Dwindling appetite for GM / Biotech's Dismal Bottom Line (21/5/2004)

Below are excerpts from two articles, one from the New York Times and the other from the Wall Street Journal. They both paint a dismal picture of biotech investments, and particularly for GM crops  (item 1). Some investors, however, appear to enjoy the hair-raising odds.

The headlines say it all: 'For biotech foods, a dwindling appetite'; 'Biotech's Dismal Bottom Line: More Than $40 Billion in Losses'. Yet despite this dismal reality, biotech companies are adroit at painting eye-catching pictures of their supposed prospects.

Biotech industry lobbyists, including the notorious ISAAA, continue to pump out numbers that make it look like GM is the unstoppable wave of the future.

The extraordinary success of the lobbyists is captured in an interview in the current edition of the Indian biotech investment magazine Biospectrum, where a journalist poses the following question to "biotech guru" Dr Shanthu Shantharam:

"Despite strident opposition from anti-GM groups, GM products are being introduced in more and more countries like Australia, India, the Philippines and Indonesia. What do you attribute the changed scenario to?" http://www.biospectrumindia.com/content/shakers/104051101.asp

While this picture fully accords with that promoted by the ISAAA's annual reports which cite the growing of GM crops in Asian giants like India and Indonesia and so on, it is wholly misleading.

GM cotton has been approved for the southern Indian States but is proving hugely controversial; likewise GM corn in the Philippines. In Indonesia the only GM crop introdued, GM cotton, has actually been withdrawn by Monsanto amidst a wave of acrimony involving both farmers and the company claiming they were losing money. Monsanto has also just withdrawn GM canola from Australia

The two articles below provide other facts and figures that also tell a very different story from the PR flaks claims of supposed expansion everywhere except in Europe.

The NYT notes that it's not just a ase of "the small number of crops [just 4] that are genetically engineered" but that even those rops are "still limited to two main [GM] traits". The article also points to: the small number of countries involved in growing them [just 6 with any significant acreage], the "sharp drop in efforts to develop genetically engineered fruit and vegetables", and thow "The pace of new product introductions has fallen sharply". It also provides the figures that back these points up.

Excerpts from 1.For biotech foods, a dwindling appetite - New York Times 2.Biotech's Dismal Bottom Line: More Than $40 Billion in Losses - Wall Street Journal

1.For biotech foods, a dwindling appetite
Andrew Pollack                                               
New York
Times, Friday, May 21, 2004
[excerpts only]

LOS ANGELES: As a research scientist at the world's largest vegetable seed company, David Tricoli used genetic engineering to create a virus-resistant melon, something that conventional plant breeders had been unable to develop.

But the company, Seminis, dropped the melon project and other work on biotech vegetables because of the high costs of obtaining regulatory approval and perceived consumer resistance.

The melon is emblematic of a problem in agricultural biotechnology: the small number of crops that are genetically engineered.

...to the extent biotechnology is growing, it is in a narrow range. Some 99 percent of the crops are grown in six countries - the United States, Argentina, Canada, Brazil, China and South Africa. And virtually all the worldwide acreage is devoted to only four crops: soybeans, corn, cotton and canola.

With these four, genetic engineering caught on before consumer resistance gathered force a few years ago. These crops are also largely used for animal feed or clothing or to make oil and other ingredients for processed foods rather than eaten directly - something that has helped them gain acceptance.

But recent attempts to move genetic engineering to other crops have met resistance...

Just last week, Monsanto shelved plans to introduce the world's first genetically modified wheat

In April, California officials rebuffed a request by Ventria Bioscience... to increase its acreage of an erxperimental rice crop engineered to produce human proteins...

And the current edition of California Agriculture magazine laments a sharp drop in efforts to develop genetically engineered fruit and vegetables...

...the number of field trials in the United States involving biotech fruit and vegetables plummeted to about 20 by 2003 from about 120 in 1999, an article in California Agriculture said.

...Not only are there just four crops, but they are still limited to two main traits introduced by genetic engineering: insect resistance and herbicide resistance.

There is also a question of how much the agricultural biotechnology industry can continue to expand without new crops, or at least new traits for the same four crops.

The pace of new product introductions has fallen sharply. In the past three years,  only two crops a year have been the subject of consultations with the Food and Drug Administration before marketing. In the late 1990s, it was not unusual for a dozen crops to go through this process each year.

And the new developments are mainly variations on the same themes.  "Within the regulatory pipeline, there's not a lot that looks dramatically new that we're aware of," said Michael Rodemeyer, executive director of the Pew Initiative on Food and Biotechnology, a research organization.

for the full story: http://www.iht.com/articles/520925.htm

2.Biotech's Dismal Bottom Line: More Than $40 Billion in Losses
As Scientists Search for Cures, They Gobble Investor Cash; A Handful Hit the Jackpot 'The Ultimate Roulette Game'
DAVID P. HAMILTON / Wall Street Journal 20may04
[excerpts only]

Since the first biotechnology company went public a quarter-century ago, stock-market investors have put somewhere close to $100 billion into the industry.

The results so far... [include] cumulative net losses of more than $40 billion for the industry's public companies.

...it's hard to argue that it's a good investment. Not only has the biotech industry yielded negative financial returns for decades, it generally digs its hole deeper every year.

This often gets lost during periodic bursts of enthusiasm for biotech, one of which is under way right now. After a three-year slump, biotech companies raised $1.5 billion from new stock offerings in the first quarter of 2004, almost three times the level of a year earlier.

The buzz surrounding these stocks reflects the unusual role that biotech has come to play in finance and medicine: a casino that sends capital to otherwise neglected high-risk corners of research—and rewards a very few with huge paydays.

Home runs in biotechnology are scarce, but they can be lucrative. A $1,000 investment in Amgen Inc. at its initial offering in 1983 would now be worth almost $150,000. During a brief biotech-stock bubble in 1999 and 2000, a well-timed investment in unprofitable Human Genome Sciences Inc. could have yielded an 11-fold return in just eight months. The company's shares have since fallen almost 90% and in 2003 it posted a net loss of more than $185 million.

Every success... is accompanied by far more failures. Since it is almost impossible to tell which of the thousands of promising ideas will turn into a hit, the losers of the biotech lottery effectively fund the windfalls of the handful of lucky winners.

Biotechnology companies are essentially research and fund-raising machines devoted to selling their scientific and medical "story" to investors and spending the resulting cash on laboratory studies and clinical testing. Some companies survive as long as two decades on investors' largesse without developing a revenue-producing drug. Like the dot-coms that populated the landscape during the late 1990s, the vast majority of biotechs have neither profits nor meaningful revenue and no guarantee they'll ever have either.

For the full story: http://www.mindfully.org/GE/2004/Biotech-$40B-Losses20may04.htm

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