Canada: On the Biopharmaceutical Fast Track

Canada's biotechnology industry has expanded rapidly in the last decade, as measured by industry-wide revenues, the launch of new companies, and the continuous diversification of its products. Canada has the largest per capita number of biotechnology companies in the world and is second only to the United States in absolute number of biotechnology companies. It ranks third in revenues, after the US and the UK, generating $1.9 billion per year. Among G7 countries, Canada has exhibited the fastest rate of growth in the number of workers devoted to R&D, external patent applications, and business expenditures on R&D.

Canada's expanding biopharmaceutical product pipeline is an outgrowth of the country's strong research base.

Canada's growing product pipeline in biopharmaceuticals is a natural evolution from a research base that has won an international reputation in fields such as genomics, proteomics, bio-informatics, immunotherapies, protein engineering, and new drug delivery systems. Sixteen Canadian universities are affiliated with a network of more than 100 teaching hospitals and research institutes.

Canada's research excellence comes with a surprisingly low price tag. Industry Canada recently commissioned a study ("Clinical Trials in Canada: Quality with Cost Advantage") demonstrating that Canada offers significant cost advantages as a location for clinical trials. The study used data from Canadian clinical trials for two cancer drugs and for an implanted orthopedic device. Canada's cost advantage, compared to the US, was 30 to 45% over the three trials.

In addition, KPMG conducted a study of comparative business costs in the major industrialized countries of North America, Europe, and Japan. They concluded that, compared to the US, Canada provides a 28% cost advantage for biomedical R&D and a 9% cost advantage in pharmaceutical manufacturing.

Canadian firms have particular strengths in cancer vaccines, glycotherapeutics, drugs to treat antibiotic-resistant microorganisms, molecular farming, and proteomics. Canada also has a number of GMP-certified facilities for the production of recombinant proteins, vaccines, and humanized monoclonal antibodies.

Canada's top three health clusters are located in Montreal, Toronto, and Vancouver, each with a large number of biotechnology companies and their own particular strengths and research priorities.

Montreal, Quebec

In the province of Quebec, the biopharmaceutical industry encompasses 160 enterprises employing nearly 15,600 people. Most basic and clinical research conducted in Canada is done in Montreal, which accounts for roughly 7,500 R&D jobs and 42% of the R&D performed by the Canadian biopharmaceutical industry.

Canada's Technology Triangle

Montreal is recognized for its leadership in neurology, neurobiology, oncology, virology, epidemiology, immunology, and research into cardiovascular diseases.

The Montreal cluster includes subsidiaries of many multinational pharmaceutical companies, including Abbott Laboratories, Aventis Pharma, Bristol-Myers Squibb, Merck Frosst Canada, Pharmascience, Pfizer Canada, Schering Canada, and Wyeth Canada, as well as many local leaders, such as Pharmascience, PanGeo Pharma, and Pharmetics.

"Over the past three years, Montreal International has helped to bring $2.7 billion in foreign investments into the region, nearly 15% of which has been in the life sciences industry," says Francis Fox, chairman of Montreal International, a non-profit organization focused on Montreal's economic development. "The 52 foreign subsidiaries that have established themselves in Metro Montreal in life sciences account for half of the total jobs in the industry."

Additionally, DSM Biologics recently announced its decision to build a large-scale biopharmaceuticals plant in Montreal. The facility will be used for the production of monoclonal antibodies (MAbs) and recombinant proteins based on mammalian cell culture technology. "DSM Biologics' decision to choose Montreal is a clear indicator that Canada has all the strengths and attributes required to attract forward-looking global biotechnology companies and internationally renowned scientists," says Henri Roy, president and general manager of SGF and SGF Sante, an industrial and financial holding company.

Canada's Cutting-edge Companies

With 14 contract research organizations located in the Montreal area, the region can lay claim to international leadership in this field. According to Michel Leblanc, vice president for life sciences of Montreal International, "CROs are an essential partner for the expansion of emerging biotech champions. This concentration in Montreal, combined with the lowest cost structure for R&D activities on the continent, partly explains our success in attracting biotech firms from Europe and North America."

In October 2003, MDS Capital (the financial subsidiary of the clinical trial specialist MDS) and the FTQ's Fonds de solidarite jointly announced the creation of a new $200 million fund for the Canadian biotechnology industry. According to Jean-Denis Dubois, the Fonds FTQ's vice-president of life sciences investment, these sums will encourage further investment. "It goes without saying that other investors will be joining us, and that our $200 million will ultimately allow the injection of an amount far greater than that."

In addition, Quebec has the most dynamic networking among research centers in Canada. More than 16 networks represent a rich pool of expertise and unique opportunities for cooperation between researchers in the private and public sectors in Montreal, throughout the province of Quebec, and around the world. It is home to a host of world-renowned universities and research organizations including Universite de Montreal, McGill University, NRC-Biotechnology Institute, IRCM-Institut de recherche clinique de Montreal, and INRS-Institut Armand Frappier, to name a few.

Toronto, Ontario

Toronto has a long track record of ground-breaking achievements including the discovery of insulin, heparin, and other life-saving extracts, the invention of rabies vaccines, and the development of the pacemaker and the artificial kidney. Modern-day breakthroughs include the isolation of the T-cell, dopamine receptors, the ryanodine receptor, and genes for cystic fibrosis, myotonic muscular dystrophy, Fanconi's anemia, Alzheimer's disease, and breast cancer.

The greater Toronto area is recognized for its expertise and accomplishments in genomics and proteomics, stem cell research, photonics, drug R&D, and neurosciences. Over the past decade, global pharmaceutical companies have invested more than $1.1 billion in local R&D. In addition, Toronto offers one of the most diversified, comprehensive, and historic research concentrations in the world. It has nine teaching hospitals offering world-class medical research facilities, more than 30 medical research centers, and a host of national and provincial centers of excellence. Investment in biomedical research at the University of Toronto and its affiliated teaching hospitals now amounts to more than $400 million per year, making it the largest center in Canada and ranking among the very best in North America and the world.

University of Toronto

In the summer of 2002, Toronto designated two square kilometers in the heart of downtown as the Discovery District. This research park is probably the most concentrated mix of research, medical applications, and business support services in the world. In this compact area lies one of the world's largest universities, one of the greatest concentrations of research hospitals and institutions anywhere in the world, and the seat of the provincial government. The financial and business capital of Canada is located within a five-minute walk.

The area continues to attract investment. Currently, the three largest development projects total $500 million. These are the Medical and Related Sciences (MaRS) commercialization project, the Centre for Cellular and Biological Research (CCBR), and the new Leslie Dan Faculty of Pharmacy at the University of Toronto.

In addition, the Structural Genomics Consortium (SGC) - a partnership among Canadian funding organizations, the Wellcome Trust, and GlaxoSmithKline - is working toward determining the three-dimensional structure of more than 350 human proteins. As the first international genomics project to be based in Canada, the SGC will include sites at both the University of Toronto and the University of Oxford in the UK. It is the first project the Wellcome Trust has funded outside of the UK.

"Large biotech and pharmaceutical companies from the United States, Europe and elsewhere are continuing to partner with Canadian companies and investing in their technological developments," says Matt Buist, manager of medical and biotechnology business development for Toronto. "Foreign investment in the sector now averages in excess of $100 million, annually."

Vancouver, British Columbia

The pharmaceutical and biopharmaceutical sector generates an estimated $120 million in annual revenues for the economy of British Columbia (BC). The incoming revenue is generated almost equally by pharmaceutical and biopharmaceutical companies. Total employment for this sector is 2,700 in private and public sector organizations.

The Vancouver cluster includes: Stanley Pharmaceuticals, QLT Phototherapeutics, Inex Pharmaceuticals, Quest Vitamins, StressGen Biotechnologies, and Stemcell Technologies. There are approximately 35 to 40 local companies researching, developing, and manufacturing biopharmaceutical products.

There also are several research facilities in the region, including the Biotechnology Laboratory at the University of British Columbia, the BC Cancer Research Centre, the Centre for Molecular Medicine and Therapeutics, seven teaching hospitals, several private testing and clinical laboratories, the Vaccine Evaluation Centre, and the Canadian HIV Trials Network.

"The world-class science being carried out in British Columbia, coupled with an extremely competitive business environment and strong record for commercialization, has made BC Canada's fastest growing biotech cluster," says Paul Stinson, executive director of BC Biotech. "We are also home to one of the world's leading annual partnering conferences, BioPartnering North America, with last year's inaugural event attracting over 350 companies from 20 countries."

Canada's Investment Climate

The federal government's leadership in economic policy has contributed significantly to Canada's success in biotechnology by stimulating the development of a critical mass of research infrastructure, large pools of post-graduate and post-doctoral researchers, world-class academia, public and private sector research investigators, entrepreneurs, and a renewed vision for the sector through the Canadian Biotechnology Strategy. One of Canada's most important goals is to double its investment in research and development by the year 2010 and to become one of the five most research-intensive nations in the world.

In addition to federal funding, funding programs are available through most provincial governments.

Canada offers the most favorable tax treatment for R&D among the G7 countries. Tax-based incentives permit firms to significantly reduce R&D costs through direct investment or subcontracting in Canada. Eligible costs include capital equipment, overhead, process R&D, salaries, and materials. Canada also introduced the largest tax reduction program in its history. This plan created a distinct Canadian advantage, with an average combined federal and provincial corporate tax rate now below that of the US and expected to fall even further.