A DuPont perspective on biotechnology

Remarks by Chad Holliday, Chairman and CEO, DuPont
http://www1.dupont.com/NASApp/dupontglobal/corp/index.jsp?page=/content/US/en_US/news/speeches/holliday_04_13_05.html

It is a pleasure to be part of the BioVision conference. The vision of this conference is one of leveraging the science of life to address society's needs in a sustainable way. This is a laudable vision, an important one, and a vision that our company shares.


I am also pleased to be here in France representing DuPont. DuPont is a 203- year old company, founded by E. I. du Pont, a French emigre to America. In an early example of technology transfer, du Pont took his knowledge of gunpowder manufacturing to America and started his company in 1802.

We have been through several transformations during our long history. Each of these transformations was technology-driven, although many business, economic and societal factors were involved in shaping products and applications of technology. We evolved from a gunpowder company into a chemical company and have now transformed ourselves into an integrated science company.


During the 20th century, safety was paramount in everything we did. It remains so. But while we were safe, we were not always sustainable. In the 21st century, we must be safe and sustainable across our five business platforms, and that point is central to my message today. In the 20th century, our science was focused on transforming natural processes and natural materials. In the 21st century, our emphasis will be on using nature's processes to build sustainable systems and create sustainable products to address global needs.

We are a major Ag & Nutrition player, with nearly 25 percent of our revenues from businesses in this area, and with 80 years of experience in all regions of the world. We have four other platforms, many of which participate in the food, fiber and material industries in one form or another.

In agriculture, we have placed tremendous emphasis on safety and sustainability. For example, our sulfonylurea herbicides have reduced herbicide use on an annual basis by 100 million kilograms.

Since 1980, the world's corn growers have increased their production by 45 percent and done it on a less than a five percent increase in acres. In effect, we've added 130 million "virtual" acres by improving corn genetics, technology and management practices.


World population will increase 30 percent by 2025 mostly in the developing countries of Asia and Africa. Demographers project 9 billion people by 2050. We now have 6.5 billion people inhabiting the planet - an increase of 500 million in just six years, which is greater than the total population of the E.U. 25.

Between now and 2025 we will have to double the world's food and fiber production on virtually the same amount of land currently in production. Only 50 to 100 million additional hectares of arable land may be available to add to the 2.5 billion hectares already under till. Water tables are dropping even as demand for water is projected to rise. Agriculture is constantly competing for land and water against increased urbanization and salinization.

Affluence is driving dietary shifts to more fat and protein consumption and there is increasing emphasis on food safety and nutritional value. The demand for protein (meat from cattle, pigs and chickens, which depend on feed grains) is already rising faster than the rate of population increase. As economies improve, so will diets.


Though we saw record yields in 2004, we are currently forecasting that demand for grains will outstrip supply in 2005 and the stocks-to-use ratio may very well resume its decade long downward trend. This is happening despite the fact that we haven't had any widespread global crop failures - a failure even in one major producing region of the world could cause disruption in the food supply and a large increase in prices.


A similar case could be made for the demand for fiber, materials, energy and for human health issues. To respond to all these needs, the technologies we adopt must address productivity, consistency, adaptability, quality and sustainability. There is no more powerful tool at our disposal for addressing these global needs than biotechnology.

It has become convenient to talk about red, green and white biotechnology to distinguish medical, agricultural and industrial applications of biotechnology. But from our perspective at DuPont we see biotechnology more holistically. Our experience is showing us that the various types of biotechnology are interrelated, just as all of nature's processes and products coexist and affect each other.

Let me demonstrate that interrelatedness with one example that is central to our research - corn. Maize is one of the world’'s most important crops. Not only is it critical to agriculture in the Americas, Asia and Europe, it is also of increasing importance in Africa. African participation is critical to solve the issue of world hunger, an important objective of the UN Millennium Development Project.


One of the first important biotechnological improvements to corn involved development of insect-resistant hybrids. This was an answer to a real unmet need, because until these hybrids were developed there was no good alternative to spraying with chemicals. Chemical control was only partially effective, and some of the chemicals had undesirable side effects. The first generation trait protected the stem, ear and leaf of the plant against damage caused by a group of caterpillar pests and helped improve productivity, quality and yield of these maize plants. The second generation trait is aimed at protecting maize against root pests and this too is contributing to improved productivity, quality and yield. This experience with yield, quality and productivity enhancements is applicable to all farmers, regardless of size, geography and type of agricultural practices.


But we are not just protecting maize against insect damage. In the U.S., every year, the National Corn Growers Association sponsors a high yield corn contest. These growers typically obtain yields over 350 bushels of corn per acre compared to the average yield of around 140 bushels per acre in U.S. If we could push the ability of the farmers to even produce 200 bushels per acre in a consistent fashion during this decade, we would not only have made a major contribution to the global need for food and feed, but also materials and energy. One of the major limiting nutrients for that kind of productivity is water. We are also trying to improve the responsiveness of maize crop to water. Such drought tolerance is absolutely critical on a global basis. It has been estimated that for farmers in an arid developing country, a water efficiency improvement of one percent would gain 200,000 liters per hectare per year, or enough drinking water for more than 150 people.


Our approach to these products and technologies has also been one of cooperative development. We have worked in an integrated fashion with technology providers, academic and government institutions, businesses in the food/feed value chain, and NGOs to bring these products to the marketplace.

Working with an external, highly regarded international global panel of scientists, ethicists, policy influencers, NGOs, and other business leaders, we have established a set of guiding principles that we use to bring the products of our research to the marketplace.


Green biotechnology has undergone unprecedented scrutiny. Biotechnology products today are rigorously tested for safety, and we fully support regulatory requirements that ensure this occurs. All scientific societies that have reviewed green biotechnology products have acknowledged the safety of these products. Green biotechnology products have been consumed by three billion people without any human safety incidents.

Meanwhile, our customers are benefiting globally from reduced inputs in the form of chemicals, fertilizers, labor, energy and improved profitability. Consumers are benefiting from high quality food at a continuing affordable price. Society is benefiting from reduced emissions, consistent supplies and the opportunity to expand the use of these materials into other arenas.


I made a statement early on that green, red and white biotechnology are highly interrelated. Let me elaborate on that. Today, in the U.S., corn is being used as a source of ethanol. In fact, approximately seven percent of the U.S. fuel today is being derived from corn ethanol. The U.S. has the objective of deriving 20 percent of its energy needs from renewable resources by 2020. In the E.U. and many other areas of the world, similar objectives are being set.

In order to meet this objective, we are not only looking at the conversion of grain to ethanol, but also the conversion of green biomass ? the plant material left in fields after farmers harvest their grains ? into ethanol. By processing this plant material in a biorefinery, this kind of ethanol promises not only an economic gain for the farmer but a sustainability gain for society. While cellulosic ethanol reduces exhaust emissions modestly, it represents a significant reduction in carbon dioxide when you factor in the CO2 that’'s fixed by the biomass of the crops grown to produce this fuel.

All of this requires new ways of interacting with other companies, government agencies and other institutions. At DuPont, we are working under a grant from the U.S. Department of Energy to look at new ways to use crops to make fuel in bio?refineries. This is critical to reduce the subsidies on ethanol and make ethanol competitive as a renewable fuel.


We also see corn as a source of materials, in particular, fiber. A polymer known as 3GT was discovered in the 1940s but never launched commercially because of the high cost of a key ingredient called PDO. Recently, one of our marketing teams working with our biochemists took another look at 3GT and wondered if a biological route might be more economical than a chemical route.

We succeeded with a bio-PDO, a key ingredient in DuPont? SoronaR, the first DuPont polymer derived from corn. Last year we formed a joint venture with UK-based Tate & Lyle to manufacture bio-PDO, with production expected to start in 2006. The technology to spin SoronaR polymer into fiber has been licensed to global fiber manufacturers, and sales doubled in 2004. They are expected to exceed $200 million by 2010.


I have illustrated the connection between green and white biotechnology. Now let me shift to the connection between green and red biotechnology using a different crop - soybeans. This is a crop that originated in China, and which is a major, sustainable source of protein and oil on a global basis. It provides some important solutions to the issue of soil fertility because of its ability to convert atmospheric nitrogen to organic nitrogen.

Soybeans have an important role to play in our health care. In most economically developed societies around the world, 70 to 80 percent of the population will experience and die of heart disease or cancer. In Europe and North America, red biotechnology is being leveraged for diagnosis and treatment of these diseases. So far, red biotechnology has emphasized diagnosis and treatment of disease, not prevention and management of disease.

However, there is a substantial global debate on nutrition, health and wellness and leveraging nutrition for the prevention and management of disease. In our view, such nutritional needs can be best addressed if linked to agriculture and food as preventative and treatment systems for managing health and wellness cost effectively. I believe that diseases such as heart disease and cancer can at least be partially addressed through nutrition. Cost effectiveness is best achieved if, during the production of food through agriculture, we take care to make sure that the right nutrients are produced. This has application globally.


Let me give you some specific examples. The U.S. regulatory authorities have accepted the beneficial attributes of soy protein for heart health. We are selling soy proteins so consumers can experience those benefits. At DuPont, we are working on making soy that tastes better so more consumers will enjoy it and derive the health benefits it offers. This isn't strictly red or green biotechnology but a combination of both.

We are in the process of introducing modified soybean oils under the brand name "Nutrium". Working with Bunge, we have developed and commercialized the first generation "Nutrium" product that eliminates the need for hydrogenation, which produces unhealthy transfats that are not "heart healthy." Our customers are in agreement that our transfat free oil meets their frying needs.

Longer term, we are addressing the deficiency of long chain omega 3 fatty acids - typically derived from fish - in diets of many regions of the globe by producing these molecules in a land-based renewable system like soybeans. Long-chain omega-3 fatty acids are also known for their positive impact on heart health.


From DuPont's point of view then, we see agricultural or green biotechnology as central and indispensable to the development of red and white biotechnology, as well as the application of biotechnology in other fields. Biotechnology will enable us to keep pace with exponentially growing global human and societal needs.

Industry's most important resource in the 21st century is information and industry is working aggressively on substituting matter with information. Green biotechnology is about introducing information or knowledge to seeds. Because the knowledge is in the seed, the products of this technology are useful globally, and every farmer around the world already knows how to harness this information and produce food.

It is important that we work together to bring these seeds to the growers so that societies can benefit from better food, more sustainable sources of energy and materials, and better health. It is no wonder that green biotechnology has been sown on a billion acres since 1995 and today is being used by more than eight million farmers around the world - 90 percent of them from developing countries. For a technology that has been in the marketplace for just 10 years, this is an outstanding accomplishment.

To date, only four crops have benefited from green biotechnology. It is my belief that within the next decade more crops - and not just annual, large-acre row crops, but also perennial crops and other specialty crops - will deploy this technology because of its compelling benefits to society. And the technology can be deployed sustainably and safely, if we all work together.


Technology has delivered affordable food and enabled the deployment of resources from farming into other human activities. Consider that 96 percent of the U.S. population in the year 1900 was engaged in primary agriculture and that was insufficient to meet the demands of the U.S. population at that time. Today, two percent of the U.S. population meets the demands of not only the U.S. but 25 percent of the world. Agricultural productivity in many regions of the world is still between 10?50 percent of the U.S.

In the U.S. and many developed economies, less than 10 percent of disposable income is spent on food. In developing economies, this number is 50?60 percent and a billion people still suffer from hunger and malnutrition. The opportunity exists to improve agriculture productivity and at the same time make food more affordable and nutritious through the deployment of biotechnology globally.

The different types of biotechnology are interrelated. There is a connection between our food and health, and the opportunity that exists to generate green materials and green energy using green biotechnology. Within parts of our society there remains a lack of consumer acceptance of certain biotechnologies. We understand that. But acceptance is conditioned by the nature of the dialog, the decision-making framework, and the political will to lay the track for the adoption of sustainable, green biotechnology. Progress is being made, but there is room for acceleration.