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The Market for Environmental Biotechnology
The UK’s Department of Trade and Industry estimated that 15 – 20% of the global environmental market in 2001 was biotech-based, which amounted to about 250 – 300 billion US dollars and the industry is projected to grow by as much as ten-fold over the following five years. This expected growth is due to greater acceptance of biotechnology for clean manufacturing applications and energy production, together with increased landfill charges and legislative changes in waste management which also alter the UK financial base favourably with respect to bioremediation. Biotechnology-based methods are seen as essential to help meet European Union (EU) targets for biowaste diversion from land-fill and reductions in pollutants. Across the world the existing regulations on environmental pollution are predicted to be more rigorously enforced, with more stringent compliance standards implemented. All of this is expected to stimulate the sales of biotechnology-based environmental processing methods significantly and, in particular, the global market share is projected to grow faster than the general biotech sector trend, in part due to the anticipated large-scale EU aid for environmental clean-up in the new accession countries of Eastern Europe.
Other sources paint a broadly similar picture. The BioIndustry Association (BIA) survey, Industrial Markets for UK Biotechnology – Trends and Issues, pub-lished in 1999 does not quote any monetary sector values per year, but gives the size of the UK sector as employing 40 000 people in 1998 with an average yearly growth over 1995 – 98 of 20%. Environmental biotech is reported as representing around 10% of this sector. An Arthur Anderson report of 1997 gives the turnover of the UK biotech sector as 702 million pounds sterling in 1995/96, with a 50% growth over three years. A 1998 Ernst and Young report on the European Life Sciences Sector says that the market for biotechnology products has the poten-tial to reach 100 billion pounds sterling worldwide by 2005. The Organisation for Economic Cooperation and Development (OECD) estimates that the global market for environmental biotechnology products and services alone will rise to some US$75 billion by the year 2000, accounting for some 15 to 25% of the overall environmental technology market, which has a growth rate estimated at 5.5% per annum. The UK potential market for environmental biotechnology products and services is estimated at between 1.65 and 2.75 billion US dollars and the growth of the sector stands at 25% per annum, according to the Bio-Commerce Data European Biotechnology Handbook. An unsourced quote foundon a Korean University website says that the world market size of biotechnology products and services was estimated to be approximately 390 billion US dollars in the year 2000.
The benefits are not, however, confined to the balance sheet. The Organisation for Economic Cooperation and Development (OECD 2001) concluded that the industrial use of biotechnology commonly leads to increasingly environmentally harmonious processes and additionally results in lowered operating and/or capital costs. For years, industry has appeared locked into a seemingly unbreakable cycle of growth achieved at the cost of environmental damage. The OECD investigation provides what is probably the first hard evidence to support the reality of biotech-nology’s long-heralded promise of alternative production methods, which are eco-logically sound and economically efficient. A variety of industrial sectors includ-ing pharmaceuticals, chemicals, textiles, food and energy were examined, with a particular emphasis on biomass renewable resources, enzymes and bio-catalysis. While such approaches may have to be used in tandem with other processes for maximum effectiveness, it seems that their use invariably leads to reduction in operating or capital costs, or both. Moreover, the research also concludes that it is clearly in the interests of governments of the developed and developing worlds alike to promote the use of biotechnology for the substantial reductions in resource and energy consumption, emissions, pollution and waste production it offers. The potential contribution to be made by the appropriate use of biotech-nology to environmental and economic sustainability would seem to be clear.
The upshot of this is that few biotech companies in the environmental sector perceive problems for their own business development models, principally as a result of the wide range of businesses for which their services are applicable, the relatively low market penetration to date and the large potential for growth. Competition within the sector is not seen as a major issue either, since the field is still largely open and unsaturated. Moreover, there has been a discernible tendency in recent years towards niche specificity, with companies operating in more specialised subarenas within the environmental biotechnology umbrella. Given the number and diversity of such possible slots, coupled with the fact that new opportunities, and the technologies to capitalise on them, are developing apace, this trend seems likely to continue. It is not without some irony that companies basing their commercial activities on biological organisms should themselves come to behave in such a Darwinian fashion. However, the picture is not entirely rosy.
Typically the sector comprises a number of relatively small, specialist com-panies and the market is, as a consequence, inevitably fragmented. Often the complexities of individual projects make the application of ‘standard’ off-the-shelf approaches very difficult, the upshot being that much of what is done must be significantly customised. While this, of course, is a strength and of great potential environmental benefit, it also has hard commercial implications which must be taken into account. A sizeable proportion of companies active in this sphere, have no products or services which might reasonably be termed suit-able for generalised use, though they may have enough expertise, experience or sufficiently perfected techniques to deal with a large number of possible sce-narios. The fact remains that one of the major barriers to the wider uptake of biological approaches is the high perceived cost of these applications. Part of the reason for this lies in historical experience. For many years, the solutions to all environmental problems were seen as expensive and for many, particularly those unfamiliar with the multiplicity of varied technologies available, this has remained the prevalent view. Generally, there is often a lack of financial resource allocation available for this kind of work and biotech providers have sometimes come under pressure to reduce the prices for their services as a result. Greater awareness of the benefits of biotechnology, both as a means to boost existing markets and for the opening up of new ones, is an important area to be addressed. Many providers, particularly in the UK, have cited a lack of marketing expertise as one of the principal barriers to their exploitation of novel opportunities. In addition, a lack of technical understanding of biotech approaches amongst tar-get industries and, in some cases, downright scepticism regarding their efficacy, can also prove problematic. Good education, in the widest sense, of customers and potential users of biological solutions will be one major factor in any future upswing in the acceptance and utilisation of these technologies.
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