Brazilians plan to turn rainforest into money
Copyright 2001 Financial Times
August 27, 2001
By Geoff Dyer
Until only a few years ago, an adventurous scientist looking to tap the potential of the Brazilian Amazon would carry a sturdy knife, a detailed map and perhaps a pith helmet.
Today's Amazon researcher needs a doctorate in a cutting-edge field of science, a bank of sophisticated computers and a working knowledge of American and European patent law. Botany is giving way to biotechnology.
Antonio Paes de Carvalho is a member of this new but controversial band of Brazilian "bio-prospectors" who are trying to turn Brazil's many tropical plants into patents and profits.
"We are using top-class science to add value to the country's huge genetic patrimony," says Mr Paes de Carvalho, a former biophysics professor who now runs Extracta, a company that uses computers to screen plants for properties that might have a medical use.
For his supporters, he is at the forefront of a new industry with limitless potential in Brazil that will show patents can work for poor as well as rich countries. Critics fear, however, that companies such as Extracta are selling genetic treasures to drugs multinationals with little return for the country.
Although bioprospection, the process of turning the natural world into medicines, has an extremely low success rate, executives believe Brazil has a great opportunity. After all, around 20 per cent of the species of plants in the world can be found there, spread among the Amazon and Atlantic rainforests, the Pantanal wetlands and the central plains.
As in all new industries, there are dizzying projections of future wealth. Two government officials tried to calculate the value of Brazil's biodiversity and came up with US$2,000bn, nearly four times annual GDP - although investors burned by the internet will be wary of this type of number-crunching.
Brazil's scientific community is also flush with success after local researchers became the first group in a developing country to master genetic sequencing.
Having deciphered the genetic make-up of bacteria that attack orange plants - a feat celebrated on the front cover of Nature, the science magazine - the Brazilian scientists are now trying to sequence genes expressed in human cancer tumours, and the genes of sugar cane and eucalyptus.
"It was good science, it looked at an organism relevant to Brazil and it helped train a lot of people in genomics," says José Fernando Perez, director of science at Fapesp, the Säo Paulo state research foundation that sponsored the research.
"We don't really have a tradition of companies investing in science, but that culture is starting to change."
The country's biotechnology potential has become a weapon in the debate over a 1996 patent law, which critics claim protects the interests of drugs multinationals over local health needs. "Without a patent law, no-one would invest in biodiversity," says Mr Paes de Carvalho. "Anything a researcher discovered would not have been protected."
Based in Rio de Janeiro, Extracta is one of many biotech companies that have sprung up in recent years to try to use these assets. It has 30,000 samples of plants that clients can ask to be analysed for specific qualities.
It is also one of the few Brazilian companies to have attracted the attention of big drugs groups, after signing in 1999 a research contract with the then GlaxoWellcome worth US$3.2m, plus 3 per cent of revenues from any drug that comes out of the tests.
Extracta's deal with Glaxo, which some see as a model for the sector, illustrates both the potential and limitations of the country's efforts to extract commercial value from its biodiversity. For a small company run out of a few prefabricated buildings on an unused bit of university campus, 3 per cent of a $1bn-selling drug would be a handsome revenue flow.
Yet, while Brazil lacks companies that have the global infrastructure to test, market and sell the final product, 97 per cent of the revenues will continue to be earned elsewhere.
"This is not Extracta's fault," says Mr Paes de Carvalho, responding to criticisms that most of the profits will not be made in Brazil. "You only get all the revenues if you do all the investment, but there are no Brazilian companies prepared to do this."
Despite the enthusiasm, Brazil's biotech sector faces a number of problems. For a start, venture capital was already scarce in Brazil before the internet collapse prompted funds to scale operations back.
"Many venture capitalists in this country still have the idea that you can get in and out of an investment in a couple of years," says Jorge Raimundo, a former Glaxo executive now working for Extracta. "But there are very few biotech companies that have put a product on the market in the first eight years."
And while Brazilian science has been winning plaudits, it is still well behind some developing country rivals. One recent study found that there were 9,000 researchers in the Brazilian private sector working on technological innovation, compared with 75,000 in South Korea. While Brazilian companies registered around 60 patents a year in the US, the South Koreans lodged 1,600.
The legal situation is also unclear. While the patent legislation is in place, a law that would regulate the use of Brazil's biodiversity is still languishing in Congress. The government has issued an edict to provide some rules, but non-governmental organisations claim the situation is still open to abuse.
"Brazil lacks the legal framework to cope with the biotech industry that is looking to take advantage of its genetic resources," says Marijane Lisboa, director of Greenpeace in Brazil. "Bio-piracy is still taking place."
Many non-governmental organisations believe the only way to control abuses is for the country's biodiversity to be made the property of the state, but the industry counters that this would stifle private initiative. "The government should be the regulator of the industry, not the owner," says Mr Paes de Carvalho.