Cuba, from 1959 onwards, has created a series of conditions in the productive, scientific-technical, educational and health spheres, to place itself in an advantageous position in relation to other countries of Latin America in terms of biotechnology.
At present, the Caribbean nation has a consolidated international recognition in the field of biotechnology and has acquired the competences proper of industrialised countries. All this, despite this being a sector led in the world by the most developed countries and the continued pressures and restrictions imposed by the U.S. blockade.
The knowledge of this state of the art industry makes it possible to detect probable risks, focus on the objectives and finally to draw up a strategy that allows the use of greater advantages to face the principal obstacles in the race toward the development of this sector and toward the consequent transformation of the Cuban economic model.
Update of the biotechnological sector in Cuba
The most outstanding institutions of the BioCubaFarma business group, which makes up the entities of the biotechnological and pharmaceutical sector, are for their major contributions to human health and the generation of high incomes (Chart 1): the Genetic Engineering and Biotechnology Centre (CIGB) with its Heber Biotec S.A. marketing company, the Molecular Immunology Centre (CIM) and its CIMAB S.A. marketing company, which represent more than 50 per cent of the medical-pharmaceutical sector’s total exports (Centre for International Commerce, 2011).
Chart 1. Principal institutions of the Cuban biotechnological sector
Source: Drawn up by the author.
These entities work together in an integrated and non-competitive way. The cooperation also extends to other scientific, productive and educational centres of the country, as well as the Public Health System. The created complementation, which has become a form of growth of the system, allows for a better use of the essential competences of each one and enables achieving, through a synergetic effect, a superior result than that of individual work.
Despite numerous applications of biotechnology in several sectors, because of the limited resources the country has the Cuban biotechnological products are fundamentally concentrated in three sectors of application: in the human health area, in cattle research and in agriculture.
In the case of cattle, the greatest contributions have been made in the area of animal health, with the obtaining of the vaccine against the Gavac bovine cattle tick and in the production of animals to improve the growth specimens, as is the case of the transgenic freshwater tilapia fish. In agriculture the efforts are devoted to obtaining more resistant species and biocides.
In the area of human health, the one that from the biotechnological point of view contributes the most incomes in terms of exports, an important part of the resources are devoted to the development of vaccines (Figure 1), of which 60 per cent is used in infants and are produced in Cuba. The priority given to vaccines responds to the interest of the system to prioritise the prevention and promotion of health. Of the 881 medicines that exist in the National Health System, 560 are of national production, in which the development of the capacities of the biotechnological sector has had a great impact.
Figure 1. Cuban biotechnological products by therapeutic area, 2011
Source: Drawn up by the author based on institutional data.
Productos cardiovasculares: Cardiovascular products
Productos oncológicos: Oncology products
Vacunas contra enfermedades infecciosas: Vaccines against infectious diseases
Productos en otras patologías: Products in other pathologies
Notwithstanding the sector’s need to have an exporting vocation as a necessary condition to develop, due to the limited size of the domestic market and the current conditions of our economy, the government has maintained as a priority giving attention to the scientific technological activity.
Figure 2. Current spending on scientific and technological activities per financing source, in millions of pesos
Source: 2015 Statistical Yearbook of Cuba, ONEI.
Presupuesto: State budget
Financiamiento: Business financing
Otros: Other financing
The Cuban biotechnological industry is, despite the capital restrictions, at a high level of development. Development and efficiency indicators like the volume of sales, the number of employees, productivity and others are higher than those of other countries with a similar situation in the world and in constant growth. Exports, also continuously increasing (Figure 3), not only measure the sector’s growth, but rather are also seen as a source of information about the value of the products and their competitiveness, as well as of the new products that are needed and the properties required for this.
Figure 3. Export of generic and biotechnological medicines, in millions of USD. From 2006 to 2013
Source: Drawn up by the author based on institutional data.
The forecast for 2013 is calculated based on the structure of Cuba’s exports from 2009 to 2012, in which the sector represented between 10 and 20 per cent of the total export of goods.
The first vice president of the BioCubaFarma group, Doctor José L. Fernández Yero, announced during his participation in the “Mesa Redonda” (Roundtable) TV programme in April 2013 that in the last five years this area’s exports have reported 2.779 billion dollars in income to the island and that that figure is expected to double in the next five years.
This increase in exports has also been marked, until now, by an important feature of the underdeveloped economies: the concentration of products and fundamentally of market. In general, the Cuban biotechnological industry has been able to extend its scientific results to 68 nations in the world, though sales to 51 of them are less than a million CUC1; and it has been able to market 50 biopharmaceutical products. These exports are concentrated in Cuba’s natural market, where the regulatory conditions are less demanding and it is easier to gain access, as in the case of Latin America and the Caribbean, and some countries of Africa and Asia.
It should also be highlighted that the countries of these regions have regulations that are less strict for the entry of new medicines in their markets. Biotechnological productions are governed by the compliance of Good Manufacturing Practices recommended by the World Health Organisation, as well as by international control agencies and/or of several countries in different areas of the world. This adds a high degree of complexity to the process, since the diversity of regulatory environments limits exports.
Potentials and limitations
As previously seen, the experience of Cuban biotechnology has been successful based on the multiple criteria that can be used to measure it: generation of products (biopharmaceuticals and vaccines), impact on public health, patents and exports; and the sector continues expanding.
This result in itself is a special feature and potential of the Cuban experience, since more than half of the biotechnological companies that emerged in the United States in the early 1980s have not achieved the profitability of the Cuban enterprises, have ended up being acquired by others and a great many of them are unable to finance themselves with their own profits.2
Compared to other investment experiences in biotechnology and technological parks, the Cuban experience exhibits a group of features that make it unique. It occurs in a country with scarce resources, industrially underdeveloped and, in addition, subjected to the longest and most intense economic blockade known of in world history, and to the hostility of also the most powerful power known of in history. It occurs simultaneously with the disappearance of the European socialist camp, which pushed the country to the economic crisis (loss of 35% of the GDP, 85% of exports and more than 75% of the supply of fuel) which is known as the Special Period.
Cuban biotechnology also emerges as an investment of the socialist State, without resorting to foreign investment (in addition not available at that time) and all the while defending social ownership over tangible assets.
Biotechnology can be seen as one of the most important tools the developing countries have for the creation of value in social and economic terms. Its possibilities are almost infinite, in the creation of novel medicines as well as in the varied applications it can have in other fields like agriculture, cattle ranching and the environment.
A current tendency with a great impact for the biotechnological sector is population aging in the world3, with which it is expected that cardiovascular and neurodegenerative diseases (Alzheimer’s and Parkinson’s, for example) will increase. There are also insufficient remedies for chronic diseases like diabetes, for which biotechnological medicines have gained great importance, as is the case of the Cuban product Heberprot-P.4 On the other hand there are the diverse types of cancer, for which a greater amount of medicines will be demanded, capable of combating them, an event that will take place in the developed as well as the underdeveloped countries. In the latter an increase in infectious diseases, like malaria, tuberculosis, hepatitis and AIDS, is also expected.
Another tendency that can be considered as an opportunity for Cuban biotechnology are the increasingly better international relations and integrationist processes with the other Latin American nations and Third World countries, which enables the increase of diverse agreements and the penetration of markets. Moreover, in light of the new transformations in the political panorama of Cuba-U.S. relations, new possibilities of clinical essays and the export of Cuban cancer vaccines to the northern nation are coming up. Our country’s great development in this sector makes it possible for U.S. scientists and from all over the world to become interested in our products.
The strategy followed by the Cuban biotechnological industry is its greatest strength, since it is based on its own material and human resources, and has had the boost provided by the State since the start, strong points to support the work toward the compliance of its mission. Factors like cooperation between the different institutions and the strategy of closed cycle have taken Cuban biotechnology a step ahead of the rest of the industry in the world, enabling its researches to become marketable products and with great international recognition.
Moreover, the low cost of the highly qualified work force and its abundance, with respect to that of the more developed countries, also implies that the Cuban products have a lower cost per peso, all this without affecting good wages for the workers of the sector and maintaining, therefore, a great incentive and commitment to the work they carry out.
On the other hand, the crisis has been a negative factor for the biotechnological sector on an international level in general. The reduction of public expenditures as a consequence of the fiscal adjustment, which affects all countries to a greater or lesser degree; the credit restrictions and, in general, the future uncertainties projected on the investors, make up a scenario in which there are less resources for the R+D (research + development) in all its stages (Figure 4). Investors seek to invest in the most advanced projects and with the greatest probabilities of success to market a new product. This seriously affects Cuba, since the majority of its transactions are carried out through foreign trade partners. In addition, the crisis has also caused the reduction of spending in the health programmes, mainly in the developed countries, thus narrowing the business possibilities of the Cuban products in these markets.
Figure 4. Spending in Research and Development in Cuba, in millions of pesos
Source: 2015 Statistical Yearbook of Cuba, ONEI.
The U.S. blockade is another factor that threatens the Cuban biotechnological industry, since not only does it prevent trading with some of the principal suppliers, but also makes it impossible to have access to several potential markets, for the development of the product as well as for its later marketing. Moreover, the blockade increases the power of the providers of the Cuban enterprises since it limits the direct acquisition in that country and delays the process, the intermediaries increase and the purchases cost more. Up to now, the country has been seriously affected in the development of joint research projects given the existing limitations for the establishment of strategic alliances with leading U.S. companies in the sector. It remains to see up to what point the exchange in the Cuba-U.S. diplomatic relations will change or not that situation.
At the same time, the diversity of destinations with different regulatory environments and the increase of international controls to the point of becoming a barrier for the entry of Cuban products to certain countries are a fundamental risk for the Cuban biotechnological sector; especially because the most restricted markets are the developed ones and it is there where the greatest benefits can be obtained.
On the other hand, the applicable regulations decided by each destination country require the permanent reinvestment in quality standards. This is a limitation for Cuba given its restrictions of capital. In addition, the Cuban industry lacks the autonomy in financial decision making, a situation that prevents, on many occasions, having the capital at the right time and turns the shortage of financial resources into one of the principal weaknesses of the sector.
Additionally, one of the obstacles of biotechnology in Cuba is due, as mentioned before, to the reduced domestic demand. In the small countries (even in the small industrialised countries) the domestic market does not have dimensions that generate an operation of sufficient volume to internalise the fixed costs of the R+D activity and of the systems of quality guarantee. Thus the exporting orientation is an indispensable condition to achieve economic feasibility.
In this context, the diversification of the market in the exporting process is an urgent task. Though the Cuban biotechnology products are exported today to more than 50 countries of all the continents, there are still problems in the concentration of these exports in terms of their value, which is a constraint on competitiveness.
However, it is important to highlight that exports finance the hard currency component of the productions for the Cuban health system, and this makes it possible to not give the relations between the biotechnology centres and the health system a market character. Of course, market relations toward other countries and relations of socialist distribution inside the country are an additional complexity for the sector.
Mid-term productivity strongly depends on the penetration of new markets, but also on the creation of new products, which is why the Cuban enterprises are facing the trade-off between continuing to produce biogenerics5 that take less effort – but also less profitability -, or to make the great effort of renovating its portfolio of products, which implies greater investment, risk and long-term profitability.
To carry out the development of that science it is indispensable to take the step toward new technologies, increasingly more advanced and whose implementation is very expensive. Bioinformatics and nanotechnology are examples of what has been used most recently in the sector. Being able to apply them will allow for combining the immense knowledge generated during the last 30 years in biotechnology with the new skills of modifying at an atomic scale (nanotechnology); and the use of computer science (information technology) to analyse and integrate biological information, such as data of sequences of DNA or proteins, in genomics or proteomics.
Lastly, the biotechnological sector has a high degree of complexity: while it is very profitable when successful, to achieve this it is necessary to invest large amounts of money and to be ready to wait long periods before recovering the investment. An important element of this wait is the process that the entire biotechnological product (especially medicines) must carry out, from research to development to the product’s registry. No less than 10 years and an investment of between 300 and 400 million dollars are necessary to develop a biotechnological medicine in the world. This is an advantage since it allows for penetrating certain markets through price competition and continue obtaining great benefits.
However, the reduced costs are also a limitation, since they can mean that the products do not have the quality standards required in the countries of the First World, where the incomes are higher. Having a lower cost, in the case of Cuba, allows for developing the drug, resolving a national health problem and exporting to the natural market; but if it wishes to penetrate the developed countries’ markets, it is necessary to invest much more in the technical quality of the equipment, in the conditions of good manufacturing practices, in the regulatory process and ensuring quality and in developing clinical essays in those regions.
The Cuban biotechnological industry has characteristics that strongly distinguish it from similar industries in the rest of the world and become, therefore, key factors for success. Among them, the principal ones are the integration between the institutions, the closed circuit system, the use of its own scientific and economic resources and the priority given to meeting the needs of the national health system.
Despite its great development and preeminent results, in the field of science as well as the economy, to become one of the most important sectors of the Cuban export structure, the biotechnological industry faces a great challenge in terms of concentration of the exports’ destinations.
Numerous external and domestic limitations affect the exporting activity of the sector’s enterprises. Among the principal ones are the blockade, the world crisis, the diversity of destinations with different regulatory environments and the increase of international controls, the constant and necessary investment intrinsic to this activity and the necessary exporting vocation for this sector to subsist in a small and underdeveloped country.
However, some institutions have been able to overcome these limitations and make maximum use of their potentials. The efficient work and timely strategies, as well as tenacity and effort of the highlight qualified professionals have made it possible for the Cuban biotechnological industry to obtain significant results. (2015)
Centre for International Commerce. (November 2011). Estudio de oferta y demanda del sector farmacéutico: Cuba. LatinPharma, Lima, Peru.
1 Freely convertible currency of national circulation. One CUC is equivalent to a bit less than a U.S. dollar in the CADECA Exchange Houses.
2 Agustín Lage: «Las funciones de la ciencia en el modelo económico cubano: intuiciones a partir del crecimiento de la industria biotecnológica ». Economía y Desarrollo, 2012, 147
3 It is expected that by 2025 the number of the inhabitants of the planet will increase to 7.94 billion and that 700 million persons will be 65 or more in 2020. See Sasson, A.: Recent Progress in Medical Biotechnology and Nanomedicine. Achivement, Prospects and Perceptions. Japan: United Nations University Institute of Advanced Studies, 2008.
4 The Heberprot-P is the only product in the world for the treatment of diabetic foot disease in an advanced state and is the best example of the result of the outlined strategy. Today it is the leading commercial product of Cuban biotechnology.
5 A product whose patent has already expired and which several firms can produce.
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