October 2001

ThinkThink CanadaCanada forfor

Biotechnology Innovation Biotechnology Innovation and Investmentand Investment

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Canada’s biotechnology industry offers a very receptive investment climate:

• dynamic and rapidly-growing companies

• a first-rate science base and business environment

• a highly-skilled workforce

• cost advantages

• access to the world’s largest and richest market: North America

• active Federal Government support for research

• a competitive regulatory environment

• other key success factors (eg. patent protection, access to financing)

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The Canadian biotechnology industry is maturing rapidly...

• The industry contains 358 core biotechnology companies:– 42% in the health sector

– 25% in agriculture

– 10% in environment

– 5% in bioinformatics

– 4% in aquaculture

– 8% in food processing

– 6% in “other”

(Statistics Canada: Biotechnology Use and Development Survey-1999*)

• 76 core biotechnology companies entered the industry between 1997 and 1999*

• Genome Canada has identified 54 Canadian genomics-related companies

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Source:Survey for CIHR, IC & Genome Canada

…with 645 products under development

(As of January 1, 2001)

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Canada’s industry is doing leading work in therapeutic and technological areas ...

Therapeutic:

Cancer

Central Nervous System

Infectious Diseases

Cardiovascular

HIV/AIDS

Technological:

GenomicsProteomicsBioinformaticsAntibody-based ImmunotherapyGene TherapyAntisenseVaccines

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… supported by research institutions with strengths in biopharmaceutical technologies ...

Samuel Lunenfeld Research Institute• genomics, bioinformatics, proteomics

Toronto Hospital for Sick Children• genomics, bioinformatics, proteomics, vaccines, gene therapy

National Research Council• genomics, bioinformatics, proteomics, antibody-based immunotherapy, vaccines, gene therapy

Montreal Neurological Institute• antibody-based immunotherapy, gene therapy

Vancouver Hospital and Health Sciences Centre• genomics, bioinformatics, antibody-based immunotherapy, gene therapy

Canadian Genetic Diseases Network (NCE)• genomics, bioinformatics, proteomics, antibody-based immunotherapy, gene therapy

Protein Engineering Network (NCE)• proteomics

Canadian Bacterial Diseases Network (NCE)• genomics, bioinformatics

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… and by biotechnology research in federal laboratories and agricultural research centres.

National Research Council:• Six research institutes• Canadian Bioinformatics Resource

Health Canada:• Canadian Science Centre for Human and Animal Health

Agriculture and Agri-Food Canada:• Fifteen research centres across Canada

Environment Canada:• environmental genomics, bioremediation, and cleaner production research / support

Natural Resources Canada:• energy efficiency and use of renewable resources

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The Federal Government also provides support through the Canadian Institutes of Health Research (CIHR) ...

Launched in June 2000, with annual budget to reach $577 million by 2001-02, the CIHR provides federal funding to health research through virtual institutes in 13 key research areas, including:

• Circulatory and Respiratory Health

• Cancer

• Genetics

• Infection and Immunity

• Neurosciences, Mental Health and Addiction

• Musculoskeletal Health and Arthritis

• Nutrition, Metabolism and Diabetes

• Healthy Aging

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• The Canadian Bacterial Diseases Network

• The Canadian Genetic Diseases Network

• The Protein Engineering Network of Centres of Excellence

• The Health Evidence Application and Linkage Network (HEALNET)

• Canadian Arthritis Network

• Canadian Stroke Network

• Canadian Network for Vaccines & Immunotherapeutics of Cancer & Chronic Viral Diseases

• Stem Cell Genomics and Therapeutic Network

… and federally-funded Networks of Centres of Excellence

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Other Canadian Government investments assisting biotechnology research include ...

• Genome Canada: $300 million for establishment of 5 genome science centres across Canada

• Canada Foundation for Innovation: $3.15 billion budget for strengthening of R&D infrastructure in Canadian universities and hospitals

• Canada Research Chairs: $900 million for establishment of 2000 Canada Research chairs by 2004-05

• Technology Partnerships Canada: Invests in innovation in Canadian companies in selected technologies, including biotechnology

• Regulation of Biotechnology Products and Processes: the 2000 Federal Budget included an additional $90 million over 3 years

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• A favourable exchange rate on the Canadian dollar provides more purchasing power than in the US

• Lower tax rates on capital gains and stock options and a lower average corporate income tax rate than in the US

• Scientific Research and Exploratory Development (SR&ED) tax credits that are available to eligible sponsoring companies when trials involve original research conducted in Canada

• Canadian Institutes of Health Research (CIHR) of Canada, which can share funding with industry partners for clinical trials in health care that are randomized or hypothesis-driven, and not solely for regulatory requirements

Canada’s advantages include economic factors ...

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… population and framework characteristics ...

• Fourteen major Canadian cities are the main catchment areas for patient populations

• The patient base is multi-ethnic, with significant pockets of founder population groupings

• A public framework health care system facilitates patient recruiting and tracking

• The national health care system provides a single set of clinical standards across the country

• A national ethical review standard for Ethical Review Boards is in place in Canada

• Streamlining of regulatory environment for clinical trials is in progress

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… and other determinants of success .

• Availability of skilled workers in life sciences and other high tech fields• Clusters of private sector and institutional biotechnology R&D activity in centres

across the country• Access to capital:

– There is an active venture capital industry which includes such firms as Canadian Medical Discoveries Funds, MDS Capital Corporation and SOFINOV.

– In the first 6 months of 2000, Canadian biotech firms raised Cdn. $1.57 billion in equity and debt, an increase of 40% from 1999 levels.

• A favourable overall business environment: The Economist Intelligence Unit ranks Canada highly in this area.

• Generous R&D tax treatment • Competitive corporate and payroll taxes• 20-year patent protection• Reform of clinical trial regulations and improvement of drug approval times (both in

progress)

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Locating in Canada provides real opportunities for companies in the biotechnology sector.

• Access to the North American market, the world’s largest and richest

• Potential for commercialization of new products through collaboration with government research experts and Centres of Excellence, and cross-sectoral research in convergent technologies

• Companies which are now sufficiently mature to establish partnerships and collaborations with foreign firms

• A skilled workforce: ranked first among G7 nations

• An excellent science base and a first-rate business environment, complemented by fiscal and financial incentives and other measures

• Committed support by the Canadian Government

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For further information on federally-supported innovation, please see the following.

• Canadian Institutes of Health Research - http://www.cihr.ca

• Genome Canada - http://www.genomecanada.ca

• National Research Council - http://www.nrc.ca

• Networks of Centres of Excellence - http://www.nce.gc.ca

• Natural Sciences and Engineering Research Council - http://www.nserc.ca

• Canada Foundation for Innovation - http://www.innovation.ca

• Technology Partnerships Canada - http://tpc.ic.gc.ca

• Scientific Research & Experimental Development Tax Credits - http://www.rc.gc.ca/sred

• Canadian Biotechnology Strategy - http://strategis.ic.gc.ca/cbs

• 2000 Federal Budget - http://canada.gc.ca

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To find out more about investment opportunities, contact Industry Canada.

• For information about investment opportunities in biotechnology, contact the Life Sciences Branch :

Linda Leinan,

Tel. (613) 954-3068; Fax. (613) 952-4209

E-mail: leinan.linda@ic.gc.ca

OR

Paul Vaillancourt

Tel. (613) 952-7700; Fax. (613) 952-5822

E-mail: vaillancourt.paul@ic.gc.ca

• For information about Canada’s positive economic climate, view the Think Canada presentation by clicking the “Canadian Advantages” button at: www.investincanada.gc.ca