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23 Sham, Y.Y. et al. (1997) Consistent calculations of pKas of ionizable residues in proteins: semi-microscopic and microscopic approaches. J. Phys. Chem. 101, 44584472 24 Hendsch, Z.S. et al. (1998) Parameter dependence in continuum electrostatic calculations: A study using protein salt bridges. J. Phys. Chem. 102, 44044410 25 Oliveberg, M. et al. (1995) pKA values of carboxyl groups in the native and denatured states of barnase: the pKA values of the denatured state are on average 0.4 units lower than those of model compounds. Biochemistry 34, 94249433

26 Swint-Kruse, L. and Robertson, A.D. (1995) Hydrogen bonds and the pH dependence of ovomucoid third domain stability. Biochemistry 34, 47244732 27 Kuhlman, B. et al. (1999) pKa values and the pH dependent stability of the N-terminal domain of L9 as probes of electrostatic interactions in the denatured state. Differentiation between local and nonlocal interactions. Biochemistry 38, 48964903 28 Whitten, S.T. and Garcia-Moreno, E.B. (2000) pH dependence of stability of staphylococcal nuclease: evidence of substantial electrostatic interactions in the denatured state. Biochemistry 39, 1429214304

29 Elcock, A.H. (1999) Realistic modeling of the denatured states of proteins allows accurate calculations of the pH dependence of protein stability. J. Mol. Biol. 294, 10511062 30 Frankenberg, N. et al. (1999) Does the elimination of ion pairs affect the thermal stability of cold shock protein from the hyperthermophilic bacterium Thermotoga maritima? FEBS Lett. 454, 299302 31 Strop, P. and Mayo, S.L. (2000) Contribution of surface salt bridges to protein stability. Biochemistry 39, 12511255

Green biotechnology and European competitiveness


Juan Enriquez
Europe has led many aspects of gene research and yet it has been unable to translate these discoveries into a globally dominant industrial sector. There are valid societal, political and financial reasons for its reluctance to deploy agricultural biotechnology but this reluctance might have unintended consequences. It will be hard to de-commoditize agriculture and improve farmer s lives. Research in medical biotechnology and the global environment might suffer. Europe could damage its overall economy and its global competitive standing.

research science, Europe is finding it hard to translate biotechnology discoveries into the thousands of new companies and vast wealth that has accrued in the USA in Cambridge MA, San Diego, Maryland and Silicon Valley. Furthermore, current debates and policies might further isolate the continent, with severe repercussions for employment and overall wealth.
Euroskepticism

Juan Enriquez DRCLAS. Harvard University, 61 Kirkland St, Cambridge, MA 02138, USA. e-mail: enriquez@ mediaone.net

The ability to understand and reprogram life forms is going to become one of the key drivers of the global economy. Some of the worlds largest companies have completely restructured themselves to become life science companies13. For example, DuPont, sold off its oil subsidiary, Conoco, to fund an aggressive life science expansion. The same is happening to companies involved in farm inputs, pharmaceuticals, food processing, energy, mining, cosmetics and even information technology. IBMs largest computer project, Blue Gene, is an attempt to build a machine that can process the enormous amount of new genomics information. As these businesses grow, or wither, they will change the competitive positions of countries. Europe is in ever-greater danger of falling far behind in this massive industrial restructuring. Europe birthed large parts of the biotechnology revolution. Many examples of leadership come to mind including Mendels peas, Crick and Watsons DNA and the Roslyn Institute clone (Dolly). During the race to sequence the human genome, the Sanger Centre served as a global example and motor; the UK government was among the first to advocate the use of embryonic stem cells. But despite cutting-edge

There are many reasons why Europeans are justifiably skeptical of a biotechnology panacea, including health concerns, regulatory efficiency, budget implications and potential environmental impacts. Over the past decade, various European countries have suffered a series of food crises. Many were caused by the introduction of ever larger and more complex agro-industrial processes. Bovine spongiform encephalitis (BSE) started because of improvements in cow feed4. Fear of processed foods increased after revelations of dioxin in farm animals, contaminated Coca-Cola and lax Salmonella regulation. During 2000, a US subsidiary of a French company Aventis, released Starlink corn into the human food chain with global consequences. Each of these incidents undermined the already shaky credibility of European regulatory authorities and politicians. When Europeans were asked whose opinions they trust to tell the truth on biotechnology, the results were: consumer organizations 26%, medical professionals 24%, environmental organizations 14%, international institutions 4%, and national government 3% (Ref. 5). Most believe that regulators focus too much on the needs of farmers and companies instead of protecting consumers. Eurocrats and politicians reacted by becoming ever more wary of new technologies. Low credibility, fear, and lack of scientific literacy makes it ever harder to use science-based arguments to promote biotechnology, particularly after the first attempted impeachment of the whole of the European Commission for their handling of the BSE crisis; precaution often trumps innovation in the Europe of today. Budget deficits have also instilled a fear of biotechnology. Europe leads the world in attempting to erase borders and reconcile multiple regulatory frameworks, as well as discussing common security

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and tax structures. But integration has not been cheap. European budgetary debates are ever tougher because the amounts involved are significant, and some countries are net contributors whereas others are net beneficiaries of European Union (EU) funds. Ireland, for example, has received the equivalent of 3% of its GNP in transfers from the community. There is increasing pressure within the taxpayer base of the countries that provide the most funds, particularly Germany and the UK, to reduce the amounts provided to the EU. But the EU bureaucracy cannot achieve austerity if agricultural subsidies remain sacred. These subsidies represent close to one half of the entire EU budget; the agricultural sector received US$ 50.5 billion in 1999, which was 16% above previously stated target spending levels6. Cultivating smaller farms, maintaining a rural lifestyle and avoiding a showdown with farmers gets more expensive every year. Europe pays a lot to produce, or not produce, food it does not need. Within the EU, the price of the average farm product is almost two-thirds more than the world price. During 1999, wheat imports paid a duty equivalent to 93% of the world market price (see http://www.fas.usda.gov/ grain/highlights/1999/99%2D06/ft6%2D15.htm). Maintaining this system requires combining high tariffs, effective barriers to entry and large internal subsidies. This scheme becomes even more difficult to balance as the EU expands. By 2000 the EU had accepted membership applications from ten Central and Eastern European countries. Potentially, this could lead to the inclusion of more than eight million agricultural workers and millions of acres of crops. More applications, including that from Turkey, are pending. Few farmers within these prospective EU members sold their produce at EU subsidized levels. In November 1998, Poland was selling rye 28% below EU intervention prices and Hungary sold its wheat ~40% below the EU price. A two-tier price structure, for old members and new members would be hard to legitimate and police within the context of open borders, but the cost of maintaining and broadening the current agricultural system could become overwhelming. However, attempts to reform this system, such as Agenda 2000, have foundered. They were gutted after farmer protests. Even if the EU achieved its objective and cut grain subsidies by 15%, rapid productivity gains without price adjustments could upset an already strained system7. New technologies are often unpopular because many European policy makers believe that each additional kilo of agricultural produce leads to demands for new subsidies rather than to a decrease in the EU budget as a result of productivity gains. As green biotechnology threatens to overwhelm budgets and regulations, many European governments have turned to safety restrictions in an attempt to protect their farmers. Battles over beef exports have raged between the EU and the USA because hormone-treated cattle grow faster and more efficiently. This could be a preview of
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even more bitter confrontations as biotechnology products continue to reduce the cost of staple crops. Finally, there are good reasons to debate and worry about the environmental and health impacts of the gene revolution. As with any new technology there will be serious mistakes and accidents. It would have been difficult to imagine World War I without technologies such as electricity and steel, or the Cold War without nuclear weapons. Scientific revolutions create great wealth but also create potential for misuse. Some of the technologies that help grow crops or create new medicines might also be used to design weapons. However valid these concerns might be, Europes attempt to ignore or slow down progress in agricultural life science could end up being extremely costly. Instead of just focusing on the potential problems of this revolution, the EU should also examine the consequences of falling far behind in a key technological revolution.
Rapid change, but not in Europe

The agriculturebiotechnology revolution is in its first and highly experimental stage; the first commercial genetically modified (GM) crops were grown in China in 1992 and large-scale adoption in the USA only began in 1996; changes can, and should, occur very rapidly. Agricultural productivity increases will grow and compound. Within the USA the speed of GM crop adoption was spectacular. By June 2000, 61% of cotton, 54% of soybeans and 25% of corn were grown from GM seeds8. Globally, however, this is still a highly localized phenomenon. In 1999, the USA planted 69% of the worlds GM crops, Argentina 14%, Canada 10% and China 3%. Companies that established a leadership position in green biotechnology research soon dominated the production of key export crops. Chemical and pharmaceutical conglomerates bought most large seed companies and by 1999 Monsanto and DuPont controlled more than four-fifths of USA corn seed and over half of its soybeans9. The entities buying, distributing and processing food and fiber also consolidated. As a few countries embraced new technologies, Europe was busily building a moat around its rural environment. In the short term, Europes decision to restrict green biotechnology has hurt a few European companies but it has not been a disaster. There is still considerable debate over the relative productivity and profitability of GM and non-GM crops. A recent EU report concluded, studies do not provide conclusive evidence on the effective profitability of GM crops10. Although this position might be arguable today, it could soon be overwhelmed by a mass of new bio-tools, patents, brain drains and marketing strategies.
Consequences of selling commodities

In a commodity system, those who can produce and sell ever cheaper, high quality goods create

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enormous pressures on inefficient producers. Sometimes it is hard to recall just how relentlessly technology lowers prices; in 1897 a pair of scissors cost the equivalent of US$ 67, a phone US$ 1202 and a bicycle US$ 2222. Over the past few centuries, growth in food production and efficiency has exceeded the increase in human population by a significant margin. In 1919 it took the average US worker 2 hours and 37 minutes to earn enough to buy a chicken; by 1997 it took 14 minutes11. Today, there is more than enough grain available to feed everyone on the planet (although this is far from equally distributed). Even famine-prone countries, such as India, are now producing grain surpluses. China imported corn as late as 1995, but by 1998 it was a net exporting country. Billions of people can now occasionally eat what were previously considered luxury foods, such as meat, because there is enough grain to feed some cattle, which have a very inefficient feedmeat conversion ratio. In real terms, the price of the average commodity is about one-fifth of what it was in 1845 (Ref. 12). World wheat prices are expected to decrease by 43% between 1988 and 2010 and corn could drop by 22% (Ref. 13). This creates a relentless tendency towards consolidation wherever economic efficiency is the key driver of bulk agricultural production. In 1989, large farms produced half of USA agricultural output; a decade later they sold close to three-quarters of USA agricultural output. Scale brought efficiency, and by 1998, the USA was producing 45% of the worlds soybeans, 40% of all corn, and 10% of wheat14. Over the past 50 years, most productivity gains have come from seed improvement, and the enormous sums invested in seed genetic research over the past decade will probably accentuate these gains. If crop yields increase faster outside Europe, it will become harder for an EU farmer to export his produce and the subsidy required to keep foreign produce out will grow year by year. Because agriculture represents such a large portion of the overall EU budget, the short-term consequences could be significant. If farmers in the Americas and Asia continue to use GM seeds and increase overall productivity 2% per year faster than Europe, the EU might have to dedicate up to 1% more of its total budget each year to maintain farmers current living standards.
Labeling and decommoditizing

In an attempt to exclude foreign GM produce, Europe has vociferously called for detailed labeling but this too might have unintended consequences. The argument that the public has a right to know is tough to counter, and adopting widespread labeling could, in the short term, harm GM food producers, particularly those in the USA, Argentina, Canada and China who grew 99% of the worlds GM crops in 2000 (see http://www.issaaa.org/briefs/Brief21.htm). Thus, at least initially, labeling could serve as an effective trade barrier and limit imports. Those who
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use GM organisms (GMOs) and label their commodities, fear becoming the target of boycotts. Even with no direct attacks, GMO producers could suffer because most benefits from agriculturalbiotechnology, so far, accrue mostly to the manufacturer and to the farmer, not to the consumer. A customer walking into a supermarket today cannot determine by look, taste or feel the difference between GM produce and all-natural produce. If two identical looking piles of corn were labeled all-natural or produced with GM seeds, most people would purchase the all-natural corn as long as the price premium was not very high. Because there is little consumer pull, companies face increasingly hostile retailers as they try to push their products; many European supermarkets, restaurants and fast food outlets already advertise that they sell GM-free produce. Furthermore, the labeling of GMO produce requires a major and costly change in the agricultural commodity system. Farmers would have to separate seeds and plots, and harvest the crops separately. Processing, sales and distribution would also require a separate and parallel set of channels. A bulk commodity system would gradually become a series of discrete business units, something that makes little economic sense unless the end product can be sold at a premium. This is by no means the case with most GM products today. In the short term, farmers and companies selling GM crops in Europe are at a disadvantage. This has led to the implosion of many business ventures particularly those launched together with pharmaceutical companies. Monsanto and Searle divided with the pharma component becoming part of Pharmacia & Upjohn; Novartis and AstraZeneca also spun off and merged their agribusiness units (Syngenta). American Home Products is selling its agricultural component to BASF. Rhne Poulenc spun off and merged its agribusiness with Agrevo (Aventis). However, as the spread of genomic information increases, the types of traits that can be engineered into plants and animals should create significant economic advantages15. A/F Protein Company has genetically engineered salmon to grow twice as large and four times as fast as natural salmon. GM cotton plants require a lower frequency of pesticide applications and are more resistant to the toxicity of the pesticides than non-GM plants. The consumption of golden rice helps to reduce vitamin A deficiency, and soon GM sugar beet will produce far more sugar than non-GM varieties. Crops that are tolerant to drought, frost, pests and salt will help to reduce a farmers key risks. Customers might be willing to pay a premium for healthier peanuts, seedless vegetables and non-allergenic foods. Many chemical products, such as textiles, detergents, lubricants, cosmetics, plasticizers, inks and dyes, are now grown instead of manufactured. Food can be engineered to have medicinal benefits. Fruits and vegetables can be genetically engineered to produce vaccines and to help fight cancer. As

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medicine and nutrition blend together, many products can be sold as neutraceuticals. In the future, a customer walking into a supermarket would face not two but various types of corn that could, for example, help prevent osteoporosis or conception or provide extra vitamins. If European farmers and processors declare the continent a GM-free zone and do not invest in the equipment and systems needed to isolate GMOs from wild-type organisms throughout the system, from the field through to the shopping cart, they could end up remaining bulk product suppliers for key crops. Remaining only a commodity system makes it impossible to sell products at a premium. Within the USA, one-quarter of the grain elevators are already segregating GM corn and one-fifth are segregating soybeans16. This could have significant consequences in overall wealth creation if GM crops begin commanding a price premium.
Resistance to green biotechnology could impact red biotechnology

Green biotechnology products reach consumers long before red biotechnology products do. The first skirmishes and broad societal changes caused by biotechnology are occurring within agriculture, precisely the field in which there is the greatest resistance to GM technology within Europe. However, many Europeans who do not want to eat GM foods have little objection to GMO-produced medicines. European policy makers seem to believe that they can deal with this dichotomy by limiting some forms of gene research and still remain competitive in a science in which information is accumulating at twice the speed of the computer revolution. In shutting down most plant and animal GM product research, while attempting to promote human research, Europe risks its competitive advantage. Gene expression pathways in plants and animals provide important clues for the identification and treatment of disease in humans because once evolution finds a useful way to fulfil a specific task in a living organism it often repeats it. As a result, the basic instructions or codes that regulate lifes processes repeat and overlap across many species. The genes contained in the simplest bacteria are often replicated and duplicated several times in those bacteria that have larger genomes. For instance, a small genome, such as that of Mycoplasma genitalium, has few cell transporters to take material from outside the cell and transport it to the inside17. Mycoplasma pneumoniae has developed far more sophisticated and abundant transporters but it also contains almost the entire M. genitalium genome18. These overlaps often recur even within the most complex organisms; the number of human genes that have no counterpart in mice is estimated to be less than 5% and ~2% in orangutans
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(http://www.ornl.gov/hgmis/faq/compgen.html). Various companies and research institutes, including Celera, Incyte and TIGR, are looking at parallel gene expression networks across bacterial, plant, animal and human genomes. Getting a bioengineered agricultural product to market is far harder within Europe than within the USA or most of Latin America. Final approval in the USA takes nine months on average whereas in the EU it takes two to three times as long, if approval is forthcoming19. As companies and scientists involved in green biotechnology find it increasingly difficult to work in Europe, they leave or close down. Novartis, a leading Swiss pharmaceutical company, initially invested billions of dollars in building its agricultural life science capability and became one of the worlds largest GM seed and agrichemical producers. But as protests grew, it had to stop using food grown with Novartis seeds for its baby food division. Then it bowed to public pressure and declining agricultural margins and announced that it would spin off most agricultural life science assets. By August 2000, it had stopped using any agricultural GMOs in any of its food products. Novartis story is similar to that of many other European conglomerates; there is little support for agricultural genetic research within Germany or France. European companies are ever less likely to fund basic research, development and production of genetically engineered products. As the European public becomes ever more wary of GM produce, some have started to question red biotechnology. Swiss pharmaceuticals waged an aggressive and expensive campaign to overcome a public referendum that would have prohibited most gene research. The notion that you can attack green biotechnology research, and have little effect on red biotechnology research is proving false. When European gene research does continue it is often offshored. Rather than face protests at home, many companies are moving their labs, sometimes within Europe, sometimes to the USA or Asia. Pharming moved from the Netherlands to Belgium to carry out its research. Ironically, after its drug proved successful, it was imported back into The Netherlands. Increasingly, European companies are simply shifting their research to a few regions within the USA; after the UKs two leading pharmaceutical companies (SmithKline and Glaxo Wellcome) merged, they immediately shifted most of their operations to the USA. Commercial biotechnology research and start-ups are far more common in the USA than they are in Europe.
Saving the environment?

Europes reluctance to accept GMOs might be understandable politically, and there are potential, if unproven, environmental and health risks. However, attempts to ban GMO adoption worldwide could have severe consequences for the environment.

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Global food needs are increasing; by 2020 the world will probably consume 80% more meat and 60% more cereals than in 1990. Close to 85% of the land in the UK that could conceivably be used for agricultural purposes is already under cultivation. To increase food production and meet additional global needs, either existing farms throughout the world have to become more productive or an area the size of the Amazon rainforest has to come under tillage. Agriculture remains the single most destructive activity vis--vis biodiversity and natural landscapes. A key objective should be to reduce its footprint and impact on land that remains virgin. This is only feasible if small-plot farmers can grow goods that produce greater value (i.e. high quality neutraceuticals or materials) and if commodity food production can be increased substantially on existing large farms. Europes attack on biotechnology is slowing the adoption of technologies that could reduce the use of pesticides and the destruction of rainforests. Most notably, Brazil has been very reluctant to use biotechnology despite enormous pressures on the Amazon forest. Its agricultural border continues to expand instead of emphasizing more productive farms. Most Africans continue practising organic agriculture; they have little choice. The net result is that free range cattle and slash-burn planting have destroyed much of the forest and fauna without increasing overall wealth and well being. These outcomes are particularly ironic given that the most vocal opponents of biotechnology have been green parties and NGOs.
Precaution might not be good enough

Acknowledgements I thank Profs Ray Goldberg, Otto Solbrig and Robert Paarlberg, as well as Rodrigo Martinez for their help and ideas.

Many recent technological revolutions have roots in Europe; the development and adoption of a common GSM mobile telephone standard birthed great companies such as Nokia and Vodafone, but there are also many examples of leadership lost. Bringing together monitor and phone, using ones home as a base for many services and transactions, wiring a country coast to coast, all occurred throughout

France in the early 1980s, years before the Internet became popular. However, there were few incentives, or openings, to compete against the phone monopoly and so the Minitel did not breed a large new economy or attract thousands of young global entrepreneurs. Meanwhile in the USA, a myriad of start-ups surrounded research centers such as Xerox Park and Bell Labs. They developed technologies the corporate behemoths ignored and, in some cases, became larger that the conglomerate that ignored what seemed like a tangential technology. Investing and supporting emerging gene companies could be a crucial component of future competitiveness. From 1999 to 2000 the number of genomics patents granted within the USA increased by 25%; they now exceed those granted for computing and Internet applications. While Europe debates the future of its countryside and tries to convince the world not to adopt GMOs, the USA has built a gene-based economy that has a market capitalization greater than everything Argentina produces during the course of a year. Fueling public fears and blocking biotechnology research might solve some immediate political and financial concerns but, in the long run, falling behind in the biotechnology revolution could be very costly. The new economy does not require a generation, large factories and thousands of workers to generate great wealth20. Information and data fuel wealth in the knowledge economy; those who produce and use this resource are highly mobile. Many of Europes best minds are already in the USA. If one looks at Europeans who are awarded PhDs in science and engineering from a US university 60% of those from the UK and 42% of Germans do not return to their home countries21. In life sciences, the incentives to carry out research or launch new companies within the EU are decreasing as the public backlash increases. If Europe cannot attract and develop people and companies that are world competitive in life sciences, it risks significantly damaging its overall economy and competitive future.
15 Dandekar, A. and Gutterson, N. (2000) Genetic engineering to improve quality, productivity, and value of crops. California Agriculture 4956 16 USDA (2000) Biotech Corn and Soybeans: Changing markets and the Governments Role. ERS report 12 April 17 Fraser et al. The minimal gene complement of Mycoplasma genitalium. Science 270, 397403 18 Venter J.C. (1998) The Current State of Genomic Research. AAAS meeting. February 14 19 Schumacher, A. (1999) Testimony before the US Senate Finance Committee, Subcommittee on International Trade. USEuropean Trade Issues, March 15 20 Kelly, K. (1999) New Rules for the New Economy. Penguin 21 International Benchmarking of US Mathematics Research panel and committee on Science, Engineering and public policy. (1997) International Benchmarking of US Mathematics Research. National Academy of Sciences, pp. 40

References 1 Enriquez, J. (1998) Gene Research, The Mapping of Life, and the Global Economy. Harvard Business School Case. 599016 2 Enriquez, J. Genomics and the worlds economy. Science 281, 925926 3 Enriquez, J. and Goldberg, R. (March/April 2000) Transforming life: transforming business. The life science revolution. Harvard Bus Rev. 4 Enriquez, J. Technology Crises and the Future of Agribusiness: BSE in Europe. Harvard Business School Case 597036 5 Eurobarometer 52.1 November 1999 6 Wayne, A. (1999) The European Union: Internal Reform, Enlargement, and a Common Foreign and Security Policy. Testimony before the Senate Foreign Relations Committee, European Affairs Subcommittee. 24 March. 7 USDA (1999) EUs Agenda 2000 to revise farm policy. April 22. Agricultural Outlook.

8 Agricultural Statistics Board. USDA (2000) Farmer Reported Genetically Modified Varieties. Acreage, June 9 Brennan, M.F. et al. (1999) Impact of Industry Concentration on Innovation in the US Plant Biotech Industry, Rutgers University, 23 June 10 Directorate General for Agriculture European Commission. Economic impacts of genetically modified crops on the agri-food sector. A synthesis. pp. 18 11 Federal Reserve Bank of Dallas (1997) Time Well Spent: The Declining Real Cost of Living in America. Annual report 12 The Economist 17 April (1999), pp. 75 13 Agacaoli, M. et al. (1994) Global and regional food demand: supply and trade prospects to 2010. Washington DC International Food Policy Research Institute pp. 29 14 USDA (1999) Foreign Agricultural Commodity Circular Series. Foreign Agricultural Service.

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