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Biotechnology Industry Overview

11, 01. 2004

Current State

Successive Entries Being Made into the Field of Cell and Tissue Culture

  The biotechnology industry is generally classified into the following four fields: fermentation, tissue culture, cell fusion and genetic engineering. Fermentation, especially, is a field that can be said to be a Japanese specialty. There is a long history in Japan of this food technology that utilizes microorganisms, as represented by such traditional fares as miso (fermented soybean paste), natto (fermented soybeans) and sake (rice wine).
 In addition to companies in the food and alcoholic beverage industries that have traditionally been involved in such biotechnology, firms from other industries such as chemical, pharmaceuticals, steel, gas and tobacco have successively entered the biotechnology market in recent years. The majority of them are involved in the field of tissue culture, which is a relatively easy area to commercialize as products.

Central Government Bldg. No.5 housing Ministry of Health, Labour and Welfare etc.
Central Government Bldg. No.5 housing Ministry of Health, Labour and Welfare etc.

The aim of such market entry is to create business opportunities, ranging from plant breeding that utilizes tissue culture technology to improve the quality of flowers, fruits and vegetables to research of grain germplasm, centering on the Japanese staple of rice, and ultimately the sale of F1 seeds (hybrid seeds) that have a large size as a market.

Gene Therapy: Treatment for Cancer Thought Most Promising

  Practical application of biotechnology in healthcare and pharmaceuticals is also steadily advancing. The major fields for its practical application are gene therapy, regenerative medicine and antibody drugs.
   In gene therapy, diseases and disorders are treated by introducing a gene that contains a blueprint for repairing or revising defective genes to a patient's body. There is great expectation placed on gene therapy by those involved since, as compared with conventional treatments such as chemotherapy or radiotherapy, it treats a disease from the fundamental cause.
   The most promising therapeutic target for the commercialization of gene therapy is regarded to be cancer. Takara Bio Inc., a subsidiary of Takara Holdings Inc., is in the lead in this area. MolMed S.p.A. of Italy, which has an agreement with Takara Bio for gene therapy using Takara's RetroNectin gene therapy medication, is already conducting clinical trials in Europe for the commercialization of such gene therapy. Takara Bio itself will soon be commencing clinical trials in Japan.

Research and Development related to Genes for the Creation of New Blood Vessels in its Final Phases

 Another area where early application of gene therapy medication is expected is for the treatment of arteriosclerosis obliterans through the neogenesis of blood vessels. Often seen as one of the complications of diabetes, this disease primarily consists of the narrowing and eventual blockage of the arteries supplying blood to the feet (i.e. peripheral vessels).
 There are many genes related to the regeneration of blood vessels, such as the vascular endothelial growth factor (VEGF), fibroblast growth factor (FGF) and hepatocyte growth factor (HGF). However, VEGF is the gene for which R&D is being conducted most actively around the world. In the case of Japan, clinical development being conducted in Korea by Takara Bio will soon be entering its final phase.
 Meanwhile, HGF gene therapy medication that is being developed by AnGes MG, Inc. (a Japanese listed company) is currently also undergoing clinical trials. HGF was discovered in Japan, and AnGes MG holds many of the basic patents. If HGF is approved globally, it will become a major new drug that will result in sales of over 100 billion yen per year.

Great Expectations Also Held for Regenerative Medicine for the Recovery of the Bodily Functions of Elderly People

 Regenerative medicine is a technology that utilizes embryonic stem (ES) cells to regenerate organs and tissues, lost through diseases, accidents, etc. or missing through congenital anomalies (birth defects). There are expectations in the application of regenerative medicine not only for the treatment of illnesses but also for the recovery of the bodily functions of elderly people. Kyowa Hakko Kogyo Co., Ltd. is the leader in this field.
   Kyowa Hakko established a technique for isolating and cultivating mice mesodermal stem cells. Related patents have already been filed and published. There is a strong possibility that it will lead to the discovery of new drug for human use.
   The practical application of cultured skin is also imminent. Cultured skin has already been commercialized in the U.S. for the treatment of the intractable ulcers of diabetic patients. R&D is being conducted in Japan towards the grafting of skin that has been cultured from the patient's own skin. In the lead in Japan are Japan Tissue Engineering, Ltd. (J-TEC; unlisted company) and BCS, Inc., a venture firm.

The Odds-on Favorite as the Next Generation Biopharmaceutical-based Medication Is Antibody Drugs

 Outside of skin culturing, Olympus Corporation is aiming for the practical application of bone engineering technology, while J-TEC is involved in cartilage engineering, etc. Hitachi Medical Corporation is aiming for the practical application of tooth germ regeneration while Terumo Corporation's target is myocardial cell regeneration for coronary heart disease patients. The money is on antibody drugs, however, as being the next-generation biotechnology-based medication.

History

Off to a Late Start as Compared to the U.S. and Europe but Catching Up in the Area of Biotech Applications

 It was around 1980 that biotechnology became a boom in Japan. With a shorter history in such research as compared with the United States and Europe, Japan lagged significantly behind these regions that were especially ahead of Japan in basic biotechnological research. However, Japan is catching up at a rapid pace in the application of the technology, such as in the form of concrete products.
 High growth of the scope of the biotechnology market is continuing in Japan. Worth about 200 billion yen in 1980, this market expanded to roughly 1 trillion 433 billion yen in 2001. In the promotional government measures for the development of the biotechnology industry, released by what was then the Ministry of International Trade and Industry (now the Ministry of Economy, Trade and Industry) in 1999, the forecast was that biotechnology would become a 25 trillion yen market in 2010.

Efforts to Link the Human Genome to New Drug Discovery Begins

The decoding of the human genome, at the forefront of genetic research, was completed in 2000. In the field of pharmaceutical production, efforts to link genetic functions to drug discovery based on these results have begun. Basic research in the fields of agriculture and chemical engineering are also advancing. There are prospects now that increased food production and the conservation of energy in chemical synthesis processes will be realized in the near future.
   Nanobiology, an integration of nanotechnology and biology; bioremediation, a technique for removing environmental pollutants by utilizing biological agents such as microorganisms and plants; combinatorial bioengineering, a method for analyzing proteins; and molecular agriculture, for the production of substances that are beneficial to plants are also among the technologies in the limelight as being promising.
   In July 2002, the Biotechnology Strategy Council was convened by the Japanese government. It drew up the Biotechnology Strategy Guidelines with the aim of enhancing industrial competitiveness. It contained an action plan to increase the national R&D budget at a pace greater than two times in five years. It also outlined prioritized and focused promotion of R&D in fields such as advanced pharmaceuticals, areas of integration with information technology as well as in the development of measurement and analytical equipment.

Three Key Points towards the Future

Point 1
Can an Environment that Fosters Biotech Ventures Companies Be Established?

 Needless to say, biotech venture companies will be the engine that will drive the growth of the biotech industry in the future. The management of a biotech venture, however, involves great risks. An outlay of massive amounts of R&D funds must be made before a new drug or medical technology is officially approved in Japan by the Ministry of Health, Labour and Welfare. In other words, a company can begin to make profits only after approval is granted. Furthermore, there are risks associated with the development of biotechnology, and there are many instances where there is no choice but to discontinue development efforts in midstream. In such cases, the massive funds already injected into R&D go to waste.
   An ideal environment would be as follows. Companies are assessed based on a forecast of their performance in five to ten year time on the basis of their technological capabilities and the business potential of their products and services. Movement towards the listing of the stocks of these venture companies then becomes brisk, resulting in a smooth inflow of development funds to companies from investors. However, when compared to countries such as the United States, there are not that many biotech venture companies in Japan that are listed on the stock exchange. It is therefore that much more difficult to assess the corporate value of a venture firm, and this is acting as an obstacle to the listing of new venture companies. An infrastructure that fosters venture firms is recently in the process of being established, such as through the public offering of stocks made possible through the Tokyo Stock Exchange's "Mothers" market and the Osaka Securities Exchange's "Nippon New Market (Hercules)." However, there is a need to further accelerate such trends.

Point 2
Will Alliances and Joint Research with American and European Companies Advance?

 The biotech boom erupted in Japan in 1980, but its history is short as compared with the United States and Europe where there is a history of research and development that goes back nearly 50 years. It seems undeniable that Japan was off to a late start, especially in basic research. Alliances and joint research with U.S. and European companies are essential in order for Japanese companies to make a dramatic leap forward in the field of biotechnology. A case for reference is that of Chugai.
 Chugai was a one of the pioneers of Japan's domestic biotech pharmaceutical products. In the early 1990s it launched Epogin (recombinant erythropoietin) and Neutrogin (recombinant granulocyte colony-stimulating factor).Today, it is currently focusing its managerial resources on antibody drugs. An application for MRA, a humanized anti-IL-6 receptor monoclonal antibody has already been filed for approval, and its additional indication for rheumatoid arthritis is in the latter phases of clinical trials. If approved, it will become Japan's first domestically produced antibody drug. There are increased expectations for this medication as a new drug of a large scale.
   Meanwhile, Chugai became a subsidiary of Swiss-based F. Hoffmann-La Roche in 2002. This move is evaluated among those in the industry as being a major benefit towards the development of antibody drugs. This is because Roche has, as a subsidiary, Genentech, Inc., an American company that is a global leader in antibody drugs. There are many synergistic effects that are anticipated.

Point 3
How Accepting Will Japanese People Become of Genetic Engineering Technology?

 A major key for the development of the biotechnology industry, especially in relation to genetic engineering, is acceptance by citizens. Genetic engineering is a relatively new technology as compared with tissue culture, etc. People are generally not very familiar with it, and there are quite a lot of people who feel an undefined sense of unease towards genetic engineering.
 In Japan, Mitsui Chemicals, Inc., Kirin Brewery and Kagome Co., Ltd. were among those who had decided to enter the field of genetic engineering. However, they decided to retreat from this field once the "allergic" reactions that consumers held towards genetic engineering surfaced. It is essential that correct information regarding biotechnology is disseminated and public acceptance promoted in order to make the practical application of biotech possible and advance the industrialization of this sector.

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