Canadian biotech: Investment slump calls for creative thinking

Posted on February 21, 2012

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By Dave Gauthier

The Province of Saskatchewan is recognized globally for its active biotechnology cluster. Various studies over the past few years indicate that the investments made in infrastructure and research expertise in the Saskatoon life sciences cluster has produced:

• 57 private biotech companies

• 40 public biotech companies

• 750 employees

• 30% of Canada’s ag-biotech companies

• 500 biotech products approved or on the market

Looking at these statistics, it would be easy to believe that all is well for Saskatchewan’s biotechnology cluster. However, conversations among stakeholders indicate some concern about the direction of the cluster and whether or not we can continue to compete in an increasingly complex and inter-connected global economy. The significant public investment in the life sciences sector in Saskatchewan was estimated by the Saskatoon Regional Economic Development Authority to be $2.6B. That places the Province 9th in the country in terms of investment in science and engineering as a percentage of employment (1). Discussion with various stakeholders also reveals a perception that the innovation pipeline has stalled and that fewer new companies are arising from the cluster over the past few years.

Our experience may not be unique in Canada. The Science, Technology and Innovation Council (STIC) of Canada released a report in 2011 summarizing the state of Canada’s science, technology and innovation system as of 2010 (2). The report indicates that despite Canada’s excellent talent pool, higher education and government support for innovation, its innovation performance is stagnating compared to other G7 countries.

Funding for University R&D has increased over the past few years, but investment by the private sector in R&D has decreased. Business investment in information and communications technologies to improve productivity is also lower in Canada.

In October 2010, a special panel was convened to study federal programs that support R&D and provide recommendations on how to improve innovation capacity (3). The panel recommended the formation of an Industrial Research and Innovation Council that would incorporate and expand the existing National Research Council’s Industrial Research Assistance Program (NRC-IRAP) and coordinate R&D programs across the country. It also recommended simplifying the Scientific Research and Experimental Development tax credit program, expanding risk capital for firms, encouraging government procurement. The report also recognized the need to build collaborations between universities and the private sector by transforming the National Research Council (NRC) into collaborative R&D Institutes. NRC has already begun the process of building several flagship programs that will involve multiple institutions across the country and be a focal point for commercialization of innovation.

Parallel to these recommendations, the Government of Canada is undergoing a massive reduction in operating budget, and all departments have been asked to provide 5-10% budget reduction scenarios for 2012. In addition to these forecasted cuts, several departments have already made dramatic cuts, including Environment Canada. In June 2011, IRAP reduced staff by approximately 20% including the Regional Director and Innovation Network positions in Saskatchewan. Consequently, despite some good recommendations on how to address innovation issues, federal government cut-backs are likely to delay action and significant investment for the next few years.

Provincially, Innovation Saskatchewan recently appointed its first CEO. Although there is hope that this new entity will be able to accelerate the innovation pipeline, full scale operations are not likely to commence until 2013 after Innovation Saskatchewan has developed a full strategic and operating plan for the organization.

Ag-West Bio has begun to engage stakeholders to see what can be done in the shorter term to deal with the perceived stagnation in the biotechnology sector.

What do you think can be done? Or do you feel that everything is fine as it is?

Dr. David Gauthier
is a member of the Ag-West Bio Board of Directors
  • Focus on Saskatchewan’s Bioscience Cluster « Canadian BioTechnologist2.0

    Posted on 23/04/2012

    [...] here for a good overview of Saskatchewan