Biotecnologia Aplicada Elfos Scientiae ISSN: 0684-4551 Vol. 15, Num. 4, 1998

Albert Sasson

United Nations Educational, Scientific and Cultural Organization 7, place de Fontenoy-75352, Paris 07 SP-France. Fax: (33-1) 45685555

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ABSTRACT

Developing countries should not arrive late to modern biotechnology considering it too sophisticated instead of appropriate and useful for their development strategies. Making biotechnological products available to the people who need them to improve their nutrition, health and welfare is a challenge and a goal to be targeted by the government agencies, research and technological development institutes in the field, as well as the concerned international organizations. The industrial and financial sectors have a role to play and their points of view must be sufficiently far-reaching as to devise specific plans to gain access to the vast, poorly explored and potentially rewarding market of the Third World. The integrated use of bioengineering techniques and suitable genetically-engineered strains will render bioprocesses more efficient and cheaper, contributing to obtain products more affordable to people. The biopharmaceutical industry provides an example where a compromise is crucial between the people's needs and industrial need of profits.

Keywords: bioprocesses, biotechnology, development strategies, pharmaceutical industry, research and development

Los países en desarrollo no deben llegar con retraso a la biotecnología moderna por considerarla muy sofisticada, en lugar de apropiada y útil para sus estrategias de desarrollo. Hacer disponibles los productos biotecnológicos a aquellos que los necesiten para mejorar su nutrición, salud y bienestar, es un reto y un objetivo que deben trazarse las agencias gubernamentales, los institutos de investigación y desarrollo tecnológico en la materia, así como las organizaciones internacionales implicadas. Los sectores industrial y financiero tienen un papel que desempeñar, y sus puntos de vista deben ser de suficiente alcance como para delinear planes específicos que les hagan ganar acceso al vasto, escasamente explotado y potencialmente remunerador mercado del Tercer Mundo. El uso integrado de las técnicas de bioingeniería y de cepas adecuadamente transformadas por ingeniería genética, harán más eficientes y baratos los bioprocesos, para contribuir así a la obtención de productos más al alcance de la población. La industria biofarmacéutica proporciona un ejemplo de dónde es crucial alcanzar un compromiso entre las necesidades de las personas y la necesidad industrial de obtener dividendos.

Palabras claves: bioprocesos, biotecnología, estrategias de desarrollo, industria farmacéutica, investigación y desarrollo

By the early 1990s, according to an Ernst & Young Group study, the worldwide market share of biotechnological product areas was the following:

World sales of biotechnology-derived products would jump from a few tens ofbillion US dollars in 1996 to$110-120billion in the year 2006. In the USA alone, the annual growth rate (1996) of the medical bioindustry was 12% and sales amounted to $10.8billion.

In the USA, and to a lesser extent in Canada and Europe, the bioindustry was focused on the medical area. The proportion was 68% in the USA, mainly for medicines and diagnostics; 43.7% in Canada and about 43% in Europe.

In 1994, the US bioindustry spent an overall $7billion on research-and-development (+23%). For public companies, research-and-development expenditures accounted for 43% of total costs and expenses. Research-and-development expenditure per employee was $68,000 in 1994, compared to $39,000 per employee in the pharmaceutical industry. The time needed to put a new drug on the market is approximately ten years with costs of research and development around $200million or even more. For the majority of US biotechnology companies research-and-development expenses were still higher than earnings from sales.

Venture capital is a major source of funding for the US bioindustry. In 1996, venture-capital funds amounted to $563million, while the opening up of biotechnology companies' capital to investors (IPO) concerned $274million and private investments reached $660million; regarding alliances, they involved $1.4billion. The biggest IPOs have been achieved by genomics companies, such as Affymetrix ($90million IPO in June 1997) or Millennium ($62million in 1997). Genomic agreements were also very successful: Corange concluded a first $50million agreement with Sequana for identifying genes involved in osteoporosis and a second $100million agreement with GeneMedicine for research on oncogenes. In 1996, biotechnology companies were able to raise 25% more funds than in 1995.

In 1994, the US bioindustry recorded sales of $7.7billion. In 1994, the main 152 biopharmaceutical firms reported a loss of $1.3billion, or an average loss of $8.7million per firm; only 20 of the 152 firms generated a profit in 1994. Of the $7.7billion sales in 1994, the following market segments were: 42% for therapeutic products, 26% for diagnostics, 15%for supplies, 9% for chemical and environmental services and 8% for agrobiotechnologies [1].

In comparison, the total US pharmaceutical industry spent $13.8billion on research and development, recorded sales of $84.8billion and employed 353,800 people. While the pharmaceutical industry had a net income of over $13billion, the bioindustry showed a loss of $4.1billion in 1994.

Each of the big five US pharmaceutical companies (Merck & Co. Inc., Ortho-Johnson & Johnson, Bristol-Myers Squibb Co., Pfizer Inc. and Eli Lilly & Co.) spent over $590million on research and development annually (around 12% of sales), whereas the top six biotechnology companies (Amgen Inc., Genentech Inc., Chiron Corp., Biogen Inc., Genzyme Transgenics Corp. and Immunex) spent between $72million and $299million each (representing 20% to 95% of sales).

In 1996, according to Ernst & Young's report on biotechnology, there was an explosive growth in the European bioindustry. Biotechnology companies were able to raise a total of 1.6billion ECU in new equity (about $2.4billion) compared to 400million ECU in 1995. European companies also invested 20% more on research in 1996 than in 1995, spending a record 1.5billion ECU ($2.25billion) [2]. According to Ernst & Young's First Annual Report on the European Biotechnology Industry, although total European venture capital investment rose to $6.15billion in 1992, venture capital investment in biotechnology has fallen its 1989 peak of over $210million to just over $90million in 1992 [3]. The United Kingdom has the most advanced system of venture capital in the European Union: £2.1billion were invested in the bioindustry in 1994.

In 1994, in the USA, the $4,299.3million devoted to publicly-funded biotechnology research was distributed as follows: 41% to health, 39% to general foundations, 8% to infrastructure, 5% to agriculture, 4% to manufacturing and bioprocessing, 2% to environment, 0.8% to energy and 0.2% to social impact research. Of this same amount, the research budgets of the eight most important government agencies represented: 78% for the Department of Health and Human Services, 6% for the Department of Energy, 5% for the National Science Foundation, 5% for the Department of Agriculture, 2% for the Department of Defence, 2% for the Department of Veterans Affairs, 1% for the National Administration for Space and Aeronautics (NASA) and 1% for the Agency for International Development [4].

In 1997, the US National Institutes of Health (NIH) were the only federal agency to be allocated an 8% increase in real terms over five years. The NIH budget in 1998 was also expected to grow slightly to reach $12.5billion, representing 95% of the federal investment in civil health research. The increase in the allocated resources was not so much in the research, but rather in the equipment and instruments needed further to the growing sophistication of medical technologies; the relevant costs were projected to amount to $359million in 1998, a 7% increase over the 1997 figure. Another reason for the privileged situation of the NIH was the role of active lobbies. The latter had indeed good arguments, such as the fact that cardiovascular diseases were killing almost 900,000 people per year, compared to 540,000deaths due to cancers and 42,500 due to AIDS. However, if one was to relate the budgets for each disease or group of diseases to the number of deaths caused by them, it was realized that the relevant Institutes invested a little more than onedollar per death due to cardiovascular diseases, fivedollars per death due to cancers and 36dollars per death resulting from AIDS. This comparison neglected the basic research carried out by the Institutes, not necessarily devoted to a specific disease, but highlighted the influence of lobbies on the budgetary decisions regarding the NIH [5].

The budget allocated to biotechnology research was projected to rise from $5.1billion to $5.3billion in 1998, in addition to an important increase in the funding of human genome mapping (+5.3%) and a slight growth in the funds devoted to gene therapy (+2.2%). The NIH could rightly show their convincing results such as the identification of some sixty genes associated with human diseases. Even if such a result did not warrant the development of specific therapies, it could lead to a great number of diagnostic tests that would bring the support of the pharmaceutical lobby for the NIH. The Director of the National Institute of Allergy and Infectious Diseases also acknowledged a 9% increase of the budget devoted to the study of malaria; this was expected to help sequencing the genome of two new strains of Plasmodium [5].

It seemed that the funding of biotechnologies by the US public agencies was rather stable and their usefulness was not questioned as they were considered sound areas of the US research-and-development activities. The debate shifted to the applications of these technologies and the ethical framework within which they were supposed to be applied. The US President announced that he was in favour of forbidding human cloning (without excluding animal cloning); the National Center for Research on the Human Genome was devoting 5% of its budget to the study of the ethical and legal implications of its activities. One may conclude that US biotechnologies are characterized by a trend toward trying to control the research from the ethical viewpoint [5].

Sales for human insulin in the USA were about $560million in 1993, whereas by 1997 its worldwide market increased to $1,035million [6]. As seen in Figure 1, since 1983 the sales of recombinant pharmaceutical proteins have increased considerably, reaching $5,462million during 1994 in the USA. The period with the highest growth rate was between 1984 to 1987, with a compounded annual growth rate of around 146%. Between 1987 and 1993, such growth decreased to an average annual rate of about 45% and from 1994 to 2000 sales in recombinant pharmaceuticals will grow at a relatively constant rate of about 15%. Thus, the projected sales of such products in the USA for the year 2000 are estimated to be above $7billion. In turn, the 1994 US market for all biotechnology products, in the nonpharmaceutical areas, accounted only for about $460million [7]. Chymosin stands out from such products, with a worldwide market of $140million [8]. Due to the lower added value of the nonpharmaceutical products, their market share represents only about 10% of the total market, even though volumetric-wise they constitute a bigger sector (Figure 1).

In terms of market share, erythropoietin, used in the treatment of anaemia and chronic renal failure, occupies the first place, followed by colony-stimulating factors, insulin and recombinant vaccines. Several hundred biomedicines are being developed and submitted to clinical trials; those already marketed belonged to the first generation of biotechnology-derived drugs, e.g. interferons, recombinant human insulin and growth hormone, antihaemophilic factor VIII, etc., a dozen or so products representing an annual market value of $5billion in 1994 in the USA [9]. The Ernst & Young Group survey listed the top ten biotechnology-derived drugs, which accounted for over half the $7.7billion in sales for the US bioindustry in 1994-1995: Neupogen (filgrastim, a recombinant granulocyte colony stimulating factor, G-CSF, which enhances neutrophil production and is used to correct deficiencies in the white blood cells, resulting from genetic defect or from the suppressive side effects of chemotherapy, radiotherapy and zidovudine treatment), Epogen (epoetin alpha or recombinant human erythropoietin, used to stimulate the maturation of red blood cells), both by Amgen Inc., which is living up to its mission "to become the world leader in developing and delivering important and cost-effective therapeutics based on advances in cellular and molecular biology" (e.g. tissue growth factors, brain-derived neurotrophic factor, interferon, interleukin-2, anti-hepatitis B vaccine and antisense oligonucleotides); Intron A (Biogen Inc.); Humulin (Genentech Inc.); Procrit (Amgen Inc.); Engerix-B (Genentech Inc.); Recombi NAK HB (Chiron Corp.); Activase (Genentech Inc.); Protropin (Genentech Inc.) and Roferon-A (Genentech Inc.).

In 1996, according to a report by Ernst & Young International Life Sciences and G.Steven Burrill & Co., a San Francisco-based private business bank, the US medical bioindustry acknowledged a striking increase in the number of novel drugs at an advanced design stage and made by biotechnology companies and medium-sized corporations. A total of 79 products have been approved, including 20 anticancer and 14 antiinfectious drugs, 14 substances used in haematology and seven in metabolic diseases. About 700 products developed by 167 public corporations are being submitted to clinical trials (1997).

Although the biopharmaceutical products (therapeutic proteins) represented, in the early 1990s, a very small fraction of the overall pharmaceutical products (only about 1% and a market value of $7.6billion worldwide), by the year 2003 they should account for at least 10% of such a market ($18.5billion in 2000) [10].

Sales in the USA represent approximately two-thirds of the world market for recombinant pharmaceuticals (Figure 1, Table 1 [11]). This large concentration of the sales in a single country can be interpreted as a slow penetration of such products probably due to their elevated price into most of the newly-industrialized and developing nations. For instance, the price for FDA-licensed recombinant tissue plasminogen activator (tPA) is $2,200 per dose, compared to only about $100 per dose for its nongenetically engineered competitor: streptokinase. It is estimated that, aside from the research-and-development costs, a significant part of the price of tPA relates to manufacturing costs [12]. Therefore, such an example emphasizes the need for improving the bioprocess, through the application of bioengineering principles, in order to make recombinant DNA technology more cost-effective, therefore enabling it, in principle, to be accessible to wider sectors of the society. The high concentration of sales in the USA can also reflect, to a large extent, a dominance of the technology at a commercial level mainly by US companies (Tables 1 and 2) [13].

Table 1. Estimated 1992 sales of biotechnology-derived health care products in the USA (in $millions) [11].

tPA: Tissue plasminogen activator.

In 1996-1997, there were 1,300 biotechnology enterprises in the USA employing some 100,000 persons; of these, 265 were publicly traded companies cited on the Nasdaq, the stock market devoted to high technologies. The US bioindustry was synonymous with small business: of the public companies, 37% had fewer than 50 employees, 18% between 51 and 135 employees and 12% between 135 and 299 employees [1]. San Francisco Bay and New England area around Boston remained the dominant locations for US bioindustry.

In the European Union, in 1996, there were 716 biotechnology companies (a 23% increase over 1995) employing 27,500 people (a 60% increase in job creation over 1995). Many of them generally had no more than 50 employees. European bioindustry is focused on agriculture and food processing, pharmaceuticals and chemicals, whereas in Japan emphasis is on industrial applications [14].

The strategy of pharmaceutical companies with respect to the adoption of biotechnologies included: the setting-up of their own research-and-development centers; acquiring biotechnology firms; concluding research contracts with laboratories at university or research centers; forming joint ventures; and making, licensing and marketing arrangements with other companies (Table 2).

Genentech Inc., one of the most innovative and best managed start-ups, was nevertheless able to evolve into a fully integrated pharmaceutical company. In addition to building its sales network in the USA, it started to do the same operations in Europe, so as to market its tissue plasminogen activator (tPA) "Activase". In spite of all these efforts, Genentech Inc. was acquired by the big pharmaceutical company Hoffmann-La Roche AG. Although Genentech Inc. was devoting 39% of sales ($132million) to research and development, it could not compete with firms that could amortize higher research-and-development budgets on a larger volume of sales [11,15]. In November 1994, Ciba-Geigy AG acquired Chiron Corp. (a biotechnology company located in San Francisco Bay) for $2.1billion. At the same time, Rhône-Poulenc Rorer chose a less costly strategy: it created a biotechnology consortium, RPR Gencell, which was carrying out research in collaboration with 15 institutions; RPR Gencell, with a staff of 120researchers, was in fact coordinating the work of 800 people and was able to make new alliances according to research and market needs. Pfizer Inc. in the USA had adopted a similar strategy, while Eli Lilly & Co. preferred acquisitions [16].

From the financial viewpoint, biotechnologies had proven a much less profitable investment since 1992, a far cry from such success stories of the 1980s as Genentech Inc. or Amgen Inc., which had brought capital flowing into the "new Eldorado", as it was known. Specialized funds had showed record profits, the Investco fund progressing in 1991, for instance, by more than 90%. In 1992, investors realized that their expectations-including for the success rate of projects-had been unrealistic. Several biotechnology companies, like Centocor Inc. or Gensia, acknowledged failures at the product experimentation stage. Others were forced to abandon a fledgling product in the face of a four- or even ten-fold drop in the company share price. According to the Bloomberg agency, there had been a 68% drop in share values since January 1992. This downward spiral was exacerbated by the US President's plan to limit health expenses announced in early 1993 [9].

Analysts were also of the opinion that, in the medium- or long-term, young biotechnology companies were doomed to join the big pharmaceutical groups, which were interested in reaping know-how. However, it was not forecasted that the pharmaceutical groups would take over 100% of all companies, because this would kill the entrepreneurship at the heart of their effectiveness.

Investors and financial analysts concluded it would be no easy task to differentiate veritably promising projects worth funding from dubious ones. This meant that only the most innovative companies capable of effectively marketing good products would have access to venture capital. The mortality rate would be high. Of the 1,311 enterprises existing in 1995 in the USA, only 350 would most probably still be around in the year 2000, half of these quoted on the Stock Exchange. If many companies were managing to survive by living off funds raised in the early 1990s, the trend was toward a progressive elimination: for instance, Synergen, one of the biotechnology "stars" on the Stock Exchange, was purchased at the beginning of 1995 by Amgen Inc. for $260million at a time when it still had a credit balance of $70million. Only two years earlier, Synergen had been worth $1billion [9]. At that time, with a market capitalization of over $8billion, the stock market was putting a value on Amgen Inc. approaching that of the pharmaceutical giant Hoechst AG.

However, there were signs that the financial situation would improve in the future. For instance, on June 14, 1995 when the biotechnology company, Cor Therapeutics, announced that the medicine it had been developing for several years was ineffective, its Stock Exchange shares dropped by 45%, but the news had no repercussions for the overall biotechnology market. One week before the collapse of the Cor Therapeutics shares, another biotechnology company, Cephalon, published satisfactory results of clinical trials which saw its Stock Exchange capital value jump from $186million to $320million; only a year earlier, the same company had recorded a loss of $35million. The message was clear. Good biotechnology projects were no longer being penalized by bad ones. Companies like Regeneron, Agouron or Autoimmune, which had obtained encouraging clinical trial results, doubled their Stock Exchange share value in a year and specialized investment funds earned between 15% and 30% during the first half of 1995 [9].

A number of constraints were hindering the expansion of the biopharmaceutical market: in most cases the biotechnology-derived drugs were administered intravenously, which is not the route preferred by patients; they were also expensive and therefore negated efforts made by the government to reduce public health expenses; the most promising drugs, i.e. antitumour agents and blood proteins, were only beginning to be exploited; efficacy and safety still needed to be demonstrated in several cases; antibiotics and vitamins produced by genetically-engineered microorganisms or using industrialized enzymes were not expected to substitute for the same products manufactured by conventional methods in the short term [11, 15]. These constraints were likely to be mitigated as a result of technological progress: lower prices would be achieved thanks to decreasing production costs and savings of energy and raw materials; new drug delivery systems were expected to broaden applications of the newly-developed products and increase their efficacy. It was more a question of the timing of this progress, as well as of how the companies would seize the new opportunities offered to them.

The $10million investment by Microsoft Corporation in a small US biotechnology firm, Darwin Molecular Inc. (Seattle), was considered an example of the convergence between information technology and biotechnologies, particularly in pharmaceutical research. In the latter, the use of information technology could save huge amounts of time and money in the development of new drugs, according to industry experts, as the mapping out of molecular structures by computer could be cheaper and quicker than conventional laboratory techniques. Darwin Molecular Inc., which was part of the Gencell consortium created by Rhône-Poulenc Rorer and focused on gene therapy, was using computers to pool vast amounts of genetic data on diseases and to sketch out the genetic make-up of proteins responsible for particular disease factors. The company then used molecular-biology techniques in the test tube to produce big quantities of potential drug candidates, which could be matched against the disease proteins on a trial-and-error basis [3]. In 1997, Darwin Molecular Inc. was purchased by the British corporation Chiroscience plc for $120million.

American, European and Japanese companies were involved in a fierce competition to market new drugs and obtain exclusive rights. For instance, 49companies had worked on tissue plasminogen activator (tPA), 95 on interferons, 60 on interleukin-2 and 38 on human growth hormone. In this competition time was a crucial factor because a relatively short-time lapse could make the difference between success and failure [11, 15].

Success in the development of biopharmaceuticals required the contribution of strong interdisciplinary research teams, including industrial microbiology, immunology, protein chemistry, biophysics and computer science. Contracts were established with universities and research centers aimed at tapping expertise not available in the companies. Engineering and industrial aspects were the most difficult to devise: scaling-up was one of the most complicated, expensive and time-consuming processes in the bioindustry, and it could be an obstacle to successful commercialization [11].

For many low-volume, high value-added products, flexible multipurpose plants were needed for the production of a wide range of products without additional investments each time a new biopharmaceutical was sought. One gram of interferon, for instance, was sufficient to treat 100,000 cases of benign viral infections. Antihaemophilic factor VIII was a similar case, as small quantities were needed and the demand in the world market was in the range of a few kilograms. Capital requirements for production was therefore less high than in other high-technology areas, but they were expected to increase as the industry matured and economics of scale in production became more obvious. It would become more advantageous to shift from one kind of product to another one, e.g. from pharmaceuticals to diagnostic kits, veterinary products or food additives. Diversification could be for the companies a means to amortize investments made in research and development and in setting up the appropriate industrial facilities [11].

Finally, marketing biotechnology-derived products needs a wide sales network and extensive financial resources, notwithstanding the fact that biopharmaceuticals might be given preferential treatment with respect to the registration and authorization procedures (e.g. fast-track approval) [11].

Research and development on new vaccines has become rather similar to research for new drugs:

The US National Institutes of Health are the world's biggest single funder of vaccine research, spending more than $300million annually. The US Center for Disease Control and Prevention spends another $528million on vaccine purchase, research and testing. European investment in research and development is of similar if not bigger size.

The UN-sponsored international vaccine institute

In May 1996, the United Nations Development Programme (UNDP) and the Republic of Korea proposed the texts of the Establishment Agreement and Constitution to initiate the creation of the International Vaccine Institute (IVI). In October 1996, the Institute's Establishment Agreement was opened for signature, and as of 30 April 1997 the signatories to the Establishment Agreement were: Bangladesh, Bhutan, Brazil, China, Egypt, Indonesia, Israel, Kazakhstan, Kyrgyzstan, Republic of Korea, Mongolia, Myanmar, Netherlands, Pakistan, Panama, Papua New Guinea, The Philippines, Romania, Senegal, Sri Lanka, Sweden, Tajikistan, Thailand, Uzbekistan, Viet Nam, World Health Organization.

Despite the pressing needs for effective and affordable vaccines against major illnesses such as malaria, diarrhoeal diseases and respiratory infections, devastating emerging or re-emerging diseases such as AIDS and dengue haemorrhagic fever, there was no international center exclusively devoted to vaccine research and development for developing countries. Furthermore, the endeavours of many developing countries to produce vaccines are hindered by lack of up-to-date technology and adequate facilities. Local regulatory authorities also often lack the capacity to provide appropriate supervision to ensure quality. An international research institute will be therefore a powerful means by which the public sector, working in partnership with the industry, can bear some of the risks of developing vaccines for these regions. It will also provide scientific and technical support for improving production and regulation.

The IVI is part of the Children's Vaccine Initiative (CVI), coalition of international and national agencies, governments, nongovernmental organizations, and public- and private-sector companies. The CVI was launched on the belief that new and improved vaccines will drastically reduce death and disease for children in developing countries. In 1991, the UNDP, UNICEF (United Nations Fund for Children), Rockefeller Foundation, WHO and World Bank agreed to launch the CVI in order to accelerate vaccine development and use.

In 1992, the UNDP initiated a feasibility study for an international institute. The study focused on the Asia-Pacific region because of the region's expanding economic resources, rapid industrial growth and progress in vaccine sciences. Based on the results of this feasibility study, the UNDP developed a proposal for the IVI to be located in Asia to help meet global needs.

The IVI will work cooperatively with international agencies, national institutions, nongovernmental organizations and industry. It will operate in partnerships with health and vaccine specialists in developing countries. It will work to catalyze, facilitate and foster vaccine research and introduction by other concerned organizations. The IVI will not be a vaccine producer, but will undertake laboratory, clinical and field studies of new and improved vaccines of particular concern to developing countries. It will also carry out epidemiological research and economic and policy analysis. The Institute will engage in collaborative projects with institutions in developing countries, involving research on, and improvement of, vaccine production and regulation. It will also provide technical services including testing of vaccine batches, development of new testing methods, production and distribution of working standards and evaluation and characterization of vaccines that will be submitted to field trials. The IVI will organize and provide extensive training and educational programs, focused on research and development, clinical trials, epidemiological research, vaccine manufacture and regulation. The IVI will use several means of information dissemination, including a newsletter and the Internet, to help meet the need for timely collection and dissemination of information in the rapidly changing vaccine field.

Operating through a network of institutions in Asia, home to more than half of the world's population and where several countries are major vaccine producers, the IVI programs will contribute to meeting the needs of countries in all regions. The IVI is located in a Research Park on the main campus (Kwanak) of Seoul National University, Korea's capital with a population of over 10million and foremost center for higher education and research. The IVI will take advantage of the University's excellent supporting facilities and the numerous departments and institutes engaged in biomedical research.

The IVI is a new international, independent, nonprofit organization. It is governed by an international board of trustees, the majority of them are elected at large, and there are ex officio members. The at-large members serve in their individual capacities. To lay the ground of the IVI, the UNDP posted international staff to Seoul. Following establishment of the Institute's formal operations, these staff will become Institute employees. Over the coming years, the IVI will recruit its senior research staff through an international search from developed and developing countries. Experts from partner institutions will form a group that will oversee collaborative projects.

The Korean Government agreed to extend to the IVI the same privileges and immunities as would normally be accorded to United Nations organizations, so as to ensure independent and autonomous operation of the Institute. In addition, the host country agreed to provide a significant portion of the Institute's annual operating budget (30%) as well as to bear the cost of the construction and equipment of the Institute headquarters as a state-of-the-art international research facility.

Research-and-development grants, contracts and training courses, and other technical services are expected to generate significant funding for the Institute. But additional support from governments, the private sector, foundations, international agencies and other services is essential, especially during the critical early years. All these resources will support activities carried out at both the Institute's headquarters in Seoul and in other countries. The UNDP is committed to continuing its support for the Institute and facilitating the pledging of required funds.

The world market value for pharmaceuticals was over $267billion in 1994, of which the European Union accounted for $91billion. The world market value of anticancer drugs would reach $12billion in the year 2000. In 1994, the world market value for human vaccines was estimated at $4.5billion, of which Europe accounted for $1.260billion, compared to $1.2billion for the world annual sales of human recombinant erythropoietin. The existing fragmentation of the market and investments in the European Union Member States does not allow a precise estimation or monitoring. Besides the dominant multinational firms, there are many medium-sized international companies whose activities are not global. Collaboration among various vaccine manufacturers has also been promoted [17].

The current growth rate of the world market for human vaccines is 7% (based on doses rather than value) and in Europe is at 12% (value figures). The number of vaccine doses used globally would be of the order of 1.8billion, of which a very large share would be for viral diseases. Industrialized countries, i.e. Europe, Japan and North America, together account for less than 16% of global vaccine use, compared to more than 60% for the developing countries, mainly supplied through UNICEF, PAHO and WHO; other countries account for the remaining 24% [17].

Market growth depends upon the demand for the product by governments and public health organizations in order to avoid uncontrollable spread of disease and promote eradication. For some diseases of major socioeconomic impact the potential market is vast. For AIDS, for instance, the potential market is estimated to reach over 100million people. Similar figures can be calculated with other diseases such as tuberculosis. In fact, the biggest market segment is the respiratory human vaccine market because its vaccines are targeted to children, the largest end-user group in the world human vaccine market [17].

In terms of volume, the best customers for vaccines are the developing countries. Each year there are tens ofmillions of children that are vaccinated with a vaccine costing about ten dollars, but there are 120million children who cannot afford this. How can we solve this dilemma? The vaccine industry is looking for a new equilibrium and considers it its duty to supply these new products at reasonable prices for the developing world and at higher prices in the developed countries. A new partnership must be built, but economic laws have to be respected and a reasonable return on investment for industry must be guaranteed [18].

Staff at WHO's Vaccine Supply and Quality (VSQ), in collaboration with interested partner institutions of the CVI, has developed a new approach to working with developing country vaccine producers and national control authorities to enable them to achieve self-sufficiency in meeting national needs for vaccine production, supply and quality. The proposed approach calls for establishing a Vaccine Production Consortium and regional Laboratory Control Networks which would be supported by the WHO, CVI and technical resources made available by the various partner institutions of the CVI with an interest in training and capacity-building.

The suppliers of vaccines to UNICEF in 1997 are shown in Table 3.

Table 3. Suppliers of vaccines to the UNICEF.

The Vaccine Production Consortium would be an informal coalition of manufacturers meeting certain standards. Participation in this coalition allows them access to WHO-sponsored training and resources to improve their vaccine quality and plan for future needs.

Following the lead of the Pan-American Health Organization's Regional Vaccine Initiative for the Americas (SIREVA), which set up a functioning regional Laboratory Control Network, the WHO's Global Programme for Vaccines and Immunization (GPV) has been working to put in place Laboratory Control Networks in other regions.

The South-East Asia region, in partnership with WHO's South-East Asia Regional Office, has established such a network. There is a call for the rapid establishment of several networks in other regions in 1997-1998. The technical and institutional expertise which would provide training and education to staff of national control laboratories and vaccine producers will include the resources of partner institutions of the CVI, including among others WHO, RIVM, Japan National Institute of Health and Massachusetts Public Health Laboratories.

Ramírez, et al. [13] noted that, by 1994, at least thirty products from recombinant fermentations had reached the market. Furthermore, at least one hundred more are expected to be in the market by the year 2000. Sales of recombinant products (being mainly high-priced biopharmaceuticals) showed a dramatic increase between 1983 and 1990, and they have shown an important increase afterwards. Sales of recombinant products are highly concentrated in the USA, representing up to 75% of the world market.

Bioengineering issues associated with the culture of recombinant organisms have been of increasing interest within the scientific community. The number of papers that appeared in 13 selected bioengineering journals on this subject increased from two in 1982 to 107 in 1994. The latter figure represented about 5% of the total number of papers published in the same journals [13].

The study revealed that, although the techniques of genetic engineering and fermentation technology are widely distributed worldwide, the research in this field is mainly carried out in industrialized or newly-industrialized countries. This high concentration in terms of research is similar to the concentrated situation regarding the production and sales of recombinant products in the USA. It was clear, as well, that research scientists preferred biological models (host cells) that, in general, are different from those used by the industry. Engineers and molecular biologists, working together, have been able to develop and improve bioprocesses considerably. It has been shown that, by using bioengineering techniques together with suitable genetically-engineered strains, the yields and/or productivity of fermentations can be increased by orders of magnitude. The integral use of these techniques will certainly contribute to optimize bioprocesses, and will lead to more efficient and cheaper processes, which in turn could make modern biotechnology products affordable to wider sectors of the world's population [13].

Technical feasibility is a requirement for a product to be marketed and early involvement of the industrial sector in process development is crucial for maintaining a strong link between research and application, but the success of a particular biotechnology-derived product often depends more on factors different from the technical ones [13].

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Copyright 1998 Elfos Scientiae

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