An evaluation of biotechnology cluster development in South Africa
Early in the new millennium, the post-apartheid South African government invested in the emerging biotechnology and health biotechnology sector to start addressing the country’s health and development challenges. The potential of biotechnology promises a far greater impact on our quality of life than any other technology known and a thriving health biotechnology industry could provide new vaccines, new treatments and diagnostics for a nation burdened with HIV, tuberculosis, malaria and hepatitis infection. The purpose of this research was to analyse the extent of biotechnology cluster development in South Africa. Technologically complex industries which massively benefit knowledge based economies have been shown to emerge and flourish within industrial clusters. A qualitative research methodology was employed with a threefold purpose in mind: to assess whether the South African biotechnology cluster exhibited the typical features of productivity, innovation and new business formation; to define the key forces responsible for cluster formation; and to ascertain whether government recognised the economic importance of biotechnology. The study population of 18 subjects comprised four biotechnology researchers, ten biotechnology entrepreneurs and biotechnology companies, a research based pharmaceutical company, a Gauteng government department, a university commercialisation office, and an organisation promoting collaborative biotechnology research. A content analysis was conducted on the responses of 18 study subjects who had undergone an extensive and unbiased interviewing process. This research established that South Africa was an embryonic cluster. The cluster’s level of productivity, innovation and new business formation was affected by a lack of critical mass of research trained scientists and industry-experienced professionals; deficiencies in public and private funding; and regulatory delays by the Medicines Control Council (MCC). In the embryonic cluster environment of South Africa, communication, collaboration and knowledge transfer - typically enhanced in clusters - were identified to be very limited, further compromising the extent of productivity, innovation and new business formation. The research also identified that South African biotechnology companies had developed a unique biotechnology business model of risk diversification which also encompassed expansion into new territories, as biotechnology is international in scope and the local market size restricted. The key forces responsible for biotechnology cluster development in South Africa were external linkages, public sector anchors and social networks. Dominant external international linkages were more relevant for cluster development and success than local linkages, as biotechnology requires specialised expertise and substantial funding, which are difficult to source locally. International linkages provide access to international funds, skills and new markets and are therefore absolutely critical when local conditions are so constrained. South Africa’s tradition of strong and credible tertiary institutions makes these public sector anchors cornerstones for cluster development by generating new knowledge, training the next generation of scientists and doctors and providing a scientific infrastructure vital for cluster development. Local social networks, although somewhat restricted, together with the geographical concentration of companies, universities, hospitals and funders in Gauteng and Cape Town enhance and foster cluster relationships and increasingly play an important role in building strength and fostering cooperation and collaboration. This research found that government had compromised the development of biotechnology with a poor biotechnology strategy, the incorrect allocation of funds and a lack of sustained funding. It identified, however, that government recognised the economic importance of biotechnology and its role in the knowledge based economy and, accordingly, had implemented various strategies, policies and initiatives to encourage development. These strategies and initiatives have raised the profile of biotechnology and have arguably been successful in galvanising the activities of the disparate groups of researchers and commercial enterprises. Government has also reviewed its current biotechnology strategy and has restated its commitment to developing biotechnology.
MBA thesis - WBS