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Solutions in the fermentation stage: How synthetic biology could help fix the global supply-chain crisis
- May 1, 2022: Vol. 9, Number 5

Solutions in the fermentation stage: How synthetic biology could help fix the global supply-chain crisis

by Edward Bryan

Crises inevitably lead to great changes and opportunities. Today’s supply chain crisis may be no different. Since the beginning of COVID-19, companies and countries have struggled to ensure steady supply of key inputs to the normal functioning of our economies. This year, key commodities and other products from Russia and Ukraine have been disrupted amid the war. And the increasing prevalence of natural disasters driven by climate change in recent years has also interfered with supply chains.

Car factories lie dormant because a missing microchip has thwarted production. Pharmaceutical providers rely on overseas supply for active ingredients in many medicines. Food producers that depend on wheat exports from Ukraine, a country known as “the breadbasket of Europe,” are at risk because the spring planting season is in jeopardy. Companies facing challenges like these in a variety of industries may find innovative ways to redesign supply chains by turning to synthetic biology.

Synthetic biology is a revolutionary technology that could make a profound impact on the way a vast array of products are manufactured. A recent white paper from AllianceBernstein (downloadable at this short-link: https://bit.ly/38HcnhH) explains how the science works and is rapidly expanding into new applications. It all happens in a brewery-like environment. Production organism cells (yeast, for instance) are typically grown and fed in a fermenter, and the downstream output (purified protein, for example) is harvested. Beyond the biotech industry, where synthetic biology was first adopted, falling costs are promoting its use to create materials that improve the quality of products such as pet food, watch straps and cement. Now, the retreat of globalization may be a catalyst for broader adoption.

How can synthetic biology help? By providing economical local production. Anywhere you can brew beer, you can make things with synthetic biology. Some examples of potential opportunities for synthetic biology to alleviate tricky supply issues include products such as oil and gas, pharmaceutical ingredients, food and flavors, clothing, and electric vehicle batteries.

Many companies might have scoffed at synthetic biology as a futuristic, expensive technology that wasn’t aligned with globally dispersed supply chains. We believe it may become a more attractive option as established companies seek to re-orient their operations, and younger companies grow and build out new supply chains from scratch. Greater investments in synthetic biology lead to discoveries that push down the costs of production, opening up more applications and markets, and creating a virtuous cycle that draws in further investment.

Investors should take note. Select innovative companies that are enabling the synthetic biology revolution offer attractive growth potential, in our view. And companies across industries that are embracing the technology to address supply chain challenges may enjoy strategic advantages, versus peers, that can unlock promising long-term return potential.

 

Excerpted from an AllianceBernstein report written by Edward Bryan, senior research analyst responsible for covering the global healthcare sector for the company’s sustainable thematic equities portfolios.

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