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Date : 04/09/2005
Source: Department of Science and Technology
Title: Hanekom: Global Aspects of Technology Transfer conference


Address by Derek Hanekom, Deputy Minister of Science and Technology, at the Global Aspects of Technology Transfer: Biotechnology

DEFINING TECHNOLOGY TRANSFER: PAST, PRESENT AND FUTURE - ASSESSING TECHNOLOGY TRANSFER IN SOUTH AFRICA AND ITS IMPACT IN THE SOUTHERN AFRICAN REGION

Mr Chairman
Distinguished colleagues
Ladies and gentlemen

Firstly let me applaud the organisers of these Gordon Conferences that concentrate on science education and policy issues. They play an important role in reflection on the very dynamic global environment and the changes that inevitably impact the lives of people and the sustainability of the environment. In short they assist us to craft our common future.

It is a particular pleasure to share a platform with Lita Nelsen, who has played such an important role in the promotion of technology transfer from universities. She has welcomed many South African delegations to MIT and in the setting of the Association of University of Technology Managers (AUTM). It is also a good opportunity to exchange views and perspectives with Dr Gill Samuels, who has been immersed in the practical realities of science policy from the perspective of the global pharmaceutical industry.

I noted from the programme that Professor Turner Isoun, the Minister of Science and Technology of Nigeria will address this conference tomorrow. We share a very positive and growing set of bilateral collaborations with Nigeria – including the domain of space and satellite technology, indigenous knowledge and the development of technologies and applications in human health.

The participation of key African countries in this conference should assist in balancing our views, sharpening our reflections and strengthening our analysis. The South African contributors at the conference include Dr Tony Heher and Dr Sibongile Pefile – both of whom are major participants in the debate on innovation and technology transfer in South Africa. I’m sure they will give you a sense of some of the challenges we face. Overall, while one may have considered some genetic modification of the programme here and there this conference could never be described as a monoculture!

In assessing technology transfer in South Africa and its impact in the Southern African region, I will concentrate on issues that present challenges and give some areas of progress and development. Given the focus of the conference I will choose the majority of my examples from biotechnology – while recognising that the challenges are no less intense in the setting of, say, nanotechnology or high performance computing.

Norman Borlaug, now 91 years old, received the Nobel Peace Prize in 1970. That is long enough ago for many people in this audience to be unfamiliar with the context of his achievement and his background. The Nobel biography, from 1970, describes him as “an eclectic, pragmatic, goal-oriented scientist; he accepts or discards methods or results in a constant search for more fruitful and effective ones, while at the same time avoiding the pursuit of what he calls “academic butterflies”. Norman Borlaug developed some of the key wheat varieties that underpinned the green revolution and focused this work in Mexico, Pakistan and India.

In his Nobel acceptance speech he said: “The obligations imposed by the honour are far greater than the honour itself, both as concerns me personally and also the army of hunger fighters in which I voluntarily enlisted a quarter of a century ago for a lifetime term. I am acutely conscious of the fact that I am but one member of that vast army and so I want to share not only the present honour but also the future obligations with all my companions in arms, for the Green Revolution has not yet been won.”

Viewed through the lenses of current scientific optimism and the complexities of the new issues that challenge us in global knowledge transfer, the work of this man seems courageous, socially concerned and principled. His research and experimental programme was funded by the Rockefeller Foundation and the Mexican Government but the transfer of his work was socially and politically mediated rather than by means of the market.

The South African Government is looking to science and technology as an enabler of improvement of quality of life and sustainable economic development as a full player in the global knowledge economy. In this regard we participate in a global trade regime far more complex than that faced by Norman Borlaug. I am sure that intellectual property was not uppermost in his mind at the time. We do know that in a visit to the International Rice Research Institute in 1999 he said in respect of intellectual property in relation to biotechnology: "How will you keep out the lawyers? How will you keep the tail from wagging the dog?"

Dr Borlaug saw a strategic challenge in making sure that future interaction with IP professionals serves poor farmers rather than other industry actors and interests. The job of responsible scientists and public institutions is moving technology around in a way that deals with human needs in balance with proper competition, and the rights of inventors and owners of IP. I am not sure that many principled scientists at the personal level would want massive personal economic gain to pre-determine how their inventions are used, or whether they are used at all – certainly not if they are of the activist tradition of Norman Borlaug.

South Africa has a keen interest in intellectual property development and protection, technology transfer, and ultimately, developing our competitiveness. However the effective protection and generous licensing of IP can also be used to advance public good agendas related to food security, health and public safety. Assuming that an economy, region or country has the capacity to secure intellectual property efficiently, these options and choices remain open. This for example is the approach adopted in the securing of patents related to HIV/AIDS vaccine development in the South African AIDS Vaccine Initiative.

Over and above intellectual property rights, we support open and cost-effective access to published research and the large public databases and open source software that underpin much of modern biotechnology. The principles of open access need to be more clearly articulated and developed.

We should avoid creating conditions where developing world scientists are excluded from biotechnological research by issues of bandwidth, and the cost of journals. South Africa enjoys some advantages in these areas but most scientists in the developing world are denied easy access to these resources.

The basic issue is this: if a technology holder and a technology recipient see advantages in a relationship, technology transfer is fundamentally about negotiation of agreements – the transfer of value between stakeholders. But more than this - it is about the genuine sharing of knowledge based upon the assumption that this will lead to a sharing of benefits.

There is a strong case for far more thought and reflection on public good technology transfer, by firms and public institutions, when the economic case is weak or absent but where the recipients may be able to use the technologies effectively.

Technology-based economic development is critical to the success of industrial nations. Governments, institutions, and corporations are accelerating creation and expansion of technology-based businesses, expediting the development of high-performance economic clusters, and strengthening research universities' ability to educate knowledge workers and commercialise technology.

To many outside the frame of modern academic research and commercialisation, the process of technology transfer is mysterious; at one level filled with intrigue and at another level obscured by the "invisible hand of the market."

It is true to say that some technologies are “slippery” and cut across all sorts of boundaries very easily – for example mobile phones. Other technologies are “sticky” and don’t move easily at all: such as oil from coal technology, deep hard-rock mining technologies and the technologies that underpin household food security for example.

In the case of biotechnology mostly we are near the “sticky” end of the scale, unless the products are highly packaged and de-skilled such as some diagnostic devices and, broadly speaking, pharmaceutical products (at least at the level of marketing and sales).

Technology transfer also takes place at two levels – within a country as part of the national system of innovation and globally as part of the global trade regime. At both these levels the significance and role of intellectual property is growing more important and in many cases more contested.

Technology transfer is thus intimately linked with Intellectual Property (IP) and its management. In the process of commercialisation benefits can be derived from knowledge and skills. Used correctly, the IP system is a powerful tool in the innovation process. It allows for the identification of a protected rights-holder, placing them in a position to derive economic benefits from the exploitation of the inventions. Protected IP is exploitable IP. Exploitable IP leads to job creation, to the development of new goods, new services, and new wealth.

However, there are some critical issues that we need to be mindful of. What if the protection is granted in the form of a local patent, but there are no research groups in the developing country that have the capacity, resources or equipment to do research in the discipline involved? And what if there are restrictions in the sale of certain dual use chemicals to that country? What if the negotiations of a free trade agreement to enhance technology transfer include anti-competitive extensions of the monopoly rights of patenting, secrecy or copyright? An example of this arose in the negotiations between the Southern African Customs Union (SACU) and the EFTA (Switzerland, Norway, Iceland and Liechtenstein) countries. These countries were pressuring SACU to enter into their legislation, five to ten years exclusivity on data for registration of brand name medicines, even those not protected by patents. This would give the brand name holder authorising power even in emergency situations. Clearly in the context of developing countries’ health needs this is anti-competitive and protects branded medicines from legitimate competition with the producers of generics.

In an open market, the transfer of technologies between nations can enhance social and economic benefits enjoyed by the recipient society. Rather than merely selling the products of a particular technology around the world, technology transfer properly organised allows new jobs to be created, new skills to be developed and new potential for innovation in the recipient society.

Kofi Annan has said that “National markets are held together by shared values and confidence in certain minimum standards. But in the new global market, people do not yet have that confidence.”

South Africa occupies an intermediate position between least-developed and developed countries. We also have a very energetic life sciences and biotechnology community. Our government has made significant focused investments and the private sector in South Africa is a large investor in research and development. It allows us a potentially useful perspective on global technology transfer issues. However, it will not be news to this audience that in many parts of the developing world there is scepticism of the value of intellectual property, of patenting, of trademarks. These are sometimes portrayed as “Western exploitation”. Is this view the product of ignorance or experience?

If one takes the perspective of a national system of innovation it becomes clear that the ability to secure patent rights is massively asymmetrical between the developing world and the developed world. South Africa, with the largest economy on the African continent secured about 100 patents in the US patent office last year. Less than 10% of these were generated in publicly funded institutions. By contrast about 4000 to 5000 foreign-originated patents are secured in the South African Patent Office annually. There is a clear linkage between the GDP per capita of nations and their levels of patenting. For example a number the larger African economies have not secured more that 10 US patents over the last decade. By contrast the US Patent and Trademark Office registered 1.3 million patents over the last decade!

This means that the majority of scientists and inventors on the African continent do not participate in the activity of securing IP, not because they are unable, but because the state of development of the national system of innovation and its complex relationships between different institutions and agencies has not yet developed to the point where this is possible.

Why is this important in the field of biotechnology? Firstly, the biotechnology revolution, in stark contrast tot the late industrial revolution has been absolutely dependent on fundamental science conducted at Universities. This good science coupled with an enabling environment for technology transfer has fuelled the development of entirely new classes of products and services. Biotech patents often cite literature that is less than 5 years old and produced by research groups of the home country. The biotechnology age is intimately connected to the fabric of publicly funded research.

But this lack of capacity in intellectual property impacts on economic development in a number of ways. Negotiations on the Cartagena Protocol on Bio-safety, for example, have been marked by a strong African lobby – pushing for very high safety standards and an onerous liability regime. This is perhaps understandable as Africa has limited current ability to exploit genetic engineering – it thus wants very high safety standards for first world-developed processes. But this might well be a defensive mechanism that defeats its own purpose, which creates substantial barriers preventing the developing world from taking advantage through ‘home-grown’ or adapted biotechnologies.

The complexity of bio-safety requirements has increased significantly in the past few years in response to vocal activism, and as a result of efforts to address public concerns. This has become a major barrier to technology transfer, with the safety testing of new products potentially costing more than their development – and the requirements are constantly changing.

Certainly evaluations must take place before products are released commercially. We have to ensure, though, that the time and resources required for such studies do not prevent the technology from reaching the poor. In addition, we must ensure that developing countries have the necessary capacity and capability to perform these evaluations on their own, thereby reducing costs and at the same time developing essential skills and knowledge. The knowledge gained from this practice will cascade down to create a better understanding of GMOs and would go a long way towards dispelling some of the myths associated with GM crops and foods.

Regional cooperation in bio-safety regulation and risk assessment for example, could build the capacity needed for these activities. This could lower the cost of obtaining approvals by lowering the number of entry points for developers. For instance, a single bio-safety review for a new GMO in the SADC region could take into account the different environmental conditions in the sub-region and provide a single recommendation, which would be available to all SADC regulators. The review process would feed into national decision making systems, accepting that while safety assessments can account for different environments, neighbouring countries may make different decisions on specific GMOs because of socio-economic impacts.

Stumbling blocks in the face of success abound. The GM potato is one example illustrating this point. The Agricultural Research Council in South Africa is currently developing a GM potato, which is resistant to local pests. This project is supported by a multinational company which provides the technology royalty-free. The technology is not patented in South Africa, but patented in a number of developed world jurisdictions. The intended beneficiaries are subsistence farmers in developing countries. There have been demonstrated benefits in controlled field trials. However, the multinational company is now growing increasingly wary of the liability regime that may be imposed through the Cartagena Protocol. Thus, it is requiring a comprehensive ‘stewardship plan’ to be implemented in South Africa – for fear that it may be liable for trans-boundary movements of the GM potatoes (not by itself or any agency, but by potato seed smugglers).

The Agricultural Research Council now has to evaluate the potential illegal trans-boundary movement, hold consultations with neighbouring regulators, and present the risk assessment for such occurrences. This is raising the costs of the development substantially. It may ultimately prevent release of a crop which could be highly beneficial to small-scale producers in Southern Africa.

Because ‘high tech’ intellectual property is developed mainly in resourced nations, and transferred to less resourced nations, technology transfer revenues tend to flow to the developed world. This is away from where the resources are needed most. Even though economic benefits accrue – a Malaria vaccine transfer, for example, would reap huge economic benefit to the developing world – the knowledge capacity to fully participate in global research is not changed.

Somehow we have been seduced into believing that market presence by high tech firms in the developing world does not include the social responsibility to engage in product research and development in the countries that buy the products. There is some evidence that this is changing, but the evidence is limited and anecdotal. The generous post war approach that allowed the Rockefeller Foundation to fund work with the Mexican government and the 20 year programme of Norman Borlaug is no longer the norm today.

It has been replaced with the rigidities of sector-focused initiatives in development assistance that are short term and have to deliver market or social outcomes that would not even be achievable in the developed world.

There is a strong relationship between official development assistance programmes and the capacity of many developing countries to respond to opportunities to participate in global developments. This complex area and its impact on science and technology capacity needs a meeting of its own, but I want to indicate some of the problems. Until very recently most donors would not consider research and development funding and equipment in their programmes. In the 2004 Foreign Policy Journal bilateral donor support to Tanzania is analysed. Switzerland for example has five projects with a value of about 30 million dollars, giving an average project size of $6m. By contrast Ireland also a donor to the level of $30 million had 404 projects (and average project size of $75000). Tanzania had substantive relationships with 18 donors with 1292 projects worth over $1 billion with a median project size of the order of less than $500 000. Indeed, each of the projects may have merit and value, but we should not underestimate the burden of managing this number of diverse projects, each with their own unique donor requirements, and have to carry on with the normal business of government at the same time. This sort of analysis indicates the additional burden of fragmented responsiveness and multiple requirements that donors inadvertently place on the developing world. The so-called Blair Commission for Africa has adopted a different approach in placing far greater emphasis to investment in science and technology.

Into this heady mix we must add the dimension of traditional and indigenous knowledge. In the Southern African setting the Hoodia plant, its appetite suppressant qualities, traditional knowledge and the rights of communities is now an often told but still often confused story – which Sibongile Pefile will explore further in her presentation. While the current developments of the CSIR, the San people and their partners are stalled in respect of the core inventions and uses, other developments have taken place. Hoodia extracts, which have not been submitted to any reliable regulatory regime, are already included in dieting remedies available from a variety of sources on the Internet. Other communities are contesting the exclusive indigenous knowledge claim of the San community The inescapable complexities should not frighten us away from the legitimate recognition and protection of indigenous knowledge, but this case study clearly shows that there is a need to further develop our models and experience.

Acknowledging the important intersection of intellectual property and traditional knowledge, the South African Parliament has before it the Patents Amendment Bill which enforces full declaration of plant origins and the use of traditional knowledge where these are used in a patent application.

In the face of adversity communities show remarkable tenacity in developing and utilising indigenous technologies for self-benefit. One example is the launch of a mosquito repellent candle making factory in a rural village in South Africa. An indigenous plant has been used for centuries by indigenous people to control mosquitoes. The technology to extract the highly effective ingredients has been patented. The “active ingredient” in the form of a plant extract is being incorporated into candles. I recently had the pleasure of launching a new manufacturing facility next to the fields in which the plant is cultivated by the local community. 67 jobs have been created to date in the rural community, 70% of whom are women.

One could imagine a situation where this is company growing into a small biotechnology venture, as new applications of the mosquito repellent are developed. However there are numerous obstacles to global success for such ventures. Small biotechnology companies in the developing world find it difficult to challenge international pirating of information and materials. This can result in a strategic business approach which places an unduly high emphasis on secrecy of intellectual property – this is likely to be less effective in global competitive markets than adequately protected and enforced patenting approaches.

In this global village we live in, huge disparities in access to resources and levels of development often lead to tensions and frustrations. So, one of the solutions is to encourage, facilitate, or ensure that technology development also occurs in the developing world. The biotechnology industry in South Africa is growing rapidly at present, off a small base. Funding for genetic engineering grew by 360% between 2002 and 2004. The growth in all related fields: biochemistry, genetics and molecular biology, microbiology, genetic engineering, and biotechnology, exceeded 46%. This bears testimony to South Africa’s commitment to strengthening biotechnology.

This increase in investment has had the effect of attracting a number of very active and promising South African scientists back to the country, stimulated the formation of local biotechnology venture capital firms and has led to a number of start-up enterprises based on University generated inventions.

However we need to make sure that these local developments are replicated in the region as a whole. This will require focus and effort by each of the countries and our development partners. Building around excellence and concentrating resources in existing institutions will be much preferred to the development of “green-field” institutions that will take far too long to develop critical mass.

Promoting awareness of the benefits and complexities of intellectual property and technology transfer to developing countries is essential. The asymmetries I described earlier will take time and effort to address effectively. South Africa, according to some desk research on the membership of the Licensing Executives Society (LES), has intellectual property and commercialisation resources similar to those of Greater Manchester. If we recall that South Africa has, at a country level, 10 to 100 times the resources of many other African countries, it is arguable that the total IP and commercialisation capacity of the entire continent is no more than two Greater Manchesters – or, put differently, less than half of Massachusetts.

In the field of biotechnology, which is critically dependent on cutting edge research, the situation will be even more strongly skewed.

This skewing effect needs to be understood in the developed world. The need to facilitate access to technology and have generosity in the arrangements with developing nations in the biotechnology field is self-evident. The establishment of good University based research infrastructure, which will lead to global collaborations and partnerships, is an obvious step both at the bilateral level and through European instruments such as the Framework programmes.

If we are determined to stimulate and implement successful technology transfer to assist the developing world, serious consideration must be given to ways of funding biotechnology enterprises through government and private investments, local and state grants, venture capital, venture leasing, capital equity markets, and convertible debt.

We also need to ensure that there are mechanisms that will generate confidence in first world investors to develop small and medium enterprises in the developing world.

Greater social responsibility is required to ensure that developing nations can emerge from a dependent to an independent existence within the global community – and this development must be sustainable. Louis Pasteur said: “Science knows no country, because knowledge belongs to humanity, and is the torch which illuminates the world.”

Alleviation of poverty, provision of food and development of agriculture will remain an urgent priority in developing countries where a high percentage of the population obtains its living from the land. Trade distorting practices, such as agricultural subsidies, which ruin the livelihoods of emerging farmers, will need to be radically reviewed. This will remain the focal point of intense and sometimes acrimonious debate in the World Trade Organisation (WTO) negotiations.

Pressure on health care budgets will continue. There will be an increased demand for cheaper and safer medicines and lower treatment costs. Developing countries themselves will need to do thorough surveys to establish their market requirements and niche areas. There is a decline in the ageing population in the developing world, whereas there is an increased ageing population in the developed world.

The developed world will have a greater demand for drugs for the elderly – in the developing world the need will be for drugs to reduce infant mortality and to fight diseases such as HIV and AIDS, TB and malaria.

Technology transfer and support from the developed world will not solve all our problems but may very well be the seed in the transition to a better future. Let us ask ourselves: ‘what needs to change in our respective countries that will enable us to move away from the conditions that we are so accustomed to right now?’ and let us make the effort to change it.

Technology transfer is an important and powerful tool for global development with positive implications, particularly for uplifting the developing world – provided we have an approach based on the development of robust national systems of innovation. As Kofi Annan has said, “Globalisation is a fact of life. But I believe we have underestimated its fragility.” Unless the practice of technology transfer is developed to take account of the realities, difficulties and obstacles in the developing world, the gap between the first world and developing countries will merely widen, fermenting disillusion and discontent across the globe.

Bruce Alberts, long-time President of the US National Academy of Sciences said this of Norman Borlaug: “Some credit him with saving more lives than any other person in history”. I wonder what will be said about us one day!

Thank you for the opportunity of addressing you on these important issues. I hope that your deliberations allow you to have both the vision and the courage to do remarkable things for a very needy world.

I thank you.

Issued by: Department of Science and Technology
4 September 2005
   

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