Growth in biotechnology sector slowed in 2000 before impact of high-tech downturn

The increase in biotechnology R&D spending in 2000 failed to match the overall increase in industrial R&D outlays for the first time in four years as the sector grew 7.6% to $712.4 million. Overall industrial R&D spending rose 11.9% that year to $11.45 billion.

Health biotech led the pack with a 15.1% increase to $515.5 million, but the total was dragged down by a lower spending in the services sector and stagnant expenditures in agriculture and natural resources. Between 1996 and 2000, biotech R&D expenditures have increased 76.5%. But the Statistics Canada data were collected before the high-tech downturn which has choked off investment in all sectors, particularly biotech. The situation has become so dire that the previous Quebec government announced a $300-million Biotechnology Fund to help bridge the gap for struggling firms until market conditions improve. The initiative was killed by the incoming Liberal government (see page 1).

The dominance of health biotech in Canada is no surprise, but what is unexpected is the lack of growth in agricultural biotech. In the five years captured by the StatCan bulletin, agricultural R&D rose 32.8%, less than half the rate of the sector as a whole. Similar anemic increases were also found in natural resources.

Faring somewhat better is the chemical industry, which rose 71.0% over the same five year period, although $5.0 million of the 2000 total accounts for a spike in capital spending.

Company sources represent the largest single source of biotech R&D funding. They account for 93% of the funding captured in the “other Canadian sources” category which represents 76% of all funding and includes affiliated firms, contracts and universities.

Despite the great interest in biotech expressed by governments, their share of funding is actually quite low accounting for just 3% of the total. The share does not include funding received through the scientific research and experimental development tax credit program.

The report notes that its data draw from the larger survey of Canadian industry and differ from a previous StatCan report on biotech — Features of Canadian Biotechnology Innovative Firms — released earlier this year.

Over the report’s five-year timeframe, the number of professionals working in the sector increased 31.2% from 3,311 in 1996 to 4,347 in 2000. The health sector accounts for 57.3% of the total. When including R&D staff engaged in biotech and non-biotech R&D activity, the 2000 total rises to 7,527. The staffing levels represent full-time equivalents.

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