Cover Image
close this bookBiodiversity Prospecting - A World Resources Institute Book (WRI, 1993, 352 pages)
View the document(introduction...)
View the documentForeword
View the documentAcknowledgments
close this folderI. A New Lease on Life
View the document(introduction...)
View the documentGrowing Demand for Genetic and Biochemical Resources
View the documentWhat is at Stake?
close this folderThe Evolution of Biodiversity Prospecting Institutions
View the document(introduction...)
View the documentProperty Rights
View the documentInternational Agreements
View the documentBiodiversity Prospecting Intermediaries
close this folderBiodiversity Prospecting Guidelines
View the document(introduction...)
View the documentRole of Intermediaries
View the documentCompany-Collector Contracts
View the documentProperty Rights
View the documentLegal Guarantees
View the documentTechnology Policy
View the documentInternational Agreements
View the documentNotes
View the documentBibliography
close this folderII. Costa Rica's Conservation Program and National Biodiversity Institute (INBio)
View the document(introduction...)
View the documentBackground
View the documentInstitutional Groundwork
View the documentINBio's Emergence
View the documentINBio's Legal, Physical, and Administrative Structure
View the documentThe Financial Challenge
View the documentThe National Biodiversity Inventory and Allied INBio Efforts
close this folderIII. Biodiversity Prospecting by INBio
View the document(introduction...)
View the documentEssential Types of Collaboration
View the documentThe Search for Wildland Chemicals
View the documentManaging Biodiversity Information for Biodiversity Prospecting
View the documentCollaborations with Universities, Government Agencies, and NGOs
View the documentFostering Drug Discovery and Local Expertise
View the documentAgreements and Contracts with the Industrial and Commercial Sector
View the documentNational Policy
close this folderIV. Contracts for Biodiversity Prospecting1
View the document(introduction...)
View the documentThe Strengths and Limitations of Contracts
close this folderParties to Contractual Agreements for the Supply of Biological Samples
View the document(introduction...)
View the documentIndustry
View the documentCollectors
View the documentIn-country Collaborators
View the documentAdvance Payments and Royalties for Sample Supplies
close this folderNon-Monetary Compensation and Technology Transfer
View the document(introduction...)
View the documentScreening for tropical diseases
View the documentResearch exchanges and support
View the documentDistribution of drugs
View the documentSupplies of Raw Material
close this folderTraditional Knowledge and Rights of Local Peoples
View the documentEthnobotanical Data and Industry Research Programs
View the documentCollectors' Obligations to Local Communities
View the documentThe Return of Benefits to Local People
View the documentConservation Provisions
View the documentConclusion
View the documentNotes
View the documentBibliography
close this folderV. Research Management Policies: Permits for Collecting and Research in the Tropics
View the document(introduction...)
close this folderKey Considerations in Granting Wildland Biodiversity Research Agreements
View the document(introduction...)
View the document1) Collecting Permit vs. Research Agreement
View the document2) Biological Damage vs. Economic Benefits
View the document3) Who needs a research agreement?
View the document4) Who Signs Research Agreements?
View the document5) Protecting Biodiversity Information
View the document6) Violating, Re-evaluating, and Terminating Research Agreements
View the document7) Who Pays for Tropical Research and its Management and in What Coin?
View the document8) How Should Research Gains and Compensations be Distributed?
View the document9) Biodiversity Information in the "Public Domain"
View the document10) Market Forces and Research Agreements on Tropical Biodiversity
close this folderVI. An Intellectual Property Rights Framework for Biodiversity Prospecting
View the document(introduction...)
View the documentIntellectual Property and Public Policy
close this folderGuidelines for Applying Intellectual Property Rights
View the document(introduction...)
View the document1. Trade Secrets
View the document2. Utility Patents
View the document3. Plant Breeders' Rights
View the document4. Petty Patents
View the document5. Trademarks
View the document6. Copyright
View the document7. Intellectual Property Management
View the documentSui generis Biodiversity Prospecting Rights
close this folderRecurring Problems with an Intellectual Property Approach
View the document(introduction...)
View the document1. Ownership
View the document2. The Complexity of Life
View the document3. Derivation
View the document4. Valuation
View the document5. The Limits of Intellectual Property
View the document6. Equity and Indigenous Rights
View the document7. Ethics
View the document8. International Legal Inconsistencies
View the documentIntellectual Property in a Framework of Laws
View the documentThe Convention on Biological Diversity's Effect on Intellectual Property Law
View the documentConclusion
View the documentNotes
View the documentBibliography
close this folderVII. Policy Options for Scientific and Technological Capacity-Building
View the document(introduction...)
View the documentNational Innovation Policy and Biodiversity
View the documentLinking Biotechnology to Biodiversity
View the documentBiotechnology Transfer
View the documentTechnology Assessment
View the documentBlind Alleys and Windows of Opportunity
View the documentNotes
View the documentBibliography
close this folderAnnex 1 - The Role of the Parataxonomists, Inventory Managers, and Taxonomists in Costa Rica's National Biodiversity Inventory
View the document(introduction...)
close this folderThe Parataxonomists
View the document(introduction...)
View the documentA Chronological History of the Parataxonomists
View the documentThe First Parataxonomist Course: January-July 1989
View the documentThe Second Parataxonomy Course: May through August 1990
View the documentThe Third Parataxonomy Course: January-June 1992
View the documentQuestions Commonly Asked About Parataxonomists
close this folderINBio Inventory Managers and Collections Management
View the document(introduction...)
View the documentThe Demands of the Job
View the documentWhat do INBio Inventory Managers Need to do Their Work?
View the documentWhere Does the Inventory Manager Come From?
View the documentHigher Degrees vs. On-the-job Training
View the documentNational vs. Regional Inventory Managers
View the documentRemaining Barriers
close this folderTaxonomists
View the document(introduction...)
View the documentRegional and National versus Monographic Work
close this folderAnnex 2 - Biodiversity Prospecting Contract
View the document(introduction...)
View the documentI. Introduction - Using the Draft Contract
View the documentII. Draft Contract
View the documentIII. Appendices to Draft Contract Between Pharmaceutical Company and Sample Collector
View the documentIV. Commentary on Contract Provisions
close this folderV. General Legal Background
View the document(introduction...)
View the documentA. Legal Framework for Contracts
View the documentB. International Laws That Could Affect International Biodiversity Prospecting Agreements
close this folderAnnex 3 - The Convention on Biological Diversity and Intellectual Property Rights
View the document(introduction...)
close this folderConvention on Biological Diversity
View the documentArticle 1:
View the documentArticle 2:
View the documentArticle 3:
View the documentArticle 4:
View the documentArticle 7:
View the documentArticle 8:
View the documentArticle 9:
View the documentArticle 10:
View the documentArticle 11:
View the documentArticle 15:
View the documentArticle 16:
View the documentArticle 17:
View the documentArticle 18:
View the documentArticle 19:
View the documentArticles 20 and 21:
View the documentArticle 22:
View the documentArticle 25:
View the documentArticle 27:
View the documentAgenda 21
View the documentConclusion
View the documentReferences
close this folderAnnex 4 - United Nations Convention on Biological Diversity
View the documentPreamble
View the documentAnnex I - Identification and Monitoring
close this folderAnnex II
View the documentPart 1 - Arbitration
View the documentPart 2 - Conciliation
View the documentAbout the Authors
View the documentAbout the Institutions

What is at Stake?

All else being equal, the growing demand for genetic and biochemical resources should increase the potential market value of the raw material. But, given the high revenues generated from the final products developed in the agricultural and pharmaceutical industries, it is easy to misjudge how much money might actually be involved.

Many of the industries using genetic and biochemical resources produce high-value commodities and thus enjoy substantial gross earnings from the commercial product. Two drugs derived from the rosy periwinkle - vincristine and vinblastine - alone earned $100 million annually for Eli Lilly (Farnsworth, 1988) - a figure that is sometimes erroneously cited as the "value" of the rosy periwinkle. But sales of a product provide little indication of the potential market value of the unimproved genetic material in the source country.

Most of the industries using these resources are capital-intensive ventures that invest substantial time and money in the production of a commercial product, and most are far removed from the original source of the genetic or biochemical material.

In the U.S. pharmaceutical industry, a commercially marketable drug requires an estimated $231 million and 12 years on average to develop (DiMasi et al., 1991). These costs cover the process of screening candidate compounds, isolating active compounds, testing for possible toxicity, and undertaking clinical trials, as well as failed attempts to discover and produce a new drug. Developing agricultural products through genetic engineering also entails substantial costs. For example, the successful introduction of Bt genes into plants took several years and cost some $1.5 million to $3 million (Collinson and Wright, 1991).

In any given trial, the likelihood of discovering a valuable compound for the pharmaceutical industry is quite low. By most estimates, only about one in 10,000 chemicals yields a promising lead, and less than one fourth of the chemicals reaching clinical trials will ever be approved as a new drug (McChesney, 1992; DiMasi et al., 1991; Principe, unpublished ms.). For example, of 50,000 extracts put through an HIV screen in the natural products research program of the National Cancer Institute, only 3 are likely to wind up in clinical trials, and of 33,000 extracts screened for cancer only 5 are receiving further study (Sears, 1992).2

Given the high value added in both the pharmaceutical industry and agriculture, the abundance of unimproved genetic and biochemical resources, and the low probability that any specific sample will have commercial value, the holders of unimproved material are likely to receive a relatively low payment for access to the resource, current heightened demand notwithstanding. In agriculture, Barton (1991) estimates, the total revenue that might be gained if developing countries sought royalties for unimproved genetic material could amount to less than $100 million annually.3

Even in the pharmaceutical industry, possible earnings from the sale of raw materials are smaller than might be thought given the industry's worldwide sales of roughly $200 billion - more than 30 times that of the seed industry (Lisansky and Coombs, 1989). In this industry, typical royalties paid for samples of unknown clinical activity (e.g., new synthetic chemicals) amount to only 1 to 5 percent of net sales - a range of royalties likely to apply to natural products as well. Consider an institution that supplies 1,000 chemicals to a pharmaceutical company in return for a 3-percent royalty on the net sales of any commercial product. Given the need to screen roughly 10,000 chemicals to find a single lead, a 1 in 4 chance of a lead being developed into a commercial product, a 5-percent discount rate, a 10-year wait before a product is ready to be marketed, and 15 years of patent protection while it is being marketed, and assuming that a drug, if discovered, generates $10 million net annual revenues, the present value of the agreement to the supplier is only $52,500.4 More sobering, there is a 97.5 percent chance that the 1,000 chemicals will not turn up any commercial product at all, and if they do, royalty payments won't begin until more than a decade after chemical screening commences.

However, the prospects for success are raised with natural products, since any extract from a species will contain hundreds or thousands of different chemicals that might result in a pharmaceutical "lead." Moreover, the probability of success can be increased through the use of multiple - and higher quality - screens. Thus, for natural products research using current technologies, the probability of success could easily be ten times that of the example above, and thus produce promising leads at a rate of about 1 per 1,000 samples.5 The probability of developing at least one commercial product in the above example would then grow from 2.5 percent to 22 percent, and the present value of the agreement would grow accordingly, to $461,000. And, if a "blockbuster" drug - earning $1 billion in sales annually - happens to be discovered under this scenario, that value would swell to $46 million.

Biodiversity prospecting does involve financial risks. With the odds against striking it rich, it often makes economic sense for biodiversity prospectors to hedge their bets by seeking advance payments and relatively small royalties rather than forgoing collecting fees and holding out for higher royalties that may never materialize. Moreover, a risk exists that the market for natural products could quickly become saturated. While a number of pharmaceutical firms have natural products research efforts under way (see Table I.1), most are small in scale, and the demand for chemical extracts from plants, animals, and microbes might be saturated by a handful of large-scale suppliers. As, say, Costa Rica, Indonesia, India, Brazil, and Mexico establish biodiversity prospecting institutes, the growing supply may well lead to steadily declining prices for raw materials.

Finally, there is no sure way of projecting future demand for biological samples on the part of the pharmaceutical industry. Within a decade or two, advances in synthetic chemistry, biotechnology, and medical sciences may curtail interest in natural products. On the other hand, wild species will continue to be a source of novel genes and proteins, as well as a source of insights into chemical and physiological processes. Nobody knows whether natural products will fall from favor in several decades or become even more valuable in medicine and in industrial applications.

In sum, while biodiversity prospecting can return profits to source countries, institutions, and communities, the amounts involved are likely to be small relative to the market value of the final products, a decade or more may pass before significant revenues materialize, a good chance exists that no commercial drugs will be produced, and late-comers may find a market already saturated with suppliers. On the other hand, given the scale of revenues generated in the pharmaceutical industry, even a relatively small share of net profits may amount to extremely large revenues for a developing country. And, if nations add value to genetic resources domestically and build technical capacity for improving the resource themselves, biodiversity prospecting could become an important component of a nation's economic development strategy.