Opportunities and challenges of biotechnological development in Kazakhstan

Biotechnologies in Kazakhstan

Those companies involved in the biotechnological industry and considering to do business abroad or growing internationally by way of technology commercialization, local production or local distribution, will face the following opportunities and challenges in Kazakhstan.

1. The research and development of biotechnologies are regulated by numerous national and international rules that create both certain opportunities and difficulties in this industry. The population of Kazakhstan has limited awareness about biotechnology. Regardless of whether Kazakhstan will or will not develop its own biotechnologies, in the context of globalization, the Republic is dragged into consumption of the world bio-industry products. Currently, Kazakhstan serves as an experimental laboratory of the developed countries of the world and the government wishes to take action to prevent the continuation of this inadequate situation. As such to prevent negative consequences and implement necessary reliable protection, Kazakhstan controls and monitors the use of imported and domestic biotechnology products.

2. Kazakhstan does not have or in other cases does not comply with the rules governing the implementation of the latest achievements in biotechnology. In this context, uncontrolled commercialization of the newest biotechnologies and products (genetically modified sources, cloning, stem cells) takes place. The Kazakh government is still in the process of adopting appropriate legislative documents in order to promote the development of genetic engineering research, in particular, Kazakhstan’s accession to the Cartagena Protocol on Biosafety.

3. An important prerequisite ensuring the competitiveness of national developments in biotechnology is the creation of the necessary infrastructure for of the entire R&D process from research to marketing and production.

Foreign companies developing high-tech business and commercializing biotechnologies in Kazakhstan face such obstacles as:

  • lack of qualified managers;
  • opacity of Kazakh companies;
  • absence of the tax regime stimulating development of innovative technologies and investments in the non-primary sectors of the economy;
  • lack of technological infrastructure. However foreign companies note a huge recent improvement of roads, airports, communications and visa regime.

4. The biology industry of Kazakhstan is planned to be carried out within the framework of public research programs with subsequent commercialization of results by the private sector.

More particularly, based on the results of such a policy, a system of public-private innovation partnership has been established, in which the state entities and businesses will act as partners. The state, supporting the scientific research and the educational system will attempt to create favorable conditions and an environment for stimulating entrepreneurship in this field, and businesses will take on all the commercial risk of bringing innovative products to the market. The state gets its benefits from collecting taxes and solving social problems, and business – its profits.

 5. The republic government organization “National Center for Biotechnology” was created precisely with the goal of commercialization of its own results of scientific developments, and those of other scientific institutions of Kazakhstan. However in reality the Center focused mainly on its own scientific research, and therefore its work to a certain extent overlaps with the functions of the research institute. There is still no formation of an integral system of industrial development of biotechnological developments on a national scale.

Biotechnological production is represented by science intensive enterprises. Currently it is difficult for local enterprises to get access to the scientific developments achieved with state funds that belong to the government. There is a need for a clearer and more precise legal mechanism for involving such developments in production, up to providing innovative companies and industrial enterprises with the right to use free of charge in their production patented designs made with government budgeted funds.

6. The government entities are chosen to play an active role in the matter of establishing and developing domestic biotechnology, because “market forces” do not work in this industry. The market itself cannot stimulate investors to move free capital to sectors with very high risks and much longer payback periods.

The Kazakh government foresees to use a variety of mechanisms through which the state participates in the creation of a favorable investment climate and promotes the commercialization of research results. In general, the tools used can be divided into several large groups:

  • direct financial participation of the state in the form of financing certain projects (for example, in the development program of the National Center for Biotechnology or participation in venture financing) or organizations (for example, small research and production firms);
  • support for public-private partnerships in research and development (public-private partnerships);
  • financing the creation of elements of the industrial and technological infrastructure (research centers, technology parks, incubators, technology promotion offices).
  • creation of tangible preferences for private capital by sharing risks, reducing the tax burden, eliminating various kinds of barriers.

7. The Kazakh government sees a creation of complex specialized units engaging in fundamental, applied research and development, and then creating prototypes, testing them and bringing them to the “commodity” stage and beyond as the most effective model for the organization of research activities in the country. Projects for research are determined by the needs of the world market on the one hand, and on the other hand, by the needs of the Kazakh society.

Government support in a form of creation of common industrial premises with the availability of large-scale equipment for use by scientists and entrepreneurs (e.g. optimization of fermentation enhancement, DNA synthesis, electron microscopy, etc.) is in progress. Such complex processes will allow to launch projects ready for mass production in accordance with demand.

8. The small innovative business sector playing a leading role in the invention and development of the newest and most risky biotechnologies is seen as of great importance in the Kazakh high-tech industry.

The state authorities are implementing measures for enterprises intending to apply modern technologies based on the use of biotechnological products to carry out necessary transformations. Such an approach, for example, is applied to agricultural enterprises that purchase domestic mineral fertilizers and plant protection products.

9. Kazakh biotechnological enterprises now require significant investments to replace obsolete and worn-out fixed assets, purchase of modern producer strains and technologies. The use of loans, interest on which is 2-3 times higher than abroad, puts the local enterprise in an obviously disadvantageous condition in comparison with foreign competitors.

10. Joining the World Trade Organization (WTO) Kazakhstan brought the national legislation in the field of intellectual property in line with the Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS).

However, it is still necessary to develop clear procedures for securing and transferring intellectual property rights created with government funds, as well as the ability to assess and pledge such intangible assets as intellectual property rights.

In order to license technology, the government established departments for licensing and commercialization of technologies in the country’s main institutions and industries under the supervision of qualified specialists in the field of patent development and production in general.

11. The enrollment and spread of Kazakhstani development institutions into the regions can serve as a catalyst of initiatives at the local level and facilitate the attraction of regional budgets to biotechnology. Funding of facilities is planned to occur on a shared basis with the participation of local authorities, funds and private investments. This will allow to concentrate sufficient funds to test the experimental and rapid launch of industrial production in the field of biotechnology, primarily in regions with high innovative potential.

12. Implementation of international standards in the education system and the formation of a pool of highly qualified human resources is another challenge of the biotechnological industry in the country. To implement biotechnological projects, it is also necessary to attract highly professional managers. Financing of training in the field of technology management is either government- or self-funded.

13. The Kazakh government encouraged a formation of clusters (territorial complexes) in the biotech industry by creating a “critical mass” of research organizations, as well as industrial and training centers in regions.

A successful example of the implementation and development of a biotechnological cluster is the experience of the Institute of Phytochemistry in Karaganda. The pharmaceutical factory, university, and experimental farm are concentrated around this institute.

14. Strengthening the relationship of science with the manufacturing sector of the economy is also on the agenda of the government. One of the important issues in this field is an increase in the demand for scientific results from the manufacturing sector of the economy. The government is looking for ways to increase the share of commercialized results of scientific activity by attracting local and foreign business entities to the financing of scientific research.

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