StatsCan data show that Canadian biotechnology industries growing rapidly

Preliminary data from Statistics Canada's latest biotechnology survey contains compelling evidence that the various industries which comprise the sector are growing rapidly and beginning to move from R&D to commercialization. The 1999 survey capturing biotechnology use and development found 361 firms active in Canada, generating revenue of $1.5 billion in 1998 and $1.95 billion in 1999. Respondents project dramatically boosting sales to more than $5 billion by 2002.

Equally impressive is the increase in R&D expenditures, which jumped 19.2% from $699 million in 1998 to $833 million in 1999, with $1,486 billion projected for 2002. As expected, human health R&D is dominant and will continue to be so for the foreseeable future. In 1998, firms active in the area of human health spent $599 million on R&D in 1998, for 85.7% of the biotech R&D total that year. In 1999, human health accounted for $703 million or 84.4% of the annual R&D total and its share is expected to jump to $1,289 million or $86.7% for 2002.

Perhaps the most telling data reflecting the growing maturity of biotechnology are the revenues that firms attribute to biotech sales as a portion of their overall sales. In 1998, firms generated $23.624 billion in sales, of which $1.554 billion or 6.6% were biotechnology products and services. By 2002, however, biotechnology sales are projected to surge to $5.009 billion, or 15.4% of $32.503 billion in revenue those firms expect to generate. The projected data for 2002 only represents firms that completed the latest survey, meaning any new entrants into the Canadian marketplace will boost revenues even higher.

"The amount of increase in the revenues for 2002 struck me in particular," says Chuck McNiven, an analyst with StatsCan's life science unit. "The data also show a strong product pipeline and optimism in the industry. The increases in R&D show that companies are in this for the long term and investing in the future."

The data released to date represents only a small portion of the total captured by the survey. In the months ahead, StatsCan will release additional reports containing additional financial estimates and data on human resources in the sector, as well as material covering intellectual property, patents, collaboration and obstacles to commercialization. The department will also work to make the data easier to compare to the previous biotechnology survey, conducted in 1998 and based on StatsCan data but conducted by BIOTECanada in conjunction with Industry Canada.

Following the initial StatsCan survey in 1997, BIOTECanada jumped into the fray and secured funding to conduct the second survey in 1998 with funding from Industry Canada, StatsCan, KPMG and Contact Canada. But the project was fraught with difficulties and delays, and the industry lobby group was not involved in the latest survey. Most problematic was the response rate to the BIOTECanada survey, with less than half of the 331 firms contacted providing financial data and 37% refusing to participate (R$, December 2/98 & May 26/99).

This time around the survey was funded under the Canadian Biotechnology Strategy with federal science-based departments and agencies providing input. The sample is also much larger, with 66% of 3,377 firms contacted actually responding, presumably providing a more accurate snapshot of biotechnology development and usage.

Joyce Groote, outgoing president of BIOTECanada, says the changes in the assumptions made when building estimates for the survey make it difficult to gauge the development of the industry. But she welcomes the initial data from the new survey as it provides solid data on where progress is being made.

"The survey says that we have an increasing maturity with more revenue coming from products. Commercialization is happening," says Groote.

Antoine Rose, head of the life science unit of the Science, Innovation and Electronic Information division, says that while caution must be used when comparing the two surveys, his staff is in the process of working on the 1997 data used by BIOTECanada to make it more comparable with the new numbers.

"For the 1999 survey, the data released so far is for developers. We use a set of narrowing-down criteria: First you have to use biotechnology, then you have to do R&D, develop new products and processes and then go through the regulatory system to get to market," he says. "This reflects strategic investments with a lot of resources being used. The final report will show the breakdown between developers and users."

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