Beyond Relocation: An Investigation into the Spatial Organisation of New Zealand Biotechnology Firms

Abstract

The commercialisation of innovative technologies is a key strategy for nations around the world from which economic prosperity can be derived. High-tech biotechnology is one area which has consistently been the focus of attention by many countries including New Zealand (NZ). Large amounts of investment from limited funds are usually invested by governments to help develop innovative biotechnology companies. When such companies relocate to another country, a sense of loss often ensues, particularly when public funding has been received. This study sought to understand how NZfounded biotech firms, particularly Dedicated Biotech Firms (DBFs), were relocating from NZ followed by an investigation into the main factors involved in their migration offshore through a qualitative research approach. Firm relocation is complex as it no longer necessarily entails moving physical operations from one location to another. Business functions have become increasingly disaggregated due to advances in communication and information technologies allowing partial relocations to occur. This study found that most NZ-founded DBFs undertook partial relocations. The reasons for relocation stemmed from difficulties in commercialising biotech in NZ. Issues of accessing capital to fund operations, availability of the right personnel and NZ’s distance from international markets were the main points identified. Most of the factors were seen to converge on a lack of critical mass in NZ’s biotech sector and concurrent cost-disadvantages in developing products and entering foreign markets. A requirement for large amounts of capital for commercialisation was found to be the most prominent feature increasing the likelihood of firms relocating from NZ. Recommendations to overcome the financial challenges of commercialising biotech in NZ included a shift in the investment behaviours of large institutional investment entities to buttress the shortage of capital during late development stages. Alternatively, Government investments could be targeted toward less risky biotech ventures leveraging off existing industries in which NZ is already globally competitive such as agriculture and food. Regardless of the changes that may eventuate, NZ’s biotech sector still requires significant growth that can only be achieved organically over time.