In a world dominated by northern hemisphere drug companies focusing on the health needs of higher-income nations, these two sectors constitute a less competitive arena for Brazil to attempt the high-tech dominance that has long eluded the nation. With most spaces on the high-tech chessboard such as IT and software already fully occupied by US, European or advanced East Asian nations, Biotech could be Brazil’s “next big thing” in the years to 2020.
It is also one of the best options for making the leap from low-margin producer of commodities subject to global cycles of boom-and-bust, to a more advanced knowledge society where assets are measured in intellectual property, not polluting industrial plant or potentially catastrophic mining infrastructure such as that of Vale and its now devastated Rio Doce operations.
After more than four decades and billions of dollars invested, a few technology hits and a number of spectacular misses, Biotech is Brazil’s next “moonshot.”
You can read about the industry – and the commercial opportunities already being explored by venture capital investors and tech funds now circling the first biotech clusters – in a special report by FT Confidential Research, a premium subscriber service of the UK based newspaper. Click here to review.
This fledgling industry plays to huge needs in terms of human health products for the tropics – not just for Brazil but Africa and Asia too – and for products to improve the efficiency of its heavily-industrialised food production industry, ranging from soybean production, through confined poultry raising to huge beef herds.
Brazil has already taken key steps in the approval of genetically modified crops under the patent of multinational seed companies, and is a massive user of pesticides and agrochemicals. Reducing this dependence through home-developed technology is a strategic goal.
“Biotechnology related to agriculture is our single best competitive advantage,” says Carlos Henrique de Brito Cruz, scientific director at Fapesp, the São Paulo state research foundation. “Brazil has efficient agriculture, available land and reasonable research that can feed into this.”
So here comes Biotech. In truth, Brazil and its Science planners had been planning this phase for some time. But success has came slowly – and the pace only picked up with the arrival of international sponsors such as the Structural Genomics Consortium, which fostered the emergence of a biotech cluster around the University of Campinas.
This has helped the emergence of companies like Recepta Biopharma, which recently closed a USA$86 million deal to licence its monoclonal antibody for câncer detection, to US company Mersana Therapeutics.
Recently Eurofarma, a São Paulo-based pharmaceutical company, broke ground by becoming the first Latin American company to achieve regulatory approval for a biosimilar drug. After nine years, including four spent jumping through the hoops established by Anvisa, Brazil’s health regulator and R$25m in investments, Eurofarma will now be able to sell Fiprima, which is used to help boost immunity in cancer sufferers.
Eurofarma has now won restricted access to the important market for biosimilar drugs, which are complex molecular medicines produced in living cells through genetic engineering and which are considered similar to their reference product. Only 20 such drugs have been approved globally since the first of these products entered the market in 2006, but it is a sector which is expected to generate $35bn in sales by 2020, according to industry sector consultants.
Small wonder, then, that UK-based pharma multinational GSK in November 2015 announced it woudld partner in a R$88.4 million investment to develop research in sustainable chemistry for drug innovation and studies of respiratory and metabolic diseases, as well as immunology/inflammation and antibacterial-antiviral treatments. GSK’s partner is FAPESP, the São Paulo Research Foundation, now emerging as a core sponsor of biotech and biopharma cluster initiatives across São Paulo state, particularly around universities at São Carlos and Campinas. FAPESP and GSK will put in R$34.6 million, with the remaining R$53.7 million will be invested by the university institutions.
Companies like GSK have played an important role in developing this industry. The company has been sponsoring target drug discovery programmes in Brazil. It’s also working with FAPESP, the São Paulo Research Foundation, to develop so-called “sustainable chemistry” or more green ingredients and precursors for developin a local pharma industry.
It’s unsurprising that GSK has been tracking Brazil’s biotech scientists in the human health sector closely. The company’s RTS,S-based malaria vaccine – under development for decades and potentially the biggest IP asset in the entire drug industry – was originally developed from work done in New York by a couple of Brazilian scientists who had been exiled by then-military rulers. The octaganerian couple, Victor and Ruth Nussenzweig, are still working in Brazil on Plasmodium vivax , the less-deadly but debilitating malaria vector that’s endemic to the Amazon basin and hotter regions of Latin America, as well as parts of Asia, Africa and north America.
For the future aspirations of a generation of Brazilian scientists now experiencing the effects of a deep recession which has cut government funding for science, the biotech strategy simply has to work. The prestigious publication Nature says science funding is paralysed while newly appointed head of FAPESP says Brazil must become much more strategic about its science funding . Certainly, the country has been wasteful in its past technology investments.
In the modern era, Brazil has known 5 decades of dizzying ups-and-downs for its high technology aspirations.
In the 1960s Brazil had short-lived nuclear ambitions were curtailed not by insufficient scientific knowledge or technology, but political weakness and debt. In pursuit of strategic dominance over Argentine military rivals, Brazil’s then-ruling generals aspired to mastery of the nuclear fuel enrichment cycle, and obtained some of the same jet centrifuge technology leaked from the Urenco plant in the Netherlands, that also went to Pakistan, Iran, Korea, and probably Israel. But Brazilian hopes of using the US-designed Angra nuclear power plant for obtaining weapons-grade uranium came to nought, thanks to non-proliferation oversight. The country wisely renounced its nuclear ambitions and in 1967 signed the Treaty of Tlatelolco.
The 1970s marked the decade in which Brazil began to explore biofuels through its maize-based ethanol. Three decades and several boom-and-bust cycles later, ethanol is a firmly established component of Brazil’s energy matrix, while scientific advances in sequencing the sugar cane genome and high increases in productivity, have accompanied the development of efficient ethanol-powered engines, energy-saving sugar mills, and an ethanol based chemicals industry.
The 1980s marked another decade of technology failures: notably the protectionism-driven attempt to develop a home-grown computer assembly which ended in costly frustration. The Reserved Market law for IT, in force from 1984 -1991, was designed to protect local assembly operations for PCs, printers and peripherals. But unlike Brazil’s Asian counterparts, planners never troubled to establish a ground-up industry including chip foundries or, or to establish a proper infrastructure to support design and manufacture. Instead the law held back Brazil’s usage of IT, while protecting a low-tech assembly industry that had heavy dependence on smuggling from Paraguay.
The 1990s were the decade during which Brazil’s aspirations in the aerospace sector successfully matured into commercial success for Embraer, a state-controlled airframe manufacturer that grew out of postwar military planning. Whilst WWII’s victorious allies had the pick of defeated Germany’s technology assets (leading to Werner von Braun’s development of the US space programme), Brazil only managed to get German military aircraft designer Henrich Focke. From 1952 he developed new aircraft including a visionary vertical take-off plane at the ITA complex in São José dos Campos. Scientific developments were absorbed by Embraer, which under government diktat consolidated and then demolished almost the entire domestic aircraft industry and became the “national champion” for aeronautics technology. Under commercial management, Embraer has evolved into an airframe designer assembling civil and military planes from foreign high-tech components.
The 2000s were marked by developments in life sciences, and exploration of Brazil’s huge plant diversity for pharmaceutical and natural cosmetic uses. This led to the emergence of commercial organisations with sophisticated marketing strategies such as Natura. This company invested heavily in Brazil’s plant diversity to produce cosmetic products using tropical forest ingredients such as Brazil nut oil, or derivatives form the cerrado uplands of central Brazil.
In the pharmaceutical field, Brazil was less successful in holding its own against international pharmaceutical companies, which took control of the market. However, a few “national champions” received enough government sponsorship to undertake some modest R&D. One example is Aché, a 49-year old company that developed Brazil’s first anti-inflammatory drug Acheflan (Cordia verbenacea), launched in 2005. Sintocalmy(Passiflora incarnata), is a naturally-derived phytotherapeutic product launched in 2010.
From 2010, Biotech and plant science has taken over. And Brazil has shown it certainly has the biodiversity — The country contains 20% of the world’s biodiversity including 103,870 animal species and 46,000 plant species. One new plant is discovered every two days. But it so has the knowhow to turn its basic science of research into hard cash. case in point is the career of Paulo Arruda, a biologist who together with a group of other scientists and majority shareholder Votorantim in 2008 sold the sugarcane breeding companies Alellyx Applied Genomics and CanaVialis, two biotech outfits spun off to Monsanto for $300m.
Scientist-entrepreneurs like Arruda, who is now leading the Campinas biotech cluster initative for SGC, will become more and more vital as Brazil’s increasingly impoverished state sector backs out of risk-taking research funding, which will increasingly be funded by venture capitalists.
Brazil’s state sector science planners have certainly made their share of costly mistakes over the decades, so now the hope must be that the private sector will provide the necessarily discipline — as well as the cash — to set the country’s biotech and biopharma dreams on the road to becoming reality.