P&G exec tips industrial biotech will dominate

Industrial biotech will eclipse its so-called 'red' and 'green' cousins, as industries are forced to adapt to environmental pressure, the head of global biosciences at the giant Proctor & Gamble corporation has predicted.

Speaking at the NZBio conference in Auckland today, Steve Meller said there was growing acceptance of industrial biotechnology, both from industry and the public, as an important relation to biomedical and agricultural biotech.

"It has been called the 'third wave', but it will overtake the other two," Meller said of industrial biotech, which includes biofuels, bioprocessing, 'pharmed' plants, polychemicals, feedstock, enzymes and catalysts, among other areas.

The biofuels area alone, Meller said, was already attracting heavy investment from very big players well aware that they were "addicted to oil", as US president George W Bush recently pointed out.

Procter & Gamble is best known as a company of brands; it recently bought Gillette in a US$57 billion deal. But, Meller said, P&G spent US$7 billion each year on raw materials whose base was petroleum -- a situation which led to the company and others in its position to turn to biotechnology as a way to maintain its profit margins.

To explain, Meller gave the example of a fictional company, 30 per cent of whose products were petroleum-based, with revenues of $1 billion and profits of $100 million. "If the price of oil goes from $60 a barrel to $80 in 2006, all of that company's profits will be wiped out," Meller said. "Many companies are trying to avoid dependency on petroleum-based products."

Meller equated petroleum giants would become "the next big pharma" in their relationships with biotechnology firms. "They are not sitting by idly," he said.

The challenge for biotech firms was in intellectual property, in establishing good partnerships, and in proving their efficiency, Meller said. The US energy and agriculture departments recently enlisted biotech firms Novozymes and Genencor to see if they could produce bioethanol at US$0.10 a gallon. The project, still in its early days, has already produced bioethanol at $0.50 a gallon.

And NatureWorks, a joint venture between Cargill and Dow, is working with WalMart, packing four of the retailer's product lines in a new kind of plastic. The result has been a saving to WalMart of 100,000 gallons of petroleum each year, Meller said - and a reduction of some 11 million pounds of greenhouse gas emission.

In the face of such figures, Meller said, government regulations and public acceptance would surely follow. Like a genie from the bottle, he said, "biotech is out and there is nothing anyone can do to stop it."