February 2005

New Zealand: Green Haven for Biotech?

The island nation may have found a way to calm both sides in the debate over genetically modified organisms.

By Stephan Herrera

The life science industries need a new prescription. ­Phar­maceutical makers, who say their high drug prices are necessitated by the huge cost of developing new medicines, are on the defensive as U.S. politicians talk about price controls and even patent reforms favoring makers of generic drugs. But if there is one group feeling particularly besieged, it's the biotechnology companies applying genetic engineering to crops and farm animals. Trade conflicts between Europe and the United States over genetically modified organisms (GMOs) are now spreading to Brazil, India, and China. Despite the potential of so-called agbio technology to produce new medicines and conquer malnutrition, rules governing firms developing GMOs are frequently ill defined, difficult to implement, and hotly contested. For most, wooing investors has become exceedingly difficult.

It's not a lack of promise that's getting in the way. Production of genetically modi­fied crops jumped 20 percent between 2003 and 2004. Genetically modified plants, which include corn, wheat, cotton, tobacco, rapeseed, soybeans, tomatoes, rice, potatoes, and poplar trees, are engineered to produce higher yields, grow in harsher soil conditions, and require fewer herbicide and pesticide treatments. The milk from genetically modified cows, goats, sheep, and rabbits is being used to produce therapeutic proteins for hard-to-treat conditions such as antithrombin deficiency, which leaves sufferers vulnerable to deep-vein thrombosis. But given the chaotic state of regulation and public opinion, developing a new agbio product has become a gamble.

New Zealand, of all places, may have found a solution, proving once again that the best ideas pop up where they are least expected. This nation's four million inhabitants form arguably the most politically and environmentally correct society on the planet—and one might think, therefore, among the most staunchly anti-GMO. New Zealand is a nuclear-free zone. Its two main islands have a small but politically powerful population of indigenous Maori, who are newly emboldened and empowered after generations of repression, and who consider plants and animals to be their kinfolk. The Green Party enjoys enormous influence in government. The country is as famous for the verdant, rolling hills of the north island and the rugged alps of the south island as it is for its high-quality, disease-free farm products—chiefly dairy, beef, and lamb. New Zealand's economy is far more dependent on agriculture than those of its Western peers; farming accounts for 4.8 percent of the country's gross domestic product, compared to .9 percent in the United Kingdom and 1.4 percent in the United States. So it's not surprising that until recently, New Zealand was on its guard against anything that might sully its pristine image. Only four years ago, the country essentially told Monsanto that its biotech wheat was not welcome there.

But against long political odds and at considerable risk to the country's clean-green image, New Zealand's parliament concluded just over a year ago that the potential rewards from GMOs outweigh the risks. To keep its economy growing, lawmakers reasoned, the nation would need to find ways to produce more (and more valuable) dairy and forest products on less and less acreage. The key would be, not to turn away from GMO technologies, but rather to manage them wisely with a transparent, enforceable, publicly access­ible, and scientifically robust regulatory framework. This framework, enacted in October 2003, gives New Zealanders more power to participate in the approval process for local GMO research and development projects than any other people in the world. At the same time, the laws protect biotech firms that meet the new standards against litigation, a problem that has been a major damper on GMO projects in other countries. Environmentalists still worry that New Zealand's protocols aren't fail-safe, and biotech firms complain that they are too costly and time consuming. But both sides agree that the country has made a start. In fact, New Zealand's GMO regulations are now considered among the world's most functional. Says one veteran biotech investor in San Francisco, "Now anybody who is investing in agbio* is paying attention to New Zealand."