The bioeconomy to 2030: Designing a policy agenda

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Biotechnology has steadily evolved to become a potential motor of environmentally sustainable production and a proven source of a diverse range of innovations in agriculture, industry and medicine. Could we be at the dawn of a new bioeconomy? Public policies will influence the answer.

Since the boom years, debates have raged about where the future sources of rapid growth will lie. Biotechnology has been one widely cited candidate. But experts are divided: some laud biotechnology as a solution to problems such as overcoming disease and boosting food supply, while others see it as a risky and invasive technology.

Can the biological sciences overcome these differences, not only to contribute to solving complex global problems, but to become a driver of economic and societal progress? This is where a bioeconomy comes in. An easy way to think about this idea is to imagine a world driven by a marriage of biology and technology, rather than, say, communications or oil.

However, rather than narrow biotechnology down to some “killer app” such as the micro-chip or the internal combustion engine, consider it more in terms of its pervasiveness and potential to drive whole areas of the economy in different ways.

Already a substantial share of economic output is partly dependent on the development and use of biological materials. This fact alone has attracted considerable government attention.

The OECD has been examining biotechnology for decades, and in 2006, our International Futures Programme launched an interdisciplinary, strategic project to examine the future of a bioeconomy and the way in which policy action could shape its longer term development.

What have we found out? One key message is that the contribution biotechnology could make to economic activity is significant. By 2030 the use of biotechnologies is estimated to contribute up to 35% of the output of chemicals and other industrial products that can be manufactured using biotechnology, up to 80% of pharmaceuticals and diagnostic production and some 50% of agricultural output.

Even without new policies or major breakthroughs, biotechnology could contribute up to approximately 2.7% of GDP in the OECD by 2030. For developing countries this share could be higher, thanks to the greater importance of primary and industrial production in overall output. Moreoever, as these figures assume business as usual, they probably underestimate the potential effects on energy, health and farming.

A striking implication of these estimates is that the economic contribution of biotechnology is potentially greatest in industrial applications, with 39% of the total output of biotechnology in this sector, followed by agriculture with 36% of the total and health applications at 25% of the total.

Also striking is how much these estimates are out of step with the present focus of R&D expenditures by businesses, where a massive 87% of private sector biotech R&D investment went to health applications in 2003, but only 4% on primary production and just 2% on industrial applications.

This mismatch could partly reflect higher R&D productivity in agricultural and industrial biotechnology compared to health biotechnology, though a lack of policy incentives, supporting regulations, skilled researchers and a public lead in R&D investment could also play a role. If a bioeconomy is to properly unfold, then this is a mismatch which policymakers can help correct.

Building in the short term
A closer look at biotechnological developments will make these conclusions clearer. Consider the three main sectors where biotechnology can be applied: primary production, healthcare and industry. While primary production includes all living natural resources, including forests, plant crops, livestock, insects and marine resources, the main current uses of biotechnology are for plant and animal breeding. The main human health applications are therapeutics, diagnostics and pharmacogenetics to improve prescribing practices. Then there are industrial applications which include the use of biotechnological processes to produce chemicals, plastics and enzymes, environmental applications, such as bioremediation, biosensors, methods to reduce the environmental effects or costs of resource extraction and the production of biofuels.

How advanced are these? To be sure, several applications, such as biopharmaceuticals, diagnostics, some types of genetically modified crops and enzymes are comparatively “mature” technologies. But many other applications in areas such as biofuels and bioplastics have limited commercial viability and rely on supportive policies or are still in the experimental stage, such as regenerative medicine and health therapies via cell-based RNA interference. Based on these advances, it is possible to predict some near term impacts of biotechnology with some precision, thanks in part to regulatory requirements for some agricultural and health biotechnologies that leave a data trail about what will possibly reach the market over the next five to seven years.

Also, while biotechnology is frequently used as a process technology to make existing products such as fuels, plastics and crop varieties, it can also be used to produce entirely new products, such as anti-cancer medicines. In these cases, the problems that need to be solved are already quite well known, from the diseases to the types of crop traits and biomass with the potential to improve agricultural and industrial outputs.

The size of the potential market for products such as biofuels or anti-cancer drugs can also be estimated with reasonable accuracy, though there are many unknowns, about the rate of technological advance in other, nonbiotech cancer treatments and so on.

Take agriculture, where the use of biotechnology is developing fast. By 2015, approximately half of global production of the major food, feed and industrial feedstock crops could come from plant varieties developed using one or more types of biotechnology.

These biotechnologies include not only inter-species genetic modification but also intragenics, which involves the transfer of genes between species that are able to crossbreed, gene shuffling, which targets traits to improve cell performance, and marker-assisted selection, which helps identify and select those traits of possible value for productivity, disease resistance, quality and the like.

Research into how biotechnology can improve both yields and resistance to stresses such as drought, salinity and high temperatures has increased rapidly since the late 1990s, as shown by the increase in the number of GM field trials (see chart). Research results are useful for finding out which crop varieties with agronomic traits could be ready for the market between 2010 and 2015, particularly for major food and feed crops such as maize and soybeans. Some of the agronomic traits will also be available for alfalfa, cotton, potato, rice, tomato and wheat varieties. Biotechnologies, other than genetic modification, are likely to be widely used to improve the quality and health of livestock for dairy and meat.

Healthcare is also reasonably straightforward to predict in the short term, with biotechnological knowledge ready to play a role in most therapies by 2015, including both small molecule and large molecule biopharmaceuticals, and with the design of clinical trials and prescribing practices being influenced through the use of pharmacogenetics.

As for industry, the value of biochemicals (other than pharmaceuticals) could increase from 1.8% of all chemical production in 2005 to between 12% and 20% by 2015. Biofuel production, for instance, could partly shift from starch-based bioethanol to higher energy density fuels manufactured from sugar cane or developing bioethanol products based on lignocellulosic feedstock such as grasses and wood.

All of these scenarios suggest a thriving biotechnological sector, but more is needed for this to become a bioeconomy in the longer term, say, by 2030 and to reach the levels of contribution to GDP our figures suggest it can. A successful innovation system is needed for this to happen.

Biotechnology R&D must be performed, paid for and result in commercially viable products and products. This process is influenced by many factors, including regulatory conditions, intellectual property, skills and development. Social attitudes, market structure and business models will also play a role. Improvements can be made to policy in many of these areas.

Regulations are needed to ensure the safety and efficacy of biotechnology products. But regulatory costs are an influential factor. For instance, regulatory costs for genetically modified plant varieties (ranging in the US from $0.4 million to $13.5 million per variety) have limited the use of this technology to a small number of large market crops, while the costs for the open release of genetically modified micro-organisms (approximately $3 million per release in the US) have held back deployment of techniques, such as bioremediation to clean up polluted soils. In some cases these costs reflect social concerns about health and safety, and these concerns have to be allayed. However, in other cases, especially in agriculture, the costs may also reflect a disjointed global regulatory environment, with researchers and investors facing similar compliance requirements in different countries.

Creating a more internationally harmonised regulatory scene would help reduce these costs by creating a level and more transparent playing field that producers, not least those developing applications for small markets, and consumers would benefit from. Policy action to ease regulatory costs would give those technologies that are ready the market access they need to grow and improve. Intellectual property rights must also be harnessed for the bioeconomy to grow. There is an opportunity for both firms and universities to use IPR to encourage knowledge-sharing through collaborative mechanisms such as patent pools or research consortia.

This will influence new business models too. Two new business models could become increasingly important to 2030: collaborative models for sharing knowledge between entities and reducing research costs, which will bolster smaller biotech firms in agriculture and in industry, and integrator models that bring key protagonists together in areas such as healthcare to manage the complexities of predictive and preventive medicine, drug development and major database analysis.

Designing a policy agenda
Clearly, realising a bioeconomy by 2030 will take work and require a policy framework for addressing technological, economic and institutional challenges across agriculture, health and industry. Mature biotechnology applications may need some minor assistance, but other areas of biotechnology, such as personalised medicines, need a major policy drive with new mechanisms. Such measures will have to manage crosscutting issues for intellectual property and integration across applications, and tackle local and global challenges, from investment and trade barriers to health and environmental concerns.

One of the promising prospects associated with bioeconomy is that its main markets will be in developing countries, reflecting rapid income and population growth. Rising levels of educational achievement across the developing world, particularly at the tertiary level, will create centres of biotechnology research that can address some of the problems that are likely to develop in these countries, including a growing need for low carbon energy, clean water and high-yield, resistant agricultural crops.

But whether the goal is to improve food security, enhance health therapies or boost the sustainability, safety and productivity of industry, obtaining the full benefits of biotechnologies will require leadership, primarily by governments but also by important firms, as well as informed civil society and consumer groups. Regional and international agreements will likely be needed too, as will mechanisms to ensure that policy can flexibly adapt to new opportunities.

In short, the structural conditions required for success must be put in place. If this is done, then a dynamic and beneficial bioeconomy would take hold and brighten the long-term future of the entire planet.


OECD (2009) The Bioeconomy to 2030: Designing a Policy Agenda, Paris.

“Agricultural and health biotechnologies: Building blocks of the bioeconomy”, OECD Journal: General Papers, Volume 2009/3, OECD, Paris.


©OECD Observer No 278 March 2010

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