14 ★ FINANCIAL TIMES Tuesday 27 August 2019COMPANIES
C L I V E C O O KS O N— SCIENCE EDITORCompanies involved in human gene
editing have entered the ethical debate
about the technology, issuing a joint
declaration that DNA must not be
altered in a way that passes genetic
changes on to future generations.
The Alliance for Regenerative Medi-
cine, an international group represent-
ing the cell and gene therapy sector, put
out a Statement of Principles on genome
editing endorsed by 13 of the mostactive companies in this field. The dec-
laration is the industry’s first collective
response to growing public concerns
about new gene editing technologies,
such as Crispr, that enable scientists
to modify an organism’s DNA far
more precisely than the cruder tech-
niques used previously to add or shut
down genes.
Fears that researchers might carry
out human “germline gene editing” —
changing heritable DNA in sperm, eggs
or a new embryo — came true last
November when He Jiankui, a Chinese
biophysicist, said that his lab had edited
a gene in two baby girls to make them
resistant to HIV infection. This muta-
tion will be inherited by their descend-ants. Dr He faced almost universal con-
demnation from scientists and academ-
ics around the world for using Crispr on
human embryos before the risks and
ethical implications were known. Now
the commercial sector, which had been
quiet about the issue, has joined in.
“We assert that germline gene editing
is currently inappropriate,” the ARM
declaration states. “Gene editing tech-nologies have not matured to the point
where human trials of edited germline
cells are appropriate. Many important
safety, ethical, legal and societal issues
involved with this type of gene editing
remain unresolved.”
Janet Lambert, ARM chief executive,
will release the companies’ statement of
principles today in Geneva, where the
World Health Organization’s expert
panel on human genome editing is
meeting to examine the technology’s
scientific, ethical, social and legal
challenges. It is also expected to set up
aregistry of research into human
genome editing.
“We want to provide a clear stance by
the industry on the bioethical concernssurrounding the potential misuse of
these technologies,” she said.
All commercial activity in gene edit-
ing involves “somatic cells”, which
includes all human tissue except sperm
and eggs. Several clinical trials of Crispr
therapies are getting under way, for dis-
eases ranging from the blood disorder
beta thalassaemia to rare forms of
blindness and cancers.
ARM says that 31 clinical trials for
gene edited therapies are in progress
around the world, 20 of which are in
oncology. None is yet close to commer-
cialisation. The US has 19 trials, the larg-
est number, followed by China, with 10,
and the UK, six. No other country has
more than two gene editing trials.L E S L I E H O O K— COPENHAGENThe world’s largest offshore wind farm
is under construction in the North Sea —
a project that will generate as much
power as a nuclear plant when the wind
is blowing.
Hornsea 1 has become a symbol of the
rapid global growth in offshore wind, as
annual installations have risen 16-fold
over the past decade. But increasing
competition in the industry has meant
that the company developing the
project —Orsted, formerly known as
Danish Oil and Natural Gas — has
started to shift its focus to new markets.
“[Offshore wind] is an industry where
demand is accelerating, competitive
intensity is going up, costs continue to
come down,” saidHenrik Poulsen,
Orsted’s chief executive.
“We have already seen a compression
of our returns,” he added, pointing out
how far the price of wind has fallen. “We
have seen competition trending up over
the past three to four years.”
Even while renewable energy globally
has seen a lot of growth in the past five
years, the reality for a lot of project
developers is that there have been
plenty of challenges.
State subsidies for renewable energy
projects have largely come to an end,
and been replaced by auction-based
awards that have compressed margins
for developers.
There’s also been a raft of new
entrants to the market, particularly in
offshore wind, as energy companies
whose primary business is fossil fuels
try to boost their green credentials.
For Orsted, the world’s largest off-
shore wind developer, these conditions
have prompted it to push into new mar-
kets including North America and Asia,
and new areas such as solar and onshore
wind.
Two big contracts won last month in
offshore wind auctions in New York and
New Jersey underscore the shift is
already under way.
“In our view, scale is the driver of
competitiveness,” said Mr Poulsen.
“That’s really the game for us.”
To do this, the company expects capi-
tal expenditure of at least DKr200bn
($30bn) for 2019-2025, of which at least
three-quarters will go into offshore
wind.
“We are not going to stay a Northwest-
ern European offshore wind business,
even if that was a very attractive plat-
form in many ways, and a very competi-
tive one,” said Mr Poulsen. “We’re going
to go global with offshore wind, and
we’re going to expand technologically
into onshore wind, solar and storage.”
But this push carries risks as well, andthe company has said it expects its debt
levels to rise along with the expansion. It
is targeting a 30 per cent ratio of funds
from operation to net debt compared
with 58 per cent at present.
In its half year earnings announce-
ment in early August, Orsted noted
power generation had been negatively
affected by curtailments and outages
during the second quarter, partly due to
some cable issues.
However, this did not hinder overall
performance too much. For the most
recent 12 month reporting period, reve-
nues were up 29 per cent and net income
33 per cent, compared with the same
period a year previously.
“It is possible that in the newer coun-tries that they are branching out to,
there could be some teething problems
and initial challenges,” said Deepa
Venkateswaran, analyst at Bernstein.
Risks can come from established mar-
kets too. On August 9, in the UK, an out-
age at Orsted’s Hornsea 1 wind farm was
one of several factors involved in a
major power cut, the causes of which are
still under investigation.
For Orsted, the push into new mar-
kets is just the latest step in what has
been a series of dramatic business tran-
sitions over the past decade.
When Mr Poulsen started as chief
executive in 2012, the company, then
known as Dong Energy, was flirting with
bankruptcy.At the time, the company included 12
businesses spanning coal-fired power
plants to electrical grid operators, which
had been lumped together in a state-
owned conglomerate. Heavy losses
from its natural gas business and coal-
fired power generation had triggered
credit downgrades.
After conducting a strategic review,
the board decided to focus on the nas-
cent offshore wind business. “It was
the one area where we actually had a
first-mover advantage,” Mr Poulsen
recalled.
At the time the global offshore wind
market was small — just 3 per cent the
size of the global onshore wind — but
looked like it had the potential to grow(annual new installations have risen
five times between 2012 and today).
Most of Dong’s other businesses were
disposed of, and the company went pub-
lic in 2016, one of the biggest European
IPOs that year. Its share price has more
than doubled since the listing.
After it sold its oil and gas business to
Ineos in 2017, Dong Energy renamed
itself Orsted, after a Danish scientist,
and has gradually been reducing its
fossil fuel assets such as coal power
plants.
The steps taken by Orsted are being
eyed by other energy companies looking
to boost their renewables portfo-
lios.Royal Dutch Shell andEquinor
(formerly known as Statoil) are both
trying to grow their offshore wind busi-
nesses, although these are still much
smaller than Orsted’s. Major utilities are
also pushing into wind, including a tie
up earlier this year between Engieand
EDP.
However, analysts say that, even as
other companies may envy Orsted’s
transition into renewables, few will be
able to mimic it.“It is not a path that is easy to follow,”
said Kingsmill Bond, new energy strate-
gist at consultancy Carbon Tracker
“The path of reinvention requires
very supportive shareholders,” he
added.
Even though Orsted is publicly listed,
it is still 51 per cent owned by the Danish
state, and its biggest shareholder sup-
ports the company’s drive to cut emis-
sions. Sometimes there was a temporary
trade-off between maximising profit
and making the transition away from
fossil fuels, Mr Poulsen admitted.
The company recently set a new cli-
mate target: to cut emissions — includ-
ing from operations, from its supply
chain, and from the sale of its products
— by 50 per cent by 2032.
This will involve finding low-carbon
construction methods for wind farms,
and will mean a reduction in its profita-
ble natural gas trading business. “There
will be a price tag on it,” added Mr
Poulsen. “Over time it will mean selling
less gas.”
However, he believes these costs will
pay off in the long term.
“As you transition away from black
energy toward green energy there will
be profits that you forgo on the black
energy side, but also profits to be made
on the green energy side,” he said.
“There will be margins that we leave
behind, but it is more than fully com-
pensated by the growth that we see in
green energy.”Energy.Expansion
Orsted pursues green goals in Asia and North America
Move by world’s largest
offshore wind developer
also comes with risks
B E N JA M I N PA R K I N— MUMBAIIndia’s booming dining apps are facing
a crisis as thousands of restaurants
abandon them en masse, fed up with
bearing the costs of an “epidemic” of
discounts as the platforms battle for
marketshare.Companies such asZomato,EazyDiner
andGourmet Passporthave attracted
millions of mobile-savvy Indians who
use their services to find restaurants
and order their food.
This has whet the appetite of foreign
investors, with Zomato valued at more
than $3bn after investments fromAli-
baba andSequoia Capital. “Foodtech” in
India has grown into an estimated $5bn
industry from just $120m in 2015,according to consultancy Redseer. But
the industry’s business model is under
threat, after India’s restaurant associa-
tion started encouraging members to
boycott platforms that offer heavily
subsidised meals to diners.
More than 2,000 restaurants have
quit the apps since the campaign was
launched this month, according to the
National Restaurant Association of
India. “Deep discounting is an epidemic.
It’s spoiling the party,” said Rahul Singh,
founder of The Beer Café, the Indian
pub chain, and president of the associa-
tion. “We’re creating discount addicts.”
The campaign has so far centred on
dining platforms but one person famil-
iar with the discussions said the restau-
rants planned to target online deliverycompanies next. This could include
popular services such asNaspers-
backedSwiggy andUber Eats.
Rohan Agarwal, a manager at Red-
seer, said restaurants that partner with
online aggregators for a year typically
enjoy annual growth in the number of
bills of 25-30 per cent. But restaurants
complain that they lose money because
of the discounts they are required to
shoulder.
“This is the first consolidated push-
back from the restaurant side so far, in
an industry where otherwise the aggre-
gators were trying to push for the
terms,” Mr Agarwal said.
India’s restaurant industry is rela-
tively undeveloped compared with that
of neighbouring China, where per capitaincome is about twice as high. While
India has an estimated 500,000 restau-
rants, Chinese delivery companyMeitu-
an-Dianpinghas more than 5m restau-
rant listings alone.
After meeting the association,
Zomato last week proposed changes to
limit abuse of the deals it offers, such as
only allowing diners to use its deals at
one restaurant per day and limiting the
number of deals to two per table.
“We have made mistakes and things
haven’t gone as planned,” saidDeep-
inder Goyal, Zomato’s founder. “This is a
wake-up call.”
However, the restaurant association
said it would not accept Zomato’s offer,
dismissing it as “another attempt to
stuff old wine in a new bottle”.Healthcare
Biotech sector sets out principles on genome editing
Industry in first collective
response to concerns
about new technologiesTechnology
India’s dining apps face exodus from restaurants fed up with steep discounts
The jack-up
construction
vessel Brave
Tern at work in
the Hornsea 1
offshore wind
farm
Marine Construction Photos /
Alamy Stock PhotoOrsted’s performance since its
flotation
Share price (DKr)
Sources: Refinitiv; S&P Capital IQ; financial reports; company; BloombergNEFOrsted’s shift to profitability
Net income (bn)- - Orsted (formerly Dong Energy)
went public in June Projected growth of oshore wind
Annual installations (GW) Heavy lifting
Fears over gene editing technologies,
such as Crispr, are growing‘There will be profits you
forgo on the black energy
side, but also profits to bemade on green energy’
$30bn
Orsted’s capital
expenditure for
2019-2025, of which
three-quarters will
go to offshore wind29 %
Increase in
revenues over the
past 12 months
compared with
period last year‘These technologies are not
at the point where human
trials of edited germlinecells are appropriate’
‘Deep
discountingis an
epidemic.It’s spoiling
the party.We’re
creatingdiscount
addicts’The business
model of apps
such as Zomato
is under threatBusinesses For Sale
AUGUST 27 2019 Section:Companies Time: 26/8/2019 - 18: 03 User: jeremy.wright Page Name: CONEWS3, Part,Page,Edition: USA, 14, 1
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