Brazil as host

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Biotechnology is growing in Brazil but has not reached the level of other countries. The biotech industry in the country is about the size of biotech in Georgia /USA.

Part of the problem is that there is competition with other countries, particularly China. Part of the problem is the regulatory limitations in Brazil, particularly in the area of intellectual property rights (IPR). I see some signs, however, indicating that international companies, big and small, are interested in moving to Brazil. I got in touch with two of these companies — Amgen and Bio-Sourcing. Amgen is an old giant, and Bio-Sourcing is a small company that will be dealing in Brazil with genetically modified animals to express pharmaceuticals for the veterinary area.

Based upon the growth rates of about 12% per year of the pharmaceutical sector in Brazil, Amgen expects that the country will become the fifth largest pharmaceutical market in the world by 2015 (up from 8th today). Amgen hopes to make its medicines available to patients in major markets around the world, including Brazil and its quickly expanding middle class. A key element of Amgen’s strategy is to ensure that the medicines produced by the company will in time be recognized by the Brazilian government, medical professionals and patients as best-in-class. They believe that despite regulatory difficulties, Brazil provides a favorable environment for clinical trials.

Thus, Amgen will invest not only in clinical trials but also in scientific research to demonstrate the quality of their products in their main therapeutic areas: oncology, hematology, nephrology and bone health. Its development interests span areas as inflammation, neurology and metabolic disorders. Considering clinical trials, Amgen distinguished in Brazil an interesting multiethnic population with a balanced age profile, competitive costs and high quality of research standards and professionals. Laboratorio Bergamo, a local, traditional therapeutics company bought by Amgen last year, will produce products for clinical trials. One can see that Amgen took its decision after an in-depth analysis that might eventually be followed by other companies in the pharmaceutical sector.

Bio-Sourcing exploits a unique technological platform that they believe has become the world leader in animal transgenesis. Bio-Sourcing is thus able to provide the industry with a cheaper production process that is both flexible and environmentally safe, according to sustainable development standards. The company develops its own pipeline of innovative products. Its molecules are produced through genetic engineering, within the milk of big mammals such as cows or goats. To this day, milk remains one of nature’s primary products, and is recognized as safe by regulatory authorities. It also allows for direct delivery, thus avoiding heavy purification constraints. This technology is a new breakthrough in human and animal nutrition as well as in dermo-cosmetics. Moreover, it is highly suitable to the production of monoclonal antibodies at a very low cost. Lastly Bio-Sourcing aims to play a part on the animal selection market, by mastering cloning and animal transgenesis techniques.

Bio-Sourcing is the sole owner GTC world exclusive license, which includes its technology, its produced proteins, its means of production, and its technology transfer to Bio-Sourcing, as well as its patents on all sectors except human drugs. GTC has already registered a medicine produced through animal transgenesis, both to FDA and EMEA, which is currently administered to patients. GTC has also developed numerous molecules, the main part of which being monoclonal antibodies.

Bio-Sourcing’s managing team has entered into discussion, at the decision-making level, with a major group in Brazil focused on monoclonal antibodies. Those industrial discussions seek to validate bioproduction projects that would be of interest to industry leaders in the country and might work safely and with efficacy in Brazil, according to the regulation in place by the CTNBIO – Brazilian National Biosafety Commission.

On the one hand, BioSourcing will consider only products previously reviewed and approved by industrials. And Bio-Sourcing will allocate its production and development means to its Brazilian subsidiary.

Accustomed to Brazil’s language and culture, Bio- Sourcing’s CEO has already made contact with local players. Brazil is highly receptive to transgenesis techniques, but it also has attractive production costs, great know-how in milk industrialization and a dynamic internal market – all of which should help Bio-Sourcing succeed.

Bio-Sourcing already has its own patents, in particular regarding an innovative molecule that could become a blockbuster, thanks to multiple applications in different sectors. Its management team has experience as chairman, CEO, chief business officer and chief scientific officer in major international groups. Clearly, Brazil being a giant in animal husbandry has attracted Bio-Sourcing, but in this case the regulatory environment in Brazil might have played in its favor, too.

Luiz Antonio Barreto de Castro

The Patent System in Brazil

During the ’60s, biology was not patentable. Genetic engineering started during the ’70s, but it was called recombinant DNA technology back then. Investments made in this area demanded a solution for intellectual property (IP) rights being applied to biology.

Though living organisms were not patentable before, genetic engineering and particularly applications in the pharmaceutical area gave rise to the Trade-Related Aspects of Intellectual Property Rights (TRIPS) Agreement, which allows patent protection to be accorded to inventions in the area of Pharmaceuticals. (The TRIPS Agreement is Annex 1C of the Marrakesh Agreement under the World Trade Organization, signed in Marrakesh, Morocco on 15 April 1994.)

Brazil signed the agreement, with 13 other WTO members. When Brazil signed TRIPS, it automatically had to reorganize its patent regulatory system. Brazil then approved a patent law in 1996 (Law 9279) and the next year approved a plant variety protection law (Law 9456). These adjustments came a few years after TRIPS, and the Brazilian patent law incorporated what was minimally required in the TRIPS Agreement.

Our patent law offered the possibility to patent (recombinant) microorganisms that satisfied what was required for granting patents — a not-obvious invention. But it also provided the option to adopt a sui generis system (the UPOV system) to avoid patenting genetically engineered plants and animals – both not required by TRIPS. Patent law and the plant variety protection are hardly compatible (See Castro L.A.B. Revista da ABPI , March/April 2011). Those who have genes and protect the gene technology by the Patent Law also want to have the ownership of whole genomes of plants. The negotiation with agribusiness has progressed, however, since in Brazil farmers can measure the benefits and thus pay for the technology fees, mostly charged by large corporations. This has made Brazil second in the world to the USA in biotech crops.

The big disagreement came in pharmaceuticals. The Brazilian law incorporated TRIPS-endorsed principles that were never accepted by the international pharmaceutical sector, particularly compulsory license. The Brazilian law allows for patented products to be manufactured in Brazil if it’s deemed that prices established by pharmaceutical companies (mostly multinationals) are abusive.

Next the Brazilian government, under the stimulus of the health public sector, modified the Patent Law and established with ANVISA (equivalent to FDA in the USA and to EMEA in Europe) that those willing to patent in pharmaceuticals, and having applied for this purpose at the National Institute of Intellectual Property, needed an agreement from ANVISA. This rule makes the Brazilian process longer than any other in the world, and it is under judicial dispute.

The Brazilian Patent Law is very restrictive, as we can see in the Article 18 of the Law, which deals with biology matters. The Law 9279 prevents patenting parts of organisms, be it microorganism, plant or animal. Cells are not patentable .Genes are not patentable, unless essential for a patented process.

Biopharmaceuticals are not patentable. Molecules derived from the huge Brazilian biodiversity are not considered inventions even if these molecules are isolated and their function demonstrated. As a result Brazil has not one molecule patented from our biodiversity. In addition the general patent performance of Brazil, as compared to Korea, for instance, is extremely weak. The almost nonexistent number of patents from Brazil deriving from our biodiversity has been previously discussed on this blog.

Patenting is an essential instrument for partnerships, which is an absolute requirement for the pharmaceutical industrial sector in Brazil, that is funded with national money, to partner with large corporations (which have been in Brazil for decades, some for a century) to ascend to the large international market. This strategy is the only one that will allow these “native” pharmaceutical companies to become relevant actors in the international scene. Fortunately, the private sector is aware of the importance of patents as an instrument for partnerships. Thus partnerships are occurring in Brazil, despite of our patenting restrictions in biology. As result the Brazilian pharmaceutical industry is growing and is responsible today for 40% of the market in Latin America. The demand for pharmaceuticals is growing at 10% per year. In fact Brazil is leading an emerging biotech boom in Latin America. But it could do a lot better if our regulatory patents system was reviewed.

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Patents granted by the USPTO for selected countries – " pedidos" = deposits ; " concessões " = granted.**

Luiz Antonio Barreto de Castro

Brazil’s laws

Biotechnology development in Brazil is moving, but slowly, due to the lack of (1) investments from the private sector and (2) a clear and consistent exercise of the Brazilian patent law (9279/96). In this commentary we will deal with the first issue and in the next with the patent context.

Science in Brazil has progressed considerably in the last couple of decades. Science output in Brazil was multiplied by five since 1980 and Brazil contributes close to 3% to the world scientific output.

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Figure 1 – Brazilian scientific output with respect to the world (indexed by Thomson/ISI), and to Latin America from 1981-2008. In green: Brazilian output with respect to the world. In blue: Brazilian output with respect to Latin America.

When we compare the public investment made in Brazil to the same public investments made by developed countries the numbers are similar. However private investments are far from what one can see in the same developed countries. For this reason, combined Brazil invests slightly above 1.0% of its GNP in science and technology.

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Figure 2 – Public and private investments in science and technology by country as % of the GDP. Public (yellow) Private (blue)

Brazil established recently two laws to stimulate private investments. The Innovation Law, December 2, 2004, and the Good Law, November 21, 2005. The last one was complemented by a Decree, on June 7, 2006, which in chapter III Articles 17 to 26 states that those entrepreneurs active in technological research and innovation can automatically deduct this investment from the income tax. In summary the government renounces to receive the tax as long as the money is invested in technological development and innovation. Both laws are recent and the results, although moving up, are still modest. In 2006 private companies invested 0.09% of the GNP.

In 2008 these investments climbed to 0.3 % of the GNP. The number of private companies in 2006 was 131 and the fiscal incentive US$1.4 billion. In 2009, 635 companies deducted from their fiscal taxes US$5 billion.

There are flaws: entrepreneurs complain that calculations are complicated (services are now available to help) and they fear that when they submit their deduction proposal the financial system will contest what they presented as technological development or innovation. Another flaw is that the laws do not benefit nascent and small companies – in other words, companies typical of the biotech sector. For this reason few biotech companies (particularly in the area of health) are benefited. Risk capital to move up small companies is still a problem in the biotech sector. Brazil has supported these small companies through another mechanism (I’ll discuss it later). The system helps these companies but they hardly are funded to scale up their business.

Luiz Antonio Barreto de Castro

No Genes, No Future

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The biotech industry relies strongly on genetic engineering, and on genes being characterized and properly expressed. This was clear to me more than three decades ago, after Herbert Boyer expressed in California the insulin gene in E. coli. I’m a member of the Brazilian Academy of Science, and since the ‘80s, I’ve stated that countries that do not identify genes will never build a competitive pharmaceutical industry, or agbusiness industry, or, more recently, biofuels industry.

Well, Brazil does not have its genes, as they say. And its pharmaceutical industry has accumulated a US$7 billion debt, when comparing sales to importing. The genes coding for the enzymes capable of converting cellulose to ethanol will come from large corporations, such as Novozymes, Amyris and Ceres – all of which are already working in Brazil, benefiting from its sugar cane industry. Monsanto acquired Alellyx and CanaVialis, both related to sugar cane.

Because it’s important for Brazil that the best technology reaches consumers, I do not criticize that. Good partners are of course welcome. The problem is that when we move to agriculture, Brazil does not have a clear strategy to identify and use the genes needed for the plants of the future. Nevertheless Brazil is second in genetically modified organisms (GMOs) cultivated, behind only the US. So what is the problem? The price we have to pay for the genes.

The RR gene from Monsanto, for making plants tolerant to glyphosate, last year cost Brazil US$200 million for our soybean farmers. That weakens Brazilian competitiveness. Other necessary plant genes are in the hands of the large corporations. We can imagine that Brazil won’t be able to compete with China in the cotton business unless Brazil does not need to pay for the genes to the Bt technology. China has its own Bt genes, after all.

Fortunately for Brazil, we have a unique Bt gene toxic to Boll weevil, coming from Embrapa, the Brazilian Agriculture Research Corporation. Boll weevil costs to the cotton farmer $150 per hectare. EMBRAPA has a rich Bt collection with 4,000 mutants, and other Bt genes may be there. But it begs the question: Why doesn’t Brazil have the genes to build the pharmaceutical industry?

Laws, in effect prevent scientists from finding these genes in our own biodiversity – a problem that has existed since 2000 and controlled by the Ministry of Environment. There is a council called CGEN, but it does not operate. It is so prohibitive, it prevents The Butanta Institute from working with its own snakes (which they have being doing for more than a century), unless authorized by this law. Institutes like Vital Brasil, in business for more than century, suffer from the same fate. More than a hundred cases are suing scientists and institutions for collecting plants without authorization from the Brazilian Institute for the Environment and Renewable Natural Resources (IBAMA) – the right arm for the law. Even though he was authorized, researcher Elibio Rech, from EMBRAPA, was fined 100,000 reais (US$45,000) because he developed a technology from a spider web coding gene. He’s allowed to do the science, but not develop a technology. Then what is Brazil’s famous biodiversity good for?

This never happened, of course, with the Canadian Air Force, which has used this spider gene for more than a decade. The law (called a provisional measure) has been a disaster for the Brazilian biotech industry. We tried to get a new law passed for the past 10 years, but never succeeded. Brazil cannot waste more time. Will we develop the Bt genes? Who knows. The matter should move from the hands of the Ministry of the Environment, to the hands of the Ministry of Science and Technology, which previously had control of such matters through the National Council of Research – all of which was before the Biodiversity Convention and before the passing of the provisional measure just mentioned.

What do I think should happen to the provisional measure? It should disappear, legally. It is judicially possible for this to happen.

Luiz Antonio Barreto de Castro

Brazil Feeds the World

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Brazil produces almost 150 million tons of grain in 50 million hectares, and it multiplied grain production by four in the last four decades. It can double again that figure without destroying the Amazon or the Cerrado. Here’s how.

This started in 1965, when Brazil established its first law to regulate the commercialization of seeds. When the Brazilian Enterprise for Agricultural Research (EMBRAPA) was created in the mid seventies, Brazil started training plant cell, molecular, and developmental biologists. Then Sectoral Funds were created in the ’90s for areas such as biotechnology and agribusiness. Without those developments, the seed industry would not have flourished in Brazil, and this industry was essential for biotech crops later developed.

When Herbert Boyer expressed an insulin gene in bacteria, I was a freshman PhD student studying plant physiology at UC-Davis, being funded by EMBRAPA. That achievement alerted us that the world was going to change. Genetic engineering was the most important science discovery, after the genetic code itself.

When I returned to Brazil, I was hired by EMBRAPA in 1981 to build agricultural biotechnology at a research center called CENARGEN in Brasilia. It was eventually named the National Research Center for Genetic Resources and Biotechnology. At this point, not one plant had been engineered, and when, in 1985, Brazilian scientists visited Europe to discuss biotech, we had nothing to offer.

Twenty-five years later when we came back to the same institutions, everything had been modified. Now we can express any gene of any organism in plants, and plant molecular biologists team up with plant breeders to create plants for the tropics. When the necessary genes are not available, we settle partnerships with gene companies. Also, EMBRAPA established the Foundation Seed Program, inspired by the US system, and this offers transgenic seeds to companies, big and small. This means that even small companies can compete if the quality of the seed is good.

Scientists in Brazil in the future hope to make grasses that fix nitrogen, so that poor people do not have to buy urea to use as chemical fertilizer, which pollutes the soil and the water. EMBRAPA scientists will release the first green beans engineered to become resistant to the Golden Mosaic Virus, using RNA interference technology.

Few countries made use of the gene revolution, particularly as related to developmental biology, to advance agriculture as we did in Brazil. We verified that genes do not have to be transferred as transgenics require, because genes are common to all species. The strategy is to release genes, such as the anti-fungic dermaseptin peptides found in frogs, to work as anti-fungic peptides in soybeans. This concept is called intragenic by Carlos Bloch, a scientist from EMBRAPA, which today is the largest of its kind, with offices in the five continents.

That’s solid progress, but the question is, why did it take so long to see biotech crops released in Brazil? We had a biosafety law in operation since 1995, but literally lost 10 years disputing the judiciary in Brazil, which took sides and made political decisions against science and scientists.

After 2005 everything changed. A new biosafety law stimulated the combination of tropical genetics and biotech so much that Brazil is second only to the US in biotech crop production. We have few plants entirely engineered in Brazil, but Brazilian corporations take advantage of our breeders’ expertise and release the best crops for all Brazilian biomes. Still, the gene revolution has not resolved a few important things.

We still have not produced plants that can defend themselves against bacteria and fungi. This technology is available in the US and at the Fraunhofer Institute in Germany. Few institutions have reliable genes to generate plants resistant to drought and to soil aluminum toxicity that together affects more than 80% of tropical soils.

There is work to do, but Brazil can make the gene revolution work in the same direction as the green revolution did decades ago, by the hands of Norman Borlaug with more powerful science tools available. 

Luiz Antonio Barreto de Castro