Delivering on the Potential of Industrial Biotechnology
July 27, 2010
Washington, D.C.
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| Putting their heads together at the Financial Innovations Lab are, from left, Alan Boyce of Adecoagro, Glenn Yago of the Milken Institute and Ronald Stoltz of Sandia National Laboratory. |
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Industrial biotechnology has great potential to replace plastics and a wide range of other consumer goods with more sustainably produced products. Instead of petroleum, bioplastics use agricultural products as a feedstock. The products are biodegradable, the manufacturing requires less energy, and the novel process can reduce overall demand for oil.
Industrial biotechnology ventures face intense competition from petrochemical companies in the consumer goods industry. These ventures are particularly sensitive to institutional and financial barriers that prevent growth and hinder commercialization.
To help industrial biotechnology ventures overcome these hurdles, the Milken Institute, in conjunction with the U.S. Department of Agriculture's Office of Energy Policy and New Uses, convened a Financial Innovations Lab. The group included top scientists and economists in academia, institutional investors, policymakers, biotech company professionals, and industry association representatives.
Biological innovation has grown rapidly, and the market for environmentally friendly products is expanding. But because the initial research is so costly, these products can't compete with petroleum-based alternatives on price. Marvin Duncan, Senior Agricultural Economist at the USDA, said the industry will require increased public investment in basic R&D.
Bobby Bringi, CEO of the MBI International, said strategies for reducing risk to the industry should be applied to attract private investment. He suggested bundling intellectual property and sharing its value equitably among the players in product development, the most costly stage of the process.
Recurring themes at the Lab included the importance of industrial biotechnology to energy security, its ability to create jobs (especially in rural America) and the role of government in supporting this nascent industry.
Among potential solutions the participants suggested are:
Increasing public-private partnerships in the form of shared research and product testing facilities
Using government to push supply and pull demand, following the model of the USDA's BioPreferred program, which assures purchases by government agencies
Improving the supply and reliability of government assistance
Exploiting the unrealized value of intellectual property to leverage financing
Creating technology efficacy insurance to minimize the risk of new ventures
Employing standardized investment bonds similar to those found in Danish investment models.
To read the results of the Lab, including recommended next steps for implementation, view the full report. For more information, contact Caitlin MacLean, manager of Financial Innovations Labs, at cmaclean@milkeninstitute.org.
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