The Four Seasons Hotel
October 10, 2002

Convergence in Biotech
The economy is once again poised for a major reshuffling, this time emanating from biotech. Just as we witnessed the eventual overlapping of publishing, TV, movies, radio, telecom and computing in the infotech transformation, so might we expect the convergence of companies as far flung as soaps, cosmetics, beverages, pig farming, food, energy, health care and family counseling. The result may be an industry that may rival or even surpass infotech as a dominating force in the market and in people’s lives.

Energy: Microorganisms on the sea floor may become a source of energy, as might hydrogen-producing algae. As the search for natural energy producing bioorganisms advances along with genetic engineering, we may see many more energy companies going the way of Monsanto and moving into agriculture and cloning.

Interior and Exterior Fashion: Biosensors will increasingly be imbedded in clothing or made wearable, as might computing. Biosensors using nanotechnology bundles similar to those found in living cells may be used to warn people of biological or chemical warfare. This will lead to biocomputing environments that marry translation, monitoring (for things like temperature, health, behavior), and caring for humans. Robotics now used in surgery may eventually come to surround us in all manner of caregiving.

Aging and Lifelong Management of the Body: With the aging of the world and the U.S. baby boomers, business related to aging, and especially the amelioration of it, will be highly successful. Cloning may prove to extend the life of cells, affecting geriatrics. And genetic mapping may lead to the unlocking of the genes that trigger aging. New collaborations based on genetic mapping will bring together researches in behavior, aging and drugs. A human’s genotype will be known at birth, and much of the expert knowledge to manage that individual’s health will be programmed into software. More work is advancing in the area of the teen years, brain development and hormones. In addition, researchers are compiling a complete pediatric neuroanatomy map – the world’s first database of normal brain development – and at the end of the 6-year study, they will have access to that map on the Web. Brain mapping is indicating that brain cells can continue to grow when the host organism is in enriched environments. And in the marriage of biotech and computing, progress is being made toward a simulation of the complete human body – a virtual human, for total analytic purposes.

The Environment, Food, Agriculture and Health: Work is being done to study the effects of chemical pollution on the human endocrine system, even while discoveries are being made of drugs polluting water systems, affecting the aquatic life that is part of the food chain. Although environmentalism is not high on U.S. consumers’ list of reasons to buy a particular product, organic and so-called natural foods do well. Biotech is making major inroads in farming, from discoveries related to resistant strains of blights, to genetic modifications - i.e., in rice – that can boost yields and cut global warming. Surprises will change how we see some crops as we make more discoveries about health, such as the positive influence of chocolate on the heart. With depression emerging as a major global health issue and with earlier links between certain depression-relieving foods (like chocolate) and eating behaviors, agriculture will be increasingly tied directly to health management. And the cloning and genetic modification of animals originally for food purposes is now extending to replacement organs for humans, production of pharmaceuticals, and even the cloning of pets.


Implications:
Just as in the telecom/computing convergence, not only will a host of companies find themselves in crossover businesses, but companies not now in biotech will find themselves directly or peripherally engaged in the industry.

Examples of direct crossover:

• Food retailers in the health care field
• Food manufacturers engaged in biosensors for everything from freshness of product to health of consumer to stocking the consumer’s refrigerator based on the consumer’s genotype, to tracing movements of agrichemicals into the environment.
• Jewelry containing pharmaceutical-dispensing schedules and processes
• Foodaceuticals (food and pharmaceuticals), cosmeceuticals (cosmetics and pharmaceuticals), pharmafoods (agricultural breeding of animals for everything from insulin to antibiotics) and genetifitness (health clubs, exercise equipment and workout routines geared to genetic readouts)

Examples of peripheral engagement would include:

• The financial sector’s investments in biotech
• New magazines springing up to cover the various areas of biotech explosion and application
• Insurers engaged in efficacy studies matching genotypes with lifestyles and treatments
• Educational software utilizing knowledge of brain workings
• The drafting of legal precedents based on bio-defenses in criminal and civil cases
• Niche marketing of religion based upon natural dispositions
• TV shows based on biothemes

Over the next few years, Avon will become more of a biotech company, and Rockwell Automation will be drawn into the world of biosensors, cybernetics (the man/machine interface) and bioenergy. In the biotech age, GM may not just stand for genetically modified foods, but for cars that provide bioenvironments that ensure safety and well being, potentially geared to the circadian rhythms, hormonal balances and brainwave patterns of drivers and passengers. Like all insurers, AIG and Ace, for example, will have to reassess risks in a biotech age, and Bottom Line publications may find unique genotypical niches to cater to with physical and mental and life style advice. And KPMG, Crowe Chizek and Virchow, Krause may find that bioethics is one of the most lucrative areas of management consulting relating to auditing.

In short, just as was true in the infotech convergence, few companies will escape being drawn into the biotech revolution, and current companies may find themselves completely transformed by the oncoming breakthroughs and their applications.


Issues Analysis provided by: Weiner, Edrich, Brown, Inc.
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