BRINGING IN THE BIG BUCKS
The biggest challenge for local biotech companies in Canada, as is the case in many countries worldwide, is access to capital.
The number of venture capitalists investing in Canadian biotech has decreased significantly in recent years, and as much as
by 60 percent in 2012 compared to 2011. Since the economic recession in 2008, VCs are generally much more risk-averse, since
an unsuccessful investment could spell bad news for them. "There is a degree of risk-taking in terms of investment population;
people must be prepared to fail with investments in drugs," comments Nick Green, president of Therapure BioPharma Inc. "You
have to understand the market, be prepared to take risks, and be capable of analyzing opportunity as well as acting and managing
Patrick J. Cashman, president and general manager - Lundbeck Canada Inc.
Fernand Labrie, CEO of local biotech company Endoceutics, notes that "there have been many attempts to facilitate and provide
more funding. However, the way in which this funding has been processed has been far too diversified, spread thin across too
many agencies, all of which need to exert independent judgment on the value of the submitted projects. There is too much division
of a limited expertise. Funding is easier in the US, but the limited knowledge of venture capitalists regarding the scientific
value of the projects and of the potential of the life sciences industry is also problematic."
John Sampalis, CEO, JSS Medical Research
Andrew Casey, CEO of BIOTECanada, notes that the establishment of a competitive public policy framework will help to attract
capital investment. "You need to find a way to reward investment in the industry in Canada," says Casey. "However that reward
is structured, the industry would welcome it, since you are essentially putting out the welcome mat. Successfully growing
a company in Canada will ultimately lead to the growth of new companies, which in turn grows the industry.
Tax credits, while often a common point of reference for biotech companies worldwide, play a vital role in the secretion of
Canada's own biotech industry. According to Investissement Québec, the net cost of one Canadian dollar expenditure in an eligible
research project in Quebec can be as low as 36 cents, resulting in savings of up to 64 percent.
Nick Green, president and CEO - Therapure Biopharma Inc
Furthermore, despite the downward trend of venture capitalists fuelling the pipeline of local biotech companies, a number
of big pharmaceutical companies have made commitments to various funds throughout the country. Lilly established a CAD 150
million (USD 145.16 million) partnership fund with local fund of funds Teralys Capital, GSK committed CAD 50 million (USD
48.39 million) to establishing a Life Science Innovation Fund, and Merck Canada has invested CAD 40 million (USD 38.71 million)
into a biosciences fund with local venture capitalist group Lumira Capital. These kinds of investments are perhaps indicative
of a new pharma model in the making.
Fernand Labrie, CEO - Endoceutics
However, not everyone is inclined to agree with this model. As Youssef Bennani, site head and vice president of R&D at Vertex
Canada, describes, "Companies in Canada are often built to be sold or partnered, and therefore have a finite timeframe with
which to work, mostly driven by venture capitalists and investors. That unsustainable mechanism has to change; otherwise you
will see no improvement in output." In order for this to happen, Benanni continues, "the Canadian pharmaceutical community
needs to strategically revamp their investments, commitment and goals to create a sustainable pharmaceutical business the
way Bombardier has done in the aeronautic space."
Andrew Casey, CEO of BIOTECanada