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The news faces of BIOTECH

A new breed of entrepreneur is emerging in the region, taking advantage of the need to clean up production processes and bring down the price of the most widely-used medication.

by Gustavo Stock / Buenos Aires

It was not just another challenge. At the age of 19, the Brazilian Luiz Chacon Filho decided to combine his two --apparently contradictory-- vocations. He began to study business administration and, almost simultaneously, founded Super Bac Proteção Ambiental Ltda., a small biotechnology company.

This double play meant he did not have to choose between continuity and rupture. On the one hand, he accepted his family’s mandate to perform scientific research, but, at the same time, he vowed to back it up with his vocation for business. He thus established an iron rule within the company: Super Bac can only carry out research and develop products that respond to the demands of the market.

Chacon was the first to follow that creed, going out to visit the industries and businesses of Sao Paulo in order to discover their specific needs. That research yielded an innovative product: bacteria that convert the waste produced by industries and businesses into simple water and organic gas. Since then, Super Bac has dedicated itself to developing and patenting what today is its principal competitive advantage: a specifi c type of bacteria –with no genetically modifi ed microorganisms-- for each waste.

Today, 13 years after establishing that rule, Chacon has the satisfaction of having fulfi lled his mission. His company has around a thousand clients in Brazil and supplies its products to companies that range from Pepsico to L’Oreal, from Grupo Pao de Azucar to Kodak, and from Laboratorios Pfi zer to Sadia, among others. The size and quality of its portfolio of clients have boosted sales, which have been doubling each year since 2004. Next year, they are projected to grow still further to reach US$ 20 million.

Chacon is just one of the dozens of innovative leaders in biotechnology that are emerging –with increasing dynamism across Latin America. This new leadership has arrived at just the right moment. At a time when clean projects begin to generate both prestige and profi ts in Latin America, there is a bright future for initiatives betting on environmental sustainability. “Today everyone is aware that the lack of water in the planet is a very serious problem and that if we do not begin to develop sustainable products, we are heading for chaos,” Chacon says. “There will come a time when green, organic and environmentally friendly products will be the only option: they will become a commodity.”

Reducing environmental impact is also one of the goals of Biosigma, the biotechnology fi rm founded by Chilean state mining company Codelco –the world’s largest copper producer— and Nippon Mining, the mining arm of the gigantic Japanese industrial conglomerate. In the tomb-like silence of an austere building located in one of the new industrial zones of Santiago, Chile, around thirty scientists are working. Their task? To chop up the DNA of bacteria to search for and identify genes that can be used to make exploitation of the planet’s copper deposits cheaper and more efficient.

Biotech solutions in ore processing have become the industry’s Holy Grail. The large producers have contracted biologists, collected bacteria and equipped laboratories in the search for the missing genome. As well as the efforts to reduce environmental impact, the main aims are to reduce production costs and make it possible to exploit deposits with low ore grades. At the center of this crusade are advanced bacterial heap leaching processes --that is, the use of bacterial agents to accelerate and improve the process of separating the metals by spraying them with certain chemical compounds

Super Bac’s Luiz Chacon Filho accepted his family’s mandate to perform scientific research and backed it up with his aptitude for business

Ricardo Badilla, the chemical engineer who manages Biosigma, is currently in the process of patenting 75 bacteria and by 2010 expects to have certified the first industrial trials prior to beginning their marketing. A patent for a living organism collected from nature? Correct, but there is no need for alarm. The patent is only valid for the bacteria’s use in specific processes. So, if you have a bacteria in your greenhouse that gives your plants a fantastic color, but was patented for extracting arsenic from copper ore, for example, don’t worry. You won’t owe Biosigma a cent.

FROM THE LABORATORY TO THE GROUND

In May last year, Badilla took a crucial step in his career. At the end of that month, Codelco’s Andina division produced the first copper cathode by a heap leaching process using three bacteria, selected by Biosigma, that were given indigenous Chilean names: Wenelén, Licanantay and Yagán. The process was performed on a heap of 50,000 tonnes of copper ore situated amid the snow at over 4,000 meters above sea level, an eloquent demonstration that the process works not only in the controlled confines of the laboratory, but also in the tough conditions under which this industry works. “This is the first time that we have injected our bacteria into a system, which in combination with the native bacteria that were present, makes the process quicker and more efficient”, Badilla says.

Argentina’s Bio Sidus also has a mission to give birth --in this case literally-- to projects designed in the laboratory. In February last year, all the company’s energy was concentrated on a calf, measuring 60 centimeters and weighing 30 kilos. At first sight, Patagonia looked just like the thousands of other Jersey breed calves born each day in Argentina. But for Marcelo Arguelles, Bio Sidus’ president, that birth was a milestone in his life. After five years of research and an investment of US$ 4 million, Patagonia became the world’s first transgenic animal to carry an agent for the creation of human insulin in its DNA.

The achievement confirms Bio Sidus’ place in the big leagues of the region’s biotech companies. Indeed, the Argentine company became a member of a select club of just half a dozen companies in the world that are developing molecules for medicinal use in genetically modified animals. In addition, Patagonia’s birth, followed by other similar calves in the following months, opens the door to a gigantic market for Arguelles. The worldwide insulin market moves around US$ 5 billion a year. For starters, with just 25 transgenic cows Bio Sidus could supply the 200 kilos of insulin consumed each year in Argentina and at a cost 30% less than with the traditional manufacturing method. “Today biotechnology’s fundamental tools of production are cells and bacteria”, says Marcelo Arguelles. “New molecules are being discovered that require very high levels of productivity, some of which are not easily produced using traditional methods and so we have to start looking for alternatives in plants and animals”.

This is a path that Arguelles has been traveling since the end of the last decade. After inheriting Sidus, a traditional pharmaceutical company founded by his father and his uncle in 1938, Arguelles discovered that in order to take it to the next level, he had to bet, and heavily, on research. Today he is reaping the rewards. As well as Bio Sidus, the Sidus Group also controls Tecnoplant, a company that works in the production and breeding of transgenic plants and the production of biomolecules from plants. But everyone’s attention is concentrated on the “pharmaceutical dairy”, as they call it in the company. The first calf in the saga was Pampa, which, when it was born in 2002, became Latin America’s first bovine clone. A year later Pampa Mansa came into the world, produced from one of Pampa’s cells into which the human growth hormone gene had been inserted. This hormone is used in the treatment of hypopituitary dwarfism. The great advantage is that, since Pampa, just one ejaculation is sufficient to impregnate 200 cows, without the need to clone them.

This same path could be followed by the transgenic cows that secrete insulin in their milk. The great difference is that the market for insulin is much larger than that for growth hormone. “There are over 1.5 billion people in the world who do not have access to insulin for economic reasons and the possibility of producing it at a reasonable price is an enormous prospect for us”, Arguelles says.

One of Bio Sidus’ great advantages is Argentina’s wealth of livestock. And that kind of natural advantage is of no small importance for the growth of the region’s biotech companies. For Brazil’s Super Bac it represents one of its key assets. “In Latin America we have the Amazon region, the greatest nucleus of biodiversity on the planet, and that is a major advantage compared to our type of companies in other parts of the world”, Chacon says. Indeed, those advantages were very much taken into account when defi ning production strategies as it recorded breathtaking growth. In October 2006, Super Bac acquired 10% --with an option on another 10%-- of the capital of Bio Green Planet, the United States’ principal manufacturer of environmental biotech products. Chacon thus not only took a place on the board of directors, but also became one of the three shareholders with access to the formulas of the company’s products, together with the possibility of importing its production technology into Brazil. But, although the production of some of Super Bac’s products on an industrial scale is now taking place in the United States, the company will continue to develop its products in Brazil. The reason? Chacon knows that Brazil’s wealth of biodiversity is an advantage and he wants to continue taking advantage of it.

PREPARED FOR GROWTH

Although many biotech companies have not yet attained levels of sales suffi cient to propel them into the major leagues in the region, the good news is that they still have a promising future ahead of them. Super Bac’s next big step, for example, will be to sign an agreement to supply one of the main global retail chains with biological cleaning products for sale in its supermarkets outside Brazil. This will give an even greater boost to the company’s internationalization process. It already sells its products to markets like Mexico, Argentina, Chile, the United States and the Philippines. What’s new is that this drive is gaining increasing support. At the beginning of 2007, the Sofi sa Bank contributed capital of US$ 2 million to Super Bac. And there’s more. “It is on the verge of putting up fresh capital to continue with our expansion in the coming months”, Chacon says.

Biosigma also has an ambitious longterm vision. And the good news is that there will be more money to go looking for fresh challenges. Biosigma, which was founded in 2002, although it formally began its operations the year after, started with a small investment --US$ 5 million. That amount grew steadily to reach US$ 21 million by mid-2007 and another US$ 20 million has now been approved. These are still not large fi gures -especially compared to the pharmaceutical sector, which takes around 80% of world investments in biotech research-, but if Biosigma’s numbers are compared to investment in Latin America, the picture improves. “Our volume of investments is, by far, the largest among Chilean biotech ventures and, in mining, they are the largest in Latin America”, Badilla points out.

By 2010, Badilla’s aim is to have signed contracts allowing Biosigma to produce at least 50,000 tonnes of copper a year using a technological prototype that, in the long term, has the potential of achieving two very signifi cant goals: “To make possible the bacterial heap leaching of primary sulfi des and, in the long term, in situ mining”, he says. The term “in situ mining” refers to the possibility of injecting a deposit’s rocks with bacterial solutions that recover the copper content, without the need to dig those unsightly pits, hundreds of meters deep, nor to grind hundreds of thousands of tonnes of rock each year. To achieve this goal, the company has established its own network of researchers and has agreements with Chilean and Japanese universities, as well as with high-tech companies in the United States and Europe. It has around 60 researchers, including scientists and doctoral students.

Meanwhile, Arguelles’ bet for the future is the sale of products that Bio Sidus extracts from transgenic animals, in association with the major pharmaceutical companies, with which it already has licenses to export to the US hormones like erythropoietin, interferon, colonystimulating factor and interferon beta. “We hope that by 2009 we will be able to place our products in the US market and that this will allow us to fi nance our further development to complete the entire transgenic animals project”, Arguelles says. Where will this further development come from? One alternative is to cross two transgenic animals. That raises the possibility of creating third generation clones, which would shed light on the accumulation of genetic errors.

That would be one step further for Bio Sidus and for the biotech companies that are continuing on their path of expansion in Latin America. It is a propitious time for them. The need to reduce the cost of medication and to achieve cleaner production processes means that the market is taking increasing notice of biotech companies. Badilla, Chacon and Arguelles are at the front of a wave of new, innovative leaders that promises to swell in the region in the coming years. They are just some of the new faces of Latin American biotech.

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