The Design Factors for a New Zealand Biotechnology cluster

Abstract

The Bay Area biotech cluster, San Diego Biotech and Biovalley are familiar to a majority of the population – even those individuals who are not experts in the field can recall the successes of these communities. All three cases have humble beginnings and over the decades, have created local job opportunities and new business formation ultimately resulting in economic growth. New Zealand biotechnology has world-class potential, ranking number four in overall biotechnology potential according to the Scientific Worldview and outcompeting its Australian counterpart ranked at number five. However, New Zealand's biotech performance still lags behind the city of Melbourne, a city that is usually compared with Auckland due to the similarity in size. ASX-listed biotechnology companies are always valued much higher and are greater in number. How can New Zealand use its potential to increase biotechnology output? This study explores the possibility of implementing a cluster strategy for the New Zealand biotechnology industry. A qualitative exploratory methodology was used to explore the design factors for a NZ biotech cluster. This methodology was appropriate since it is a new mode of inquiry that has previously not been investigated. A conceptual framework was developed from the literature review resulting in three design factors to be considered: specialised or diversified cluster, geographical and relational proximity and cluster formation considerations. Primary findings gathered the perspectives of twelve biotechnology industry members through semi-structured interviews. Secondary findings gathered international cluster examples and critical factors for cluster formation in NZ to support the primary findings. Overall, participants leaned towards a diversified cluster which was in contrast with secondary findings, and a desire for international integration. They also discussed current strengths of the industry in line with critical factors for cluster formation, weaknesses of policy initiatives and how best to engage the private sector in the vision. These three sources of information converged to form important discussions on how such a strategy would apply in the New Zealand biotechnology context, resulting in six recommended design factors: 1) a strategy in favour of specialised clusters, 2) the use of virtual communications for international integration, 3) investing in absorptive capacity, 4) developing strong cluster branding, 5) engaging the private sector as the leader and 6) encouraging the public sector to create initiatives that strive for quality, increased specificity and long-term thinking.