Spearheading the Covid response

The biotech sector has since spearheaded the global response to the coronavirus pandemic, which has accelerated both the development and adoption of various medical, health, and bioinformatic biotechnologies.

For example, biotech firms have helped to decipher the Covid-19 genome and understand how our immune defence mechanisms work against infection. They have used this information to develop various diagnostic tests, therapeutics, and vaccines.

As examples, US-based wastewater epidemiology biotech startup Biobot Analytics uses genomic and chemical tests and data analytics to detect the virus in a community’s sewage system to track its spread. Biotech diagnostics company Sherlock Biosciences developed the first FDA-authorised CRISPR-based SARS-CoV-2 test kit, which can return results in about an hour.

Renewed relevance

At its core, biotech is a field of technology that implements biomolecular and cellular processes to create healthcare, food, agricultural, industrial, and fuel products.

Based on its relevance in our modern lives, the sector will continue to advance and play an increasingly prominent role in society as more applications emerge.

According to a report by Vision Research Reports, the global biotech market will grow at a CAGR of 16.83% to surpass the USD 1 trillion mark in 2022 – the global biotechnology market was valued at USD 752.88 billion in 2020 – and reach USD 3.44 trillion in size by 2030.

Ongoing biotech innovation will drive this growth and transform our future as we tackle global problems, including new diseases through personalised medicine; environmental pollution, food scarcity, and management through agri-biotech and synthetic biology; and untold emerging applications in the flourishing global bio-industrial sector.

Creating investment opportunities

These developments will create investment opportunities for private and institutional investors. According to a McKinsey & Company report, the average share price for European and US biotechs increased at more than twice the rate of the S&P 500 between January 2020 and January 2021, while Chinese biotechs performed more than six times better, with their average share price more than doubling in a year.

The biotech sector also saw double-digit annual growth in fundraising from VCs and deals such as partnerships, co-developments, and joint ventures between 2019 and 2020.

SA's growing biotech sector

From a local perspective, South Africa's growing biotech sector can contribute to global innovation with the right investment and focus while also benefiting the local economy.

“Biotech has been a nascent sector in the country for some time but pockets of innovation have emerged in recent years,” explains Dheepak Maharajh, Cluster Head at BioCiTi, a Cape Town-based biotech innovation incubator and accelerator.

BioCiTi sees enormous potential in biotech as a technology that can benefit the environment and make a positive impact on people’s lives. As such, the organisation aims to support entrepreneurs and catalyse scientific innovations from ideation to commercialisation.

“The pandemic helped to accelerate progress in the local sector with vaccine development and increased vaccine production capacity in the country,” continues Maharajh.

More broadly, biotech innovation in South Africa is focused on moving away from harmful technologies.

“Biofuel development is a strong theme emerging in South Africa as the country seeks ways to shift from its reliance on fossil fuels,” elaborates Maharajh.

“At Investec we see it as a business imperative to keep track of emerging innovation,” says Camilla Swart, Fintech Partnerships and Innovation at Investec (SA). “It’s exciting to see the South African biotech ecosystem growing. We understand that accelerators like BioCiti play an important role in nurturing biotech start-ups, helping them to become investor-ready and to access the right networks”

“More and more,”  she adds, “we are seeing the confluence of businesses that are set to offer both profit and purpose, and benefit the planet and communities. Many financial services and high net worth individuals are seeing the potential of impact investing as a means to both give back and see returns.”

Economic driver

With the country's strong scientific base, Maharajh believes the biotech sector offers numerous opportunities to attract foreign direct investment, which will create jobs and support economic growth.

“We can leverage our expertise and existing infrastructure to drive the government's ambitions to create a thriving biotech economy,” he explains. 

“More investment and focus on South Africa's biotech sector will also create sustainable solutions that deliver climate change benefits and improve food security by helping to reduce our environmental impact and loss of arable land.”

Maharajh's highlights

Five key themes that will drive biotech advancements in 2022 and beyond

  • 1. Biological tools

    As the pandemic rages on, genome testing and sequencing, and vaccine development will serve as the main driver of sector growth in 2022.

    Indalo Bio is a certified advanced genetics laboratory and a graduate of the BioCiTi programme that is helping meet the demand for diagnostic testing amid the pandemic.

    “The lab started off doing cancer-based research but pivoted to Covid testing amid the pandemic, which has benefited their business,” says Maharajh.

    BioCiti-based biotech startup Afrobodies has also contributed significantly to our understanding of the virus and how it mutates.

    The company developed antibodies that were among the first in the world to undergo laboratory testing against the 501Y.V2 Beta variant was first detected in South Africa.

  • 2. Food technology

    As the world continues to grapple with climate change, the lines between food technology and biotech innovation will increasingly blur. Biotech solutions that support sustainable farming practices sit at the forefront of our fight against rising plant pestilence and the threats to agriculture posed by insects and abiotic stresses such as drought and cold.

    Biotech solutions aimed at addressing these problems include plant breeding to raise and stabilise yields, while creating crops that offer enhanced resistance. Bio-agri technology can also enhance the nutritional content of food or help to improve digestion, which is vital to address issues around malnutrition and food scarcity.

    For example, local biotech startup Biotikum produces probiotics for animals to improve gut health and feed efficiency.

    “This technology has demonstrated benefits in vitro and will soon roll out to probiotics for people,” says Maharajh. 

    There is also significant focus within the biotech community on alternatives to livestock farming for meat. These innovations include plant-based proteins, insects for food, and lab-cultured meat products. 

    BioCiTi supports numerous biotech startups that are working to improve food security and reduce greenhouse emissions associated with livestock farming to benefit the environment by creating sustainable meat alternatives.

    These companies include Maltento, which produces soldier fly larvae as a protein-rich alternative for pet food and animal feed, which typically use fish meal.

    “This innovation will help to reduce overfishing in our oceans and reduce incidences of livestock disease such as mad cow disease,” adds Maharajh.

    In addition, Mzansi Meat Co leverages BioCiTi infrastructure to create lab-grown meat from cells to replace animal products. 

    “While many of these disruptive technologies are still in the R&D phase, when they hit the market they will change the way we think about protein,” affirms Maharajh. 

  • 3. Bio-fabrication

    Biofabrication entails producing complex biologic products from raw materials such as living cells, matrices, biomaterials, and molecules. This area of biotech innovation holds significant potential within the consumer products and industrial sectors.

    “Emerging trends and developments around nano-materials and biopolymers are allowing us to create biodegradable products that reduce our impact on the environment,” states Maharajh.

    Gracious Nubian is an example of local innovation in this area. The company aims to inspire a healthy world through menstrual solutions for women with its biodegradable sanitary pads. Made from biological materials, women can reuse the washable sanitary pad for up to two years.

    Another biotech innovation relates to the development of a beneficial bacteria that you add to washing water. The product neutralises the cleaning chemicals and starts to kill the flora and fauna in the pipes before the waste water reaches the treatment plant.

    “By starting the treatment process immediately, we can reduce the burden on our grey water systems,” adds Maharajh.

  • 4. Health and wellness

    Maharajh highlights another prolific biotech trend that relates to using natural resources to create new products.

    “While not a new trend, the way the sector is applying these processes is new. By taking knowledge and formulating new products, particularly around botanicals, biotech startups are creating broad applications within the complementary medicine, skincare, and haircare sectors.”

    For example, SK Botanicals is a local biotech company that scientifically develops and GMP manufactures multifunctional botanical skincare products.

  • 5. Biocomposites

    Biocomposites are a more sustainable alternative to fossil-based plastics. These bioengineered materials are typically made from polymers and natural fibres, and will create effective solutions to address the world's spiralling plastic waste problem. They are also driving the global shift to a circular economy.

    By adding biocomposite material to new or recycled plastics, biotech companies will help to improve material usage and reduce the amount of micro-plastic that enters the environment while reducing carbon emissions and energy consumption. 

Disclaimer

Please note that Investec is not necessarily endorsing or investing in the companies mentioned in this article. The article is purely informational to highlight some of the key industry trends surfaced by Biociti.

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