2007 - Borderless Biotech & Mexico's Emerging Life Sciences Industry

Borderless Biotech & Mexico's Emerging Life Sciences Industry -- []

Borderless Biotech& Mexico’s EmergingLife Sciences Industry

a briefing paper by San Diego Dialogue a division of UCSD Extension

with generous funding by Merck & Co. Inc.

developed under contract by Crossborder Group Inc.

June 2007

Borderless Biotech & Mexico's Emerging Life Sciences Industry -- [1]

Executive Summary

The San Diego Dialogue, a program of University Extension at the University of California, San Diego, has spent the last three years focusing on issues of innovation and competitiveness in the crossborder region. On the heels of the 2006 publication of a major research report on the San Diego/Baja California Re-gion, Borderless Innovation, a relationship was established with the global pharmaceutical company, Merck and its subsid-iary, Merck Sharpe & Dohme in Mexico City. Merck has had a longstanding commitment to innovation in the United States and, in recent years, its attention has turned to innovation in Mexico and Latin America. With support from Merck, the San Diego Dialogue launched a Life Sciences Gateway Initiative, with four strategic life science regions identified by Merck in Mexico – Guanajuato, Jalisco, Morelos and Nuevo León. The focus of the partnership has been to build long term relationships be-tween the R&D, technology commercialization and life science business communities in Mexico with their counterparts in California and across the United States.

This briefing paper is an initial look at the multiplicity of opportunities that exist in Mexico. It provides some insight into what may be the barriers to harnessing necessary capabilities on the part of the Mexicans, but also vis-à-vis perceptions of Mexico by the life science clusters in San Diego and Orange Counties. The report highlights the contributions Mexican scientists and companies have made to the development of life sciences, and provides introductions to the regions identified by Merck. It is also a reminder of the capabilities of Baja California, and their connection to the greater San Diego region.

What is significant to the U.S. is the extent to which Mexican regions are mobilizing national, state and local resources to coordinate their research with economic and workforce development. This docu-ment points out that there has been notable growth in research activity across Mexico measured by increasing numbers of research centers and science graduates, growth in patent activity, expansion of incubators and infrastructure of innovation, and growth in advanced manufacturing and clinical trial activities across Mexico.

These growing assets, and commitments from Mexico, represent a promising development for San Diego and California. San Diego is one of the most vibrant life science research and development communi-ties in the world. The level of research funding, combined with the amount of venture capital coming into San Diego companies, means that San Diego has become a global hub in the life sciences arena. The San Diego innovation community is linked to research, commercialization, investment and market-ing around the globe, and as such, is an appropriate gateway for a life sciences initiative across Mexico.

This briefing paper is based on personal visits to the Mexican regions described in the report, as well as a strategy for building relationships between the many partners in any effective innovation system. Seminars and roundtables over the next 12 months involving peer-to-peer interactions of leadership from Mexico with leadership in California will focus on IP strategies, venture investing, strategic partnering in manufacturing and clinical research, as well as basic research partnerships in areas of biomedicine and biotechnology. The data reported in this report will be amplified in subsequent white papers, which will go into much greater depth about each of the regions. For the purposes of this June Forum Fronterizo, this briefing paper has been developed as a way of informing and inspiring potential partners, particularly in San Diego and across California, to investigate the opportunities to grow a borderless life sciences community by engaging our friends and potential partners in Mexico.


A Vision of Borderless Biotech

What do Genentech, the birth control pill, biomedical devices, and biotechnology have to do withMexico? More than most people think – and that creates a unique opportunity for not just the UnitedStates, but also for the California life sciences industry in particular. While much attention is focusedon Europe and Asia, several regions within Mexico are emerging as highly capable life sciences researchcenters, as well as sites for current – and future – industry growth.

These regions, and the potential opportunity they present for collaboration with the San Diego andCalifornia life sciences industry, are the focus of this first briefing paper – and the focus of a 18-monthbinational project launched last December, 2006, between UCSD Extension’s San Diego Dialogue andMerck Sharp & Dohme (Merck) - the Life Sciences Gateway Initiative. Working with government andlife sciences leaders in some of Mexico’s most innovative regions (including the states of Guanajuato,Jalisco, Morelos, and Nuevo León), UCSD and Merck aim to “build sustainable binational relationshipsamong researchers, scientists and investors for the purposes of stimulating and nurturing the lifecycleof innovation….”1

This collaborative effort joins together two separate ongoing efforts – Merck’s multi-year initiative topromote life sciences in Mexico through research, events, and education; and San Diego Dialogue’s2006 binational study, Borderless Innovation – a groundbreaking report that analyzed opportunities inthe San Diego-Baja California region to increase the competitiveness of science and technologyindustries. Combined with the efforts and activities within each region, the result is – so to speak – atriple helix of life sciences leadership.

While not a focus of the current project, previous research done for the Borderless Innovation reportclearly demonstrated that Baja California is also one of Mexico’s emerging life sciences regions. Infact, each of the five states that will be discussed – Guanajuato, Jalisco, Morelos, Nuevo León and BajaCalifornia – have their own strengths and specialties. Most also share some of the same challenges thatcan potentially be best solved through unified efforts, as well as shared opportunities.

Genentech and Mexican Innovators

In California in the late-1970s, Genentech was not as well known as it is today. One of its co-founders, Dr. Herbert Boyer, was a professor of biochemistry and biophysics at UCSF, where several members of his research team, including Mexican-born Francisco Bolivar and Californian Ray Rodriguez, were diligently working to create a safe and effective biological mechanism to facilitate cloning of special bacteria. Their answer: a “plasmid vector” – a small, self-replicating genetic element with built-in coding of enzymes that allow its host – a bacteria, for instance – to thrive in environments in which many other bacteria cannot (for instance, in the presence of antibiotics).

The resulting genetic package was the plasmid pBR322 (the “B” for “Bolivar”, the “R” for Rodriguez) – designed to be resistant to two antibiotics (ampicillin and tetracycline). When placed into a fast-growing bacterial host like E. coli, pBR322 allows the altered bacteria to be selected (screening negative bacteria). By subsequently modifying this plasmid to “carry” human genetic materials, they were able to stimulate the production of certain hormones by the bacterial host – such as insulin. Once a modified plasmid vector like pBR322 is coupled with a gene to promote insulin production and then inserted into an E. coli bacteria, the result is a self-replicating, genetically-modified cellular factory that can safely synthesize human insulin – a process that helped to launch Genentech as a multi-billion dollar company.


15,400

48,000

74,200

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2,010,000

3,010,000biotechnology"san diego"

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biotechnologymexico

biotechnologymonterrey

biotechnologyguadalajara

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"GoogleTM Metric" ofSelected Search Terms

Measurement of the total number of

returned results

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What are Life Sciences?

To use the definition outlined in the highly-acclaimed 2005 study by the Council on Competitiveness and Global Bioeconomy Consulting, “Catalyzing Cross-Bor-der Innovation: The Mexican Life Sciences Initiative”,life sciences are:

“...broadly defined to include all biological technolo-gies and applications. This includes: biotechnology, pharmaceuticals, plant and animal technologies, med-ical devices, healthcare (e.g. translational research, clinical trials), biological related information technol-ogy (e.g. bioinformatics, telemedicine), as well as biological-related production and manufacturing.”

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US - Mexico Trade inBiotechnology & Life Science Goods

(2003-2006, US$billions)

US Exports Imports

Trends in Mexico’s Life Sciences Clusters

In most discussions about the global life sciences industry, Mexicois not usually considered a prime location for innovations and hightechnology. This lack of general awareness, in fact, can bedemonstrated with a simple metric comparing the number of“hits” certain phrases receive on the internet using the searchengine Google™.

As seen at left, when combining the word “biotechnology” withvarious phrases, such as “San Diego”, “Mexico”, “Guadalajara”,etc., relatively few English-language pages apparently exist thatreference some of Mexico’s biotech regions. While admittedly lifesciences-related activities are still an emerging part of the econo-my, and this Google™ metric is far from a perfect measurement ofthe actual situation, it does provide at least an indication of theperceived degree of biotechnology activity (and perhaps perceivedcapability) in Mexico. That said, other indicators show morepositive signs.

Trade Trends

According to the latest data from the US Department of Commerce, trade between the US and Mexico in biotech-nology and life sciences goods is on the increase. In 2006, trade in these goods had reached nearly $3 billion in total trade, and had an average annual growth of 15% between 2003 and 2006.

What are these goods? The US Census Bureau defines these Advanced Technology Products as:

Biotechnology ProductsFocuses on medical and industrial applications of ad-vanced scientific discoveries in genetics to the creation of new drugs, hormones and other therapeutic items for both agricul-tural and human use.

Life Sciences ProductsConcentrates on the application of scien-tific advances (other than biological) to medical science. Recent advances, such as nuclear resonance imaging, echocardiogra-phy, and novel chemistry, coupled with new production techniques for the manu-facture of drugs have led to many new products for the control or eradication of disease.


Trends in Life Sciences Education & Workforce

Raw trade figures tell one story. Another story can be revealed by the notable annual increases indoctoral graduates specializing in key areas of science – including Agricultural Sciences, Natural &Exact Sciences, Health Sciences, and Engineering & Technology. While the number of those receivingdoctorates in these areas still is relatively small – an estimated 1,147 in all of 2005 – the numbers are nearly a five-fold increase over the last decade (with a 17% average annual increase). It’s also useful to consider that these numbers do not count the significant numbers of Mexican scientists that are graduating from doctoral pro-grams in the United States, Europe, and other countries.

Master’s degree programs are also showing in-creases that bode well for Mexico’s biotech potential. According to CONACYT (Mexico’s National Science and Technology Council), the number of new students entering master’s de-gree programs in life sciences-related fields has more than doubled since 1995, from 674 stu-dents entering such programs to more than 1,500 in 2006. It should be noted, however, that thesepositive increases have also raised some concerns about the possible lack of high-skilled employmentopportunities in Mexico to absorb these graduates - a critique that underscores the opportunity forexpanding companies to investigate this potentially underutilized workforce.

Birth Control and the “Dupont of Mexico”

Mexico’s innovations in life sciences have not been limited to the last two decades. In fact, one of the pharmaceutical industry’s early success stories – the birth control pill – has roots in Mexico…literally. Early steroid research in the 1930’s showed that progesterone could inhibit ovulation in women, but commercial applications weren’t feasible since steroids at that time were isolated in very small amounts from animal glands – an expensive process. Dr. Russell Marker (a Chemistry professor from the University of Pennsylvania) developed an alternative process that converted toxic steroids (sapogenins) into the pregnancy hormone progesterone. Dr. Marker also discovered a viable source for this: the cabeza de negro – a wild yam in Mexico.

In 1944, Dr. Marker and two entrepreneurs in Mexico City founded Laboratorios Syntex to develop and commercialize crystalline progesterone. While Dr. Marker left after one year following a dispute, Syntex’s co-founders soon hired Dr. George Rosenkranz, who envisioned building Syntex into “the Dupont of Mexico.” Dr. Rosenkranz’s team of researchers – including Dr. Alejandro Zaffaroni – not only were able to ultimately develop commercial quantities of progesterone, but ultimately won an international race in 1951 to synthetically develop cortisone (beating out a rival team from Merck, among others). Syntex’s researchers also included Luis Miramontes, a college student from UNAM in Mexico, who was instrumental in synthesizing norethindrone – the active ingredient to one of the two earliest oral birth control formulas.

In 1964, Syntex expanded to Palo Alto, California, where the talents of Drs. Rosenkranz, Zaffaroni, and other Syntex alumni (including Dr. Carl Djerassi), helped contribute to the growth of California’s life sciences industry…

Annual Doctoral Graduates in MexicoBy Area of Science (1987-2005, CONACYT)

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Agricultural Sciences Natural & Exact Sciences

Health Sciences Engineering & Technology


The SNI & Life Sciences Publications

In addition to positive educational trends in life sciences, Mexico’s National Researcher System also shows some interesting trends. The SNI (to use its Spanish acronym) is a voluntary but screened registry of accomplished researchers in Mexico. As seen at right, between 1995 and 2005, the number of researchers registered in health, biotechnology, and agricultural science-related activities nearly doubled.

Over the last decade, the number of scientific publications that Mexico is generating in life sciences-related fields has also more than dou-bled in some notable areas, including chemistry, pharmacology, immunology, microbiology, and plant and animal sciences. These last two areas, in fact, appear to have relatively high global strengths – according to Thomson Scientific’s Essential Science Indicators, Mexico’s microbio-logical publications are cited 39% higher than the world average, and plant & animal science publi-cations are cited 42% higher than average. While this relative rating of citations isn’t necessarily as strong in other areas, it does provide an indepen-dent and global indicator of Mexico’s increasing scientific capability.

An Update on Medical Devices and FDARegistered Facilities

San Diego Dialogue’s 2006 publication, BorderlessInnovation, described biomedical devices – one component of the life sciences industry – as a “ready opportunity for regional economic devel-opment efforts”, particularly in light of San Diego-Baja California’s “largely untapped oppor-tunity to become one of the major hubs of biomedical device design, manufacturing, and global marketing in the world.” While that still holds true from a regional perspective, such a vision might also hold true for a California-Mexico strategic relationship as well, particularly given the high concentration of biomedical device com-panies in Southern California.

Looking at the global expansion of medical device manufacturing, it’s also an opportunity that both countries are at risk of losing: between 2003 and 2007, the number of China-based medical device manufacturers registered with the FDA increased

by 156% to over 2,600 companies. During thissame time, China also surpassed Taiwan as havingthe largest number of foreign firms registered,Korea (with a 93% increase in number of firms)leaped over Canada and the UK, and the numberof registered firms from Mexico fell behind thenumber of firms from India and Israel (the numberof FDA registered firms in these latter two countriesgrowing by 73% and 47% respectively, while Mexico’snumbers increased by only 12%).

While FDA registered firms are not necessarily aperfect indicator (it doesn’t, for instance, neces-sarily reflect employment or actual amounts ofgoods traded), it does underscore the fast-movingshifts that can occur in an increasingly skilledglobal workforce. One state within Mexico that istaking advantage of this opportunity is actuallyright next door: Baja California.

In 2003, Baja California biomedical device firmsemployed just over 23,700 individuals. Based on2006 data from Producen (an in-dustry promotion research center sponsored in part by the Government of Baja California), estimated employ-ment in this sector had risen by 29% to nearly 35,000.Such growth is not just the result of State and local economic develop-

SNI Registered ResearchersBy Area of Science

(1995-2005p, CONACYT)

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Biology & Chemistry

Medicine & Health Sciences

Biotechnology & Agricultural Sciences

26,419

34,088

0

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10,000

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35,000

2003 2006

Baja CaliforniaBiomedical Device Employment


ment teams, but also by the industry itself, with the formation of the Cluster de Productos Médi-cos de Las Californias – the Medical Products Cluster of the Californias. This group, made up of many of Baja California’s largest medical prod-ucts manufacturers, is actively encouraging suppliers to expand into Mexico – something that, if done correctly, can actually result in more competitive companies and more employment on both sides of the US-Mexico border. The second-largest market for US medical equipment in Latin America (after Brazil) could also become one of the industry’s largest strategic partners, as well.

Pharmaceutical & Clinical Research

As also reported in Borderless Innovation, Mexico is one of the largest pharmaceutical markets in the world and the largest in Latin America. With industry sales expected to reach nearly $14 bil-lion in 2007, nearly all major multinational pharmaceutical companies are present, including Merck (operating as Merck, Sharp & Dhome de México), Abbot Laboratories, Astra Zeneca, Bay-er, Bristol Myers, Eli Lilly, Glaxo Smith Kline, Roche Syntex, Novartis, Novo Nordisk, Pfizer, Schering Plough, and Wyeth. While most of these pharmaceutical giants are involved with manu-facturing activities, many also have made significant investments in clinical research, as well.

There are, in addition, several hundred other pharmaceutical manufacturing companies pri-marily involved with generics. Nearly all pharmaceutical companies are active in the na-tional industry assocation, CANIFARMA (CámaraNacional de la Industria Farmacéutica), which represents the interests of two major categories of firms: research-based pharmaceutical firms (which are represented by a sub-group within CANIFARMA, called the Asociación Mexicana de Industrias de Investigación Farmacéutica[AMIIF]), and generics manufacturers (which are part of CANIFARMA’s Asociación Nacional de Fab-ricantes de Medicamentos – ANAFAM).

As mentioned, most of these firms are involved with manufacturing (concentrated in Central Mexico and the Distrito Federal [DF]), with very little activity in R&D. While at first glance, a manufacturing focus might be considered a weak-

ness, it also underscores the highly developedmanufacturing expertise within Mexico, whereproduction is done under high-quality, GMP stan-dards, often in FDA-registered facilities. Forcompanies seeking options for lower-cost, high-quality, nearshore manufacturing of pharmaceu-ticals, Mexico can play a strategic role inoutsourced manufacturing.

Two examples highlight this evolving opportunity:San Diego-based Diversa (covered previously inBorderless Innovation), continues to manufactureenzymes and proteins through a strategic venturewith FERMIC – one of Latin America’s largestpharmaceutical fermentation plants located nearMexico City. FERMIC’s FDA-GMP approved facilityhas a production capacity of over 1.3 millionliters, and an expansion underway that will in-crease that capacity to 1.9 million liters; inaddition to having an on-site R&D department tosupport their own efforts to become more in-volved with custom manufacturing of newbiological and biotech products.

The second example demonstrates another typeof evolution: Boehringer Ingelheim – a globalpharmaceutical leader – announced in April 2007that one of their two Mexico facilities will nowoffer contract manufacturing and packaging ser-vices for solid, semi-solid, soft-gel and liquidpharmaceuticals. According to company state-ments, not only will they be able to deliverproducts at the same or lower cost compared toIndia or China, they will also be able to serve theentire North American market from this locationwith existing safety certification in the US, Can-ada and Mexico. Notably, a tri-country strategymight also facilitate (as well as potentially com-plicate) future measures to consider directprescription drug importation from Mexico andthroughout North America, as well.

But pharmaceutical manufacturing is only onepart of the life sciences industry in Mexico.Pharmaceutical companies (largely members ofAMIIF) have also supported the development ofstrong clinical research clusters in key metropoli-tan regions, including the DF (Mexico City),Cuernavaca (Morelos), Guadalajara (Jalisco), andMonterrey (Nuevo León). According to AMIIF,clinical trials undertaken by their members haveinvolved more than 1,250 institutions in Mexico,more than 2,000 researchers, and over 51,000patients (in 2005).


These numbers are, in fact, increasing. While FDA-tracked clinical trials clearly are still concentratedprimarily in the United States, a recent study by Thomson CenterWatch notes that the Latin Americanclinical research market has “experienced significant growth over the past 10 years, especially duringthe last five.”

Why such growth? According to their 2005 survey of more than 300 investigative sites in Latin America, some key elements are cited: large treatment-naïve populations, centralized health care systems, strong physician-patient relationships, high patient retention rates, Western-trained investigators, and disease patterns that reflect both developed and developing-world markets. In addition, participants in this survey also noted that faster patient enrollment has typically led to a lower proportion of trials delayed longer than one month (compared to sites in the US and Europe).

As seen in the graphs at right, Mexico, in fact, while still “emerging” as a global location for clinical studies, actually ranks slightly higher in current or recently-completed studies than either India or China. Mexico-based clinical researchers also have significant experience not just in Phase III and IV trials, but also Phase II and an increasing number of Phase I clinical trials. And, most speak English and are geographi-cally closer to California companies.

Many studies are already also being conducted simultaneously in a binational (or multinational) context: a Phase III Merck study of HIV therapies that includes sites in San Diego and Mexico City (DF); a Phase II study for asthma treatments by Hoffmann-La Roche in San Diego, Monterrey, Guadalajara, and Mexico City; and a Phase III study by Pfizer/Sanofi-Aventis for diabetes in San Diego, Mexico City and Mon-terrey are just three of many examples.

Such binational protocols have the potential for not just speeding a life sciences discovery to market faster, but also could be used to leverage a multi-regional clinical trials network that increases the skill base of researchers as well as fosters a value-based mechanism for creating the human and physical infrastructure necessary for supporting Mexico’s emerging life sciences industry.

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source: ClinicalTrials.gov

China

India

Mexico

Brazil

San Diego

FDA/NIH-Tracked Clinical Trials (Active & Recent, May 2007)

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23%

64%

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FDA-Tracked Clinical Trials in Mexico - By Phase

Why Only Five Regions?

While this initial briefing paper does not intend to be a comprehensive nor a definitive study of Mexico’s emerging life sciences industry, it is clear that the five states discussed in this document – Guanajuato, Jalisco, Morelos, Nuevo León, as well as Baja California – have some of the most-advanced life sciences facilities as well as some of the highest levels of human scientific capital in Mexico, as seen in this map showing the concentrations of SNI re-searchers by State. Other states, including Sonora, Tamaulipas, Colima, Yucatan and others, also have notable research capabilities in life sciences, but are not discussed here.


Regions of Innovation in Life Sciences

While over the coming months, more detailed briefings will be developed describing the life sciencesinfrastructure and activities within each State, a few highlights about these regions of innovation arepresented below. Notably, as is the case with other technology centers throughout the world, theseregions often are rooted around higher education centers – either public or private universities,Federal laboratories, and State technology institutes.

As seen at right, all of them are substantially expanding their overall science base and SNI-registrations. In fact, increasing private sector interaction, new sources of fund-ing, as well as plans by State and local governments to foster the growth of life sciences in these regions, could play a large role in catalyzing their development and capa-bilities over the coming decade. Other factors may also play an unexpected role – such as Mexico’s lack of prohibitions in stem cell research, as well as its more flexible immigration rules (which have the potential to foster international interactions that may be less-common or more difficult in the US).

Guanajuato

On arrival to the construction site of Mexico’s new NationalGenomics Laboratory for Biodiversity (LANGEBIO - Laborato-rio Nacional de Genomica para la Biodiversidad), one isstruck by the contrast between the simplicity of the sur-rounding strawberry fields and the vision of creating one ofthe world’s foremost laboratories dedicated to sequencingplant, animal, and microbial genomes of potential use foragricultural, medical and industrial applications. While thenew 100,000 square foot facility is nearing completion adja-cent to CINVESTAV – the Center for Research and AdvancedStudies – LANGEBIO’s Director, Dr. Luis Herrera-Estrella (a

member of the US National Academy of Sciences), has already led a team at the Laboratory to map outthe more than 52,500 genes of maiz palomero – one of the oldest species of maiz, and known to manyas pop corn.

This accomplishment, coming only two years after the launching of LANGEBIO, is part of CINVESTAV’s 25 year history as a center for advanced biological and biotech research. Located in Irapuato, Guanajuato, this Feder-ally-funded center (part of the National Polytechnic Institute’s network of research facilities) is actually one of Mexico’s centers of excellence in basic and applied research related to plant biology and agricultural bio-tech. Strong support from the State government and CONACYT has allowed CINVESTAV to develop well-re-spected Masters and Doctorate programs in plant biotechnology, with over 250 graduates from these programs to-date. In addition, CINVESTAV is home to

SNI-Registered Researchers(2005 & 2007)

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CINVESTAV researcher discussinggenetic structure of maiz

Some Biotech Projects in Guanajuato:

Research into the production of natural insecticides using modified hairy-rooted plants

Biocontrols of agricultural diseases using spores

Development of a biological process that produces nanoparticulates of silver

Altering plants to act as bioreactors to produce vaccines and other products


over 30 researchers specializing in biochemistry, biotechnology, microbiology and plant biology.While CINVESTAV and LANGEBIO are perhaps the best known of the State’s 35 research centers, just a short drive away is the Instituto Tec-nológico de Celaya (TECELAYA) – one of 218 centers that make up Mexico’s National System of Technological Higher Education. TECELAYA of-fers a doctorate program in chemical engineering; as well as Masters and undergradu-ate degrees in chemical, mechanical, industrial and biochemical engineering. This last program – Biochemical Engineering – has a staff of more than 30 professors, a current Master’s program enrollment of nearly 40 students, and more than 500 enrolled in the bachelor’s program.

With an orientation toward bioengineering and molecular biotechnology, TECELAYA’s research-ers also have developed an orientation toward commercial applications of their activities – par-ticularly in the food and agricultural industry. In fact, while few patents have sprung from TECE-LAYA (a situation not uncommon in Mexico), several of their innovations have already been licensed by national and international companies – including a process using modified enzymes and bioreactors to allow higher extraction of natural pigment from marigolds - a process subsequently licenced to India-based AVT Natural Products and Chrysantis of Chicago.

Additional life sciences-related institutions are also part of the Guanajuato cluster – among them the University of Guanajuato’s Research Institute in Experimental Biology; and INIFAP (InstitutoNacional de Investigaciones Forestales y Agropec-uarias), a National research institution with a local center housing 60 researchers focused on forestry, agriculture, and animal sciences. With

the State government undertaking vigorous ef-forts to develop additional industrial andtechnology parks, as well as educational andtransportation infrastructure, Guanajuato ap-pears to be positioning itself as a future leader inagricultural- and nutraceutical-related biotech-nology.

Jalisco

What do wastewater from tequila production andantibiotics from frog skin have to do with lifesciences? Both are the focus of current biotech-nology research underway just West ofGuanajuato – in the neighboring State of Jalisco.Better known in the US by its capital, Guadalaja-ra, the State is one of Mexico’s largest with apopulation of nearly 7 million. It also is one ofMexico’s leading locations for clin-ical research, health care, and technology manu-facturing(including elec-tronics,pharmaceuticals, and software).

As seen in the graph at right, Jalisco actually ranks fourth in the number of SNI-registered re-searchers that are focused on life sciences (after the DF, More-los, and Estado de México). It is also home towell-respected educational institutions and re-search centers in health, genetics, food,environmental and animal sciences – the largestbeing the Universidad de Guadalajara (UdeG).

UdeG’s CUCBA (Centro Universitario de CienciasBiológicas y Agropecuarias) alone has more than50 life sciences-related researchers registeredwith the SNI, approximately 300 professors, andnearly 3,000 students enrolled in undergraduate,graduate and doctoral programs – including neu-robiology, molecular and cellular biology, seedand forest science, genetic reproduction, plantand animal biotechnology, and food science. This

Life Sciences ResearchersRegistered in SNI - By State

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CINVESTAV research labs host lifesciences visitors from US & Mexico


large cluster of students involved with biology has made UdeG the natural state-level organizer for Jalisco’s annual Olimpíadas de Biología – the Biology Olympics.

While much smaller in size, the CONACYT-sponsored CIATEJ (Centro de Investigación y Asistencia en Tecnología y Diseño del Estado de Jalisco) and its over 80 researchers are also part of Jalisco’s life sciences research infrastructure – undertaking a vari-ety of projects for agro-industrial and pharmaceutical companies, while also acting as a training ground and educational center for post-graduate students in biotechnology, food sciences, and envi-ronmental technology. Beyond education and projects, CIATEJ researchers also generate scientific publications and patents (19 publications and 5 patent applications in 2005 alone).

Guadalajara is also the home to another valuable resource: the Biocluster del Occidente – a non-profit group formed in 2005 to enhance the competitiveness of existing pharmaceutical and bio-medical companies, as well as promote the development of new biomedical and biotech firms. Headed by Dr. Gregorio Cuevas – a scientist and entrepreneur with a doctorate in Applied Biochemistry from MIT – the Biocluster hasbrought together five universities (including the UdeG, ITESO, and the Universidad Autónoma deGuadalajara), as well as CIATEJ, and some of Jalisco’s major veterinary and pharmaceutical compa-nies. The goal: to spur the growth of the life sciences industry in Jalisco and surrounding states, andto help protect and commercialize ideas developed by regional researchers.

No discussion about life sciences in Jalisco can go with-out mentioning another research asset: the HospitalCivil de Guadalajara. The Hospital Civil is a teachinghospital affiliated with the UdeG, providing on a dailybasis over 2,400 consultations, nearly 500 emergencyroom examinations, over 15,900 laboratory tests, andreal-world learning experiences for 1,300 medical stu-dents. The Hospital Civil has the second-largestinstalled bed capacity in Latin America over its 12 floors,drawing patients from not just Jalisco, but from sur-rounding states as well.

With a strong research focus, the Hospital has the onlytissue bank in western Mexico. The Hospital currently

has 20 researchers involved with 15 separate lines of study (including stem cells), and in 2006, 43clinical trials were initiated (all were Phase II or Phase III trials with multinational sponsorship).Despite such achievements, Hospital Civil is only just beginning to consider clinical trials a strategicpart of its activities.

Morelos

Somewhat overshadowed by the concentration of life sciences resources in adjacent Mexico City(Distrito Federal), Morelos stands apart as the state with the second-largest number of SNI-registeredlife sciences researchers (more than 300) and the second-largest number of members in Mexico’sSociedad Mexicana de Bioquímica (Biochemistry Society - 58).

Frog-Based Antibiotics?

Dr. Alfonso Islas and a small team from UdeG love frogs – or, at least the antibiotic properties in certain pro-teins that they’ve isolated and have been researching from the skin of the Ameri-can Bullfrog.

Working with both CONACYT and Laboratorios Veterinar-ios (LAVET), UdeG and Dr. Islas hope to turn this natu-ral antibiotic into potential animal and human applica-tion following additional research…

Hospital Civil de Guadalajara(photo courtesy of Hospital )


Patents and Culture

Comparisons of global technology regions usually conclude that the low number of patents issued annually in Mexico must indicate a lack of ability or inventiveness. While patent applications in Mexico are certainly below what should be expected, the situation appears to be more complex than many conclude.

In fact, while world-class research is often underway in these regions at university centers, there is little “cultural” emphasis at the institutions for protecting ideas for possible future commercial-ization – rather, peer prestige through publishing often trumps the desire to protect innovative ideas, and legal rules for some re-searchers create barriers for turning ideas into commercial products.

Proximity to the US also leads some Mexican inventors to file applications there, avoiding Mexico’s patent system entirely. While patent statistics typically only show the country of the “first listed inventor”, a review of US patent data done for this briefing shows nearly an equal number of US patents have a Mexico-residing inventor listed on the application, compared to the number of patents granted each year in Mexico to Mexico-based inventors. With many of Mexico’s creative minds employed by multinational companies, there is also an increasing number of US corporate patent applications that have a Mexican inventor listed on US corporate patents…

This concentrated critical mass of human capital – largely in the city of Cuernavaca, Morelos – is madeup of a large number of research centers – fifteen in all – focused on biology, biotechnology, genomics,and health. While the Universidad Nacional Autónoma de México (UNAM) dominates Morelos’ lifesciences cluster, several other research centers are of note, including the Instituto Nacional de SaludPública (National Institute of Public Health, one of Mexico’s leading health research centers, withspecializations in diabetes, HIV, tuberculosis, and cancer, among others) and the Centro de Investi-gación en Biotecnología (Center for Biotechnology Research – CEIB) at the Universidad Autónoma delEstado de Morelos, focused on biological controls, natural products, and environmental remediation.

However, it is UNAM’s Morelos campus that is the focal point for two major research centers. TheInstituto de Biotecnología (Biotechnology Institute - IBt) is the largest, with approximately 100researchers, nearly 250 students (graduate and post-graduate) and technicians, and over 80,000 squarefeet of laboratory space. Founded in 1982 by early biotechnology pioneer, Dr. Francisco Bolivar (ofpBR322 fame), IBt has become one of Mexico’s biotech centers of excellence, specializing in plantmolecular biology, biocatalysis, molecular medicine and microbiology.

UNAM-Morelos is also home to the recently founded Centrode Ciencias Genómicas (Center for Genomic Sciences – CCG), a university research center co-founded by Dr. Rafael Palacios (a member of the US National Academy of Scienc-es), and the result of a larger effort to study nitrogen-fixing microorganisms. Notably, CCG’s research staff of 35 re-cently announced the complete gene sequence of Rhizobium etli – a bacterium that lives symbiotically with the common bean.

While many involved with Morelos’ life sciences industry are some of the country’s leading scientists, to date relatively few examples exist of that knowledge resulting in patents or commercial products. Probiomed – oneof Mexico’s few domestic pharmaceutical and biotechnology companies – is one of the exceptions,establishing a strong research collaboration with the IBt that has resulted in the first domestically-created recombinant DNA-based pharmaceutical products in Mexico. Several other research collabora-tions with companies like Schering/Paion, Silanes, and Allied Domecq, are also underway at IBt.

CCG Laboratory (photo courtesy of UNAM)

Patents Granted toMexico-Based Inventors

55 59 6586 101 104 120 135

118 122 107 100

148116 112

141 120 118118

139

121

162

131 132

0

50

100

150

200

250

300

1995

1996

1997

1998

199

9

2000

200

1

2002

200

3

2004

200

5

2006

Mex Patents Granted to Mex Inventor (1st Inventor)

US Patents Granted that Include Mex Inventor (any)


Nuevo León

They call it the “International City of Knowledge” – otherwise known as Monterrey, Nuevo León. Thismetropolitan area is the center of a major push by the State government (in collaboration with Federaland local officials, as well as key educational institutions) to grow beyond the traditional model of“manufactura” (manufacturing production) to what they call “mentefactura” (“mind”-production).To do this, the State is focusing its economic development and educational programs toward high-techindustries -- among the priorities, biotechnology and medical services.

Much of their effort has been focused on schools. According to State officials, more than 32,000children are studying under updated educational programs that stress science and innovation. Inaddition, more than US$50 million in State and Federal funds has been invested in a variety oftechnology projects, including the construction of a new Parque de Investigación é InnovaciónTecnológica (PIIT - Research and Innovation Technology Park). The PIIT – built just minutes fromMonterrey’s airport – will have six research centers and from various universities (including theUniversidad Autónoma de Nuevo León [UANL], CINVESTAV, and ITESM-Monterrey Tec), as well asincubator space for IT firms, and a global business center affiliated with the University of Texas.

While some evidence exists that biotech spin-offs are starting to form (particularly from long-timeindustry promoters, such as Dr. Hugo Barrera – a professor at UANL), universities continue to be thefocal point for life sciences activity. Largest in Nuevo León is the UANL – considered the strongestresearch university in Northeast Mexico, with over 145 life sciences-related researchers alone inMexico’s SNI registry (48 of which are in the School of Biological Sciences). While the UANL School ofMedicine offers a wide range of Doctoral and Masters degrees in medical and biomedical research, its Biological Sciences program has 130 professors focused on biology, food sciences, and biotechnology. UANL also has a Centro de Incubación de Empresas y Transferencia de Tecnología (Center for Business Incubation and Technology Transfer - CIETT) to support the future growth of those emerging spin-offs.

Over at Monterrey Tec (ITESM), another biotech investment has also taken shape: a new, US$35 million Biotechnology Center that aims to integrate the school’s chemical engineer-ing, food, biology, and medical talent into new innovations and new businesses. The Center is a four story facility with food safety testing labs, bioreactors, and research lab space surrounded by undergraduate and post-graduate science class-rooms. With a strong interest in connecting their capabilities to the international marketplace, theDirector of the Centro de Biotecnología made a point during a recent visit – the informational brochureused to promote the Center was printed in only one language: English.

Monterrey’s life sciences industry continues to grow, sup-ported by its strong clinical trials capabilities. Many of these,in fact, occur at the UANL-affiliated teaching hospital(Hospital Universitario) and ITESM’s Hospital San José (the twolargest centers for clinical research in Nuevo León). With thenew Council of Specialized Medical Services (formed to pro-mote Monterrey as a “health tourism” destination), additionalgrowth in medical services and clinical trials is likely, both atuniversity sites, and at a small number of start-ups (such asMonterrey-based DeBBiOM) which will serve US firms seekingclinical research options, as well as domestic firms facingMexico’s new generics bioequivalency requirements.

Dr. Simon Goldbard visits withDr. Mario Alvarez, Director of ITESM’s Biotechnology Center

UANL’s Hospital Universitario


San Diego: A Portal for Borderless Biotech?

This document is yet another part of a continuing effort to describe Mexico’s evolution in technologyand science. Clearly, certain intriguing crossborder opportunities appear to exist in the case of lifesciences – whether in ag-biotech, biocontrols, genomics research, pharmaceutical manufacturing,medical devices, or clinical trials. While all of Mexico cannot expect to immediately become aworld-leader in all areas of this sector, its history already shows examples of regional genius andconnections with California’s biotech and pharmaceutical industries. The question remains: can thishistory be expanded upon - and will it include San Diego?

Given that San Diego has the largest concentration of US-based biotechnology firms along theUS-Mexico border and one of the largest in the United States, there is a strong case and a uniqueopportunity to work with the dynamic regions that make up Mexico’s emerging life sciences industry.Direct flights from both San Diego’s or Tijuana’s airports to these regions provides access that fewother locations in the United States can take advantage of. The broad use of English by many ofMexico’s technology leaders eliminates yet another barrier to increased interaction, scientific collab-oration, and possibly investment. Such an opportunity, first discussed in Borderless Innovation, canhelp act as a catalyst for both increasing multi-regional competitiveness in life science companies, aswell as accelerate Mexico’s growth in this sector.

Just as the strength of a helix is based on the connections between its components, so too the potential for San Diego to become both a portal and a partner for Mexico's emerging life sciences regions creates opportunities for each side of the crossborder region. Joining together the talent and capabilities of San Diego, Guana-juato, Jalisco, Morelos, Nuevo León, and Baja California in the development of a life sciences partnership may create a unique, international model that goes beyond borders. Ultimately, such a partnership might also extend to many other regions – in the US, Mexico, Canada, Europe and Asia – supporting new job growth, new discoveries, and a world of borderless biotech.

The Life Sciences Potential of Baja California

Just south of San Diego, one can find not only the largest concentration of biomedical device companies in Mexico – but a small but growing number of biotech researchers and entrepreneurs, as well. Highlighted in Borderless Innovation, the Baja California biotechnology cluster is located primarily in Ensenada with its concentration of educational and research institutions, such as the Centro de Investigación Científica y de Educación Superior de Ensenada (CICESE), and the Universidad Autónoma de Baja California (UABC). In fact, Ensenada’s centers are themselves a reflection of historic crossborder leadership, as it was a contingent of representatives from UNAM, CONACYT, and UABC that visited the Scripps Institute of Oceanography in La Jolla as part of a feasibility study that led to the creation of what is now known as CICESE in 1973.

Currently, CICESE’s Doctoral and Master’s degree programs in marine biology and biotechnology play a large role in Baja California’s future biotech potential (particularly in marine biotechnology), as does UABC’s Doctoral program in agricultural biotechnology and its Master’s programs in desert ecology, veterinary sciences, and health. The Instituto Tecnológico de Tijuana (Tijuana Technology Institute) also has Doctoral and Masters programs in chemistry, adding further life sciences potential to a region whose workforce is highly educated in global manufacturing and production.

While Baja California does not have the largest number of SNI-registered life sciences researchers, it does have something few other regions in Mexico can claim – interaction with and proximity to one of the largest concentrations of biotech research and capital in the United States: San Diego.


Asociación Farmacéutica Mexicana www.afmac.org.mx

Asociación Mexicana de Industrias de Investigación Farmacéutica www.amiif.org.mx

Banco Nacional de Patentes (Mexico, searchable) www.impi.gob.mx/banapanet

Cámara Nacional de la Industria Farmacéutica www.canifarma.org.mx

Centro de Biotecnología - ITESM www.mty.itesm.mx/dia/ing_agricola/cbt.htm

Centro de Investigación y Asistencia en Tecnología del Estado de Jalisco www.ciatej.net.mx

Centro Universitario de Ciencias Biológicas y Agropecuarias - UDG www.cucba.udg.mx

CICESE – Marine Biotechnology Department biotecnologia.cicese.mx

CINVESTAV – Irapuato Campus www.ira.cinvestav.mx

CONACYT - Consejo Nacional de Ciencia y Tecnología www.conacyt.mx

Council on Competitiveness – Mexico Projects www.compete.org/gi/us_mexico.asp

INMEGEN – Instituto Nacional de Medicina Genómica www.inmegen.gob.mx

Instituto de Biotecnología - UANL www.fcb.uanl.mx/Mis_Webs/InicioIB.htm

Instituto de Biotecnología - UNAM www.ibt.unam.mx

Instituto de Investigaciones Oceanológicas - UABC iio.ens.uabc.mx

Premios a la Innovación en Salud y Alimentación www.premiosinnovamex.com.mx

Secretaría de Salud www.salud.gob.mx

San Diego Dialogue www.sandiegodialogue.org

Sociedad Mexicana de Biotechnología y Bioingeniería www.smbb.com.mx

Appendix - Websites for Additional Information

Asociación Farmacéutica Mexicana www.afmac.org.mx

Asociación Mexicana de Industrias de Investigación Farmacéutica www.amiif.org.mx

Banco Nacional de Patentes (Mexico, searchable) www.impi.gob.mx/banapanet

Cámara Nacional de la Industria Farmacéutica www.canifarma.org.mx

Centro de Biotecnología - ITESM www.mty.itesm.mx/dia/ing_agricola/cbt.htm

Centro de Investigación y Asistencia en Tecnología del Estado de Jalisco www.ciatej.net.mx

Centro Universitario de Ciencias Biológicas y Agropecuarias - UDG www.cucba.udg.mx

CICESE – Marine Biotechnology Department biotecnologia.cicese.mx

CINVESTAV – Irapuato Campus www.ira.cinvestav.mx

CONACYT - Consejo Nacional de Ciencia y Tecnología www.conacyt.mx

Council on Competitiveness – Mexico Projects www.compete.org/gi/us_mexico.asp

INMEGEN – Instituto Nacional de Medicina Genómica www.inmegen.gob.mx

Instituto de Biotecnología - UANL www.fcb.uanl.mx/Mis_Webs/InicioIB.htm

Instituto de Biotecnología - UNAM www.ibt.unam.mx

Instituto de Investigaciones Oceanológicas - UABC iio.ens.uabc.mx

Premios a la Innovación en Salud y Alimentación www.premiosinnovamex.com.mx

Secretaría de Salud www.salud.gob.mx

San Diego Dialogue www.sandiegodialogue.org

Sociedad Mexicana de Biotechnología y Bioingeniería www.smbb.com.mx

This Forum Fronterizo briefing paper was developed by San Diego-based Crossborder Group Inc. (www.CrossborderBusiness.com) under contract with UCSD Extension and San Diego Dialogue, with the generous support of Merck. The opinions expressed in this briefing paper do not necessarily reflect those of San Diego Dialogue; the University of California, San Diego; Merck; or Merck Sharpe & Dohme.

If you would like more information about Mexico’s emerging life sciences industry, please contact UCSD Extension-San Diego Dialogue at (858) 534-8638, or visit our website at www.SanDiegoDialogue.org; foradditional information about UCSD Extension’s Global Connect program, please visit our website at globalconnect.ucsd.edu.

2007 - Borderless Biotech & Mexico's Emerging Life Sciences Industry

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