Over 20 years ago Cyril Donninger moved fast to turn the economic opportunities presented by biotech into realities. He was a lone campaigner, determined to create a private-sector biotech industry in SA. With R75 000 in start-up capital from SA Druggists he launched Bioclones in 1982. After some early success with diagnostic products, he focused Bioclones on pharmaceutical products. He produced and registered recombinant human erythropoietin (EPO) in SA by 1997 - and quite aside from it being a significant achievement, it was an inspired move. EPO is a genetically engineered version of a hormone produced naturally by the kidneys to stimulate bone marrow into making red blood cells. It's used to treat anaemia resulting from chronic renal failure or from cancer chemotherapy. (It's also used illegally to enhance performance in endurance sports.)
And it's big. EPO generates more than US$12bn in sales globally.
Donninger's product was arguably the world's first approved generic of the EPO blockbuster EPOGen, produced by the biotech giant Amgen.
Yet he failed to make significant inroads into the SA market. This meant that when Amgen's global patents began to expire about two years ago, Bioclones was not in a position to use SA as a springboard into other global markets.
Now Bioclones has a new opportunity. Last year the company secured a $1,8m deal with Swiss firm Solidago to manufacture and market another blockbuster biotech drug - human recombinant granulocyte-colony stimulating factor (G-CSF). A sister product to EPO, G-CSF stimulates the production of white blood cells and can be used to counteract the side-effects of chemotherapy.
The licence agreement was made possible by a $5,3m investment by government agency, BioPad.
Now Bioclones, with the support of shareholder Sekunjalo, is working to bring its Cape-based production facility in line with global manufacturing practices. "We hope to be done within a year," says Donninger.
But even if Bioclones can get this facility up and running within the year, the much-hyped "millions of rand of foreign exchange" may not be there for the picking.
Aside from US-based Amgen, there are at least five European companies and another 20 around the world active in the biogeneric field of G-CSF. Competition will be brutal.
Pioneering a biotech trail in SA was never going to be easy. The company has had significant shareholder changes over the years, which has meant that finance has been erratic. Bedfellows have included SA Druggists, which was acquired by Malbak; SA Breweries; JCI; and Sekunjalo. In particular, the JCI shareholding (which was acquired in 2002) was "a difficult time", says Donninger. "We experienced extreme funding difficulties under JCI. The survival of the company was at stake."
Bioclones must also have been distracted in the early 1990s by a four-year patent dispute with Amgen over EPO in SA. Though Amgen backed off, the litigation must have absorbed precious resources.
The company has also been plagued by chronic manufacturing issues - to the point that its production of EPO (at a plant in Centurion) and its double-stranded RNA product, Ampligen, at its Goodwood plant has dwindled significantly.
"There is work to be done," says Donninger. "By world standards our EPO plant is a pilot facility. We need a production plant that is world-sized. We need in the region of $20m to build a bigger plant."
Marketing is another battle. "We are a biotech company, not a pharmaceutical marketing company, so we don't have an army of medical reps at our disposal."
Though no-one disputes that the biotech industry requires deep pockets and patience, Bioclones' delay in making its product portfolio pay may also have something to do with the personality at the helm.
People who know Donninger acknowledge that he is an astute businessman, but cite his reluctance to delegate control and form meaningful partnerships to take the company to the next level. Some say that the frustration of not being able to capitalise on the significant potential of the company is the reason some of Bioclones' most valuable employees left the company. Donninger says they resigned because of "erratic payment of salaries and difficulties with creditor payments and thus supplies [during the JCI period]."
Be that as it may, most people who know the company believe it still has tremendous potential - but the required funding is larger and the window of opportunity is smaller than it once was.
