British Columbia’s $600-million biotech industry is showing excellent growth but it could be seriously threatened by a hotly competitive global environment, says a leading Vancouver industry expert.

Speaking at a Vancouver Board of Trade policy forum on B.C.’s biotechnology sector last week, lawyer Hector MacKay-Dunn asked the question: Is the industry on the tipping point?

Over the last year the B.C. biotech industry raised a record $1 billion in capital. Revenues this year will jump to $600 million, compared with $300 million last year.

“The revenues are on a hockey-stick curve,” added MacKay-Dunn.

But B.C. companies need to work harder at the early financing stage, he said, suggesting management look at the venture section of the Toronto Stock Exchange for capital.

The junior B.C. mining industry, he noted, was successful when it raised funds on the then Vancouver Stock Exchange.

“Universities are the launching pad (for many biotech concepts),” he added, and company managers need to “get them off the bench and into the clinics.”

Bill Newell, senior vice-president and chief business officer of Vancouver-based pharmaceutical firm QLT Inc., told the forum that one of the major challenges for biotechs is to avoid being attractive targets for takeovers by outside investors.

The way to avoid that prospect, he added, is to be so successful “that you become too expensive to be acquired.”

Robert Kilpatrick, a partner in the California investment firm Technology Vision Group, observed during the forum that except for raising capital, B.C. has many of the conditions for a successful biotech industry.

The big challenge, he added, “is how are your companies going to continue to be funded once they are created?”

B.C.’s biotech sector is the seventh largest in North America, with QLT’s Newell calling it a still “somewhat nascent industry.”

The inaugural National Biotechnology Week was being celebrated in Canada from Sept. 27 to Oct. 1, organized by BIOTECanada nationally and by BC Biotech in British Columbia. Several events were scheduled to help promote the industry and provide information as to its current and future development.

“It’s tremendous to see Canada’s biotech industry coming together for this national initiative,” Paul Stinson, executive director of BC Biotech, said in a statement. “It illustrates how important the biotech industry is to virtually every region of this country.”

MacKay-Dunn praised the B.C. government for its support for the sector, noting since 2001, the province had allocated $350 million in funding, “which translated into $1.75 billion worth of research projects.”

But even though growth has been strong, there are still hurdles ahead. Management expertise is a problem, said MacKay-Dunn, at both the senior and board levels. “We need to nurture and develop talent that is out there,” he said.

Peering into the future, MacKay-Dunn said he hopes that by the year 2010, there will be five more large revenue-generating companies in B.C.; industry employment will rise to 7,500, double what is it now; there will be two major pharmaceutical companies with manufacturing plants and research and development facilities; and that B.C. will have a “business climate second to none in Canada.”

BIOTECH IN B.C.

* B.C. is the fastest-growing biotech sector in Canada with a 108-per-cent growth rate in the number of core biotech companies from 1997 to 2001.

* B.C.’s biotechnology industry comprises more than 90 private-sector firms, as well as a number of research centres located at government institutions, universities, teaching hospitals and technical colleges.

* B.C. is home to the seventh-largest biotech cluster in North America, based on the number of biotech companies.

* Most of B.C.’s biotech firms have been spun off from the province’s universities, affiliated teaching hospitals and public-sector research institutions.

* B.C.’s biotechnology industry is dominated by firms in the health-care sector, with approximately 60 per cent of B.C.’s biotech companies developing biopharmaceutical and biomedical applications. The breadth of their product focus ranges from new classes of antibodies to AIDS/HIV and cancer therapies, drug-delivery systems, and the treatment of inflammatory diseases such as asthma and arthritis.

* In 2003, British Columbia accounted for 47 per cent of all public and 34 per cent of all private biotech financings in Canada. Total investment in public companies in B.C. in 2003 was $789.85 million; and total investment in private companies in B.C. in 2003 was $83.4 million.

* Total estimated employment by Vancouver biotechnology firms is 2,593. The pharmaceutical industry employs an additional 1,121.  – Source: BC Biotech

(George Froehlich can be reached at george@businessedge.ca)