There has been a strong political 'push' for the creation of a biotechnology industry in Queensland.

Strategic Issues: Biotechnology (noting also ARCHIVE material) includes reference to:

• large scale funding of R&D facilities - noting also references in Buying Industry;
• political leadership of international 'marketing' of the industry;
• growing research / patenting successes;
• a bull-market in biotechnology firms' shares.

Queensland's Ongoing Challenge: Smart State includes reference to a government venture capital fund for biotechnology ventures.

And this effort has been seen to have the potential to produce solid commercial results because international venture capital participation may be attracted.

Success: Courage can bring success. Premier Beattie now has clear evidence that his push to develop a biotechnology industry in Queensland is working. This started 3 years ago and seemed improbable because Queensland's traditional industries are not science based, and there has been a lack of capital which always forced scientists with good ideas to take them offshore. Beattie led missions to annual Biotechnology Industry Association meetings, and launched taxpayer funded research infrastructure. With this intervention and large spending results have to be demonstrated. Now CBIC World markets is to invest $40m in a venture capital fund established for Australian biotechnology - which is run by Brisbane's CM Capital Investments. This shows that Queensland's biotechnology is taken seriously in North America. Beattie had visited Texas in 1998 to see how a previously mining and agricultural economy had been rebuilt by attracting IT facilities - and based his strategy on this (Franklin M. 'Germ of an idea grows bigger than Texas', Courier Mail, 15/6/02)

Unfortunately, while there will undoubtedly be some (and hopefully many) real successes, the methods being used to advance the biotechnology sector are amateurish. In particular:

• the traditional constraint on success by Queensland / Australian scientists (etc) in obtaining support for their ideas was never primarily a lack of capital. Rather the real problem was the lack of people and organizations with the knowledge and skills to make a commercial success of innovation. If this commercial-competency gap had not existed there would have been no shortage of profit-seeking investors. There are undoubtedly many very interesting biotechnology prospects in Queensland. But there always have been similar opportunities (if not in biotechnology, then in something else). In this respect nothing is different now except that (a) trying to commercialize such ideas has now received more serious attention for about 15 years and (b) biotechnology has unfortunately been turned into a political football. In principle, venture capital will be packaged with a pool of commercial skills that will help overcome the commercial-competency gap - but politicisation of the sector introduces a much easier path to payoffs (by lobbying), and this may subvert the contribution that venture capital should bring;   
• biotechnology is an intrinsically difficult sector to succeed in (for reasons also indicated by articles on Biotechnology). For example biotechnology is:
  •  always affected by ethical / health / safety issues (eg Matthews J., 'Parting of the ways', Financial Review, 24-5/11/01). It thus must be constrained by a high degree of regulation which inhibits free entrepreneurship (as compared with IT say);
  • sometimes characterized by very high costs in bringing products to market. A lack of the capital required to do so has been seen as a threat to the existence of many firms with potentially valuable technology [1];
  • probably better developed by corporate strategies different to those which popular opinion favours (Taylor L 'Clever way to future prosperity', FR, 24/10/02)
  • claimed by some associated with the industry to be being sabotaged by interstate rivalry (ie by the biotechnology 'push' of the Victorian and Queensland Premiers);
  • currently affected by scams and characterized more announcements than practical outcomes. In this respect it is reminiscent of the dot-coms which attracted vast quantities of North American venture capital in the late 1990s;
  • being promoted by governments almost everywhere as a key future industry after IT - and it is certain like the Internet to disappoint its backers [1]
• the proposal by CIBC World Markets to support biotechnology venture capital operations in Brisbane may not be a proof of potential commercial success. For example:
  • there has reportedly been a near boom in biotechnology stocks. Financial institutions may quite legitimately be more interested in such a boom (a phenomenon of investor psychology) than in the underlying prospects of the industry;
  • there is also increasing recognition in the US that serious failures have arisen because corporate managements followed primarily financial market criteria which did not reflect the real requirements for sustainable commercial success (see Chancellor E. 'Perverse incentives',  Financial Review,  7/6/02);
  • inducements may have been offered. Doing so is certainly the present state government's style (eg see Buying Industry, and note that a lack of disclosure of this has caused concern to the Auditor General). And, as the above article pointed out, the Government is desperate to demonstrate practical results from its biotechnology 'push'.
• the Queensland Government has itself proposed establishing a Biotechnology Venture Capital fund. This is a silly proposal (see Government as a Venture Capitalist).
• political 'push' on anything always creates the impression of success for a few years - until losses emerge and public money dries up. Experience with similar efforts in Victoria in the 1980s, show that during this interim period public opinion is that things are going well (see The Fall of the House of Cain).   As eventually occurred in Victoria, Queensland's day of financial reckoning is fast approaching (see About Queensland's Budgets) - and if political 'push' on biotechnology turns into back-pedaling then the extent of underlying commercial realism will be quickly revealed;
• the fact that the Biotechnology 'push' is said to be based on the experience of Texas in diversifying its resource based economy into IT (see above article) needs careful consideration.  Contextual differences will make a huge difference.  In any strategy to transform a region economically it is critical to pursue initiatives relevant to the customers of a targeted industry, rather than those which merely give short term gains to the targeted industry itself at government expense. The former is possible in the USA because it is characterized by a strong corporate sector which traditionally sees itself as responsible for economic strategy - and thus tends to drive public policy in ways which are compatible with real business success. By contrast in Australia (Queensland in particular) business is relatively weak - and traditionally depends strategically on the initiative of foreign investors and governments;
• Queensland's Public Service is highly constrained by political imperatives (see The Growing Case for a Professional Public Service), so the quality of advice and implementation regarding any program is going to be highly suspect

In practice problems in achieving commercial gains are being reported [1, 2, 3, 4, 5].

A more general account of the problems arising from methods such as those used for biotechnology are outlined in A Commentary on Smart State: Illustrating Queensland's Lack of Serious Public Policy; and About Queensland's R&D Strategy.

A Commentary on Smart State also suggests more realistic ways to create an environment in which biotechnology might become more commercially successful - by:

• emphasis on upgrading support for commercial success through innovation in the economy generally, rather than through merely funding technical inputs to an economic system not equipped to make profitable use of them;
• recognition that successful innovation will usually start with market demand (which entrepreneurs find a technical solution to) rather than through trying to force-feed the 'commercialization' of research results.

June 2002 - and modified subsequently