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March 1996

THE VALUE OF SANGRE DE DRAGO

What is the value of Michelangelo’s "Creation" in the vault of Rome’s Cistine Chapel? Simply adding up the price of the materials used and the artist’s wages would only reflect a fraction of the value of that great masterpiece. Most people would agree that even considering current art market criteria would still underestimate its real value. The value of the Creation cannot adequately be expressed by market prices. Nevertheless, it can still be argued that the commercialisation of artworks helps in their conservation. But this argument is only partly true: a Picasso owner would certainly have a vested interest in its conservation, but that would provide no protection against the loss of other works of art. The same is true of biodiversity: the introduction of some species into the free market trade may help in their conservation, but that does not guarantee biodiversity conservation in general, nor of individual species, since the plant often looses its commercial value once the specific compound with the desired genetic information is extracted.

Shaman Pharmaceuticals has filled for patents in its home country, the United States, for two products derived from the Sangre de Drago plant: Provir, an oral medicine against a respiratory tract virus that causes a childhood disease, and Virend, an anti-herpes medication. Sangre de Drago, a plant of the Croton genus, is widely used throughout the Amazonian basin due to its well know medicinal properties. The species most commonly used is Croton lechleri. Shaman argues that the development of new medicines from "wild" biodiversity and associated enthnobotanical knowledge will not only benefit the company but that it will also aid biodiversity conservation and improve the well-being of the communities it works with. The company believes that there are inherent general benefits to be derived from genetic resources commercialisation. In the following pages it is argued that that supposition is, even in the best of cases, incorrect.

Setting the price

Economists have tried price all sorts of environmental goods and services through analysis that value their place in the market. Nevertheless, the market value does not necessarily reflect its true value. According to Catalonian economist Joan Martínez-Alier, it is possible to arrive at ecologically-adjusted prices, but that does not at all mean that those prices would be ecologically correct. During the last decade many have tried to set a price on biodiversity, often with the idea of adding that value to national accounting figures. So many different theoretical assumptions have to be taken and such a wide variety of elements go into those calculations, that in the case of Ecuador, economist Joseph Vogel arrived at two widely differing figures for the value of its biodiversity: US$ 256 or 429 million! Besides the inherent difficulties involved in economic valuation, figures such as these do not take into consideration moral, leisure or aesthetic aspects: therein lies the gap between market prices and true value.

Genetic information is one of those environmental goods that in recent decades have been undergoing an important process of market introduction. Gene-based information has increasingly found its way into industrial use by key economic sectors such as agriculture, pharmaceuticals and chemicals. In 1980 the US pharmaceutical industry recorded no budget for the evaluation of plants. Fifteen years later it was estimated by RAFI that more than 200 companies and research institutes around the world were assessing animal and plant compounds in the search for medicinal properties. Massive biological extinction did not really concern economists until they realised the potential losses involved. By the mid-1980s pharmaceutical industry analysts warned that every medicinal plant disappearing in the tropical forests could represent a US$200 million loss for the industry.

Pharmaceutical companies carrying out bioprospecting claim that one of their main objectives is the conservation of wild biodiversity, but in reality the link between bioprospecting and conservation seems to be a very weak. In order to really make a difference, industry would have to invest in truly empowering those local communities that live in direct contact with biodiversity. Even with the best of intentions, it is very doubtful that those companies would be willing (or even able!) to make large enough investments to reverse the loss of biodiversity in developing countries.

Another limitation for bioprospecting companies is the subsidiary role they play in the wider industrial panorama. Small biotechnology companies like Shaman operate more as idea labs than as production units: the latter is usually carried out by the large pharmaceutical transnationals. Biotechnology companies can be -- and are -- easily bought up. In reality, Shaman has made most of its income through contracts with pharmaceutical giants such as Eli Lily and Ono.

Shaman Pharmaceuticals: the theory

The generally accepted success rate of random bioprospecting in plants, animals and micro-organisms is one pharmaceutical with market potential out of 10,000 compounds screened. California-based Shaman Pharmaceuticals was established in 1989 with an innovative prospecting strategy, based on the premise that the use of indigenous knowledge greatly improves the odds of finding active compounds. Shaman carries out lab analysis of plants that are used as medicinals in at least three geographically distinct communities. This "filter" brings the odds of making a marketable hit up to one out of two plants studied. The company has worked with over 30 indigenous communities in Latin America, Africa and Southeast Asia.

Shaman strives to find new technologies for drug discovery by integrating several scientific fields: ethnobotany, medicine and plant chemistry. The indigenous communities which have developed their knowledge over time have a key role to play in this process. The knowledge of indigenous peoples and other forest inhabitants is a central aspect of Shaman's pharmaceutical research and development (R&D). This indigenous knowledge is complemented with the knowledge and technology of Shaman's scientists.

The "reciprocity" required to make the partnership between Western science and indigenous knowledge work is considered one of the company's basic principles. Shaman’s other "innovative" principle in the development of new therapeutic agents is its contribution to biological and cultural conservation. There is no doubt that, at least in theory, Shaman shows greater sensibility towards the environment and people than the majority of big business. Yet, as will be seen below, a closer analysis of the company's practice of reciprocity is questionable.

In theory, the company facilitates the return of benefits to the communities it works with from any product developed. This compensation is made through a non-profit organisation created by Shaman itself: The Healing Forest Conservancy. The non-profit is in charge of contacting communities to find out their needs and channel compensation accordingly. Shaman promises to give a percentage of profits to all the communities and all the countries they have worked with, independently of where the information that lead to product development and commercialisation originated.

Shaman Pharmaceuticals: the reality

Shaman has not marketed any product so far, but has two patent applications pending in the USA for products derived from the Sangre de Drago (Croton spp). The traditional usage and dosage of the plant vary all over the Amazonian basin. Among the more common medicinal applications are: wound healing, anti-inflammatory treatments, anti-rheumatics, haemorrhoids, and skin problems. Most of the uses identified in field research focus on its healing capacity and effectiveness against herpes, the latter being the subject of one of Shaman’s pending patents. Pharmacological research, initiated because of the plant’s multiple uses in traditional medicine, has shown Sangre de Drago to contain an alkaloid with healing capacity.

Unlike most medical knowledge in the West, knowledge about the curative powers of Sangre de Drago is in the public domain. While knowledge about many other traditional remedies is strictly guarded, in this case all groups living in the Amazonian area -- indigenous peoples, racially-mixed populations, settlers, and even tourists -- share it. The plant’s chemical composition and ethnobotanical uses have been published several times: hardly a "trade secret". This makes Shaman’s claim of "novelty" for the two products it has developed from local knowledge about Sangre de Drago more than questionable.

In October 1992, Shaman sent a research expedition to Eastern Ecuador to work with the Quichua indigenous community of Jatún Molino, in Pastaza province. The company planned on talking to the local healer and collecting samples of medicinal plants used by the community. For Shaman executives the work done with that community and the on-going relationship kept with its members is an example of short-term reciprocity. Yet company expenditures in Jatún Molino have represented less than US$3,000, and often the money spent has gone to pay for services rendered to Shaman, or to solve problems for the research teams.

Since the company has not marketed any products yet, it is impossible to judge "reciprocity" in relation to profits. Yet it might be helpful to take a look at a similar case. In Peru the company Liofilizadora del Pacífico has begun marketing UÒa de Gato (Uncaria tomentosa), an Amazonian liana traditionally used against arthritis, rheumatism, and diabetes. Western science has confirmed its cellular healing and immune system strengthening properties. The company expects 1996 sales of US$25 million, of which it will return US$60,00 to the Ashaninkas indigenous communities, about 0.2%. And even this small amount should not be considered as compensation for the knowledge provided, but as a payment for work done in plant cultivation. Profits made from a drug may vary greatly. In the case of two products developed from the tropic’s rosy periwinkle plant, the company Eli Lily makes about US$100 million each year.

These kind of numbers must be kept in mind when a pharmaceutical company talks about reciprocity. Shaman is no doubt expecting to reap great profits from the commercialisation of its Sangre de Drago-derived products, and its short-term reciprocity just does not seem fair. If the value Shaman gives to the genetic resources and associated ethnobotanical knowledge provided by Jatún Molino is equivalent to their donations so far, it is comparable to setting the Creation's price according to the cost of the materials and artist's wages.

The company has also established agreements with other community organisations for "mid-term" reciprocity. In Peru Shaman signed a contract with COICA’s (Coordinadora de Pueblos Indígenas de la Cuenca Amazónica) central office. Shaman pays COICA a "favourable" price for the Sangre de Drago plant resources it needs for research, while the indigenous peoples’ coordinating organisation guarantees quality control and sustainable resource management. Yet payment for plant collection should not be considered compensation for knowledge, when in reality it is just payment for work done.

The company talks about "long-term reciprocity" once the profits start rolling in, which means compensation to the communities even if they are no longer working with them. The Ecuadorian Quichuas have been promised compensation once Shaman's first product is marketed, and benefit sharing from any product developed in the future. Yet no mention has been made of what type of compensation will be given, what will it amount to, nor who will be the beneficiaries. And the reality is Shaman has only losses, amounting to US$13 million in 1993 and US$19.4 million in 1994. Any income comes from contracts with other pharmaceutical companies.

In its publications Shaman acknowledges the importance of crediting the Intellectual Property Rights (IPRs) of communities and compensating them accordingly. Nevertheless, in over 300 Shaman-related press articles published in the USA, no mention is made of the communities that have provided knowledge leading to product development. The Quichua Jatún Molino community is not mentioned in company or The Healing Forest Conservancy publications. In Ecuador, the local community was mentioned in only three press articles. The fact is that although Shaman talks about sharing IPRs with local communities, the two Sangre de Drago derived products will be patented in the USA under the company’s sole name.

What does each win or loose?

The company: Shaman includes reciprocity with indigenous communities and the conservation of biological and cultural diversity amongst its guiding principles. Yet, despite its innovative philosophy and strategy, its main objective is still maximising profits. In this case the company has had no sales profits so far, since none of its products have reached the market. Shaman’s niche in the pharmaceutical industry is quite specialised: it does basic research and develops products for production by others, as illustrated by its contract with Ono Pharmaceuticals to search for a diabetes remedy. Contracts like these keep Shaman alive until it markets its own products.

Indigenous communities: Shaman pretends to compensate local communities for the knowledge they impart. The reality is that once indigenous communities share their knowledge or genetic material they lose control over those resources, whether or not they are compensated for them. Once the genetic material derived from those plants, animals or micro-organisms is patented, access to the resources may be restricted by IPR-created monopolies.

Intellectual integrity must include the right of indigenous communities to say NO to the access to their resources and associated knowledge (see Towards a Biodiversity Community Rights Regime in the October 1995 Seedling). Prior informed consent and consent negation as conditions for access must urgently be developed at both national and international levels. Shaman first tried to get the knowledge it wanted by convening a meeting with the Quichua Federation of Pastaza province. When the Federation refused to strike a deal with them, Shaman moved on to establish a working relationship with a community not integrated into the Federation. This is not a very respectful approach to all the other indigenous communities that share knowledge with the people in Jatún Molino.

Shaman calls its policy one of "reciprocity". It has established programs to compensate the communities and countries where they have worked. The company also talks about benefit sharing once products are market, but they never specify percentages nor amounts. It is difficult to understand what is meant by "redistributive justice" with local communities when so little information is given.

Many indigenous groups are suspicious of corporate bioprospecting initiatives. In a statement read to the plenary of the Convention on Biological Diversity meeting last November in Jakarta, the Indigenous Peoples’ Biodiversity Network stated: "What you call bioprospecting we call biopiracy until sufficient consultations with indigenous peoples and farmers’ organisations have been carried out, and consultation is not consultation unless it is carried out among equal parties".

Biodiversity: Shaman also aims to contribute to the conservation of biological diversity, yet its main initiative in this area so far has been to finance about thirty studies in four different countries on the use, sustainable management, growth and distribution of Sangre de Drago. It also requires those providing plants for them to do so in a sustainable manner and to reforest. Although all the studies done so far on Sangre de Drago may indeed ensure the sustainable management of the plant, this is of little consequence to the conservation of biological diversity. Conserving a Picasso does not lead to the safekeeping of other works of art. No mention has been found about concrete measures Shaman proposes or is involved in directly dealing with biodiversity conservation.

In Shaman’s case, the objective of contributing to biological and cultural diversity seems far from becoming a reality. The tools chosen by the company to date -- questionable compensation of indigenous knowledge and sustainable plant management plans -- do no seem to offer sufficient elements to meet these objectives. Therefore, at least in the case of Sangre de Drago, the idea that commercialisation leads to biodiversity conservation has not turned out to be true.

The author would like to thank Elizabeth Bravo of Acción Ecológica (Ecuador) and Joan Martínez Alier. Viki Reyes may be contacted at: FLACSO/Ecuador, Ulpiano Paez 118 y Av Patria, Quito, Ecuador. Tel: (593 2) 54 27 14. Fax: (593 2) 56 61 39. E-mail: viki@nervm.nerdc.ufl.edu

Selected sources:

* Cai, Y; F. J. Evans; M. F. Roberts et al. (1991), "Polyphenoliccompounds from Croton lechleri", Agrochemistry, Vol. 30, No. 6, pp.2033-2040.

* King, Steven, (1994) "Establishing Reciprocity: Biodiversity, Conservation and New Models for Cooperation Between Forest-Dwelling Peoples and the Pharmaceutical Industry", in Greaves, Tom: Intellectual Property Rights for Indigenous Peoples - A Sourcebook, Society for Applied Anthropology, Oklahoma, pp.71-85.

* King, Steven R; and Thomas J. Carlson, (1995) "Biocultural Diversity, Biomedicine and Ethnobotany: The Experience of Shaman Pharmaceuticals", Interciencia, Vol 20, No. 3, pp. 134-139.

* Martínez-Alier, Joan (1994), De la economía ecológica al ecologismo popular, Barcelona, Icaria.

* Neill, David A., (1993), Silviculture of 'Sangre de Drago' (Croton spp) in Ecuador, Fundación Jatun Sacha/Missouri Botanical Garden.

* RAFI, (1994), Bioprospección, biopiratería y comunidades indígenas, November.

* Vogel, Joseph H. (1994), Genes for Sale: Privatization as a Conservation Policy, New York, Oxford U. P.