The biotechnology revolution and its potential impact on the South African economy

Smit, Barend Schalk (2004-12)

Thesis (MBA)--Stellenbosch University, 2004.

Thesis

ENGLISH ABSTRACT: In the history of the world, technological change has always played a central role in the advancement of the global economy. Every now and then a technological development comes along that causes a quantum leap in the technological progress of the world. Such were the mechanical developments that led to the industrial revolution, or the electronic developments that led to the more recent information technology revolution. A characteristic of these developments is its profound impact on the world economy. An explosion of new product and production possibilities typically follows such landmark technological developments. So fast and intense are the technological and resulting economic changes, that it can truly be described as a revolution. Recently, the rapid advances in molecular biology have caused such a multitude of new product and production possibilities in biological sciences that it can be described as a biotechnology revolution. Modern biotechnological techniques like recombinant DNA techniques have made the genetic manipulation of organisms possible. This creates possibilities of new production techniques and products previously unimaginable. The centre stage of the biotechnology revolution is in the US and Europe. South Africa and other developing countries have lagged behind in adopting and extracting economic value from modern biotechnology. This study investigates the issues in modern biotechnology and how the South African economy can benefit from modern biotechnology. It was found that modern biotechnology has tremendous economic potential and that already many overseas companies are generating huge profits from modern biotechnology products in all fields of biotechnology. However, some concerns about the safety of modern biotechnology point at the necessity for a proper global regulatory framework to ensure the consumer acceptance of biotechnology products required to continue to extract value from new biotechnology developments. Various cost factors need to be considered in the biotechnology industry and in South Africa the importance of these cost factors is much more pronounced due to the small scale of the South African economy. South Africa and many other developing countries will most definitely benefit from adopting modern biotechnology and expanding national biotechnology capacity. However, analyses like cost-volume-profit, economic potential, and production factor gap analyses need to be executed, preferably up to product level, to determine the appropriate biotechnology areas or products with the biggest economic potential and on which South Africa should focus its biotechnology efforts. Government stimulation of the South African biotechnology industry is welcomed by the industry. The expansion of South African biotechnology capacity will result in sustainable long-term economic benefits, not only to South Africa, but also to other developing African countries. It is concluded that the large-scale adoption of modern biotechnology in South Africa is appropriate and that the exploding biotechnology product developments, combined with increased market acceptance of modern biotechnology products, will create significant economic benefits in the South African economy.

AFRIKAANSE OPSOMMING: Sedert die vroegste tye in die geskiedenis van die wereld het tegnologiese ontwikkeling 'n sentrale rol in die vooruitgang van die wereldekonomie gespeel. Elke nou en dan vind daar 'n tegnologiese ontwikkeling plaas wat 'n kwantumsprong in die vooruitgang van die wereld tot gevolg he!. Voorbeelde hiervan is die meganiese ontwikkelinge wat tot die industriele revolusie gelei het, of die meer onlangse elektroniese ontwikkelinge wat die informasietegnologierevolusie tot gevolg gehad het. 'n Kenmerk van hierdie ontwikkelinge is die geweldige impak wat dit op die wereldekonomie gehad het. 'n Ontploffing in produkte en produksietegnieke is tipies die gevolg van hierdie landmerk tegnologiese ontwikkelinge. Die tegnologiese- en gevolglik ekonomiese veranderinge is so vinnig en intens dat dit waarlik as 'n revolusie beskryf kan word. Die onlangse vinnige vooruitgang in molekulere biologie het so 'n ontploffing in nuwe produkte en produksietegnieke in die biologiese wetenskappe veroorsaak, dat dit as 'n biotegnologiese revolusie beskryf kan word. Moderne tegnieke, soos rekombinante-DNS-tegnieke, maak die genetiese manipulasie van organismes moontlik. Dit lei tot die ontwikkeling van nuwe produkte en produksietegnieke wat voorheen ondenkbaar was. Die fokuspunt van die biotegnologie-revolusie is in die VSA en Europa. Suid-Afrika en ander ontwikkelende lande het agtergeraak in die toepassing en ekonomiese aanwending van moderne biotegnologie. Hierdie studie ondersoek spesifiek die kwessies in moderne biotegnologie en hoe Suid-Afrika voordeel daaruit kan trek. Die studie het bevind dat moderne biotegnologie geweldige ekonomiese potensiaal het en dat daar reeds baie buitelandse maatskappye is wat groot winste in alle velde van biotegnologie genereer. Daar is egter sekere bekommernisse oor die veiligheid van moderne biotegnologie. Dit dui op die noodsaaklikheid van 'n deeglike globale regulatoriese raamwerk. So 'n raamwerk sal die verbruikersaanvaarding verseker wat nodig is vir die suksesvolle ekonomiese toepassing van moderne biotegnologie. Verskeie kostefaktore moet in die biotegnologie-industrie in berekening gebring word en in Suid-Afrika is hierdie kostefaktore baie belangrik weens die klein skaal van die Suid Afrikaanse ekonomie. Suid-Afrika en baie ander ontwikkelende lande kan definitief uit die aanvaarding van moderne biotegnologie en uitbreiding van biotegnologie-kapasiteit voordeel trek. Analises soos koste-volume-wins-, ekonomiese potensiaal- en produksiefaktorgapinganalises moet egter uitgevoer word, verkieslik tot op produkvlak, om die geskikte biotegnologieveld met die grootste ekonomiese potensiaal vir Suid-Afrika te bepaal. 'n Paar sleutel marksuksesfaktore moet in die biotegnologiebedryf in gedagte gehou word. Die kernbeginsel van hierdie sleutel marksuksesfaktore is geidentifiseer as die vermoe van biotegnologieprodukte om so 'n goeie waarde-aanbieding aan die klient te bied, dat die mark bereid is om 'n premiumprys vir die produk teen ekonomies lewensvatbare vraaghoeveelhede te betaal. Stimulering van die Suid-Afrikaanse biotegnologiebedryf deur die regering word wyd deur die industrie verwelkom. Die gevolglike uitbreiding van die biotegnologiekapasiteit in Suid-Afrika sal langtermyn ekonomiese voordele vir SuidAfrika, asook vir ander ontwikkelende lande in Afrika inhou. Die gevolgtrekking van hierdie studie is dat grootskaalse aanvaarding van moderne biotegnologie gepas is in Suid-Afrika en dat die ontploffing in biotegnologieprodukontwikkelings, tesame met groter markaanvaarding van moderne biotegnologieprodukte, groot potensiele voordele vir die toekomstige Suid-Afrikaanse ekonomie inhou.

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