8 November 2002

LORD SAINSBURY - MASTER OF SCIENCE FICTION!

UK science minister, Lord Sainsbury, was recently quoted in the Financial Times boasting of the "stunning change in the entrepreneurial attitudes of our universities", and claiming,"The UK  ratio of companies to research spending is more than six times higher than in the US. It's a dazzling record..."

Sainsbury quoted various figures in support of this and he quotes exactly the same figures in the interview below from the Observer business pages.

"In 1999 to 2000, he says, there were 199 companies spun out of universities, compared with an average of 70 over the previous five years."

But this time his claims are subjected to some critical scrutiny:

'...the figures on the number of spin-offs date to the tail end of the dot.com boom. Were these companies any good? What is the attrition rate?"

Sainsbury's only response is anecdotal - he repeats the claim of one academic that the quality is improving. But The Observer's journalist comments, "...it is indisputable that there is less finance around now, and that technology has been tarnished by the deflation of the bubble. There are lots of spin-offs, for example in Cambridge. The question is where are the $1 billion companies. Not long ago we had several - including ARM and Autonomy. There is the rub, they are not there any more. Where is the longevity?"

That goes to the heart of the problem. Even setting aside the problems for knowledge, ethics and society that come with such a cras industrial alignment of our public univiserties and research institutes, *the bio-biz strategy is not succeeding even within its own terms*. And nobody should be more aware of that than Lord Sainsbury.

The Sainsbury Laboratory of the John Innes Centre is an institute on which he has lavished monies from his personal fortune, both via his Gatsby Trust and through direct commercial investment via his company Diatech.

When the JIC landed a 50 million pound deal with UK biotech company, Zeneca, the project was hailed as a model for others to follow with claims it would "benefit UK businesses" and contribute to "the UK's economic competitiveness."

However, despite massive investments in the biotech sector Zeneca's total revenue from agriculture biotechnology was *zero* and after becoming part of AstraZeneca and seeing its stock, like that of the other gene giants, fall and the "life-science model", which it had pioneered, written off as a failure, AstraZeneca looked, without any success, for a buyer for its ailing agrochemical/life science division.

In the end it had to spin it off as part of Syngenta, a collaboration with fellow troubled gene giant Novartis, in the hope that by separating this sector of their operations, Syngenta's performance would do less damage to the rest of the parent companies. As part of the spin-off, Syngenta took on the JIC/Sainsbury Laboratory deal but that deal collapse earlier this year costing Lord Saiunsbury's pet institute millions in lost invetsment.

As the Wall Street Journal said back in January 2000, "With the controversy over genetically modified foods spreading across  the globe and taking a toll on the stocks of companies with agricultural-biotechnology businesses, it's hard to see those companies as a good investment, even in the long term."

***

Master of science friction

Lord Sainsbury seems the archetypal plutocrat, but he is a man with a mission at the heart of British government. He explains it to Oliver Morgan
The Observer , Sunday October 20, 2002
http://www.observer.co.uk/business/story/0,6903,815257,00.html

 Plutocrat! Crony! Frankenstein! The slings and arrows of political life rain furiously down upon Lord Sainsbury of Turville.<P>The target: scion of the supermarket dynasty, the third richest man in Britain (according to the Sunday Times 'Rich List'), Labour donor and friend of Tony, Science and Innovation Minister and advocate of genetically modified foods.

Surely Sainsbury's generosity (he has given some £9 million to Labour over the past five years), led to his DTI job. Surely he has influenced the Prime Minister to support science and GM research in particular for his own gain - he has shares in Innotech, a company that develops GM foods. Surely he must be a man of intrigue, guile and charismatic charm.

Not at all. Lord Sainsbury is owlish and donnish. He is flamboyantly unflamboyant. Unusually for a Minister, he refers constantly to a thick file of papers, throwing out facts and figures in answer to questions with academic glee. First and foremost, he says, he is a passionate advocate of science, but one who wants to see it break out of universities and academic institutions.

'We have an outstanding science and technology base here. There is always a tendency to say we are not good at innovation. But we have actually done pretty well in industries which depend on elite science: pharmaceuticals, aerospace, optical electronics. But It is not enough. We need to spread the benefits to many more industries. That is the biggest challenge to the DTI - how do you use skills and creativity in science and technology to create competitive advantage in science and industry?'

Laudable, surely.

But the worry is that advocacy of science - which aside from Sainsbury's political influence, includes channelling family money into organisations such as the Gatsby Charitable Foundation to fund plant science - overlooks ethical issues which very much concern the public.

How does he respond to scepticism about GM foods and about science in general?

'I don't think it is totally true that the British public are against science and technology. If you look at the figures, people are actually pro-science. They think that science is important for wealth creation, they by and large think it improves the quality of our lives and that it is a good career for them and their children.'

What figures these are is unclear. But he continues: 'They certainly look very carefully at new technologies and there are certain new technologies that they are concerned about.' Such as GM food? Sainsbury prefers to cite the use of stem cells - taken from embryos - in research into diseases such as Alzheimer's and Parkinson's disease. He says debates about the ethical issues in both houses of Parliament were won by those advocating the use of these cells, and that the public are in favour too. 'My view is that people don't see this as a threat, in fact they are extremely keen that this research should go on.'

He is more careful over remarks on GM technology, falling in with the Government's formula on the issue. 'There are potential benefits in this technology, but one has got to be certain about the safety aspects,' he says.

So, Sainsbury believes that on balance the benefits of science outweigh concerns over where it is taking us. Less controversial is the application of science to manufacturing - which has been a headache for the Government since it came to office in 1997.

Ministers want to stem job losses in the industrial 'heartlands' - thanks to exchange rate and recession around 500,000 have gone since May 1997 - but it can't bow to industry demands to remedy its competitive disadvantage by entering the euro.  It wants to talk up manufacturig, but it can't avoid saying, as Patricia Hewitt did last week, that the management of UK firms is not up to par.

Sainsbury says: 'In today's global economy we can't compete on the basis of cheap labour or materials, we have to compete on skills, knowledge and creativity because we are competing with companies with one tenth of our labour costs.'

He points to chemicals and textiles - two industries seen as 'sunset' cases without a future. But he stresses there are real opportunities in terms of speciality chemicals, for example, with ICI moving in this direction.

Sainsbury accepts  manufacturers are sceptical about the benefits of science to wealth creation. He argues that a culture change is needed. But he also points out that the UK is raising its game in transfering technology from universities to business. In pharmaceuticals, historically the most science and research driven industry, the record is good. Of the 25 best selling drugs in the world, UK companies are responsible for five, he says.

'In terms of the knowledge transfer to industries, there has been a culture change in the last 10 years, particularly in the last five.' In 1999 to 2000, he says, there were 199 companies spun out of universities, compared with an average of 70 over the previous five years.

He adds that there is a spin-off company in the UK for every £8.6m of research, compared with one for every £13.9m in Canada, and one for every £53.1m in the US. And, he claims, academic application is spreading regionally. But the figures on the number of spin-offs date to the tail end of the dot.com boom. Were these companies any good? What is the attrition rate? Sainsbury says: 'I was speaking to one VC recently and he said the quality had gone up. They are seeing better propositions.'

Nevertheless, it is indisputable that there is less finance around now, and that technology has been tarnished by the deflation of the bubble. There are lots of spin-offs, for example in Cambridge. The question is where are the $1 billion companies. Not long ago we had several - including ARM and Autonomy.

There is the rub, they are not there any more. Where is the longevity? Sainsbury reflects on the effect of the bust on these companies. 'They will come back because they are good companies. The problem with the dot coms was that they were seen as technology companies, but they were not, any more than a company that uses the phone is.'

The problem is how to deliver new scientifically driven ideas into the market place, and protect them once they are there. Again, Sainsbury has statistics to hand. Patents filed rose by 22 per cent from 1998 to 1999. Research and development, before the introduction of a tax credit for larger businesses, has risen this year.

It is a mixed picture. Some sectors - obvious ones like pharmaceuticals and aerospace - are good at R&D, some not. But there are some surprises - food manufacturers are rather good at it. Why is this? 'Well they are given a very tough time by the food retailers. They are very demanding.' You'd know about that, then, Minister? Actually, his Lordship resigned his directorship of the family business in 1998. Nevertheless, there is a very wry smile.

Profile
Name: Lord David John Sainsbury of Turville
Born: 24 October 1940
Educated: King's College Cambridge, Columbia University
Family: Married, three daughters
Career: Joined J Sainsbury 1963, finance director 1973-90, chief executive 1992-7; Trustee Social Democratic Party 1982-90