The Multinational Monitor

MARCH 1984 - VOLUME 5 - NUMBER 3


W E L C O M E   T O   T H E   H I G H   T E C H   A G E

Cashing In on DNA

by Kathleen Selvaggio

This spring, a plant geneticist with Atlantic Richfield Company will travel through the Andean valleys south of Lima, Peru in search of a tiny wild tomato that has twice the pulp of a cultivated tomato. Later, the scientist hopes to locate the genes that made the tomato so pulpy and insert them into a cultivated tomato, producing a meatier tomato. Every one percent of solids engineered into watery tomatoes will be worth an estimated $78 million to the soup and catsup industries. Though the new tomato will derive from a species native to Peru, the country will be paid no royalties on the sales of its seeds and Peruvians will even have to buy seeds from ARCO in order to grow the new species in their own country.

In recent years, diet instant beverages, sugarless chewing gum, and lately, diet soft drinks have started appearing on store shelves with a new ingredient called Nutrasweet, a sugar substitute that contains bioengineered components and lacks the bitter aftertaste of saccharin. Capturing a share of the lucrative diet food and beverage market was a sweet deal for G.D. Searle, the pharmaceutical giant that makes Nutrasweet, generically known as aspertame. But health experts of all stripes widely suspect the substance of being harmful to health and charge the FDA with approving it too hastily. And Third World Countries that depend heavily on sugar imports are worried too: products like aspertame and high fructose corn syrup, another bioengineered sugar substitute, have already cut into their sugar sales and could threaten their economies.

These are just two examples of the first wave of commercial products emerging from the biotechnology revolution-bringing with them unknown and possibly incalculable social effects.

Biotech practitioners and their corporate backers are more sanguine than ever about the prospects for the new technology. With each new development, biotechnology's possibilities are escalated. Biotech now promises to feed the world, cure cancer and other diseases, end pollution, breed super cows, raise supercrops, conserve energy-all at an inexpensive cost.

Hype or no hype, biotechnology has the potential to dramatically change agricultural and medical practices and to unleash important new productive capacities, with major consequences for both industrial countries and the Third World. As biotech products begin to appear on the market, society is faced with the critical question of who is to control it and how it will be applied.

While some methods used in modern biotechnology date back centuries, the cornerstone for the sophisticated "genesplicing" technology was laid in 1973 when scientists learned to remove segments of the infinitesimal DNA molecule from the cell of one species and insert, or "splice" them into the DNA of another cell. Since DNA holds all of an organism's heritable information, this achievement gave people the ability to design new forms of life. Around the same time, researchers made significant progress in artificially fusing cells of different organisms, thus producing hybrids that cannot occur in nature.

Suddenly, the opportunity arose to "engineer" plant or animals to incorporate useful characteristics of other species, or to synthesize large quantities of substances that are rare, expensive, or unavailable in nature. The commercial potential of these techniques was lost on few scientists. As with past scientific discoveries with practical application, a whirlwind of entrepreneurial activity was set off on campuses (see box). Small biotechnology companies with clinicalsounding names like Biogen and Genentech began springing up in the late 1970s on the periphery of universities from Cambridge, Massachusetts to Palo Alto, California. Today, biotechnology companies number well over 100, most formed within the past three years, by the conservative estimate of the congressional Office of Technology Assessment.

Commercial interest in biotechnology intensified after June 1980, when the Supreme Court ruled 5-4 that geneticallyaltered microorganisms could be patented. The rush for DNA megabucks became apparent four months later when the San Francisco-based firm Genentech offered its stock publicly-the first biotech company to do so-and watched the price leap from $35 to $89 per share in 20 minutes. Other biotech firms have since enjoyed similar rises in their stock prices. "Biotech companies have more money than they know what to do with," declares Nelson Schneider, a vice president for E.F. Hutton Company who monitors the industry for investors.

Before young biotech firms choose to go public, however, most rely on financing from venture capitalists, who often take the number of PhDs in a firm and the reputation of its chief scientists as a measure of its future earning power. Or companies seek research contracts or R&D partnerships with large established companies, which have competed fiercely almost from the beginning for a share of the biotech market. A number of multinational companies, such as Dow Chemical, Eli Lilly, Du Pont, and HoffmannLaRoche, have bought heavily into biotechnology in recent years. E.F. Hutton's Schneider estimates that 200 of the Fortune 500 companies are venturing into the field, from any of several angles: contracts with universities, direct investments in small firms, and in-house research programs. Nearly every major chemical, pharmaceutical, and petroleum company is spreading their investments in all of these directions. Jack Doyle, an analyst with the Environmental Policy Institute who is writing a book about biotechnology and agriculture, thinks the big companies see huge profits to be made in biotech, "Multinationals look at this technology as something they can make for pennies and sell for dollars. Cloning is a mass production technology," he says. Corporations may also be protecting their flanks against future losses to new companies pioneering unknown technologies. "When the day comes when plants are no longer dependent on chemicals, or when new drugs replace the old ones, these big firms want to be there," he adds.

While the hundred or so small biotech firms are more than holding their own at the research stage, the pattern being set by companies turning out early biotech products suggests that the small companies will increasingly rely on large companies for marketing and manufacturing. "These little firms need sugar daddies. They won't survive without a corporate umbilical cord," says Doyle. He predicts that most of the new companies will merge together or be acquired by one of the major drug or chemical firms. "It will be the exceptional small company that emerges on its own footing-the Genentech or the Biogen, perhaps, which have strong, savvy business people."

Indeed, Genentech and Biogen, along with Cetus, Genex, and Applied Molecular Genetics are leading the pack of biotech companies in bringing new products to market. The products fall roughly in three categories:

  • Pharmaceuticals. Bioengineered human insulin is now available to diabetics (though not at the rock-bottom price once promised) and sales of dozens of different diagnostic tests used to detect disease have reached $20 million a year. Being readied for market are human growth hormones, which will aid abnormally small children, a blood clotting agent for hemophiliacs, a blood clot dissolver designed to stop heart attacks, a protein to regulate the immune system, and several kinds of interferon, a natural body hormone that may combat herpes, the common cold, and even cancer. Vaccines for everything from hepatitis to polio are under development.

  • Agriculture. Already on the market is a vaccine for scours, a fatal diarrhea that afflicts calves, while vaccines for other animal diseases, including hoof and mouth disease, are under development. Growth hormones currently being tested promise giant livestock that would produce more milk and meat without consuming more food. Plant genetics research is focused on modifying plants across the entire spectrum of world crops to improve their nutritional value or flavor, resist disease and herbicides, tolerate frost or drought, or do without fertilizers and pesticides.

  • Industrial and environmental applications. Sugar substitute aspertame, which uses genetically engineered bacterial enzymes, is now on the market-though some say too soon. In the pipeline are a drain cleaner that dissolves hair, synthesized Vitamin B12, microorganisms that would eat dioxin or oil spills, and others that would leach oil or minerals out of rock.

More than $2.5 billion invested in developing commercial products is yielding sales in the millions; projections of future sales range anywhere from $15 to $65 billion by the 1990s. But as Harvey Price of the Industrial Biotech Association notes, "The general consensus is that the industry is expanding at a phenomenal rate."

The U.S. government is also concerned about maintaining that growth, and sees its leadership in the field of biotechnology, along with other high technology sectors, as key to retaining a competitive edge in the world economy. For that reason, government officials are raising a great hue and cry over the perceived threat from Japan and, to a lesser extent, from Europe. A study prepared for Congress by the Office of Technology Assessment and released in January assesses international competition in the biotechnology field and concludes that the U.S. "could have trouble maintaining its competitive position." "The Japanese government has targeted biotechnology as a key technology of the future," the study warns.

At its public release, the report provoked a flurry of reaction among alarmed congressmen, who called for measures to stimulate investment and promote government-industry cooperation. But some observers are critical of the whole tone and thrust of the study. "This study is an example of the technological xenophobia sweeping this country," says Jack Doyle. "The OTA is frantically waving the American flag, saying we have to fund research in this area. But in the whole race to capture markets, other values will get trampled."

Doyle is one of the few people speaking from this perspective. As an environmentalist and land resource expert, he has paid close attention to the broad social and environmental impacts of what he calls "Green Revolution II"-the genetic revolution in agriculture. While he believes biotechnology has the capacity to enhance yields and conserve resources, especially for the Third World, Doyle is skeptical that those benefits will result as long as private interests retain control over the new technology.

Rather than increasing Third World farmers' control over production, he points out, the agri-genetic revolution may increase those farmers' dependence on the West. For example, seeds for the new high-yielding supercrops will only be available through seed houses, now almost entirely controlled by multinational petroleum and chemical companies such as Shell Oil, British Petroleum, and Ciba-Geigy. Only a small percentage of farmers may be able to afford the new seeds or corporate-bred hormones and chemicals.

The new technology may also result in the displacement of poor farmers by offering economies of scale and thus encouraging farm enlargement. "The economic benefits will flow to farmers that can use them in the early years, when they are most expensive. These will certainly be the more well-heeled farmers," says Doyle. And, as other critics have noted, many companies are deliberately genetically engineering plant varieties to be compatible with agrochemical they produce. For example, a farmer will be able to spray weed-killing herbicide liberally on his herbicide-resistant crops without worrying about killing the crop, boosting profits for the company that sells both.

Another deliberate corporate strategy for ensuring profits is the development of hybrid plant varieties, plants that are highly inbred for superior characteristics but yield seeds of poor quality. Seeds for these hybrids would have to be purchased on a regular basis.

One bitter irony in the development of supercrops and superanimals is that many of them draw on the genes of plants and animals found only in the genetically diverse tropical zone, which spans the globe across Third World countries. Thus the people of the Third World are being asked to buy back from private interests some of the genetic resources of their own country in the form of seeds or hormones. While a few countries such as Ethiopia now ban the removal of genetic resources, the vast majority of "gene-rich" Third World nations place no restrictions and demand no compensation for the commercial exploitation of those resources.

Another concern is that the widespread use of a limited number of seed varieties will drastically injure genetic diversity. Because uniform food crops are much more susceptible to attack by disease or insects, ecological catastrophes of the kind that caused the Irish potato famine can result. Already, high-yielding plants that grew out of the green revolution have led to the extinction of valuable plant varieties.

In general, the research goals of biotech corporations reflect the priorities of industrialized countries. Critics like Fred Buttel, a Cornell University professor who heads a research group on the socioeconomic consequences of biotechnology, believes that under corporate control biotechnology will reinforce scientific, technological, and productivity gaps between developed and developing countries. "By and large the Third World won't benefit first from biotechnology. It is being developed for the much larger market of developed countries and will be passed onto Third World countries on terms primarily determined by industrial countries," he says. This claim has been well illustrated in the example of Genentech Corporation's refusal last year to manufacture an anti-malaria vaccine after the World Health Organization, which is funding the vaccine's development, denied it exclusive rights to manufacture-and profit from-the vaccine. Vaccines for other devastating Third World diseases are not being developed by private companies precisely because the people who would benefit from them cannot afford them. In addition, very little research is oriented toward subsistence crops.

Several developing countries, including India, Mexico, Brazil, and Cuba, are setting up their own biotechnology programs, but in general these programs lack funds and technical expertise. One effort to remedy this situation has been made by 25 members of the United Nations, who have proposed the establishment of a biotechnology research center that would conduct basic and applied research oriented toward the development needs of the Third World. But plans for the center are stalled due to the unwillingness of industrial countries, primarily the U.S., Japan, and Europe, to commit funds and its future now looks bleak. "If this center got off the ground, it would make a big difference in biotech politics," says Fred Buttel, who is not optimistic about the prospects for the center's success.

Those arguing for the application of biotechnology to social problems have tended to be lost in the roar of enthusiasm for biotech's wonders. But one new organization is bringing together concerned scientists, health experts, and union activists, to voice the broad range of social, economic, environmental, and ethical questions surrounding biotechnology. The Cambridge-based Committee for Responsible Genetics was formed in the fall of 1983 for the purpose of "insuring that the new biotechnology be developed in the public interest." Among other things, the groups will publish materials and sponsor study groups and conferences on issues such as the impact of biotechnology on farmers and farmworkers in both developed and developing countries, and the role of gene-splicing in weapons development.

But the challenge for groups like the Committee for Responsible Genetics is how to assert the public's right to a socially responsible biotechnology. With over $1 billion in public funds poured into the research that led to ground-breaking scientific discoveries, the public has a vested interest in their outcome. As a number of observers have noted, biotechnology offers the opportunity for society to get serious about ecology, nutrition, health, and more equitable economic relations. At present, however, no mechanisms exist through which those priorities can be asserted. As Jack Doyle notes regretfully, "The institutions we rely on to inject those priorities-government and universities-are coopted by the biotech industry." O

Linda Keenan contributed research to this article.


Leaders of the Gene Revolution

Banking on future sales, selected leading and U.S. and foreign companies set large budgets for biotechnology research and development in 1982.
Company $ Mil
Dupont (US) 120
Monsanto (US) 62
Eli Lilly (US) 60
Schering-Plough (US) 60
Hoffmann LaRoche (Switzerland) 59
Genentech (US) 32
Cetus (US) 26
Biogen (US) 8.7
Genex (US) 8.3
Sumitomo (Japan) 6+
Ajinomoto (Japan) 6+
Hoescht (W. Germany) 4.2
Elf-Aquitaine (France) 4+
Source: Office of Technology Assessment


Biobucks On Campus

There is a new breed of biologist on American campuses these days. Talented researchers and dedicated teachers are turning into astute businessmen and women.

Take Mark Ptashne, the head of Harvard's Department of Biochemistry and Molecular Biology. This prominent biologist had a reputation as an antibusiness, anti-establishment radical - until his DNA research brought companies like General Electric and Du Pont knocking on his door. Today, Ptashne doubles as major shareholder and a leading advisor to the Genetics Institute, a Boston-based medical firm backed by pharmaceutical giant Baxter Tranvenol Corporation.

Currently, there is hardly a single topranking molecular biologist at an American university that has not signed up as a part-time consultant or board member of some corporation. Some have even been lured out of academia altogether, the most notable example being Ptashne's former colleague Walter Gilbert, a Nobel prize-winning molecular biologist who left his post at Harvard in 1982 to become the chief executive officer of Biogen Corporation. Hundreds of new PhDs in the life sciences have also been recruited to industry's ranks.

In addition, companies have granted large sums of money to university biology and genetic departments in return for rights to patent or license products that might result from research. A sample of recent corporate largesse: Hoechst A.G., a German chemical firm, granted $70 million to Massachusetts General Hospital, Harvard Medical School's teaching arm; W.R. Grace endowed M.I.T. with $8.5 million; Monsanto granted $23.5 million to Washington University and $4 million to Rockefeller University; and Du Pont granted Harvard $6 million.

Corporation's efforts to corral scientific talent have also led to novel - and questionable - institutional arrangements. M.I.T.'s two-year-old Whitehead Institute founded by Edwin Whitehead, an industrialist with interests in biotechnology companies, is set up in parallel to the university's biology department. The institute shares faculty, access to university facilities, and rights to appoint new faculty members with the university, and also gains ownership to patents resulting from research it finances.

Many university and industry persons alike defend such collaborations as a way for financially-strapped universities to get money. Others believe that it threatens university's autonomy and integrity and may have long-term effects on the nature of scientific research. Eric Holtzman, chairman of the biology department at Columbia University, warns that commercial interests may change the way a university distributes its resources.

"Universities have traditionally maintained basic research without thought of something immediately coming out of it," he says. "Now, because of their potential to attract big money, biology departments may become much more important within universities. As chairman of the biology department, I think that's terrific, but as a faculty member, I see how it can skew educational missions."

Another concern is that corporate demand for secrecy to protect "proprietary" information restrict the open exchange of information and materials crucial to scientific research.

For some critics like Sheldon Krimsky, a Tufts University professor who describes himself as "one of the few people speaking for the public interest in biotechnology," the concerns run even deeper. Given the substantial public investment in biotechnology as a result of decades of government funded research, who will speak for the public?

"We need a sizeable number of unassociated molecular biologists to reflect objectively on this field, he says. Without them, certain questions will simply not be asked - questions about the social impacts, the ecological impacts and safety risks, and about whether the benefits are less than the costs to society."

Several universities, including Harvard, Yale, and the University of California system, have adopted guidelines to limit corporations' influence over research they sponsor and to require professors to disclose their corporate affiliations. But Krimsky believes that most of these guidelines - when they are enforced - function primarily to grant faculty members as much flexibility as possible and to ease the criticism on university administrations.

- K. S.


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