Bill Gates Tackles Biotechnology

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By Paul Crookall

Over the past two decades Bill Gates has quickly become the richest man in the world, while heading the leading company in the information and communications technology industry that is transforming the global economy. Now, he has announced his retirement as head of Microsoft - to focus on the biotechnology industry and global health and prosperity.

Thomas Friedman's The World is Flat is one of Gates' favorite books. It describes globalization and the effects of ICT, which changed the way people work, learn, buy and entertain themselves. But, he now realizes, for the third world, the first step is to get them healthy.

There are interesting parallels to earlier philanthropists. Henry Flagler was the co-founder of Standard Oil (with David Rockefeller) and became one of the richest men of his time. Appearing before a congressional committee, he was called a "robber baron" - a title that stuck to him, Carnegie and Rockefeller. But after that congressional appearance he had a change of career, took his wealth, moved to Florida and spent the rest of his time and money building the infrastructure of that state and helping the poor.

Gates has announced that, over the next two years, he will be making the transition from "full time Microsoft, part time Gates Foundation, to full time Gates Foundation, part time Microsoft." The change in direction follows congressional hearings on Microsoft. Gates now recognizes that "Business now has a substantial role to play in what has traditionally been government areas, such as education, workforce development and health."

He says "biotech and IT are the two newest, most innovative industries. They are both centred at leading universities. About half of the innovations come from universities, but most need to be brought out, and commercialized, by small companies."

He was recently in Ottawa for the announcement that his Foundation is putting up $28 million and the feds $111 million: "to support Canadian researchers and institutions to work with collaborators around the world, including in developing countries, on a range of HIV vaccine research activities including: discovering new vaccine candidates and conducting social research; strengthening clinical trials capacity (in and for poor countries); manufacturing promising vaccine candidates for trials; and addressing policy, regulatory, and social issues related to HIV vaccine development (e.g. changing laws to promote global access to vaccines)," according to the press release. Health Minister Tony Clement advised that the government is seeking proposals for public-private partnerships for the Canadian HIV Vaccine Initiative, which will work in cooperation with the Global HIV Vaccine Enterprise. "Backing researchers, making sure that the ability to manufacture and test will not hold things up, makes a big difference" Gates added.

The announcement is another component of the projects the Canadian HIV Vaccine Initiative (CHVI) must coordinate internally and externally with the Global HIV Vaccine Enterprise. This step is the culmination of discussions begun two years ago. The five funding departments are: CIDA, Industry Canada, the Public Health Agency of Canada, the Canadian Institutes of Health Research and Health Canada. It is also a component of Gates' wider efforts to create vaccines for the poor, including support for GAVI, the Global Alliance for Vaccines and Immunization, a public-private partnership focused on vaccine access for children in poor countries (see www.gavialliance.org).

It's a variation on give a man a fish, feed him for a day, teach a man to fish, feed him for a lifetime. Or perhaps it's a societal level adaptation of Maslow's hierarchy of individual needs, which many of us remember from first year psychology. Gates sees the first step is to build health. The second is to build education. Then, with that foundation, the world of IT can help build the economy. Rather than traditional aid, Gates is looking to build, to transform these poorer nations while transforming the health care, education and IT sectors.

Gates noted that he is pursuing partnerships with governments in developed countries: "There is no place, in the arts or science, where it works without government stepping up to do a substantial part of it." But he didn't mention the role of democratization and good government in developing countries in the hierarchy of needs. However, Thomas Friedman, who Gates respects for his writing on globalization, has noted, "One of the most important and enduring competitive advantages that a country can have is a lean, effective, honest civil service." Perhaps that is a higher level need that will be addressed later.

Terra Forming
Sipping on a diet Coke and wearing a suit that looked like it was off-the-rack from a mid-priced clothing chain, he skillfully handled questions from the media during his day in Ottawa on Feb. 20. On a personal note, he advised that his children are limited to 45 minutes a day of video games, and he uses an audit log to check the internet sites they visit. When I asked whether his donation was an expense, or an investment, he reeled off a list of what biotech combined with focused foreign aid has done: for example, measles used to kill six million annually; with increased use of vaccines that is down to 600,000.

For Gates, the $28M is a small investment, part of a multibillion dollar effort to change the world. His vision is broader than reducing HIV.

At a meeting later that day with the political, economic and academic elite of the country, Gates made clear that he sees Canada as an important player in the global future. And that building the workforce of tomorrow, through education, is key. He especially likes the University of Waterloo and wants to support more university-research park combinations and commercialization spinoffs. He noted that the demand for skilled workers, knowledge workers, was rising faster than supply in Canada. Meanwhile, Canada's productivity per worker continues to decline and the World Economic Forum's ranking of our competitiveness is falling. But drawing people to the field shouldn't be a problem "We don't say 'Look at our profits going up,' that's a subtext. You talk about how we make a difference in the world, you get out in front of the corporate social responsibility issues to get the top people. The new generation are more into corporate social responsibility."

Just as IT is sourced around the world, based on the best cost-benefit, so Canadian biotech will have to compete with "that bright scientist in India who might come up with a cure for Alzheimer's."

The New Business Model
The funding is part of the Foundation's larger investment to develop and deploy vaccines that will knock off the top viral killers - starting with HIV. Objectives include: "to save a life for $1,000," and "to have a vaccine for the top 20 diseases within the next 20 years." Gates has no interest in the so-called "lifestyle killers" such as obesity, smoking and inactivity. His focus is on the viruses.

Gates dodged questions about the business model he will be using. But he was clear about Microsoft's business model. He started small, hiring his friends. Then he built long term relationships with leading universities (including U. of Waterloo). He looked to commercialize university research and support startups. He hired the best people, not based on the profit they could make but because "It's about how we make a difference in the world." Expect funds to flow to "large research universities, the ones who spin out biotechnology and software startups." And expect him to build partnerships with biotech and pharmaceutical companies.
Where might this lead? To a scramble to become the partners? To more pairing up between biotechs, pharmas and research universities?

He has focused on these areas because "there is not a sufficient market push to provide it." So it needs philanthropy, government support, and support from the public, who he sees as "willing to support generously when they see projects having an impact."
He is also hopeful for further economic growth and health solutions if governments support higher education. "Investing in education is a key to competition, and as the world gets more educated, there will be more people working on solutions to our problems."

Leadership
Looking at the broader picture, this is part of a global effort Gates is devoting his life to. He has begun a transition "right now, I am fulltime at Microsoft and part-time at the Foundation. By summer 2008 I will be fulltime at the Foundation and part-time at Microsoft." Having dropped out of university at age 20 to pursue his dream for information technology, at 51 he is dropping out of IT to focus on biotechnology.

Despite having become the world's richest man, and built one of the world's top companies, few people have paid attention to Gate's organizational acumen. The media fawns over Jack Welch and Rudy Giuliani and their leadership style, but ignore Gates as, perhaps, a geek who got lucky. That might be about to change. Biotech and pharma are about to see a transformation over the next two decades that may be as profound as IT's transformation over the past two decades. The impact on the biotech industry will be massive.

Paul Crookall, MBA, PhD, is a former hospital CEO and now a writer on management and editor of Canadian Government Executive magazine.