SOUTH AFRICA: AFRICA'S BIOTECH POWERHOUSE

UNCLAS SECTION 01 OF 04 PRETORIA 001324

SIPDIS

STATE FOR EB/TRASTOGI, OES/PCI/ESHAW
STATE FOR OES AND EB
USDA FOR FAS/BIOTECH GROUP/BSIMMONS, GIPSA, APHIS
STATE PASS USTR

TOFAS: 19

SENSITIVE

SIPDIS

E.O. 12958: N/A
TAGS: EAGR ETRD SENV TBIO TSPL SF
SUBJECT: SOUTH AFRICA: AFRICA'S BIOTECH POWERHOUSE

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SENSITIVE BUT UNCLASSIFIED; PROTECT ACCORDINGLY. NOT FOR
INTERNET DISTRIBUTION.


1. (U) Summary. South Africa leads the African continent in
the adoption, acceptance and advancement of biotech
knowledge. It has a vibrant and productive biotech
community that produces far more scientific articles and
patents than any other Africa country. Funding for biotech
grew 360% between 2000 and 2004. Growth in related fields
of biochemistry, genetics, molecular biology, microbiology,
genetic engineering and biotechnology exceeded 46% for the
same time period, totaling about R 260 M (USD 43 M).

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SOUTH AFRICA ACCEPTED BIOTECH IN 1992
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2. (U) South Africa has a long history of acceptance of
biotech crops, beginning with its first field trials of GMOs
in 1992 and with the first permits issued only 5 years
later. Today South Africa is one of only four countries in
the world (USA, Canada, and Argentina) that produces more
than two biotech crops. The scope of research at the
Agricultural Research Council (ARC) extends across plant
tissue culture, molecular biology, recombinant DNA and
diagnostics. Three ARC institutes conduct research on the
development of transgenic crops - the Vegetable and
Ornamental Plant Institute (Gauteng),the Fruit, Vine and
Wine Research Institute (Western Cape) and the Grain Crops
Institute (North West).

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TODAY THE SOUTH AFRICA GOVERNMENT CONDUCTS LEADING EDGE
RESEARCH
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3. (U) BioTech scientists at the Veterinary Institute of the
University of Pretoria completed the first genome to be
sequenced in Africa. The bacterium that was sequenced,
Ehrlichia ruminantium, is spread by ticks and causes the
economically devastating heartwater disease in livestock and
wild ruminants. Scientists will now use this data to
develop a vaccine.


4. (U) South Africa's Council for Scientific and Industrial
Research (CSIR) is one of the leading scientific and
technology research and development organizations in Africa.
CSIR provides science and technology services including
skills in biosciences, material science, manufacturing,
natural resources and the environment. CSIR has assisted in
the development of genetically superior trees and is
continuing efforts to improve breeding techniques to design
trees with improved wood properties and improved resistance
to alien invasion. CSIR has also aided the successful
commercialization of the manufacturing of beta-carotene from
algae. CSIR is a key player in research into use of micro-
organisms to remove toxins from industrial waste and in
aiding soil remediation.


5. (U) CSIR has been a key researcher into the use of
indigenous plants since the early 1960's. A research
breakthrough by CSIR scientists relating to the isolation
and structure elucidation of a new chemical entity (P57)
extracted from the indigenous succulent Hoodia has led to a
new treatment for obesity. CSIR licensed a UK company in
1997 to further develop and commercialize this discovery. A
contact for mass production was signed with Unilever in

2004. The agreement between CSIR and the San People, an
indigenous group, whose knowledge was used as the basis for
the preliminary research provides that CSIR will pay the San
8% of all milestone payments it receives once the product
becomes fully commercialized.


6. (U) CSIR also collaborates with traditional healers in
the study of indigenous plants with mosquito repellent
properties. A community-owned mosquito repellent candle
factory has been launched in Limpopo where this plant is
being cultivated and distilled.


7. (U) The Medical Research Council (MRC) focuses on local
health priorities, playing a key role in furthering health
research within South Africa. A leading MRC program is the
South African AIDS Vaccine Initiative (SAAVI) which is

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working with key national and international partners to
produce a locally affordable vaccine. Local participation
in this project includes over 250 scientists at ten national
institutions with funding coming primarily from MRC, the
South African government and Eskom. SAAVI collaborates on
product development and clinical trials with the U.S.
National Institutes of Health, the HIV Vaccine Trials
Network (HVTN) and the International AIDS Vaccine
Initiative. In 2004, the SAAVI group included the only
accredited laboratory outside the U.S. to perform clinical
immunological studies and testing within the HVTN.


8. (U) The National Research Foundation (NRF),the national
agency responsible for promoting and supporting basic and
applied research, is another active player in the biotech
field. Two NRF-created Centers of Excellence are
biotechnology based, including the Center of Excellence for
BioMedical TB Research, and the Center of Excellence in Tree
Health Biotechnology. NRF also manages the Innovation Fund
that invests in technological innovations. Funds allocated
to the Innovation Fund have increased from approximately
R329 million (USD 54 million) in 2000 to R714 million (USD
119 million) in 2004.


9. (U) Launched in 2001, BioVentures is South Africa's first
and only niche biotechnology venture capital fund. It
invests in seed and start-up stage biotech companies.
Investments to date have been in fields as diverse as drug
discoveries to medical devices to waste water
bioremediation. Since 2001 BioVentures has invested more
than R50 million (USD 8.3 million) in 8 South Africa start-
up companies.


10. (U) Under the National Biotechnology Strategy adopted in
2001, South Africa has developed several other initiatives,
programs and centers. Six Biotech Regional Innovation
Centers have been established, including the Biotech
Partnerships and development (BioPAD),Cape Biotech trust,
LIFELab (the East Coast BioTech Center),PlantBio Trust, the
National BioInformatics Network and Public Understanding of
BioTech (PUB). Each regional center has a specific mission
and vision.


11. (U) BioPAD establishes companies that use biotech in the
fields of health (animal and human),industrial, mining and
environmental biology. Working with the Agricultural
Research Council (ARC),the Water Research Commission,
Rhodes University, CSIR, the University of Pretoria and
other partners, BioPAD has helped develop:

-- Innovative bio processes that reduce the acidity of
drainage water, a serious problem in mining,

-- A novel method for extracting active ingredients in
aloe plants,

-- Production of a pro-biotic range of koi fish, and

-- A new diagnostic kit for use against animal diseases
spread by ticks such as corridor disease.


12. (U) Cape BioTech Trust has focused upon cluster
interventions benefiting the broader biotech community and
industry. It has several pending projects including a micro
array platform at the University of Cape Town, BioCareers
Portal, and Genecare Molecular Genetics. Three other
projects are in the development and funding stage.


13. (U) LIFELab in the Eastern Coastal region has
concentrated on projects that improve human health. It
currently provides venture capital for bioprocess and
biotech projects focusing on infectious diseases such as
malaria, TB and HIV/AIDS. One key project is the
development of a Liquid Fermentation Lab south of Durban
which will set up an incubator for commercialization of
processing requiring liquid fermentation and cell cultures.


14. (U) PlantBio focuses on food security and
biofertilization. One key project located in a rural area
south of Durban with a population of 50,000 assists small
scale organic farmers. PlantBio recently invested R10
million (approx USD 1.6 Million) is a plant multiplication
facility that uses tissue cultures to produce plants for

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local and international sales.


15. - (U) The National BioInformatics Network (NBN) and the
Public Understanding of Biotech (PUB) are both information
dissemination organizations. NBN's goal is to ensure that
molecular and high throughput biology information is
centralized and available to the South African biotech
community. PUB develops school-based resources, hosts
biotech workshops and training courses and provides biotech
information to mass media.

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PRIVATE BIOTECH INDUSTRIES IN SOUTH AFRICA - AN EXPANDING
UNIVERSE
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16. (U) Beyond the official South African government
umbrella, a National Biotechnology Survey in 2003 found that
South Africa had 622 research groups engaged in 911 biotech
research projects, involving about 4300 researchers. Key
private companies include Synexa Life Sciences which has
developed a proprietary bioprocessing technology for
production of natural and recombinant products from
microbial hosts. Aspen Pharmacare is Africa's largest
generic pharmaceutical manufacturer. Aspen pioneered the
production of low-cost generic anti-retroviral (ARV) drugs
under voluntary licenses from GlaxoSmithKline and Boehringer
Ingelheim, among others. Aspen's ARVs are manufactured at
its oral solid dose facility which has been accredited by
the US Food and Drug Administration, as well as by the World
Health Organization.

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AGRICULTURAL BIOTECH - A SUNNY PICTURE
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17. (SBU) The South African Government generally supports
biotechnology: transgenic varieties of cotton, corn and soy
are approved for commercial planting and account for
approximately 90 percent of South Africa's cotton, 20
percent of corn, and 70 percent of soybeans. South Africa
can play a vital role as other countries in Africa develop
biotechnology policies because it has the most resources,
such as scientific expertise and financial support, as well
as a progressive regulatory system. Without the South
African Government's leadership role in this region, future
progress in biotechnology can be stifled by anti-technology
groups.

18. (SBU) South African farmers can be divided into two
categories. Large-scale, commercial farmers, usually white,
are modern businessmen who often have more in common with
their American counterparts than with their fellow, more
traditional Africans. Small-scale farmers, sometimes
growing only for their subsistence needs, are usually black
and have smaller plots of land planted to grains and
vegetables. GM products have a wide appeal with both
groups. Each group appreciates that GM crops use fewer
inputs and have higher yields, both in quantity and in
quality. In fact, small-scale farmers find some GM crops
easier to manage than traditional varieties.

19. (SBU) Seed companies have found that small-scale
growers are an important market for GM crops, and they
promote their new seeds extensively by hosting Farmer Field
Days at company test plots throughout the country.
Distributors are from the local area, speak the local
language, and take the time to explain to the people the
benefits of using modern seeds. Most important, the seed
companies of South Africa visit each of their customers'
farms several times each season for after-sales service to
give advice and to try to ensure satisfied customers. The
seed companies in essence perform the extension service
function that was formerly performed by the South African
Department of Agriculture. In recent years, the Provincial
Departments of Agriculture have taken on the extension
function, and it is difficult to find a farmer, large or
small-scale, who has anything positive to say about their
performance. When care is taken by the seed company
representatives, both large and small-scale growers are
generally receptive to new technologies. This has led to
significant increases each year in the area planted to
biotech seeds in South Africa.

20. (SBU) A good example of products under development is

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the USAID-funded transgenic potato project, in cooperation
with Michigan State University and South Africa's
Agricultural Research Council (ARC) (the ARC is a UNESCO
biotechnology training center for Africa). The project is
in the third year of contained field trials with projected
commercialization time frame of 2008. Before petitioning
for commercialization, a "socio-economic impact"
questionnaire will be completed in order to gain the views
of farmers and their communities about the use of the
genetically engineered potato. The chief researcher told
post that the ARC is working closely with the GMO
Registrar's office to ensure that trials are on the right
track, and she believes that they will need another year of
field trials before submitting a formal application for
commercialization to the GMO Registrar.


21. (SBU) The potato contains a Syngenta-developed gene in
South African cultivars engineered to resist the tuber moth,
which is particularly important for small-scale farmers
storing their potatoes after harvest. The contained trials
are taking place in six regions, representing different
ecological areas of South Africa. Five of the six planting
trials are completed. Recent storage trials show 100
percent control of the moth.


22. (U) The ARC is also working on a drought-resistant
soybean, which is locally produced with a gene licensed from
Belgium. The earliest that the soybean could be
commercialized would be 2009 as they still need two more
years of multi-locality field trials. The group is also
working on a virus-resistant ornamental plant, which has
shown some success; a virus resistant sweet potato that has
not been successful due to weevil problems; and virus
resistant tomatoes. It also is working on gene mining
projects on cow peas, sorghum and potatoes to locally
develop genes that will help resource-poor farmers.

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-------------- FUTURE OF
AGRICULTURAL BIOTECH IN SOUTH AFRICA - BEYOND POTATOES AND
CORN
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23. (SBU) The South African Parliament is currently debating
proposed amendments to the GMO Act. ARC researchers believe
that rules under the Cartagena Protocol of Biosafety will be
more restrictive to research, development and
commercialization of new products than the proposed
amendments. ARC remains hopeful that the new amendments
will not be too restrictive or expensive.

24. (SBU) Comment. Agricultural biotech is well-entrenched
in South Africa. While a few, vocal but limited membership
groups still question the safety of GMOs, the ordinary
consumer in South Africa pays little attention. GMO crops
that are in place will be difficult, if not impossible, to
dislodge. Farmers appreciate the vale added by GMO seeds
and crops and will be reluctant to return to non-GMO
products. Meanwhile, biotech is exploding into other fields
of research and activities. The government is actively
encouraging the expanse of biotech research, positioning
South Africa as a biotech leader not only for Africa, but
for the developing world. The government would be hard-
pressed to now begin decrying the folly of biotech, and we
see no sign that is disposed to do so.
TEITELBAUM