British Columbia’s Life Sciences Sector: Leading the Great White North?
The perception of Canada on the international stage is often tied to its proximity to the US, its rich natural resources, and less than desirable climate. Although this may be true at least in part - the global recession has forced many countries to re-examine their competitive positions and in this regard, Canada has chosen to pursue a path which will strengthen its knowledge-based economy and enhances its capacity in the areas of therapeutic development, energy, agriculture and the environment.The objective of this blog entry and my three subsequent entries is to provide some insight into the knowledge-based economy of this country with a particular focus on life sciences.
Private sector biotechnology within Canada is comprised of about 670 companies generating a direct economic impact of about $1.1 billion CAD annually. The segments encompassed within the sector include (in order of size): - industry/environment, therapeutics, agriculture, and genomics.- The historical epicentre of life sciences within Canada has been in Quebec albeit one-third of all Canadian biotechnology companies now reside in British Columbia (BC).
A recent economic impact study undertaken by LifeSciences BC suggests the provincial sector accounts for $500 million in direct expenditures and employs approximately 7,500 people. It should be stressed that these national and provincial figures represent a fraction of the total market which would take in to consideration direct, indirect, and induced impacts.
What makes BC so attractive to life sciences companies?
The BC Progress Board recently released its Tenth Annual Benchmark Report, noting several of these factors which include but by no means are limited to:
- Health outcomes in BC are better than anywhere else in Canada, pointing to the expertise resident within its medical system. The Province has one of the most diverse ethnic populations, the highest life expectancy, and the lowest cancer mortality rates.
- Access to healthcare and a centralized database in areas such as oncology and pharmaceutical prescriptions make Canada’s most westerly Province an ideal “living laboratory” in which to conduct research, particularly for specialized populations or even post-marketing and surveillance studies.
- Environmental quality in BC is second to none. Protected areas, government policies, and a strong social sensitivity lends itself to a comprehensive approach to ecosystem management, which amongst other initiatives, is strongly supportive of alternative energy sources such as biofuels.
- A vast expanse rich in resources means biofuel and bioproduct organizations can be in close proximity to relatively secure sources of feedstock originating from forestry, agriculture and even municipal waste.
- Insofar as human capital, the percentage of BC’s population possessing a university degree is only second to that of Ontario.
Having provided some context insofar as Canadian and BC life sciences, the next three blog entries in this series will delve further in to a number of critical success factors for the sector; namely capital, collaboration and convergence. It is my hope that such information will serve as a catalyst for you to attend BioPartnering North America 2011 and explore the numerous opportunities that exist for you and your organization.
- Don Enns
President, Life Sciences British Columbia
About Life Sciences British Columbia
LifeSciences British Columbia supports and represents the biopharmaceutical, medical device, bioproducts & bioenergy, and greater life sciences community of British Columbia through leadership, advocacy and promotion of our world-class science and industry.. For more information, please visit http://www.lifesciencesbc.ca
China Blog Series Part 4: Questions Still Remain
This is part 4 of a 4 part blog series featuring growth, challenges and predictions for China’s emerging life science industry:
Will Novartis’ USD 1 billion investment finally shame domestic Chinese pharmaceutical companies into making real commitments to innovative R&D?
The Chinese government, via funding programs such as the 863 National High Technology Research and Development Program, the 973 Major State Basic Research Development Program of China, and the “Torch” technology development program, has committed significant resources to developing basic and applied research germane to innovative drug discovery and development (among other areas). In spite of this support, China remains sluggish in producing innovative (Western) drugs. Part of the blame for this surely lies at the feet of China’s domestic pharmaceutical industry, which, as a whole, has failed to substantially nourish or reward local drug development and, in particular, commercialization efforts. To be sure, the new healthcare reforms will likely reward China’s larger drugmakers with no increased R&D efforts on their part; but, as foreign big pharma steps up R&D in China and lures an increasingly large portion of the nation’s scientific drug discovery and pharmaceutics talent, will local drug companies be content to be passed by and play the generics game indefinitely? Novartis’ announcement may compel local Chinese pharmas (and their government stakeholders) to answer this question sooner rather than later.
What is the real significance of the Novartis announcement?
Regardless of whether the CNIBR yields significant returns in years to come, the magnitude of Novartis’ commitment constitutes a statement which cannot be ignored. At the very least, it is an affirmation of the importance of the Chinese pharmaceutical market to Novartis ��� and by extension the global pharmaceutical industry ��� going forward. While it is perhaps too early to judge, the investment may also mark a watershed moment for the pharmaceutical R&D space in China ��� an indicator that it has reached the next stage in its evolution. Does Novartis believe that new, innovative drugs will come from China? One billion dollars is a lot to spend if they don’t.
- Dr. Jon Zifferblatt
Managing Director, General Biologic
About General Biologic
GBI is an information and professional services firm founded in China in 2002. With more than 30 professionals in Shanghai, our business is providing critical data and advice covering China’s pharmaceutical, biotechnology, and healthcare industries. Our goal is to create a transparent operating environment for our clients, and provide the insights into the competitive landscape they need in order to capitalize on the tremendous opportunities available in China. Our clients depend on the news, data, and analytics we provide to make informed decisions every day. GBI’s clients include most multinational pharmaceutical companies and a leading group of biotechnology companies, healthcare companies, investors, consultants, law firms and financial analysts. For more information, please visit http://www.gbipharma.com/.
China Blog Series Part 3: One billion reasons why pharma R&D in China has reached the big leagues?
This is part 3 of a 4 part blog series featuring growth, challenges and predictions for China’s emerging life science industry:
Subject to the same questions as other R&D commitments
One year later, the CNIBR expansion is still unfolding. Details of exactly where and how the funding will be spent have yet to be released. As with many of the MNC R&D center efforts that have come before, it remains possible that the amount of cash earmarked for innovative drug R&D may be allocated over a long period of time and be only a fraction of the total commitment. (Even a fraction of one billion dollars, however, is still no small sum.)
Motivations, collateral benefits
Presence in an increasingly important market: Novartis is of course buying much more than a just research facility with its investment. With a pharmaceutical market that is poised to become the world’s second largest over the next decade (worth USD 109.5 billion by 2020), China is a focus of increasingly intense interest for all multinational drugmakers. Having a major presence — a presence which extends beyond commercial/sales/regulatory functions to include manufacturing and now, R&D — is becoming increasingly important. (The black box of distribution will likely remain outside company walls for the near- and mid-term, unless centralized procurement is able to engender significant transparency.)
Goodwill: Like other such investments by MNC pharma, Novartis’ CNIBR commitment is also motivated by a desire for governmental goodwill. With new national and regional pricing and reimbursement lists, expansion of government health insurance and community healthcare, and increased oversight of hospitals, tendering, and prescribing- it is clear that China’s healthcare sector will remain a highly regulated one, and issues of market access will be critical for any company seeking to enjoy the fruits of China’s expanding pharmaceutical market.
Recruiting: The CNIBR, now headed by Dr. En Li, will also allow Novartis to extend a sizable taproot into China’s PhD and pharmaceutical research scientist talent pool. While this pool has undoubtedly grown larger in recent years, new R&D centers built by multinational pharmas and the expanding presence of CROs has rendered competition for skilled research staff increasingly stiff. A marquis investment such as the CNIBR will likely give Novartis an extra edge, beyond simple compensation, in attracting top talent.
Implications for the sector as a whole
Novartis’ headline-grabbing CNIBR announcement will likely accelerate a number of (already occurring) trends in the pharmaceutical research sector: Outsourcing activity moves west (or at least out of Shanghai and Beijing): As mentioned above, the Novartis investment, and others like it, will serve to raise the stakes in luring skilled scientists and increase salary expectations across the board. Contract research shops and as well as MNC pharma functions depending on lower-cost R&D manpower will be forced to move to markets where wages remain at lower levels. This phenomenon is already occurring. Excel PharmaStudies’ (now part of PPD) selected Taizhou City for its new biometrics center and several notable deals have been signed involving Wuhan’s Biolake including WuXi PharmaTech’s USD 100 million commitment to build a 40,000 square meter CRO facility and Pfizer’s newly opened radiation biology facility (with current staff number of 40 which is expected to reach 200 over the next two years). Nanjing has also become a locus of increasing amounts of CRO activity.
Number and quality of students studying pharmaceutical-related sciences will rise: Like the westward shift of CRO bases, this phenomenon is already underway; for example, the number of students enrolled at the Shanghai Institute of Biological Sciences (SIBS), a leading center of postgraduate training in fields related to pharma R&D, has more than doubled over the past decade from 723 students (including 394 PhD candidates) in the year 2000, to 1467 (973 PhD) in 2008. Novartis’ high-profile investment will likely give an added boost to the growing amount of young talent choosing the pharmaceutical R&D-related fields.
Follow-on commitments for more infrastructure/acquisitions, both R&D and otherwise: While most research-based MNC pharmas have likely already planned spending increases for China in the future, the CNIBR announcement may have galvanized boards and CEOs to consider the timeframe of their China strategies. Novartis has made a major play on a key area of the global pharmaceutical chessboard, the rest of big pharma will need to consider if it will respond in kind. Some have already done so — Sanofi-Aventis announced in April that it will establish an Asia-Pacific R&D center in Shanghai; others have made non-infrastructure investments that can still provide access to Chinese talent and novel compounds, such as Lilly’s planned venture capital fund to provide financial aid to early-stage research programs in Chinese universities.)
- Dr. Jon Zifferblatt
Managing Director, General Biologic
About General Biologic
GBI is an information and professional services firm founded in China in 2002. With more than 30 professionals in Shanghai, our business is providing critical data and advice covering China’s pharmaceutical, biotechnology, and healthcare industries. Our goal is to create a transparent operating environment for our clients, and provide the insights into the competitive landscape they need in order to capitalize on the tremendous opportunities available in China. Our clients depend on the news, data, and analytics we provide to make informed decisions every day. GBI’s clients include most multinational pharmaceutical companies and a leading group of biotechnology companies, healthcare companies, investors, consultants, law firms and financial analysts. For more information, please visit http://www.gbipharma.com/.
China Blog Series Part 2: More recent commitments - First slow steps towards innovative R&D
This is part 2 of a 4 part blog series featuring growth, challenges and predictions for China’s emerging life science industry:
As early as 2006, AstraZeneca announced a USD 100 million commitment to create the company’s Innovation Center China (ICC) to be located in Shanghai. To be sure, the company did establish an initial lab facility in 2007; however, moving forward, it seems that a significant portion of committed funds will be used to construct AZ’s China headquarters as well as training facilities an regional offices. A Phase II, in which the ICC will undergo and expansion and move into a purpose-built facility, is slated for completion by 2012. GlaxoSmithKline’s China R&D center has followed a similar course of steady but slow growth. In 2007, GSK announced the establishment of a USD 40 million Shanghai R&D center which, among other functions, would serve as the company’s primary center focusing on neurodegenerative disorders. As of 2008, the company had increased its staff from 170 to 200 and stated its intention to double this number by the end of this year, as well as pursue drug discovery efforts in addition to pre-clinical and clinical trial support.
AstraZeneca and GSK’s commitments to scientific infrastructure in China are not unique- many other MNC pharmas including Genzyme, Sanofi-aventis, Johnson & Johnson, and recently both Merck-Serono and Boehringer-Ingelheim, (with planned funding levels of EUR 150 million and 100 million respectively) have established (or plan to establish) R&D bases in mainland China. Novo Nordisk has not surprisingly doubled down on its China R&D presence, announcing plans to increase the workforce at its Beijing center from 100 to 200 employees by 2015. In many cases, the funding windows stretch over extended periods of time and resources are only partially allocated to what can be considered to be innovative drug discovery research, with sizable portions also earmarked for later-stage drug development, training, and regional R&D and administrative capabilities. While the past five years have seen a healthy dose of fanfare and flag-waving by both Chinese scientific bodies and big pharma concerning novel drug R&D, many efforts are still only tentative first steps. Much attention has been given to seven and even eight figure funding commitments; however, significant portions of these monies may in fact go towards non-innovative, or even non-R&D related activities.
There is little doubt that R&D investments in China have edged ever closer to backing integrated novel drug discovery efforts, but China has yet to claim a seat at the table among the world’s major pharmaceutical R&D centers… until now?
- Dr. Jon Zifferblatt
Managing Director, General Biologic
About General Biologic
GBI is an information and professional services firm founded in China in 2002. With more than 30 professionals in Shanghai, our business is providing critical data and advice covering China’s pharmaceutical, biotechnology, and healthcare industries. Our goal is to create a transparent operating environment for our clients, and provide the insights into the competitive landscape they need in order to capitalize on the tremendous opportunities available in China. Our clients depend on the news, data, and analytics we provide to make informed decisions every day. GBI’s clients include most multinational pharmaceutical companies and a leading group of biotechnology companies, healthcare companies, investors, consultants, law firms and financial analysts. For more information, please visit http://www.gbipharma.com/.
