readers respond

What you had to say:

Car seats made of soy foam, biofuels powering jets and easy-application clamps that can stop blood hemorrhaging in a matter of minutes. All are examples of the great work going on in Canada’s biotech sector and of the positive impact biotech has on our lives.

They’re also the kind of success stories that are being celebrated during Canada’s tenth National Biotechnology Week. With events scheduled across the country, National Biotechnology Week plays an important role in introducing the public to the positive aspects of biotech. It also acts as an advocate for success stories in an industry that’s still recovering four years after the global financial crisis.

Every year, in line with National Biotech Week in September, Biotechnology Focus does its part to help raise awareness for the Canadian biotech sector. In the months leading up to September, we run a Readers Respond survey, to get your feedback on what is and what isn’t going right in Canada’s biotech and life sciences sector.

Some of the questions we asked included how you felt Canada measured up on the international biotech scale, as well as what the major issues were that you wanted raised before government. Our goal was to find out what you want to change, and to generate ideas for how we can improve biotech in Canada.

To simplify things, this year we had one main survey for everyone in the life sciences field, whether on the research or business end, to fill out. Respondents ranged in sectors from drug discovery and therapeutics, to biomedical devices, diagnostics, bio-agriculture, environmental and industrial.

From your responses, a general theme emerged: Canada needs to get interested in biotech. We need to do a better job of championing our successes to the general public, as well as to investors. In an industry that’s traditionally reaching for the bucket and getting ready to bail, we need to advertise more effectively our success stories – the examples of how funding biotechs can be highlyattractive instead of highly-risky.

How does Canada’s bio-economy measure up?

First off, we asked our readers what the most compelling stories were in the biotech sector for 2013, including the biggest hits and misses. Answers varied, and many were of the opinion that 2013 has so far been a fairly dull year for biotech, especially in terms of financing. While 2012 saw a resurgence of biotech’s venture capital ecosystem, readers were quick to point out most of that money is going towards larger, well-established companies instead of start-ups or smaller companies still developing their products. So far, the largest financing announced this year has been the federal government’s $400 million Venture Capital Action Plan. Readers say this is a step in the right direction, but much more is needed in terms of government support for biotech.

In terms of ‘hit’ stories, the most mentioned were Paladin Labs’ growth and BioAmber’s $80 million IPO. Other big stories included the IPO window opening in the U.S., and Valeant Pharmaceuticals $8.7 billion acquisi-

tion of American company Bausch & Lomb. Readers also highlighted Medicago being acquired by Mitsubishi Tanabe Pharma in a deal valued at $357 million. Concerning ‘miss’ stories, readers pointed to the ‘downgrading of the National Research Council (NRC) to a business support model,’ as well as the downturn in the pharma sector, with major products coming off patent resulting in pharmaceutical companies seeing large drops in revenue.

In answer to the question is Canada keeping pace internationally in your fi eld, answers were divided. In all, 43 per cent of you thought that Canada was keeping up with the competition, while 57 per cent feared for our position on the global map.

As for how we can improve our position in the global bioeconomy, readers had many suggestions for making Canada more competitive. Most of you called for more money put towards basic research, as well as on the other end of the spectrum more funding for commercialization. One respondent suggested reducing the bureaucratic hold ups in public institutions such as the CIHR and NSERC, describing the process of applying for funding as ‘time-consuming and disheartening.’ Readers also wanted to see more meaningful collaboration between the public and private sector. As another reader put it, the emphasis should be on “creating a Canadian science and innovation ecosystem that breaks down the silos between sectors, disciplines, levels of government, etc.” The new formula moving forward needs to be collaborative on all levels – between public and private sector as well as across the provinces.

Making Canada more welcoming to capital

Here in Canada, we’re in a new normal when it comes to access to capital – or lack thereof. According to Ernst & Young’s Beyond Borders – matters of evidence report, in 2012 the amount of capital raised in Canada’s biotech industry was US $733 million. This number was slightly lower than 2011’s US $739 million raised. As we move forward in an economy where fi nancing is most likely to remain limited, companies need to adapt and develop a new model for the future.

Concerning the all-important question how can we make Canada more welcoming to capital, feedback favoured basic reform and increased tax incentives for investors. What Canada needs is a new investment regime to encourage biotech investment, a regime that can foster a culture of investment, in an alternative risk-based industry. Or as one reader suggested, we need to be more risk-tolerant, creating incentives and rewards for individual wealthy investors to risk their capital into Canadian companies.

Another general theme that emerged was that investment was lagging in the biotech sector. The money is here, but not the interest to invest. In Canada, money often goes to more appealing investments, with shorter deadlines and less risk. Canadian investors need to realize that investing in biotech can help transform and strengthen Canada’s economy.

There were also calls for removing the regressive changes to the SR&ED program, and making SR&ED less restrictive, with more focus on smaller emerging companies instead of giving money to larger MNEs. Readers also wanted tax breaks for angel investors, and generally de-risking investment for venture capitalists, by getting government to assist small companies in getting to a fundable stage with initial investments. Readers suggested that industry partner with government on investment programs, to help Canada’s large number of start-ups get off the ground.

Top priorities to get before government

You had many great suggestions for what you want changed in Canada’s biotech industry. Ideas such as enhanced SR&ED tax credits and expanding IRAP were strongly favoured. Also popular was the idea of creating tax or monetary incentives for innovative R&D.

There were also calls for making investment capital more easily accessible, and widening the venture capital pool. Another hot button issue – one that’s mentioned every year in our surveys – is the expansion of flow-through tax credits to investors in small biotech firms. As one reader explained, we need to “create an environment where you unlock the financial capital from risk-averse investors. We are passive investors in Canada and the incentives are a must to get them to move off their comfort zone.”

One reader cited that the CIHR grant approval rates are critically low, and that there is a disconnect between federal, provincial and local institutions. Even at the national level, the lack of coordination between the CIHR and the CRC (Canada Research Chair) programs was pointed out, and flagged as a problem in the recent international site review of the CIHR: “It behooves the federal government to step in and somehow moderate local hiring practices, as the country is currently training and hiring more research scientists than it is actually willing to fund operationally. This is very inefficient and demoralizing for many in the field. The recently announced changes to CIHR grant review procedures do NOT really address this problem and should not be thought of as an improvement in that sense.”

Readers wanted better coordination between government entities, such as the federal Department of Foreign Affairs, Trade and Development (DFAIT) and Health Canada, with the various provincial health ministries, saying they are too silo’d and need to better work together, to better create jobs and drive our economy.

In terms of what Canada’s government is doing right, answers point to some of the life science clusters, as well as life science incubators, as a way to foster innovation. You sang the praises of SR&EDs and IRAP, saying that while they might need some tweaking, they’re still an example of the one thing government is doing right, along with continued support for academic research.

Regions that you identified as doing a lot of things right in biotech included the U.S. and Israel for their governments’ emphasis on R&D in small companies. You also pointed to China and again the U.S. for investing the majority of their capital in their own economies, as well as the innovation going on in Holland’s medical development sector. Also mentioned were Germany, Boston, New Zealand and Finland for their innovation and financing systems. Regions within Canada that got the thumbs up included Sarnia for its bio-based chemicals cluster, and Québec for leading the reinvesting-in-biotech charge.

Whether it’s in the healthcare, biopharmaceutical, agriculture or clean tech field, canada’s public and private sectors are doing their best to compete on the global stage. from the results of this survey, it’s clear that biotechnology does have an important role to play in our daily lives as Well as our future.

Getting the public involved

Along with improving our venture capital system, raising public awareness of biotech can help send funding towards the life sciences. And if you can get public support, you just might be able to attract government funding as well. The general public needs to learn more about the useful applications of biotechnology, and how biotech is transforming our every day lives. In turn, scientists and researchers need to learn how to present their discoveries to the public in a non-threatening way, talking about the benefits as well as firmly outlining the potential risks and benefits. By having a more open dialogue, the hope is to increase public awareness of biotech. To that end, we posed the question to readers what would you tell the public about the potential of biotech on a larger scale. Answers were unanimous: biotechnology has the potential to affect all of us in positive ways. Or as one reader explained, “we are on the cusp of a new age of controlling and directing naturallyoccurring organic materials and molecules, to drive the next wave of the industrial revolution.”

In broad strokes, biotechnology has the potential to create jobs, a healthier society, a cleaner environment and a sustainable future. On this note, Canada’s bio-agriculture sector has a large role to play in helping sustain our future.

Readers suggest that as we face the inevitable effects of climate change, as well as an expanding and increasingly affluent global population, biotech’s role in food production is especially important for the future: “Traditional crop breeding procedures probably will not be able to work quickly enough to improve or modify plant growth properties in the face of continued general warming of Canada. This cannot be left purely to the private sector which probably cannot take an adequately long-term view.”

Whether it’s in the healthcare, biopharmaceutical, agriculture or clean tech field, Canada’s public and private sectors are doing their best to compete on the global stage. From the results of this survey, it’s clear that biotechnology does have an important role to play in our daily lives as well as our future. Canada’s biotech industry is doing its best to compete globally. To this end, we all have to work together to advance innovation in biotech and the life sciences. This includes attending National Biotechnology Week, which runs from September 20 to 27. We hope you join us in celebrating Canada’s biotech sector.

To see this story online visit http://biotechnologyfocus. ca/?p=8669