Leading the Biotech Boom
September 23, 2004 At today's Policy Forum sponsored by Deloitte and Touche LLP and Pfizer, three noted panelists spoke about the biotechnology industry in B.C. and its potential to play a significant role in the economy.
Bill Newell is senior vice-president and chief business officer at QLT Inc., one of the most successful biotech companies in Vancouver. Newell listed three key facts that point to biotech as an emerging industry in Canada: Canada ranks third in the world behind the U.S. and the U.K. in generating revenue; we're second only to the U.S. in number of biotech companies; and we're number one in R&D; spending per employee. Newell emphasized that these figures are not merely a one-year statistics blip, but follow a trend that has evolved over several years. He gave a breakdown of the biotech industry on a provincial basis, showing B.C. solidly in third place behind Quebec and Ontario for both public and private companies, but leading the way in new company formation.
Newell described a typical biotech company in B.C. as being private, R&D; focused, having no commercialized product, having less than 50 employees and less than 18 months of funding. He contrasted this with QLT, a clear success story in the industry, which began in 1981 as a "shop above the bakery," and now boasts 150,000 square feet of state-of-the-art lab space, over 300 employees, and is about to complete a merger with Atrix Labs that will add huge benefits to the company in products, pipeline and platform. Dr. Robert Kilpatrick is a partner in Technology Vision Group LLC in California-the number one location in North America for biotech. B.C. 's rank as seventh in the list of biotech companies in North America is "an excellent place to be," said Kilpatrick, who presented a case for the province to model its biotech industry after San Diego's. Why San Diego? For several reasons, said Kilpatrick. It has all the key elements for a "life science cluster": science, talent and money. San Diego also has a similar geographical set-up to Vancouver; both cities are compact and contained, and there is close proximity between universities, educational centres and biotech companies.
"Vancouver and San Diego have many shared characteristics," said Kilpatrick, including "a culture of collaboration between leading public and private sector organization, as well as a strong commitment to the creation of sustainable bioscience industry." Yet another reason to emulate San Diego is that "the ability to collaborate is inversely proportional to the distance that separates you," said Kilpatrick, quoting Dr. Ed Holmes of the USSD School of Medicine. "This means keep your friends close." Kilpatrick believes the transition from a resource-based economy in B.C. to a knowledge-based economy including biotech and information technology is possible by adapting the San Diego model.
"Are we at the tipping point?" asked Hector MacKay-Dunn, QC, senior partner at Farris. He cautioned that things could go either way in the biotech industry, given the fragile and competitive world environment.
However, with the right plan, MacKay-Dunn believes biotech could also be taken to a whole new level.
He listed several strengths that B.C. has going for it in the industry: We're recognized as a biotech leader in Canada; we have world-class educational institutions; we have key anchor companies; we have good government policy that welcomes new business; and we have the lowest cost of jurisdiction. Financially there is strong support in the industry, with over $1 billion raised in the last 12 months. The building blocks are in place: we have the people, the money and the resources, said MacKay-Dunn.
A weakness counterbalancing these strengths is a lack of management expertise, both at the senior level as well as the board level. Several companies have had to go outside Canada to fill these positions, which may cause the company to feel "they are not truly Canadian," said MacKay-Dunn. Other forces at play are the inherent risk in the industry, the time and money it takes to develop a new drug, the difficulty in attracting and retaining good people and significant pressure from other jurisdictions.
Financing is a major issue in biotech, and foreign investment a significant issue for Canada; U.S. investors like investments to be close to home, and there is a risk of companies migrating to the U.S. prior to commercialization.
MacKay-Dunn offered several recommendations to address these weaknesses in the industry: the expansion of the international finance centre to encourage investment flow into Canada; the initiation of government-sponsored, early-stage investment funds; government sponsorship of some form of U.S. tax regulations for U.S. investors; opening up refundable tax credit facilities to include foreign-owned or controlled B.C.-based companies; and finally, the education of potential U.S. investors about the similarities between successful American biotech markets and B.C. 's market. With these building blocks in place, MacKay-Dunn believes the balance will be tipped in our favour.
This content was provided courtesy of the Vancouver Board of Trade. To read more related articles, go to www.boardoftrade.com.
