Commercializing the stem cell sciences pot

Commercializing the stem cell
sciences
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Commercializing the
stem cell sciences
Olivia Harvey
Woodhead Publishing Series in Biomedicine: Number 12
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Contents
Acknowledgements xiii
List of abbreviations xv
About the author xvii
1 Introduction: stem cell science, biotechnology
and the problem of commercialization 1
1.1 Modelling the most successful biotech business in the world 4
1.1.1 Entrepreneurialism and the US biotechnology industry 6
1.1.2 Negotiating the ‘valley of death’ 7
1.2 Emerging stem cell therapies and the commercialization
of biotechnology

8
1.2.1 Similarities 9
1.2.2 Differences 10
1.3 Some prospective possibilities for the stem cell industries 11
1.3.1 Reagents and media 12
1.3.2 Disease models and cell lines 12
1.3.3 Storage and technology systems 13
1.3.4 Off-the-shelf products 13
1.3.5 Non-human applications 14
1.4 The limits of commercialization in the stem cell sciences 15
1.4.1 The size of the market 15
1.4.2 The relationship between risk and return 16
1.5 What are the most lucrative commercial models to adopt? 16
References 17
2 Stem cell treatments in a global marketplace 19
2.1 Patients drive the market 21
2.1.1 Patient activists 23
2.1.2 Stem cell tourism 25
2.1.3 Anti-ageing and life-extension medicine 27
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2.2 Healthcare providers and the consumption of stem cell
technologies 29
2.2.1 The politics of healthcare 32
2.2.2 Inequalities in healthcare 34
2.2.3 The future of lifestyle medicines 36
2.3 Stem cell tourism: is it a fraud or a worthwhile endeavour? 38
2.3.1 Drs Shroff and Varma 40
2.3.2 The Dominican Republic 41
2.4 The lucrative potential of animal applications of stem cell

products and techniques 43
2.4.1 Food security and stem cell technologies 45
2.4.2 Veterinary applications of stem cell therapies 47
2.5 What is the potential for market share? 48
References 50
3 The role of innovation systems in the
commercialization of biotechnology 55
3.1 The international context of stem cell science 58
3.1.1 Innovating for enhanced competitiveness 60
3.1.2 The principle of competitive advantage and why it matters 63
3.2 The key components of national innovation systems 65
3.2.1 Funding 66
3.2.2 Regulation 68
3.2.3 Workforce and education 70
3.2.4 Taxation and business rules 72
3.2.5 Patenting 74
3.2.6 Consumer protection 76
3.3 The intersection between commercialization and innovation 77
3.3.1 The constraints of working in-country 78
3.3.2 Global flows of labour and capital 79
3.4 Globalization and innovation systems? 81
References 82
4 Low-risk, low-value: adult stem cells 89
4.1 A brief history of adult stem cell technologies 92
4.1.1 Bone marrow transplants 94
4.1.2 Cord-blood banking 99
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4.2 Adult stem cell science in the twenty-first century 102
4.2.1 Example 1: Mesoblast 105
4.2.2 Example 2: Regeneus 108

4.2.3 Example 3: breast enhancement with stem cells 111
4.2.4 Example 4: vision repair 114
4.3 So where are the commercial opportunities? 116
References 118
5 High-risk, high-value: embryonic stem cells 121
5.1 The global debate 124
5.1.1 US politics and hESC research 127
5.1.2 Patenting issues in the EU and the US 130
5.1.3 Global regularity disparity 133
5.2 Current clinical trials 135
5.2.1 Geron 138
5.2.2 Other FDA-approved clinical trials: Advanced Cell
Technology 142
5.3 The future of hESC work? 144
References 147
6 Low-risk, low-value: iPS cells 153
6.1 iPSCs and the autologous solution 156
6.2 Imagined scenarios 159
6.2.1 Centralized production 162
6.2.2 Stem cell banking 165
6.2.3 Training delivery 168
6.2.4 Supplementary products and processes 171
6.2.5 Collaborative licensing 174
6.2.6 Outpatient clinics 177
6.3 The iPS cell industry? 180
References 182
7 What does the future hold? 187
Index 191
Contents xi

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Acknowledgements
This book is, if not a culmination of, at least related to several years
of postdoctoral research, conducted while I was a member of staff at
four separate institutions across two continents and funded by two
different research grants. The first grant was a UK Economic and
Social Sciences Postdoctoral Fellowship, funded as part of the Social
Science of Stem Cells Initiative, hosted at York University by
Professor Andrew Webster (Award No: PTA-350-27-0001
‘Government Strategies and Commercial Models: The Politics of the
Global Stem Cell Bioeconomy’). This grant was originally located at
the University of East Anglia, Norwich, with Professor Brian Salter’s
Global Biopolitics Research Group. Part-way through the project,
the Global Biopolitics Research Group relocated, joining the newly
established Centre for Biomedicine and Society at King’s College,
London (now at Brunel University). The second grant was a
University of New South Wales Faculty of Arts and Social Sciences
Postdoctoral Research Fellowship for the project ‘Stem Cell Science
in Australia: Commercial Opportunities, State Strategies and the
Global Bioeconomy’. At the University of New South Wales I was
hosted by the School of History and Philosophy. While completing
the final writing up I taught part-time in the Department of Sociology
and Social Policy at the University of Sydney.
Mentors, colleagues and friends at the University of East Anglia,
King’s College, London, the Centre for Biomedicine and Society, the
University of New South Wales and, lately, the University of Sydney,
have provided the intellectual framework through which the ideas
that inform this book have developed. Thank you to Professors
Catherine Waldby (Sydney), Brian Salter (KCL), Clare Williams
(CBAS), Steven Wainwright (CBAS) and Barbara Prainsack (CBAS).

xiv Commercializing the stem cell sciences
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Thank you too, to Drs Melinda Cooper (Sydney), Kathryn Ehrich
(KCL), Andrea Stockl (UEA), Joanne Faulkner (UNSW) and Jane
Bolitho (UNSW), and to Amanda Dickins (Ex-KCL) and Marios
Elles (Sydney). Finally, thank you to my partner Walter for putting
up with my IT difficulties.
Published by Woodhead Publishing Limited, 2012
List of abbreviations
ACT Advanced Cell Technology
AIDS acquired immune deficiency virus
AMD age-related macular degeneration
ANZCTR Australian New Zealand Clinical Trials Registry
ART assisted reproductive technologies
CIRM California Institute of Regenerative Medicine
EPO European Patent Office
EU European Union
FDA Food and Drug Administration (US)
GDP gross domestic product
GMP good manufacturing protocols/practice
GSK GlaxoSmithKline
GTP good tissue practice
hESC human embryonic stem cell
HFEA Human Fertilization and Embryology Authority
HIV human immunodeficiency virus
HLA haploid leukocyte antigen
HSC haematopoietic stem cells
ICT information and communications technology
IPO initial public offering
xvi Commercializing the stem cell sciences

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iPSC induced pluripotent stem cell
ISSCR International Society for Stem Cell Research
IVF
in vitro fertilization
JDRF Juvenile Diabetes Research Foundation of America
LED light-emitting diode
MPC mesenchymal precursor cell
MS multiple sclerosis
NAF National Abortion Federation (US)
NHMRC National Health and Medical Research Council
(Australia)
NIH National Institute of Health
NIS national innovation system
OECD Organization for Economic Cooperation and
Development
R&D research and development
R&E research and engineering
RPE retinal pigment epithelium
SME small or medium-sized enterprise
TRIPS Trade-Related Aspects of Intellectual Property Rights
UKSCB UK Stem Cell Bank
USPTO US Patent and Trademark Office
WARF Wisconsin Alumni Research Foundation
WIPO World Intellectual Property Organization
Published by Woodhead Publishing Limited, 2012
About the author
Olivia Harvey’s interest in stem cells began as part of her PhD
project (Sociology and Anthropology, UNSW) at a time when the
global stem cell debate was in full flight. This PhD research ultimately

translated into a postdoctoral focus on the relationship between
state strategies for enhancing the stem cell industries and the actual
effects on innovation practice. She has published previously on the
regulatory environment in Australia and the US, and on innovators’
views of strategic attempts to manipulate the conditions of innovation
in the stem cell industries. In 2010 she was the recipient of the Best
Article of the 2009 Volume prize from the journal Politics and
Policy.
The author may be contacted via the publishers.

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1
Introduction: stem cell science,
biotechnology and the problem
of commercialization
Abstract. This introduction outlines the background behind the
emergence of stem cell science as a global industry, how it fits in and
exceeds the biotechnology industry model, and some of the options for
product development that are emerging in the stem cell sciences. The
difficulties of commercializing biotechnology and how these new
products are circumventing some of these difficulties are also discussed.
The end of the chapter provides an outline of the chapters to come.
Keywords: biotechnology, commercial models, the valley of death,
new products
Since stem cells were first isolated from a human embryo in 1998,
interest in the development of a global stem cell market has grown
exponentially. Prior to this, while the existence of human embryonic
stem cells had long been established, it was thought impossible to
isolate them with any degree of success. The 1998 discovery opened
up a new avenue of research that subsequently became one of the

world’s hottest topics.
Following so soon after the birth of Dolly the cloned sheep in the
UK just two years earlier, the isolation of stem cells from human
embryos fuelled an explosion of interest in the clinical and
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2 Commercializing the stem cell sciences
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commercial possibilities of stem cell and cloning technologies. At the
same time, much of the global excitement around these new
possibilities was also tempered by an extraordinary level of
community reaction to the potential consequences of what unfettered
applications of such groundbreaking discoveries could mean. The
years immediately following these discoveries saw human embryonic
stem cell research attain a high media profile amid all the political
and community debate about what should be done about both
cloning and stem cell research.
The debate over the ethics of using human embryos in research
had become so intense in some places that in 2001, then US President
George W. Bush used a prime-time broadcast to announce that
federal funding for research involving human embryos would be
banned (CNN, 2001). This move seemed to ensure that human
embryonic stem cell research was both irrevocably tied up with
reproductive cloning and seemed to be irretrievably mired in the
cultural politics of the US abortion wars. Subsequent administrations
have also dealt with the complexities created by this scenario, and
even now the use of human embryos in publicly funded research in

the US is engulfed by a legal and ethical quagmire that shows few
signs of being resolved any time soon.
The initial hype created by the discovery that stem cells could be
isolated from human embryos was driven by the potential of
embryonic stem cells to turn into any cell in the human body. This
opened up the possibility of being able to generate replacement
tissues effectively on demand for a range of injuries, illnesses and
incapacities. The so called ‘holy grail’ of stem cell science is the
prospect of being able to mass produce such a product and have it
widely available in an off-the-shelf format for the global market,
in much the same way as pharmaceuticals are made and sold around
the world. Little headway has been made in creating such stem cell
based products, although two human clinical trials are now
currently underway in the US utilizing human embryonic stem cell
derived products.
Nearly 15 years on from the first isolation of human embryonic
stem cells, a nuanced and highly sophisticated marketplace in stem
cell science has slowly inched its way forward. Around the world,
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The problem of commercialization 3
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scientists have been working on bringing stem cell technologies to
the market for a wide range of diseases and clinical applications. In
India, China, the Caribbean and parts of Eastern Europe too, there
is a robust market developing in ‘stem cell tourism’.
Although there are many critics of stem cell tourism and the sale

of what are widely regarded as unproven techniques to people who
are seen to be desperate for improved treatments and cures, from a
commercial perspective the stem cell tourist markets are important
to consider. The questions addressed in this book are not so much
concerned with the authenticity, veracity or justice of the stem cell
tourist markets – although they are undoubtedly important issues –
but are rather intended to examine all of the developing markets in
the stem cell ‘industries’, worldwide. Similarly, so too are the
growing markets for the treatment of animals important to consider
from a commercial point of view.
Outside of the unproven therapies and animal markets, the most
successful applications to emerge on the human market so far have
come from adult stem cells. These include: bone marrow, cord
blood, cartilage, bone, heart tissue, fat and skin products designed
to target specific ailments and painful conditions, if not
life-threatening illness and disease. There is now a range of adult
stem cell products in development, ranging in application from
cosmetic treatments to highly complex procedures to help heal
cardiac tissue after heart attacks.
The aim of this book is to track the development of the commercial
prospects for the stem cell sciences and look at the ways that stem
cell technologies have entered or are entering into the marketplace in
order to identify what specific barriers might be facing the global
industry. The goal here is to provide a resource for individuals
interested in the development of the stem cell markets, to identify
new opportunities for entry into the market and to examine the
success or failure of other stem cell based technologies already
available on the market. This book is thus designed to be a
comprehensive analysis of the structure of the emerging global
markets in the stem cell sciences, including sections on the level of

government investment and support in different locations for these
nascent industries. It is a premise of the analysis offered here that
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4 Commercializing the stem cell sciences
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commercialization does not happen in a vacuum and that cultural
values, government intervention, scientific and in-country
technological capacity and a myriad of other factors affecting the
flow of people, resources and money locally and across borders
will impact on the success of any new product entering into the
global bioeconomy.
1.1 Modelling the most successful biotech business in
the world
One of the keys to unlocking the success of new developments in the
stem cell sciences lies in identifying how they map onto existing
markets. As new biotechnological products, emerging stem cell
therapies are a subsidiary of the global biotechnology industry. With
its roots in developments in agriculture and animal husbandry in the
early twentieth century, the first modern biotechnology product to
sell successfully was a recombinant DNA artefact developed by the
US-based company Genentech in 1978. Since the late 1970s, the
biotech industry has developed at an exponential rate, although
industry analysts Ernst & Young (2008) have highlighted that
biotechnology only started to return a profit worldwide more than
30 years later. Nevertheless, they report that post-financial crisis the
global biotechnology industry in the established centres around the

world (that is the US, Europe, Canada and Australia) is worth nearly
US$80 billion annually (Ernst & Young, 2010). Emerging markets
in India, China, Japan and Singapore are expected to add even more
to this revenue stream in coming years (Ernst & Young, 2010).
The US biotech industry is far and away the world’s largest and so
far most productive. In 2009 for instance, the US biotechnology
revenue stream for publicly traded biotechnology companies was
US$56.6 billion (Ernst & Young, 2010). Notably, this figure includes
the loss incurred by the buyout of Genentech by European
pharmaceutical company Roche (Ernst & Young, 2010). In Europe,
by contrast, the revenue raised by publicly traded biotechnology
companies was around €11.9 billion in 2009. In comparison, in
Canada and Australia for 2009, revenues were US$2.2 billion and
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The problem of commercialization 5
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US$3.7 billion respectively (Ernst & Young, 2010). Given the
significant size of the US industry in comparison to those elsewhere,
it is hardly surprising that governments around the world are
working on building strategies that would help local industries
mimic the US biotechnology industry.
The main approach to emulating the success of the US industry
adopted by governments has been to identify the successful indicators
of commercialization and to try to repeat those conditions at home.
In the last seven years governments in the UK, Australia, Canada,
India, China and Singapore have adopted precisely this method in an

attempt to support specific development in the stem cell industries.
More broadly, leveraging up national competitive performance of
biotechnology in general is also thought to have a flow on effect in
enhancing the performance of the stem cell sciences. Essentially, the
rationale is that with the right conditions in place, commercial
success will happen as a matter of course.
Whether or not this approach is effective has largely remained
untested. Some of the data in Ernst & Young’s (2010) Beyond
Borders Report on the global biotechnology industry seems to
indicate that while the overall components of innovation are relatively
similar for biotechnology in each country, there are country-specific
factors that challenge the idea that there is one, uniform commercial
model. For instance, one of the industry commentators asked to
identify what the strengths are of Indian biotechnology in the
Beyond Borders Report (2010) highlights the different funding
models used in the US and India as a significant point of divergence.
Whereas US biotech is heavily dependent on venture capital
investment and its short-term time frames, the commentator argues
that Indian biotechnology is debt-financed and thus the only
requirement is repaying creditors over a long-term (Ernst & Young,
2010). Exactly what impact these differences might have on the
overall survival and competitiveness of biotechnology companies in
each of these locations though is difficult to determine.
Despite some of these queries about whether or not transplanting
the successful elements of one industry into another country actually
works, the key consideration must focus on addressing exactly what
it takes to model US biotechnology. Central to addressing this
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concern is an examination of what some of the core components are
that make US biotech so successful. There are arguably two main
factors that determine success in the US industry: the role of the
entrepreneur and exit strategies for venture capital. The following
sections explore the two main explanatory ideas for the success of
the US biotechnology industry.
1.1.1 Entrepreneurialism and the US biotechnology industry
According to Genentech’s own corporate history San Francisco-based
entrepreneur Robert Swanson heard about the work of Dr Herbert
Boeyer and Stanley Cohen in the new area of recombinant DNA
technology at the University of California, San Francisco, and sold
them the idea that there were potential commercial applications of
their work (‘History’, ). Genentech was established
in 1976 and fast became one of the world’s foremost biotechnology
companies. On going public in 1980 the company raised US$35
million and the stock price nearly tripled within an hour of being on
the market (‘Corporate chronology’, ). Genentech’s
first recombinant DNA product was a synthetic human insulin product
that was licensed to the pharmaceutical company Eli Lily in 1982. In
1985, Genentech marketed human growth protein, the second of their
patented recombinant DNA technologies.
The corporate history of Genentech makes much of the meeting
between an entrepreneurial venture capitalist and an innovative
university scientist. In this model, it is the venture capitalists who are
usually seen as the primary entrepreneurs, namely the ones with the
vision to see a successful future. This is also the classical economist’s

model of economic growth, with the entrepreneur driving business
cycles through being able to develop opportunities for market entry
where others have not (Sweezy, 1943).
Capitalizing on the idea of matching venture capital with scientific
innovation, technology transfer offices have been established at
universities and other research institutions around the world as a
means of structuring and supporting the process of entrepreneurialism
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