The missing link
By : Anna Kocinska
Tadeusz Pietrucha, the director of Lodz-based Bio-Tech Consulting, will hold the second annual Bio-Forum in May, which he says is aimed at bringing biotech science and business together.
"So far, it's like being sent out on a mission," Pietrucha said. "There are only a few companies in Poland that are already doing something in biotechnology, but at least we found out that they exist."
Pietrucha is one of few people in Poland who, despite a gloomy picture painted by both scientists and businessmen, maintains that Polish companies and researchers will at least be able to start developing biotechnology for use on the domestic market.
Pietrucha established Bio-Tech in 1996, but the company only rose to prominence in 1998 after the launch of the firm's Internet service, which was an instant hit among scientists and later, businessmen. "We are now close to launching a small portal that will be similar to the U.S. biotech services," Pietrucha said.
The firm's Web site contains a list of Polish companies involved in biotechnology. The list is alarmingly short. "Apart from those few companies already doing business in biotech or potentially interested in it, there is a group of entities merely standing on the sidelines," Pietrucha said. "I think that pharmaceutical companies are most likely to respond to the biotech challenge because they're watching U.S. companies producing medicines from genetically modified proteins and they know that's where the money is."
Applied science
Magdalena Fikus, a genertics professor in Warsaw, advocates a practical approach to scientific research.
According to Magdalena Fikus, a genetics professor at Warsaw's Biochemistry and Biophysics Institute, biotechnology started to develop in the United States in the late 1970s in small laboratories set up to test scientific concepts. "They were risking possible failure, but creating the know-how for large pharmaceutical companies they had contracts with," Fikus said. "Once a project was completed, the lab would sell the license to a larger corporation."
U.S.-based Genentech, which created recombinant human insulin for mass production and later sold its license to pharmaceutical giant Ely Lilly, is a perfect example of biotechology's beginnings, Fikus said. "While today, in my opinion, the U.S. market is dominated by large concerns with their own research centers, small research companies with a clearly set commercial goal could be a solution for Poland," she said.
Unfortunately, though, with 1,000 scientists employed in biotech research and 1,670 students beginning biotechnology studies every year, few are interested in the more practical uses of scientific research, according to Bio-Tech Consulting.
"What we have in Poland is only basic research, and no research and development (R&D) companies to apply scientific projects," Pietrucha said. "If Polish companies are to be interested in scientific projects, such projects have to be practically oriented. And in the West, promising scientific concepts are taken to the next applicable level in small R&D companies."
According to Fikus, Poland has scientists ready to pass on the potential glory of making laboratory discoveries and concentrate on more practical activities. "I think that working on something that may provide predictable practical satisfaction in the end will excite many," she said. "It's true that industrial application used to be perceived by scientists as something low, but even (Stanley) Cohen and (Herbert) Boyer, who improved methods of DNA recombination, applied for industrial patents and many famous scientists meet in the supervisory boards of different firms." According to Pietrucha, Bio-Tech's current mission is to find people less interested in "scientific firecrackers" and ready to commit themselves to application studies. "It's going to be a long process but gradually scientists may limit their ambitions and companies will learn to communicate with the world of science," he said.
Wanted: biotech aficionados
During the last two years, the U.S. biotech industry stagnated while venture capital (VCs) funds focused on Internet investments. But announcements that the human genome has been mapped might help attract venture capitalists' attention to the biotech sector, where many companies are unprofitable or don't have the surplus revenue to invest in an unpredictable future. And investing in biotechnology is expensive. Celera Genomics, whose owner is Applera Corp., announced in February that it had received a $20 million grant from the National Heart, Lung and Blood Institute and the National Human Genome Research Institute to sequence the lab rat's genome.
"The question is who is going to pay for biotech in Poland," Fikus said. "Genentech, for many years, had to be financed and Polish firms cannot afford to take such commercial risks and finance research that might fail."
According to a report compiled by the Biotechnology Committee in 1995, Poland's capitalists are not ready to invest in such a risky venture as biotechnology. Since the report was published six years ago, not much has changed.
While in the United States investing in start-ups is the norm, in Poland large pharmaceutical companies are not forming alliances with biotech start-ups and venture capital firms, which invested heavily in the Internet but don't appear to be interested in biotechnology.
"We are not actively pursuing it now, but if something interesting comes along we will exploit it, but no excellent opportunities have presented themselves yet," said Robert L. Conn, managing partner and cofounder of Innova Capital, a private equity firm that manages Poland Partners L.P. and Innova 98 and is starting a third fund. According to Conn, it is important to remember that the differences between the United States and Poland begin with the fact that the U.S. tech-heavy Nasdaq index has been an essential component in the success of U.S. biotech venture capital firms achieving above-average returns. "Additionally, our partners on the ground are not sufficiently specialized in the area to create deals and we have not yet seen strong evidence that Poland could become a major center of excellence in the field and we have not yet seen strong investment proposals in the area," Conn said.
He said that biotech is a global business and Polish companies might not have the means to access global research talent and generate alliances to gain access to global distribution channels. "It all requires a global perspective," Conn said. He added that there are practically no similarities between the Internet and biotechnology as far as the Polish market is concerned. "The Internet is simply application and not research," he said. "It's something even I could learn in a couple of years. Secondly, biotech is not globalized like the Internet. It requires a lot more capital and above all it's essential to get to the distribution channels, which are obvious with the Internet. So parallels between the Internet and biotech start with the word 'start-up' and that's where they end."
According to Bio-Tech's Pietrucha, no company in Poland will risk its own cash as long as the government doesn't also provide funding for biotech start-ups. "In Germany, the government invested a huge amount of money to establish and finance R&D companies located in research centers, which I call incubators," he said. "It's where groups of researchers work on the commercial application of scientific projects. They should be established in Poland." According to the German Education Ministry, last year the government spent DM 400 million on biotech R&D.
"The German government decided that it needed to develop a biotech industry and made grants and loans available to selected areas within Germany, intending to focus biotechnology in three regions," said Rob Arnold of PricewaterhouseCoopers in London. "This has now been expanded by other policies to establish biotech in parts of the former East Germany, also with government funding. Then VC funding followed and Germany now has as many biotech companies as the U.K. (around 300 compared to 1,300 in the United States)."
In Western Europe, special biotech development programs were already being introduced by the 1980s. From 1982-1986, the European Economic Community's (EEC) Biotechnology Committee had an ECU 50 million budget and spent ECU 3.2 million on 77 grants. But the Polish government cannot afford to finance the biotech sector. In 2000, zl. 630 million ($157.5 million) equal to 21.6% of state funds allocated to science were to be spent on research, estimated the Research Committee (KBN), responsible for distributing state research funds. Biotech scientists were only able to use a small portion of those funds. In 2001, in accordance with KBN's prognosis, research funding will increase up to 27.3% of total funds for science and amount to zl. 901 million ($225 million). "It saddens me that politicians still don't understand that the government should support high-tech in Poland," Pietrucha said.
Settlers in a new territory
Pipe cleaner: Pawel Styczynski is an adviser toHantpol, a Warsaw-based biotech company thatsells water-treatment products.
According to scientists, a lack of funds is not the only problem for Polish biotech pioneers. "We need to decide how to profile the development of biotechnology in Poland," Fikus said. "Today, the world biotech (industry) is going in two directions: medicine and drugs, and genetically modified plants. I don't think Poland could ever successfully compete on the drug market." According to Fikus, the cost to introduce a new generation of drugs can run as high as $1 billion in the United States. "We cannot even dream about this kind of money, so it might be better to orient our efforts elsewhere," he said. "Where? Genetically modified food might be our domain but Europe doesn't want it."
According to Pawel Styczynski, an adviser to Hantpol, a Warsaw-based biotech company specializing in environmental protection, the chances that Poland will catch up to the rest of the world in producing costly technologies are low. "While it's possible for us to export bio-products for cleaning water pipelines to the U.S., I don't think any company could do the same when it comes to mapping the human genome," Styczynski said. "We (in Poland) can't afford such research."
Hantpol was established by a group of scientists in 1991 and today it sells 50 tonnes of bio-products used to treat water. "We have more than 200 clients and our products are used in water treatment plants, office buildings, hypermarts and hotels," Styczynski said. Additionally, 50% of Hantpol's revenue is generated by exports to Slovakia and the Czech Republic, and the company also plans to enter the Russian market. But according to Styczynski, the demand for biotech products is still low in Poland. "We don't necessarily tell our customers we will use biotech methods to solve (their) problems because we know it doesn't mean anything to (them)," he said.
Meanwhile, more then 1,600 young Poles enroll in 20 universities and polytechnic institutes offering biotechnology studies in Poland every year.
"The best students choose biotechnology and new biotech faculties are being opened because they (students) know biotechnology is flourishing worldwide," Fikus said. "But as a result, what we get is only the base, intellectual potential and there is no one to use that talent." Many biotech graduates never work in their profession and the five years they spent studying biotechnology might seem like a waste of time. Fikus, however, is still optimistic. "Maybe we should concentrate on what we are good at, meaning basic research," she said. "We (in Poland) are world class in basic research so maybe it's better not to assume that we will produce a drug to fight cancer."
