
Exchange of digitised information
Management of intelligent networks
Neural networks
Materials
Elaboration of organic matrix composites
New textile fibres
Multifunctional surface coatings
Synthesis of complex molecules
Production, instrumentation and measuring
Intelligent sensors
Catalysis
Microtechniques
Membrane separation processes
ANVAR will be the point of contact for these new ventures,
although Invest in Franc will certainly help overseas investors
contemplating a significant investment in French R&D potential in
relevant areas. Feasibility studies will be funded to 50% of costs
(0.5 MF maximum) and later stage development to 30% of costs with a
bonus of 10% for small and medium sized enterprises.
New Companies Emerge
The French economy is expanding at a rate unprecedented in the last decade. Unemployment is falling fast and new business start-ups are occurring at a healthy pace. I would guess that almost 150 new biotechnology companies have been established in the past two years. These have been encouraged by the positive signals sent by new investor exit routes (such as EASDAQ and the Nouveau Marché) and the unprecedented commitment to entrepreneurial expansion in high technology signalled by Ministers Strauss-Kahn and Allegre.
The mergers of mid and large sized pharmaceutical companies have probably had no significant impact on employment of skilled workers as entrepreneurial start-ups profit from the new availability of senior management skills.
Despite continuing high costs of employment it is arguable that never before has France been such an attractive site for high technology investment. As hinted earlier many start-ups benefit from incentive schemes that offset high employment costs and offer overall costs comparable to those of the USA.
In the short-term and probably for the next five years France will continue to be a good place to set up new biotechnology and new high-technology companies of all kinds. Solid commitment to a future economy based on technology would underpin this. Already the OECD finds that the contribution of advanced technologies to France's economy is much greater than that of Germany.
This commitment probably means that France will in future continue to succeed. Success will reduce the burden of unemployment and free further funds for cutting business charges.
Companies will fail. I can see that many of the new biotechnology companies do not have the critical mass necessary to ensure sustainability through even moderately difficult circumstances.
France is succeeding in turning around its position on the stigma of failure. We only need to see clear signals of a changing attitude emerge from the traditional financial institutions and France could become an entrepreneurial leader in Europe.
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