Iceland: Silicon Valley of Cod
There’s More Than One Way to Skin a Fish
Nicholas P. Sullivan
If you scale and skin a codfish, and process the skin in the proper (mild) manner, you can apply it to burns, wounds, and even brain and spinal dura (a tough, protective membrane). High in Omega3 polyunsaturated fatty acids, the fish skin reduces inflammation, reduces pain, recruits the body’s own cells, and is ultimately converted into living tissue. In double-blind, randomized trials, cod-skin grafts have healed wounds faster than synthetic products made from human or animal tissue, and with no risk of disease transmission. The fish skin is simply more similar in structure to human skin than other skin substitutes. Kerecis, the company that has received more than 40 patents around the world for the use of cod fish skin for medical use, is located in Ísafjörður, in the Westfjords of Iceland, right below the Arctic Circle.
“Iceland is the Silicon Valley of codfish,” says Thor Sigfussion, founder of the Iceland Ocean Cluster House, an incubator on the docks of Reykavik. It houses around 70 companies and attracts thousands of visitors annually from the fishing industry and policy circles. Many of the companies in the Iceland Ocean Cluster are developing fish-related products — such as leather for wallets and purses, beauty creams, medicinal pills, blockchain technology for seafood, electric fishing boats, cod-liver products, and a Niceland, branded fish-traceability app and QR codes. Navis is developing an electric long-line fishing vessel, alongside nanotechnology battery-maker Greenvolt, a US startup.
Kerecis, which has been part of the cluster since its beginning in 2011, is clearly in sync with Sigfusson’s “100% Fish Utilization” project. The idea is to focus less on the volume of fish than value for the fish, on ways to turn waste into value. The business value of the startups in the Iceland Ocean Cluster over the last three years is roughly $50 million. But the value generated for the fishing industry in terms of exports is calculably more. In 2018, the value of byproducts made from fish in Iceland was estimated to be around $400 million.
Iceland generates roughly three times the value from 40 percent of the catch. By 2017, Iceland was utilizing 72 percent of codfish, according to Arnljótur Bjarki Bergsson, a former executive at MATIS, a food and biotech R&D firm in Reykavik. In 1981, according to MATIS, cod generated .75 SDR (an international currency value based on a basket of major currencies); in 2013, it generated 2.3 SDR (a bit more than 3x gain). Another way of looking at it is like this: If a cod fillet is worth $10, the whole cod is worth $30.
Iceland, like other small countries such as Israel and Singapore that have minimal natural resources, has learned punch above its weight. To generate such value, of course, you need cod. And while the cod fisheries of Canada and the US in the Northwest Atlantic have fallen on very hard times, verging toward zero catch and moratoriums on fishing, Iceland has another tale to tell. Iceland started ranching rather than hunting before other cod-fishing nations and is now reaping the rewards.
Iceland’s cod catch peaked in the 1960s, then started declining. In 1984, Iceland introduced total allowable catch quotas (transferable), which took a while to work properly. The catch hit all-time lows in the early 1990s. But since then it has since rebounded. The cod catch in 2017 was 253,000 tons, on par with the long-term post-WWII (1955–2015) average, according to Iceland’s Marine Research Institute. Between 2008 and 2016, in fact, the catch quota actually doubled. The breeding population is now at its highest point in 40 years. The overall cod stock, which hit a maximum of 2.5 million tons in the early 50s, and dipped to as little as 550,000 tons in the early 1990s, is now estimated to be 1.2 million tons. The annual catch now is almost exactly what it was in the 1945–1950 timeframe, before the post-World War II technology boom in fishing led to over-exploitation of stocks.
On top of it, discards are considered negligible (1 percent) and by-catch, although not completed quantified, is considered low. The Icelandic cod industry is certified by the Marine Stewardship Council (MSC) — the acknowledged international standard for sustainable best practices. Iceland accounts for only 1 percent of the world’s global catch, but 6 percent of the MSC certified catch.
It’s difficult to square this with what’s happening in the Northwest Atlantic, although cod stocks on both sides of the Atlantic and the North Sea go through cycles. Otherwise, the Icelandic advantage would seem to be a function of cold Icelandic waters and a consistent management system. Sigurður Ingi Jóhannsson, Iceland’s Minister of Fisheries, certainly credits the quota system: “We have been strengthening our fish stocks, which is different to what has been happening in many other places, and it is this emphasis on sustainable and responsible management which we have been practicing which is now bearing fruit.”
There’s another factor: Iceland kept foreign fishing fleets off its shores well before the 200-mile “exclusive economic zones” were created by the UN in 1982. That played a big part in sustaining the biomass and keeping it at a high enough level to sustain itself. To do so, Iceland went to “cod war” with the UK — four times over 23 years.
THE COD WARS
In 1952, after watching British boats fishing close to its shores for years, Iceland claimed a 3–4 mile zone off the coast as its own waters. At this time, there was no such thing as territorial waters. In response, Britain banned Icelandic cod from the UK, depriving Iceland of its main export market. But that loss was soon replaced by import demand from Russia and the United States, allowing Iceland to withstand the ban until Britain finally capitulated.
In 1958, an emboldened Iceland expanded its nautical zone to 12 miles, an affront to NATO and all the Western powers. “Little” Iceland, a key NATO member despite its size because of its location, was likely calling in its chits for offering an airbase to the Allies during World War II. And, it has few natural resources beyond fish, except for geothermal energy.
Britain continued to fish within 12 miles and brought along the British Navy for protection. When the Icelandic gunboat Thor fired warning shots at the British trawler Hackness, the HMS Russell came between them and threatened to sink the gunboat, which retreated.
In 1961, after three more years of British fishing boats escorted by British Navy ships in “Icelandic waters,” Iceland threatened to leave NATO. This was in the heat of the Cold War about the time of the Cuban missile crisis, and Iceland was key to NATO because of its geographic position as both an airbase and an ocean monitor in the Barents Sea submarine channel. The UK finally agreed to the 12-mile limit.
In 1972, Iceland upped the ante — to 50 miles! Still without an army or navy, Iceland had now outfitted its Coast Guard ships with trawl wire-cutters. As Coast Guard boats and British trawlers rammed each other, Icelanders cut the British nets from the boats. Britain capitulated again.
In 1975, Iceland extended its “economic zone” to 200 miles. This was not a first, but close to it. Earlier, Peru and Costa Rica had tried to extend their zones to 400 miles, but that effort was widely ignored by the rest of the world. The Iceland gambit attracted British navy boats on one side and Icelandic gunboats and Coast Coast trawl-net cutters on the other side. There were 35 ramming incidents in six months, but no casualties. With Iceland threatening to leave NATO again, NATO stepped in and called for an end to the largely ritualistic hostilities. The so-called Cod Wars, after a 23 year run, were over. Little Iceland had defeated mighty Great Britain.
In 1982, with the Convention on the Law of the Sea, the UN mandated a 200-mile “exclusive economic zone” (EEZ) for every nation. But Iceland, during a key period when industrial trawlers were in high predation mode — Russian factory ships visible from Cape Cod were raiding Georges Bank in the 1960s and 1970s — Iceland had protected its cod biomass so it would continue on when others withered.
TURNING WASTE INTO VALUE
Iceland is now making very good use of its cod. This is not exactly new, but significantly expanded. Lysi, for example, was established in 1938 and is one of the world’s largest producers of marine oils for human consumption (that means cod liver oil and other marine lipids), and is still a global supplier of numerous related products. But Kerecis, which is one of the best exemplars of fish value creation, has turned cod skin into a significant medical product with a range of applications.
The company has turned organic matter “previously discarded as worthless into a product that helps thousands of people worldwide,” says Hallgrimur Jonasson, general director of Icelandic Center for Research (Rannis). Says Dr. Lee Rogers, a podiatrist who has used the product on diabetic wounds, “The skin of the fish, once scales are removed, is strikingly similar to human skin on a microscopic level.”
The Kerecis Omega3 Wound is designed to be trimmed for placement directly into the wound, after which it is moistened with saline and covered with a sterile dressing. Technically speaking, the MariGen Omega3 fish-skin is a dermal-matrix transplantation technology that uses acellular (no fish cells to compete with human cells) fish skin for tissue regeneration. MariGen Omega transplantation technology is also used to for hernia repair and breast reconstruction.
Company founder and CEO, Fertram Sigurjonsson, established the company in 2009 in Isafjordur, Iceland, 30 miles south of the Arctic Circle and 250 miles north of the capital, Reykjavik. Kerecis is privately held by Icelandic, American, British and French shareholders, half of whom are founders of the business. Investment is estimated at $10 million and revenues at $30 million. In 2019, the company acquired the Swiss life-science company Phytoceuticals, whose goal is to develop first-in-class fatty-acid-based solutions for major indications in dermatology. Kerecis has been approved by most European regulators.
In the US, Kerecis is FDA approved and is adapting battlefield products for the Department of Defense, given the large number of soldiers who have suffered serious, life-threatening burn wounds. Kerecis has been approved by the FDA to treat second-degree burns; a trial to treat third-degree burns is being sponsored by the Defense Department.
Kerecis products are used by the Veterans Administration, Brooke Army Medical Center in San Antonio, the legendary Cleveland Clinic, and East Liverpool City Hospital in Steubenville, Ohio, among many others. “It’s a 40 percent to 50 percent quicker healing process,” says Rick Perez, director of business development at East Liverpool City Hospital, which is primarily using Kerecis to help heal diabetic wounds. Medicare accepts Kerecis treatments in all 50 states, as do many EU countries.
A more prosaic use of cod skin is to tan it and create leather products. Atlantic Leather, established in 1994, is a leading manufacturer of exotic leather from fish skins: salmon, perch, wolffish and cod. Each has its own unique character, comes in a diverse range of colors, textures and finishes, and is good material for wallets, purses, handbags, and dresses.
Fish skin, of course, is only one part of the fish that is often (but not always) wasted. Codland, co-founded by Thor Sigfusson, in 2012, the year after he founded the Iceland Ocean Cluster, is taking care of the rest of the parts. Codland brought together seven companies with the idea of fully utilizing byproducts from cod and connected them to fishing companies: Haustak, the largest fish-drying company in Iceland; Visir, a long-line fishing company; and Thorbjorn, one of the largest fishing companies in Iceland. The fishing companies supply the raw (waste) material and the bio-technologists take over to produce fish oil, calcium and other mineral supplements (from fish bones), and hydrologized marine collagen (also made from cod skin) for aging skin and joints.
Niceland — the founder, Oliver Luckett, was head of innovation at Disney and knows something about branding — is a tech company that has a different relationship with cod (and other fish). Because most fish in the world is an unbranded, commodity product, Niceland is attaching a brand to fresh, wild fish from the cold, pristine waters around Iceland. It is doing so by tracing fish from “sea to pan,” packaging and shipping fish with a QR code that shoppers can scan on their mobiles and see when, where, on what boat the fish was caught, how and when it was processed, and when it was shipped on what flight. To do so, Niceland is working with a sister company, TraceablliT. As a value add, the app includes photos of the capture boat and recipes.
Niceland’s first market is Denver, Colorado, through a partnership with Seattle Fish Company. The original idea came about when Niceland saw that Iceland Air planes flying direct to Denver had excess space in the cargo holds. So those holds are now carrying Niceland-branded cod and haddock from Iceland, with Arctic char next up on the runway.
Success with cod utilization is now spilling over to shrimp. Genis, for example, develops methods for using aminosugars derived from shrimp shells to treat inflammatory and degenerative conditions in bone, cartilage and other tissues. Genis owns one patent in Europe, Japan and the US, and two pending patents in more than 30 countries. Primex is an Icelandic marine biotech company and is a global leader in the manufacture and supply of pure chitin and chitosan derivatives, derived from shrimp shell, aimed at nutritional, cosmetic, food and biomedical markets.
As these successful stories about sustainable fishing and whole-fish utilization in Iceland resonate in a world where over-fishing and waste are the norm, Thor Sigfusson has expanded his Ocean Cluster concept to Portland, Maine, Seattle, Washington, and New Bedford, Massachusetts. Many other countries have shown interest in the Iceland Ocean Cluster model. The first Ocean Cluster House (incubator) outside of Iceland will open in Portland, Maine in 2020 with a similar mission: To create new value and opportunities by connecting entrepreneurs, scientists, and businesses in the marine industry.
In an industry that has long been secretive and insular, such peer-to-peer knowledge sharing is rare. Indeed, it is the antithesis of the anti-science, wild-capture fishing mentality that is organically changing as older fishermen and boats are being replaced by a new generation of sustainable hunters and “green” boats.
