Science team formed to help firms
A team of scientists is setting up shop in Christchurch to work with biotech companies. MICHAEL BERRY reports on three of the region's promising firms who will be working with them - Gelita, Synlait Milk and Canterbury Scientific.
Something you probably didn't know. Most of Crown research institute Industrial Research's 350 researchers reside in Wellington, the mecca of public servants. And only a quarter of the researchers are spread between Auckland and Christchurch.
Someone in the corridors of power has finally seen the light and is sending some of this brain power south to the country's second-biggest city, one of its largest manufacturing hubs and a region which is renowned for agricultural production.
Industrial Research is setting up a new "protein science team" to be based at the University of Canterbury Biomolecular Interaction Centre and assisted by PhD and masters students from the university.
Another newly created Christchurch unit at IRL will be the Manufacturing Innovation Group. The five-strong group should grow to 12 over the next 10 months and is there to help Kiwi businesses solve their problems with engineering, whether pointing them in the direction of businesses with existing technology or coming up with something new to help.
Industrial Research advanced manufacturing technology general manager Richard Templer said the Christchurch team would work nationwide, but would be focusing on Canterbury businesses.
Andrew Muscroft-Taylor is leading the team of five protein scientists. He said while the team was small it was based at the best research facility in the country and Christchurch had a burgeoning biotech sector stemming mainly from farming on the Canterbury Plains.
The IRL team will help companies overcome problems and improve production quality.
About 10 companies were on the team's radar as partners in research.
Some were household names, others still in startup and necessarily secretive. Already IRL had partnerships with two companies and others were being negotiated, he said. The Christchurch companies were promising and high value, he said, ranging from long-running Woolston gelatine factory Gelita NZ to health science firm Canterbury Scientific.
TURNING POWDER INTO GOLD DUST
Milk powder is gold dust for New Zealand. Synlait Milk is working to make it even more valuable.
The Dunsandel-based company is minuscule compared with industry giant Fonterra, which would easily beat Synlait in the volume-based commodity milk powder game.
Instead, Synlait is shifting its focus to making high-value milk powders that sell for a packet overseas.
Its first such foray, Canterbury Pure, is an infant formula that flies off Shanghai shelves for about $90 a kilogram. Chinese toddlers would go through a 900-gram tin about every 10 days.
Synlait's milk processing business is using the Chinese distrust of their own milk processors to further the appeal of its products and is backed in this by its 51 per cent Chinese owners, Bright Dairy.
Roughly a third of infant formula is milk powder, the rest is whey, minerals and other ingredients. So the markup isn't simply the difference between the cost of milk powder and the sale price, but it's still lucrative.
The other products being hatched are slightly more oddball, but Synlait research manager Simon Causer is confident that, treated right, they will be well worth the effort.
The company is now working with Industrial Research Ltd (IRL) in a number of ways but part of the aim is to break new ground and new market niches. Causer says Synlait did only quality testing in house and used other organisations including IRL and universities for analytical tests..
The company wants to be large enough to be competitive, while remaining small enough to be flexible in what it can create.
Synlait exports virtually all of its products and not only to China, but to African and Middle Eastern countries that are close to the equator and ill-suited to dairy farming.
Synlait has come a long way in a short time. Set up by chief executive John Penno and North Island farmers Ben Dingle and Juliet Maclean in 2000, the company owned a 600-hectare farm near the Rakaia River, and still does.
About 150 South Canterbury farmers now supply the company with 2.2 million litres of milk a day, or about 5 per cent of New Zealand's milk. In 2010, the founders sold 51 per cent of Synlait Milk, the processing company, to Chinese investor Bright Dairy allowing the business to built additional plant and expand.
The plant now has a whole and skim milk dryer, an infant formula dryer and a specialty dryer. The specialty dryer is where the high value products come in.
Although not much smaller physically than the other dryers - it produces only about 150 kilograms to 300kg an hour, the others do 10 tonnes - the specialty dryer is where Synlait sees its future, Causer says.
His job is to find the next big things for the company after infant formula - and there are a few bubbling away.
Colostrum powder is made from the first three milkings of the season. Colostrum is higher in protein and antibodies than ordinary milk as it is supposed to pass on an immune-system boost to the new-born calf. Obviously that can only be made in a one-month window each year.
Hyper-immune milk powders are in development to ease all sorts of ailments, from traveller's diarrhoea to inflammatory bowel syndrome. And then there's Night Milk: the drink to improve people's sleep patterns.
Melatonin is the active ingredient. It's a chemical that animals and humans produce to regulate sleep patterns. Production fluctuates, with more being made at night. That means milking cows at the perfect moment when their melatonin levels are highest to produce a milk powder with higher-than-usual levels.
Another product is A2 milk, a different strain of milk made by a small proportion of cows and all humans.
A2 milk has an ever-so-slight variation in its chemical makeup which could mean it is healthier than the more common A1 milk. In Australia, A2 was selling at more than three times the price of usual milk, Causer says.
Several large Synlait farmers had already split their farms into A1 and A2 herds to create A2 milk powder to be sold overseas.
The first run was done three weeks ago.
Those kinds of nutritional offerings are very popular and as long as they can be backed up with science, they will be highly profitable, Causer says.
"The hope and dream is the demand will increase for that so we can bring in more farmers and grow it."
However, the company was reluctant to take those products to market without completing rigorous testing to make sure they do what they claim, he says.
The company knows it stands on its reputation and one slip could be devastating, he says.
GELATINE FIRM BOUNCES BACK AFTER ROUGH YEAR
Gelita New Zealand had a rough 2011.
"We've taken a hammering - geez we've taken a hammering," Gelita plant manager Gary Monk says.
"But we still seem to have pretty good support from Gelita AG, which is the German company that owns us."
Gelita makes gelatine from cow hide at its Woolston factory. The cow skin contains collagen which is extracted and treated to make the gelatine powder used in everything from jelly babies and yoghurt to inkjet printer paper and pharmaceuticals.
The Woolston gelatine factory has been pumping out the stuff since the site was converted from a glue plant in 1913 by British immigrant Charles Davis.
The family-owned business merged with Goodman Fielder in the 1980s, which then sold it to Gelita AG in 2002.
Meanwhile, the factory has kept producing gelatine - about 1720 tonnes annually - in pretty much the same way for almost 100 years. Davis Gelatine - the company's retail gelatine brand - would probably be found in most Kiwi kitchens.
The February 22 quake dealt the largest disruption in the firm's long history.
Most of the old buildings, many made of red brick, were badly damaged; all up $20 million worth of damage to plant and buildings was a massive blow.
It was three weeks until power was restored and another three before the factory could start running again.
"No power for three weeks - and in full production mode. After that the material was stuck rock solid inside the pipes and equipment."
To top that off, a few months later the hide store roof collapsed in the August 2011 snowstorm causing another $2m damage.
Then the June 2011 quake knocked out power in the area for a week meaning even more lost production.
But there is a silver lining of sorts. The upheaval has given Gelita the chance to rebuild its century-old factory. Many buildings on the sprawling property need to be replaced and being able to put almost all of the process under one roof is the aim.
That comes with its own problems. Gelita is a 24-hour, seven-day operation. In a normal year it closes only once, for a week, to do equipment checks and maintenance.
Any repairs and rebuilds of the factory will have to be done around a constantly operating system and its 60 staff, Monk says.
The company is planning for a more modern plant to rise from the original factory and it hopes to develop a much quicker method to replace its current 30-to-40-day process. The new method is already in production trials and Monk says it is promising.
Gelita worked with Industrial Research about 10 years ago to develop a new, quicker method using high-pressure-injection technology. That was abandoned as pressure injection was too expensive to run, but Gelita's new method builds on that idea, using enzymes instead.
The good thing about enzymes is that they work under their own steam, which would suit Gelita. If enzymes can be made to carry the necessary chemicals into the gelatine, it would mean a four-day method that would be cheap enough to take up.
IRL's new Canterbury protein science team has approached Gelita and taken some samples to determine whether they could help reduce the gelatine's odour by taking out the molecules that create it, Monk says.
"We've certainly got some complex problems that we can't solve so far because we don't have the specialised knowledge.
"They've obviously got some protein chemistry knowledge and they have expertise in identifying chemicals in gelatine."
The new method, combined with a less-odorous finished product, would make better gelatine, which could be made into gelatine capsules for the pharmaceutical industry.
To date, the Woolston factory has not been a large supplier of capsules as it calls for a higher quality of gelatine. In the past, the company was exceptionally strong in the food sector, but these days a lot of that production has gone overseas.
The up-and-coming industry appears to be pharmaceuticals, both the mainstream and the supplement market, Monk says.
Everything, from dried kiwifruit to mussel shells, is being crushed up and marketed as health products these days.
"A lot of entrepreneurs have identified that making capsules is not super difficult if you've got the right equipment, and putting in the ingredients that seem beneficial for health is quite popular these days."
This piques Gelita's interest because the growing natural herbal remedies invariably fill gelatine capsules.
If it comes off, the new process would take four days, which would be a huge step forward, he says.
OVERINDULENCE BRINGS RICH PICKINGS
Diabetes is a growth business, an affliction of affluence, Canterbury Scientific chief executive Neil Pattinson says.
As the middle classes of developing countries grow, the ailments that beset them change, which essentially means more customers for Canterbury Scientific's customers, who are big names of the global health science business - Siemens, Roche and Beckman Coulter, which test for diabetes and do regular monitoring.
For more than a decade, Canterbury Scientific has been earning a crust supplying the drug companies with haemoglobin controls, which are used in monitoring tests for diabetics round the world.
The demand for the control is secure, with repeat business guaranteed because diabetics have to be retested every three months to monitor their condition, Pattinson says.
Meanwhile, the opportunities provided by the developing countries are staggering.
In China alone, there are now 90 million diabetics - about one of every 14 Chinese - as the well-off satiate that most human tendency to overindulge.
So it's perfect timing for Industrial Research Ltd to extend its reach in Christchurch.
Canterbury Scientific is on the hunt for other medical conditions that, like diabetes, need regular monitoring.
Industrial Research's greater resources would help with tests and other work that Canterbury Scientific would struggle to do on its own, Pattinson says.
And the company is used to working alongside other scientists.
Canterbury Scientific moved into its Whiteleigh Ave offices and laboratories in Addington about two months before the February 2011 quake.
The new building performed perfectly and Canterbury Scientific opened its doors to other organisations that were not so lucky.
"We have become a hub for scientists here, which is gratifying for us, and a refugium for displaced scientists."
The business has 14 staff, including four PhD-educated researchers who are researching new haemoglobin products as well as others in the same vein as their diabetes control business.
Staying ahead of the curve and creating new products and methods that could be licensed to bigger players is the aim, Pattinson says.
Industrial Research is helping Canterbury Scientific investigate pancreatitis, which seems promising.
Another project is the four-way collaboration of Canterbury Health Laboratories, the University of Canterbury, the British Cambridge University and Canterbury Scientific looking for a way to spot pre-eclampsia in pregnant mothers.
The condition is characterised by a rapid rise in blood pressure that is potentially fatal to mothers and their unborn babies.
Usually identified about 20 to 32 weeks into a pregnancy, the partners are on to a way to spot it quicker.
The affliction is perfect for Canterbury Scientific's product development checklist: all mothers would be tested during each pregnancy, so demand would continue unabated even as the condition is addressed.
Canterbury Scientific is a big brother of the Canterbury biotech scene, 27 years old and supplying haemoglobin to the large international companies since 1996.
"There's really exciting work happening within New Zealand - and particularly in Canterbury - which we are wanting to support and help develop."
Industrial Research's expansion in Christchurch will be a welcome catalyst for biotech companies to help each other for the benefit of all, Pattinson says.
Canterbury Scientific would be able to do more ambitious development work and do it quicker than it could before, which was crucial for creating new products ahead of global competitors.
"There is a hub . . . around information communication technology in Christchurch; it would be nice to extend that to be a bio-technical hub too.
"This is a nucleus, you could say, of such an entity happening . . . it's not there yet, but it's a damn good start."