Over the past few decades, biotechnology has emerged as key sector in the Canadian economy.  It is estimated that the “bio-economy” has an $84.7 billion share of Canada’s GDP, or 6.9% of Canada’s overall economy.  Through environmental applications to climate change, improved health outcomes, and feeding global populations with better crops, nutrients and vitamins in foods, biotechnology can offer solutions to many problems facing Canada and the world.  It holds some of the key cards to ensure long-term environmental and economic prosperity.

But many challenges remain for this sector. Many of which the Senate Social Affairs, Science and Technology committee recognized in 2008, when we did a thorough review of the federal governments science strategy.  In many ways, what inhibits the biotech sector inhibits the entire science community in Canada.

One of the main stumbling blocks for the biotech sector is the ability to attract capital funding. This has been particularly difficult during the recent recession but the problems have been around for many years.   According to Biotech Canada, Canada’s emerging biotech companies without a commercialised product on the market make up 90% of the industry. Often it may take 10 years to go from the research stage to commercialization.  This inhibits the interest of some venture capitalist that are looking for quick returns on investment.

To further complicate the situation, a study by Deloitte, found that venture capitalists in Canada expect the number of venture firms to decrease between now and 2015, because of competition in emerging markets. This contraction will lead to even less money available for investment in the biotech sector.  The government must act to reinvigorate venture capital in Canada by enhancing tax credits for start-up and venture capital investing.

The Science Research and Experimental Development (SR&ED) tax credit is another important program that can help biotech companies retain capital. The SR&ED program is a federal tax incentive program that companies can claim tax credits for such expenditures as wages, materials, and machinery. Our committee believed that the SR&ED credit limit should be raised to $10 million dollars from the current limit of $3 million.  Also, to help the biotech sector the government should allow cash refund benefits to non-Canadian owned biotech firms that are operating and doing research in Canada.

The biotech industry is facing other significant challenges that must be addressed.  According to Bio-Talent Canada, there is a labour shortage of workers with the skills necessary to work in the industry.  They found that 34.4 percent of biotech companies are dealing with skills shortages and candidates often lack practical, real-world experience.

Canada ranks low compared to other OECD countries in science and engineering graduates and completion of apprenticeships which makes-up the bulk of the biotech workforce. And, graduation numbers at the master’s and doctoral levels in science and engineering which are key drivers of research and productivity remain relatively weak compared to other OECD countries.

This is having and will continue to have a significant impact on the biotech industry and the broader science community going forward.  Capital investors need to be confident that the right people are working for and heading up biotech firms.

Another way that the government can help with the labour shortage is by harnessing workers from other sectors that have been hit hard by the recession. With thousands of jobs lost in manufacturing these workers should be retrained, wherever possible, in the skills necessary for the biotech industry. Focused training in this area, for these workers could do a lot for biotech industry, the workers families and the Canadian economy.

This industry also needs to start using underutilised segments of the population.  According to a report by Bio Talent Canada, nearly four out of five companies have neither Aboriginal Peoples nor people with disabilities as part of their workforce.  This is a huge untapped population that has a lot of potential.  Finding ways to include them in their workforce will not only fill gaps but lift many people out of poverty.

Same goes with recent immigrants to Canada. They often have international degrees in science and engineering but find it difficult to secure work because their credentials are not recognized or they don’t have Canadian experience. The federal government should accelerate its work on recognition of qualifications from other countries. Also, the government should develop a tax credit for employers who hire newcomers in their field of expertise and support bridging programs for newcomers with accredited qualifications.

Obtaining the full benefits of the “bio-economy” requires purposeful goal-oriented policy.  It requires leadership from all levels but particularly from the federal government to establish the conditions necessary for this industry to flourish.  This is significant for our future and Canada needs to get fully engaged.

Recent Publications