Biotechnology Innovation System in Brazil Study: Evolution, Challenges, and Future Prospects

1. II BRICS WORKSHOP BIOTECHNOLOGY INNOVATION SYSTEM IN BRAZIL: AN EXPLORATORY STUDY Valéria Judice e Conceição Vedovello Rio de Janeiro, 26 de abril de 2007 Title Summary Introduction Objectives Methodology Theoretical Framework Biotechnology Innovation System Preliminary conclusions

2. INTRODUCTION Reviews of biotechnology evolution - Last 30 years Knowledge-based industry, multidisciplinary Different areas: health, agriculture, food processing, environment, new materials , new sources of energy Brazil: State of the art scientific developments: genomics, proteomics, pharmacogenomics Industry – around 300 companies (Biominas / MCT, 2001) Title Introduction Objectives Methodology Theoretical Framework Biotechnology Innovation System Preliminary conclusions Research question: How are evolving knowledge flows, interactive learning, entrepreneurial and innovation action within Brazilian biotech?

3. OBJECTIVES General: to establish theoretical and empirical elements to analyze biotechnology developments in Brazil within theinnovation systems (IS) framework Innovation system is understood: - As a focusing device to contextualize knowledge creation and diffusion processes - As policy and development instrument. . Title Introduction Objectives Methodology Theoretical Framework Biotechnology Innovation System Preliminary conclusions

4. SPECIFIC OBJECTIVES 1)to focus on Brazilian biotechnology IS and explore three sets of elements: - knowledge and technologies, - actors and networks - institutional (policy) aspects; 2) to map the main concentration and irradiation areas of biotechnology development in Brazil (critical geographical areas); 3) to offer common bases to comparisons of biotechnology IS within the BRICS group. Title Introduction Objectives Methodology Theoretical Framework Biotechnology Innovation System Preliminary conclusions

5. METODOLOGY - DEFINITIONS • Terminology • Biotechnology refers to a broad and complex set of enabling technologies which have in common the use of biological cells or molecules applied in the production of products and services for the development related to life sciences, biology, chemistry, medicine, agriculture and computation sciences (bioinformatics), among others. The bioindustry has diverse applications • Scope • Exploratory study – empirical research is focused on the systemic elements in three states where the strongest and most impacting biotechnology developments have taken place in Brazil: São Paulo; Minas Gerais and Rio de Janeiro Title Introduction Objectives Methodology Theoretical Framework Biotechnology Innovation System Preliminary conclusions

6. METHODOLOGY Literature review, secondary data collected Primary data collected: questionnaires to 50 Brazilian companies (in 2001) to 48 companies (2004) in-depth interviewing 10 company directors, CEOs and managers; case studies preparation (2005,2006) interviews with scientists and policy makers Brasília, Rio de Janeiro, Belo Horizonte and São Paulo (2006, 2007) Title Introduction Objectives Methodology Theoretical Framework Biotechnology Innovation System Preliminary conclusions

7. THEORETICAL FRAMEWORK Biotechnology innovation systems perspectives: national, regional, local, technological, sectoral. National approach: National and sub-national approaches of biotechnology are the most frequent in the literature. Geographical basis for contextualizing technological and sectoral aspects. Country specific factors in the development of the biotechnology industry Authors: Senker and van Zwanenberg, 2000, 2001; Mehra, 2001, Bartholomew, 1997, Chaturvedi, 2003, March, 2003; Kaiser and Prange, 2004; Gittelman, 2006; Mets, 2006; Wu, 2006; Marques and Gonçalves Neto, 2007. Title Introduction Objectives Methodology Theoretical Framework Biotechnology Innovation System Preliminary conclusions

8. THEORETICAL FRAMEWORK Sub-national (regional) approach: Addresses the problem of variety within national borders; analyze sectors, clusters interaction with the regional governance and innovation support infrastructures Overlapping of regional innovation systems and clustering processes [1] - extensive publications on biotechnology cluster and geographical concentration. Authors: Prevezer, 1997; Audretsch, 2001; Porter, 2001; Cooke, 2001a, 2003, 2004a; 2004b; Cooke et al, 1997: Koput; Bowie; Smith-Doerr, 2002; Casper; Karamanos, 2003; Feldman; Francis, 2003; Kaiser, 2003; Niosi; Bas, 2003; Kaufmann; Schwartz; Frenkel; Shefer, 2003; De Vol; Wong; Ki; Bedroussian; Koepp, 2004; Nelsen, 2005. [1] Local Productive Arrangements, LPA in Brazil Title Introduction Objectives Methodology Theoretical Framework Biotechnology Innovation System Preliminary conclusions

9. THEORETICAL FRAMEWORK The sectoral approach Departs from geographic boundaries and defines the unit of analysis by associating interdependent organizations which operate the same product market, across nations or regions. (Malerba, 2002, 2005) The technological approach Privileges the composition of technological competences underpinning innovation across sectors. (Carlsson, 2002) Title Introduction Objectives Methodology Theoretical Framework Biotechnology Innovation System Preliminary conclusions

10. THEORETICAL FRAMEWORK In this study: the basis for definition of the biotechnology innovation system incorporates technological and sectoral innovation systems perspectives Supplementing the technological perspective with the sectoral perspective makes it possible to subdivide the biotechnological innovation system into sectoral sub-systems (Carlsson and Stankiewics, 2002; Malerba 2002, 2004, 2005). Title Introduction Objectives Methodology Theoretical Framework Biotechnology Innovation System Preliminary conclusions

11. Technologies: - Maturity / emergent - Composition (heteorogeneous/ homogeneous) - Localization (local, global) Systems: Levels of analysis Technology and knowledge Products Technology competences Boundary delineation What is the technology /knowledge field? Boundaries change over time Actor belongs to the system? Performance Complexities of assessment Emergent systems System integration Knowledge flows and networks Diffusion of knowledge, interaction and learning BIOTECHNOLOGY INNOVATION SYSTEM Title Introduction Objectives Methodology Theoretical Framework Biotechnology Innovation System Preliminary conclusions Figure 1: Biotechnology technological system of innovation

12. Technological: Regimes Opportunities Apropriability Cumulativeness Agriculture Food Pharma Biotechnology Knowledge base Energy Public Sector Healthcare Chemistry System integration Knowledge flows and networks Diffusion of knowledge, interaction and learning BIOTECHNOLOGY INNOVATION SYSTEM Title Introduction Objectives Methodology Theoretical Framework Biotechnology Innovation System Preliminary conclusions Figure 2: Biotechnology sectoral system of innovation (and sub-systems)

13. Knowledge and technologies Actors and networks Institutional aspects Exploitation of basic science ( training of HR and learning) Integration of heterogeneous knowledge Exploration of markets potentials and reality Companies Scientific research Government Venture capital Public and private finance and investment Institutional arrangements Policy making Normative Rules of governance (regulatory framework: intellectual property ) Cognitive, cultural BIOTECHNOLOGY INNOVATION SYSTEM Title Introduction Objectives Methodology Theoretical Framework Biotechnology Innovation System Preliminary conclusions System integration knowledge flows and networks Diffusion of knowledge, interaction, learning Figure 3: Key dimensions of Biotechnology Innovation Systems

14. BIOTECHNOLOGY INNOVATION SYSTEM • 1. KNOWLEDGE AND TECHNOLOGIES • Exploitation of basic science – knowledge diffusion, learning , training HR • Evolution of biotechnology research in Brazil from 2002-2004 (CNPq database) • Comparative data on: • Indexed paper biotechnology publication - 1991-2002 • BRICS (Brazil, India, China, South Africa) and other (South Korea,Cuba, Egypt) • Biomedical USPTO patents - 1990-2003 • BRICS (Brazil, India, China, South Africa) and other (South Korea, Cuba, Egypt) Title Introduction Objectives Methodology Theoretical Framework Biotechnology Innovation System Preliminary conclusions

15. BIOTECHNOLOGY INNOVATION SYSTEM USPTO biomedical patents (1990 to 2003): South Korea (337) India (178) China (98) Brazil (44) Cuba (29) South Africa (29) Egypt (10) Title Introduction Objectives Methodology Theoretical Framework Biotechnology Innovation System Preliminary conclusions

16. BIOTECHNOLOGY INNOVATION SYSTEM 2. ACTORS AND NETWORKS 40 to 60% of scientific research; 81% of companies: SP, MG and RJ São Paulo - Knowledge leadership and the pervasiveness of the genomic network model - the ONSA organization process Minas Gerais – the opportunity nexus, the anchor company and a biotechnology local productive arrangement (LPA) - Biobrás case Rio de Janeiro - Constructed advantages of public goods – Oswaldo Cruz Foundation, UFRJ, Bio-Rio Title Introduction Objectives Methodology Theoretical Framework Biotechnology Innovation System Preliminary conclusions

17. BIOTECHNOLOGY INNOVATION SYSTEM 3. INSTITUTIONAL ASPECTS Strengthening the interaction among actors Restrictions to consolidation of innovation systems in developing economies (a) lack of comprehension of aspects that influence or difficult production, dissemination, utilization of information, knowledge and technology within entrepreneurial activities (b) when obstacles are identified: lack of capacity for overcoming them (c) lack of national policy design driven to development promotion that require and stimulate innovation in terms of industrial policy. Title Introduction Objectives Methodology Theoretical Framework Biotechnology Innovation System Preliminary conclusions

18. BIOTECHNOLOGY INNOVATION SYSTEM BRAZILIAN INNOVATION SYSTEM IN BIOTECHNOLOGY Complexity and sophistication of methods, the employment of multidisciplinary approaches, and high costs involved in financing research. Differentiated management is required whether biotech is to be made competitive: • Appropriate environment based on strong basic and technological research, • Incentives to the establishment of “start up” enterprises, expertise to transform knowledge into products, services and processes. • Needs of legal framework in order to deal with intellectual property, standardization, control and quality certification, biosafety and bioethics. Title Summary Introduction Objectives Methodology Theoretical Framework Biotechnology Innovation System Preliminary conclusions

19. BIOTECHNOLOGY INNOVATION SYSTEM BRAZILIAN INNOVATION SYSTEM IN BIOTECHNOLOGY Institutional building up and financial support Decade of 1970 - training of HR; support to scientific and technological institutions, creation of Cenargen Decades of 1980-1990 - ABRABI, PRONAB; Program on Endemic Diseases (PIDE); Program on Genetics (PIGE); PADCT; RHAE; CBAB; CTNBio ; Bio-Rio; Biominas; Center for Biotechnology-RS, BIOAGRO, TECPAR, (Center for Molecular Biology of Paraná State); From late 1990’s onwards - Pluriannual Program of the Federal Government (PPA), National Program of Biotechnology and Genetic Resources (Genomic Program);Sectoral Funds for supporting S,T&I , Competitiveness Forum of Biotechnology. 2006-2007 Industrial, Technological and Trade Foreign Policy (PITCE);Biotechnology National Policy – Biotechnology Policy: Protection and Development (MCT and MDIC). Title Summary Introduction Objectives Methodology Theoretical Framework Biotechnology Innovation System Preliminary conclusions

20. PRELIMINARY CONCLUSIONS • Study is exploratory. It was aimed at establishing theoretical and empirical bases to analyze biotechnology developments in Brazil using the innovation systems (IS) framework. • The study was also oriented to provide comparable IS information within the BRICS countries group. 3. Substantial human resources, research and educational infrastructure have been built up in Brazil. However, biotechnology research is concentrated in Southeast, particularly in the states of São Paulo, Minas Gerais and Rio de Janeiro. Data collected on research groups in the country (CNPq database) showed that the Southeast region is responsible for no less than 40% of biotechnology research to 60% Title Introduction Objectives Methodology Theoretical Framework Biotechnology Innovation System Preliminary conclusions

21. PRELIMINARY CONCLUSIONS 3. The organizational patterns of biotechnology industry are established in localized agglomeration areas (clusters and LPAs). About 81% of the companies are in SP, MG and RJ, 4. Collaborative arrangements and alliances involving five main actors: universities; biotech companies; pharmaceutical; government (policy, regulatory aspects), and finance (vc, public and private funding). 4. Small to medium-sized biotechnology-based enterprises, foreign and national pharmaceutical firms are currently in operation in the country. 5. Expanding the system’s capacities in innovation, sustainability and competitiveness in the future are challenges that require a strategic effort by industry, universities, R&D&I, and adequate supporting policy and governmental action in regulatory and financial fronts, as well as other relevant institutional and promotion schemes. Title Introduction Objectives Methodology Theoretical Framework Biotechnology Innovation System Preliminary conclusions

22. PRELIMINARY CONCLUSIONS 6. Main challenges involve:continuity of S,T&I policies and programs, investments; improvement of links among public and private actors; improvement of expertise integration; convergence of regulations derived from different Brazilian surveillance agencies and institutions; adjustments of legal framework - international /Brazilian; strengthening of entrepreneurial culture; consistent approach to ethical issues biotechnology.implementing a reasonable approach to biotechnology issues: more technical than political and ideological contents. Title Introduction Objectives Methodology Theoretical Framework Biotechnology Innovation System Preliminary conclusions