Keywords: business enhancer, consortium strategy, government, technology and industry.

Two complementary strategies are proposed to help develop the biotechnology industry in Chile. The objectives of such propositions are based on identifying business opportunities, which can be transformed into biotechnology projects that complement the competitive advantages of the most active areas of the Chilean economy.

As a result, the establishment of these initiatives may create the proper business environment where good information, investors’ safeguards and economic incentives would be provided to encourage investors to support new biotechnology ventures focused on mining, aquaculture, forestry, as well as wine and fruit production.

According to the Chilean Commission for the Development of Biotechnology, the Chilean biotechnology industry lacks financial support from venture capital and foreign investors, has a relatively modest proportion of highly qualified employees that work in Research and Development, presents insufficient patent productivity and is mostly regulated in terms of the use of GMOs.

However, regarding its research capacity in biotechnology, Chile stands third in South America after Brazil and Argentina. Nevertheless, Chile has virtually the same percentage of biological researchers as a proportion of the population than Brazil (119 researchers per million habitants) and a larger ratio of scientific publications identified via Medline per biological researcher than Brazil and Argentina. In fact, Chile presents practically the same number of scientific publication per biological researcher than USA.

As of December 2002, the Chilean biotechnology industry was comprised of 31 companies that accounted for approximately US$ 10 million in sales and employed nearly 600 people. According to Dornberger (Dornberger, 1999), almost all Chilean biotechnology companies emerged from academic institutions; some were the result of research projects that were developed into companies, while others were literally designed as spin-off initiatives. In general, the main activities of these companies are related to chemical diagnostics, human and veterinary medicine, and enzyme production.

Chile’s reputation for mining, aquaculture, agriculture (in particular, wine and fruit production) and forestry can serve as the foundation upon which a biotechnology strategy can be implemented in order to differentiate the Chilean biotechnology industry from the general trend of biomedical or genomic biotechnology development. The idea is to support with a range of biotechnology tools and processes the productive sectors that have significant participation in global markets and represent competitive advantages for the Chilean economy. In that way, biotechnology may be used to reduce production costs or exploit new resources.

In other words, a successful biotechnology strategy is to do with taking advantage of the leading position and reputation that Chile enjoys in several global markets. Altogether, the intention is to showcase Chilean biotechnology as a scientific innovation that would be responsible for complementing the competitive advantages and improving the value of the most competitive industries of the Chilean economy.

However, biotechnology companies and research institutions may complement their efforts in biotechnology development with the assistance of several Chilean institutions, where most of them are part of the science and technology development framework of the government.

Briefly, two general trends can be described from what is happening in biotechnology development in Chile.

First, big corporations like the Chilean Copper Corporation (Codelco) are recognising that some of their productive needs and competitive advantages must be optimised in order to keep their competitive fitness up to global market standards. Therefore, Codelco through its biotechnology partner company, BioSigma, is aiming at improving their current in situ bioleaching processes through the implementation of several biotechnology solutions. In this way, tailored solutions from the biotechnology arena are being developed to satisfy specific productive needs of a large business.

In contrast, in other productive sectors, such as agriculture and forestry, an alternative approach to include biotechnology as a tool for competitive improvement is being used. In this case, several stakeholders are grouped to form a cooperative consortium, where productive needs that generally affect the whole sector are being addressed. In this way, biotechnology development is seen as an alternative route to optimise the performance of the productive companies that form the alliance.

On the whole, biotechnology development in Chile is naturally evolving into two routes. The first one is to do with leveraging existing Research and Development resources from universities and research institutions to satisfy specific unmet needs of large businesses, while the other, is to follow the same principle but addressing unmet needs of productive sectors as a whole. In other words, the main difference relies in how the existing biotechnology resources are being pulled (scope and focus) to achieve either company - or industry -specific performance goals.

The following propositions represent two complementary approaches that aim at developing the biotechnology industry in Chile.

The Business Enhancer organisation should identify, structure and promote biotechnology business opportunities that could be transformed into new biotechnology companies or improve the turnover of existing biotechnology companies with the participation of investors.

The Business Enhancer should operate as an intermediary or facilitator entity that coordinates a number of biotechnology stakeholders in order to serve company-specific unmet needs of selected productive sectors.

According to Valenzuela (Valenzuela, 2003), the Consortium Strategy is to do with the management and investment schemes that the government should use to ensure the effective involvement of the private sector in biotechnology development.

In other words, the technological solutions would be developed in academic institutions but would be under the control of the consortium’s business mindset. In this way, the efforts would be focused on improving the capabilities and commercial activity of entire productive sectors, while at the same time, establishing meaningful industry-academia interactions that may take advantage of intellectual property assets, which may benefit the Chilean biotechnology industry as a whole

The strategies proposed represent a new way to help develop the biotechnology industry in Chile. First, they use unexploited resources (productive sectors, technology providers and government agencies) that are difficult to access through traditional biotechnology models. And second, they are exclusively focused on complementing competitive advantages of productive sectors with biotechnology solutions.

These models are mainly proposed with the intention of reducing the risk of failure and the cost of establishing new biotechnology businesses. For example, the Business Enhancer would encourage private or foreign investors to support the identification of biotechnology solutions for the unmet needs of the main productive companies in Chile.

In other words, it would provide bio-business opportunities to investors who wish to satisfy with biotechnology solutions the unmet needs of the main productive areas of the Chilean economy.

However, the Business Enhancer model assumes that the potential biotechnology solutions are already available among research and academic institutions. Therefore, no substantial Research and Development expenses should be made by the investors in order to set up a company that provides such solutions.

On the other hand, the Consortium Strategy is mainly focused on developing from scratch the biotechnology solutions tailored to each industry. In this context, government participation, through economic development agencies, would play a major role in the plan by initially assuming the risk of researching and developing new biotechnology solutions. In other words, the government would take the first mover risk, while at the same time, including relevant stakeholders as counsellors and minor investors.

Finally, it is expected that the shareholders involved with the Consortium Strategy would receive benefits (financial or strategic) directly from their participation in the new biotechnology ventures that would be established.

Altogether, both models present different ways of encouraging the engagement of relevant stakeholders to the strategies. For the Business Enhancer, industry engagement in biotechnology development may be improved because no economic burden would be borne by the productive sectors unless a ‘feasible’ biotechnology business opportunity is identified.  In the case of Consortium Strategy, industry involvement may increase because the government would initially cover Research and Development expenses. Hence, a considerable risk reduction for other partners involved in this initiative may be achieved.

DORNBERGER. U.Empresas Biotecnológicas en Chile (Estudio 1999). Biotechnology Companies in Chile (1999 Report). University of Leipzig, Small Enterprise Promotion and Training SEPT, Germany, 1999. 20 p.  

VALENZUELA, P.D.T. La estrategia de los consorcios. Revista Universitaria Chile, 2003, no. 81, p. 44-47. Portable Document Format. Available from Internet: http://www.puc.cl/ru/81/pdf/81_dossier_3.pdf.

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