HOT BUTTON ISSUES
Canadian Life Science //Compiled by Shawn Lawrence
Survey says:
Funding gap widens as biotech remains neglected in Canada With this, our fourth Hot Button Issue, Biotechnology Focus once again polled its readHOT ersBUTTON from both industry and academia to list their personal top three priorities they’d likeISSUES to get before government. What comes from their answers is a powerful tool highlighting the issues the sector faces going forward and what government needs to do to help the industry compete at the highest possible level. From our reader’s responses, it’s abundantly clear that the business of biotech in Canada is faring poorly, while research in general is suffering from a funding shortage. Many respondents expressed concern with how under funded the industry is at the commercialization stages, a situation that has been worsened by a general capital shortage. “Sluggish and sputtering,” is how one reader described the situation while adding that biotech companies that had finances in place prior to the downturn are barely surviving. Worse still, almost 80 per cent of respondents that took our surveys felt the worst of the economic downturn isn’t over. Further complicating matters, the venture capital sector has altogether stopped investing in Canadian companies simply because investors find them too risky due to their characteristically small size and pipelines. Derrick Rancourt, associate professor, University of Calgary comments, “Although Canada has the most number of biotech companies in the world on a per capita basis, they are all one hit wonders that are likely to fail. Research innovators such as my self are getting burned by the lack of VC. What’s the point of patenting our inventions if we cannot move them through the product development stage?” Many of our readers were equally frustrated, expressing that they felt that their calls for help to government have fallen on deaf ears. In fact, approximately 91 per cent of respondents from our research survey and 95 per cent from the C-level executive survey stated they believe government isn’t listening to what the industry and sector is trying to tell it. So what’s behind this lack of confidence? For starters, while much of the poor performance of the industry can be attributed to the chaotic market place, there is also a general feeling that government isn’t doing enough to improve the situation. Current investment trends in Canada both in public and private sectors have affected business. In particular, the shortage of Canadian investors has had a negative impact on the availability of capital. Likewise, the few investments that are being made are coming from foreign interests, which further down the road could lead to Canadian companies packing-up shop and moving elsewhere. Giving financial support to struggling companies, offering corporate tax incentives to potential domestic and foreign venture capital investors who invest in Canadian companies, providing government grants to both companies and research institutes that desperately need them, and offering low interest loans to Canadian companies are just some of things that government could be doing to ease the burden. The shortage of available capital has also forced companies to reduce staff causing paralysis of operational activities. On the research side, there are similar rumblings of unrest with lack of operational funding a chief concern. In fact, almost 94 per cent of respondents that took our research survey said that they found granting and financing opportunities harder to come by in 2009 then in past years. Offering a solution to the problems industry faces, Ann Hanham, managing director and general partner of Burrill & Company states, “Government needs to provide stimulus funding (not just in research but in commercialization) to venture capital and experienced entrepreneurs. Tax incentives would also be extremely helpful to defray staffing and research & development costs.” Moe S. Aziz, president and CEO, Sino Pharmaceuticals Corporation adds, “Government needs to prioritize the life sciences industry as a key, strategic industry in Canada that is vital to Canada’s economic interests and has the potential to generate significant employment and economic GFP growth. Then it needs to develop a clear, coherent, long term development plan for the life sciences industry.” 10 BIOTECHNOLOGY FOCUS MARCH 2010
In addressing the concerns on the research side respondents said they’d like to see government come up with a structured strategic plan balancing investment into new equipment and infrastructure, as well as the creation of career positions for scientists. Essentially they’d like to see a substantial ramp up of direct and indirect operating funds. “There has been excellent support for infrastructure through the CFI program. As well, highly qualified re-
?
Do you feel that government is listening to what the life science field is telling it? (Research Organization response)
91%
9%
Yes 9% No 91%
?
Do you find granting and financing opportunities? (Research Organization response)
94%
5% 1% Easier to come by: 1% The same: 5% Harder to come by: 94%
