Biotechnology in Agriculture: 1994 Year in Review

Nineteen ninety-four was a turbulent year for the biotechnology industry. The industry's largest sector, biopharmaceuticals, was hit with a number of clinical trial setbacks and failures, and investors began to question the worthiness of their high risk investments in biotechnology in general (1). In fact, three of the top ten worst performing stocks for 1994 on the NASDAQ market (based on percentage change from 1993) were biotechnology stocks: Telios Pharmaceuticals, MicroProbe, and Alpha 1 Biomedicals (2). Although each of these three companies are focused on therapeutic development, agricultural biotechnology companies may have been hurt by the pharmaceutical sector, and did not fare much better.

Here is a sample of some select ag-biotechnology company stocks and their percentage price change during 1994 (3):

As was noted in the Agricultural Biotechnology Notes section from the August 1994 NBIAP News Report, the movement of agricultural biotechnology stocks closely mimics that of the biopharmaceutical sector. This is likely due to the large swings in individual biotechnology company stock prices (usually therapeutic firms) that pull the entire biotechnology industry with them, economic conditions that impact all stocks, and a lack of sophistication and understanding of the technologies by some investors.

In addition to the poor market showing by agricultural biotechnology companies, a number of other notable developments took place in 1994 related to the agricultural biotechnology sector. Some of these include:

• Monsanto's bovine somatotropin (BST) went on the market in February 1994, creating controversy and litigation over its economic impact and product labeling provisions.

• Calgene's genetically engineered Flavr Savr (TM) tomato was approved by the FDA in April 1994, and went on the market in the United States. It was also issued patent protection by the European Union.

• The USDA (APHIS) approved discontinuation of regulation under the Plant Pest Act of some genetically engineered agricultural products, including BXN (TM) cotton (a herbicide-tolerant cotton), Laurate Canola, the Flavr Savr (TM) tomato (all developed by Calgene), and Monsanto's herbicide-tolerant soybean.

• The NIH published revised guidelines for research involving recombinant DNA molecules.

• The FDA developed proposed regulations that would establish a mandatory premarket notification system for foods derived from genetically modified plants.

• The German government eased its strict biotechnology regulations, making it easier to conduct research and development using genetic engineering. One area that this change may impact is the number of field trials conducted in Germany, as only 2 field release permits had been approved there between 1986 and 1992, compared with 77 in France and 316 in the United States for that same period. The European Union also worked toward easing permit requirements for field tests of genetically engineered plants.

• The broad patent awarded to Agracetus in 1992, covering all genetically engineered cotton varieties, came under scrutiny and was considered for possible re-examination.

• The U.S. Patent Office requested comments on proposed changes in patent protection rules for biological inventions.

The FDA found seven genetically engineered food plants safe, including tomatoes from Zeneca Plant Science, DNAP Plant Technology, and Monsanto; ZW-20 squash from Asgrow; insect-resistant potato and herbicide-tolerant soybean from Monsanto; and herbicide-tolerant cotton from Calgene. Although these food crops were deemed safe by the FDA, they are also subject to approval by the USDA and/or the EPA.

In spite of the lack of confidence of investors in agricultural biotechnology companies during 1994, one end-of-the-year forecast predicts almost 30% average annual sales growth over the next ten years of ag-biotech products, increasing from an estimated $130 million in 1994 to almost $1.5 billion in 2004 (4). Research discoveries continue to evolve, and this, combined with breakthroughs in ag-product commercialization and regulation in 1994, continue to fuel optimism for the sector's future growth.

References:

1. Biotechnology in the U.S. Pharmaceutical Industry, The Institute for Biotechnology Information, January 1995, pg. 5-23.
2. Year-End Review of Markets and Finance, The Wall Street Journal, Tuesday, January 3, 1995, pg. R4.
3. The Wall Street Journal, Tuesday, January 3, 1995, pg. R25-R30.
4. Shamel, R.E., and M. Keough, 1994. Non-Medical Areas Expected to Show the Fastest Growth in Biotechnology. Genetic Engineering News, December 1994, pg. 11.

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