Biotech Firms Struggle With Identity Crisis : Definition of Industry Affects How Products Are Regulated by Government

The biotechnology industry is pretty smug these days.

Products in health care and diagnosis and even in the agricultural arena are getting approved and into the market faster than even the industry’s most glib supporters predicted a mere five years ago. For the most part, the capital the industry needs is there, and, as a group, the companies are back in favor on Wall Street.

Best of all, by comparison with other companies under the wide umbrella of high technology that are facing maturation and flattening of growth, biotechnology companies are looking forward to a wide-open future for products and sales.

Now, if it just weren’t for this nagging identity crisis . . .

Biotechnology companies can’t agree whether they want to be identified as part of an industry or simply the makers of tools for a variety of other industries. For instance, the scientific techniques developed by biotech companies can be licensed to manufacturers to create new drugs and other products.

Debated Again

The question was debated again last week as the Industrial Biotechnology Assn. held its annual meeting in San Francisco. Some of the trade group’s 53 members even scorn the term biotechnology and prefer names that describe a specific process.

But this is more than a quibble over semantics. For as this young field of endeavor moves its work out from the research labs into the rough-and-tumble marketplace, the definition of what it is affects how it and its products are regulated by the government, how it is perceived by the investment community and how it turns its products into profits.

Biotech is the term that was coined to describe a collection of scientific techniques, including genetic engineering (alteration of genetic information in cells) and monoclonal antibodies (a technique for cloning a task-specific cell).

The trouble is, according to David T. Kingsbury of the National Science Foundation, as these new techniques are being absorbed into the mainstream of biological sciences, biotech’s definition has been expanded, which is mucking up the already complex regulatory process.

Subjected to Strict Review

“We’ve done a great deal of mischief to ourselves,” said Kingsbury, an assistant director at the National Science Foundation who has been involved in developing guidelines for review and approval of biotech products. Kingsbury believes that too many products have been included under the biotech label--and in the wary public attitude--and thus subjected to unnecessarily strict review.

“It’s biotechnology creep,” said Henry I. Miller, special assistant to the commissioner at the Food and Drug Administration. For the most part, the five federal agencies concerned with regulating biotech products consider it a tool, rather than an industry. That enables them to determine which agency has responsibility for reviewing and approving any given product. For instance, the FDA regulates drugs whether they have been created through gene-splicing or traditional chemical processes.

That system of dealing with biotech in its parts, rather than as a whole, was reaffirmed in June with the Reagan Administration’s new guidelines for biotechnology.

Considered a Tool

The Environmental Protection Agency considers biotech a tool and not an industry, said John A. Moore, an assistant administrator for the EPA’s office of pesticides and toxic substances.

“Regulation is based on use,” he said. Some biotech-created products are not subjected to lengthy reviews; those involving organisms with new genetic characteristics that will be used in uncontained environments are, however.

Although the regulatory process is still fragmented for the products of biotechnology, most companies seem to prefer the current system to one that would lump all biotech together under a new, single regulatory arm.

George B. Rathmann, president of Amgen, a Thousand Oaks-based biotech company, said: “We can nudge and adjust the existing structure and chances are it will adjust and be better for us than creating a whole new structure.”

So far, Rathmann said, the companies have found good reason to be loosely linked as an industry. It has been easier to develop a coalition on issues that cut across the spectrum of many of the companies, such as regulation and export restrictions.

Increased Visibility

It has also increased the young companies’ visibility with investors. This factor is especially significant as many of the companies now seek to expand their operations to market and sell their own products, rather than licensing them to other, established companies.

As the companies mature, the identity crisis may resolve itself, Rathmann believes. Many will probably stumble in this expansion, but some may succeed to become, for instance, major drug companies.

And then, Rathmann said, “I wouldn’t be at all surprised to see them become arms of the pharmaceutical, agricultural or chemical industries.”

In any event, the name game is likely to go on for a while. For now, the Industrial Biotechnology Assn. doesn’t have a better term. “We’re taking it under consideration,” IBA President Richard Godown said.