The next boom in biotech

Animal health is a multi-billion dollar global industry and it’s growing at 6% per annum. Today let’s explore the growing role of biotechnology in animals.

Biotech

Fifty years ago the average dairy cow in the USA produced less than four tonnes of milk per year. Today the figure is 10 tonnes. A massive 150% increase!

Over the same period the number of eggs laid per American hen has increased by about 30%.

Statistics like these, according to one leading company, prove that ‘Healthier Animals are More Productive’.

Now many might dispute the notion that animals crammed into barns and force-fed with growth enhancers are healthier than those that roam in the fields.

But the figures do show what can be achieved by intensive farming, without which today’s food supply would be a great deal less. Relative to wages, global food prices have decreased by 75% over the last 60 years, a remarkable achievement.

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Biotech’s place in the multi-billion dollar animal health industry

In Breakthrough Biotech I have written plenty about human health and about crop science. And we have plenty of great stocks in the portfolio to take advantage of these themes.

But in my new book, The Future of Investing: How Biotechnology Could Transform Your Portfolio, I explore the growing role of biotechnology in animals. Animal health is a multi-billion dollar global industry. It is growing at 6% per annum and it has many of the attractions of the human health industry with one particular advantage.

The fact is that if animals die in the course of medical experiments there is no great public outcry or a spate of law suits. Not in the same way as in the human healthcare industry. That means it’s not necessary to run the billion-dollar, ten-year trials required for human medicine.

The animal health business is split into two categories – farm animals and domestic pets. 350 million cats and dogs are kept as pets worldwide but this number is dwarfed by the 70 billion animals reared for food. Keeping these animals fit and healthy is essential to devoted pet-owners and farmers alike.

As an introduction to this industry, I want to start by showing you the ways in which biotechnology is used to treat animals. They are more extensive that you might think.

To start with, think of animals as living creatures, like you and I. They are vulnerable to infection, their health deteriorates as they get old and they can get cancer, diabetes, and heart disease just like us.

They have their own slate of problems – foot and mouth disease, brucellosis, rabies and swine flu to name but four. These can become epidemics – in 2013/14 Porcine Epidemic Diarrhea Virus killed 10% of the USA’s pig population.

We need to look after the health of animals not only for their own sake but because 60% of all diseases are ‘zoonotic’ – meaning that they can be transferred from animals to humans and vice-versa.

So one aspect of the animal health business is a mirror of the human health business. Its main categories are vaccines, antimicrobial drugs, anti-inflammatories, endectocides (that deal with the parasites that live off other animals) and feed additives.

You can discover more about biotechnology in animals in my new book The Future of Investing: How Biotechnology Could Transform Your Portfolio, which you can get a FREE copy of here.

Maximising the yields of the protein factory

Now, though, stop thinking of animals as four-legged versions of you and I.

Instead, think of them as protein factories. In go the raw materials of grass and animal feed, and out comes meat, eggs and milk.

Intensive farming is all about maximizing yields and there are many ways to improve the output of this biological factory.

I want to go through those today to give you a better background of this area of biotechnology. And then next week we’ll start looking for some ways to invest in this theme.

Reproduction:

The starting point is to have the best animals. In the 1970s, for instance, European farmers understood that the Holstein breed that predominated in North America gave higher milk yields.

So they started to import live animals so that today the European dairy herd is largely Holstein.

These days, we no longer need to import live animals. Artificial insemination based on genetic traits and the worldwide distribution of bull semen has allowed farmers to breed their own champions.

Today a single bull can be responsible for 100,000 offspring in a single year, not because he has an outsized libido, but because his semen can be collected, cryo-preserved and shipped all around the world.

Meanwhile a female can also be responsible for more than her fair share of offspring through the process of embryo transfer, which sees her embryos placed in the uterus of other females.

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Genetic Selection:

In order to get healthy offspring we need to select healthy parents and these can be chosen according to genetic markers that, for instance, are correlated to disease resistance or fast growth.

The study of animal genetics could also aid the design of better treatments – a sort of personalized medicine for animals – while transgenic animals are engineered to contain genes from other species.

For example, transgenic cattle have been created to produce milk containing particular human proteins, which may help in the treatment of human emphysema.

Animal Nutrition

Now that we have our genetically superior animal, we need to feed it. Many animals eat grasses that are hard to digest. That is why a cow has an extra stomach compartment called the rumen, a fermentation chamber where food can be softened before being returned to the mouth for further chewing.

By using conventional plant breeding and GM we can improve the crops that animals eat. For example researchers have engineered alfalfa with 20% less lignin and 10% more cellulose, a combination that makes it more digestible. High-oil corn reduces the amount of feed required for a livestock diet which in turn reduces the volume of manure. We can use biological methods to prepare animal feed, for example the white rot fungi that can break down indigestible plant lignin.

You can discover more about biotechnology in animals in my new book The Future of Investing: How Biotechnology Could Transform Your Portfolio, which you can get a FREE copy of here. (LINK)

Improve Gut Function

Having got some suitable food into the animal, we want him to convert as much as possible into meat. The process of metabolism takes place in the intestinal tract, which is lined with bacteria. This is the ‘gut flora’ which, we are starting to understand, plays a key role in health and development. Prebiotics, which act as a bed for the growth of beneficial microbes, and Probiotics, which are live microbial feed supplements, can both improve the balance of the intestinal microbiome.

Faster Growth

Scientists have all sorts of other tricks. For instance, growth promoting agents like somatropin and recombinant growth hormone stimulatory peptides can increase the growth rate of cattle, sheep and pigs. Antibiotics are controversially used as growth promoters. Farmers have even used the anabolic steroids and beta agonists beloved of cheating athletes, although these are banned in some countries.

Recombinant bovine somatropin (BST), though, is widely used. When given to lactating cows this genetically engineered synthetic copy of a natural growth hormone can increase milk yield by 15-30%. A particularly unpleasant sounding treatment that is used to improve meat quality is immuno-castration.

Animal Health – Disease Diagnosis

Just as the early diagnosis of disease can improve human health, so it can for animals. So this is a key area. Modern tests are based on monoclonal antibodies and on highly sensitive DNA detection. We’ll look at this in more detail another time.

So that’s a brief intro to what is a huge and very lucrative niche of the biotechnology sector. But there is plenty more to come.

Now, I don’t like the idea of factory farming any more than you, but we can scarcely live without it.

From improving the pasture, to selective breeding, to altering the balance of the gut microbiome, we are learning to tinker with natural biological processes. And this is the essence of biotechnology.

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