Boviquest sells licence for genes

By LIAM DANN

New Zealand biotech company Boviquest has achieved a world first, selling a licence for the use of two New Zealand dairy cow genes to multi-national animal health company Merial.

Boviquest - a joint venture between NZAX listed Livestock Improvement (LIC) and Fonterra's Vialactia - was the first company in the world to identify the exact genes relating to milk production in cows.

It is now the first in the world to commercially license those genes.

Boviquest commercial manager Peter Gatley would not say what the deal was worth. But it would bring in significant cashflow, enabling the company to find new genes.

The research team was on track to discover several more valuable genes over the next two or three years.

Merial, which has annual revenue of $2.5 billion, will be allowed to use the technology only for screening cows.

New Zealand farmers will retain exclusive access to its use in screening breeding bulls, Gatley said.

The Boviquest board had weighed up the risks of sharing the technology with competing dairy nations in deciding to make the sale.

The screening of breeding bulls was something that was even more valuable but could also be sold if and when the board decided it was worth it.

The board's only focus was on what was best for the dairy industry in the long run, he said.

By bringing some cash back to Boviquest now it created the opportunity for research which could unlock new genes. That was ultimately the best way to keep the New Zealand industry ahead of its competitors.

The cash value of licensing the technology was dwarfed by the value it had brought - and would continue to bring - to New Zealand farmers.

It is estimated that genetic improvements to New Zealand cows add more $30 million a year to the industry in net returns.

LIC will continue to use the genes - called Quantum and Optimum - to increase the genetic merit of its bulls, which supply the semen for more than three million artificial inseminations each year.

Joint venture

* Boviquest is a $60 million joint venture between Livestock Improvement and Fonterra.

* It was the first in the world to identify two variants of the milk-producing gene.

* Livestock Improvement has operated its artificial breeding programme for more than 50 years.

* In 1971 the average New Zealand cow produced 2809 litres of milk. By 2002 average milk production was 3791 litres.

* Genetic gain is estimated to generate more than $30 million in net profit for New Zealand dairy farmers each year.