1. CPROST SIMON FRASER UNIVERSITY Centre for Policy Research on Science and Technology The Vancouver Biotechnology Cluster Report to ISRN, May 2004 J. Adam Holbrook, P.Eng., Centre for Policy Research on Science and Technology, Simon Fraser University, Vancouver, BC, Canada © Adam Holbrook, 2004

2. CPROST SIMON FRASER UNIVERSITY Centre for Policy Research on Science and Technology A collaborative effort Graduate students: N. Crowden M. Felczak C. Hickton M. Petrusevich S. Reibling M. Salazar K. Warfield N. Weiner Support from: SSHRC (grant #412-2000- 1002) Canadian Water Network NCE DFAIT Scholarships program

3. CPROST SIMON FRASER UNIVERSITY Centre for Policy Research on Science and Technology Biotech cluster study information 50 interviews completed: 23 biotech/biomed firms, 7 government agencies, 7 CROs/CMOs, 5 venture capitalists, 5 law firms and consultants, 2 research institutes, 1 industrial association; limited to the Lower Mainland of BC Cluster statistics: 90 privately owned firms, 12 CROs, 3 CMOs, 6 clinical trial organizations, 7 venture capitalists, 8 government organizations, 3 not-for-profit organizations, 3 research institutes Other statistics: 43 private firms develop pharmaceutical, therapeutics and genomic products for human health care, more than 100 develop medical devices, bioinformatics, nutraceuticals, diagnostics, and agriculture and aquaculture products.

4. CPROST SIMON FRASER UNIVERSITY Centre for Policy Research on Science and Technology Biotech cluster “buzz” in Vancouver Smaller than Montreal or Toronto clusters but more bioscience “stars” (Queenton and Niosi) Role of location/ lifestyle clearly a contributing factor: 85% of firms affirm that their location is due founders being from Vancouver, who have close relationships with universities and labs Young and small firms; inspiration - QLT created in 1981 - largest privately owned biotech firm in Vancouver - 300 employees Spin-off firms created between 1995-2001 and still active in summer 2003: 14 out of UBC, 5 out of SFU (Clayman & Holbrook); biotech firms account for half of all spin-offs.

5. CPROST SIMON FRASER UNIVERSITY Centre for Policy Research on Science and Technology Barriers to cluster and firm development Difficulty finding and attracting qualified employees Lack of “local” upper level management personnel and drug development expertise; 60% of firms find it difficult to replace key people from local pool; perhaps due to relative youth of biotech cluster Competition with US and Eastern Canada due to economic disadvantages associated with Vancouver (remote location, high taxes) Gaps in the value chain: contract research organizations (CRO) in the region are service providers mainly to US firms but not local firms Too many one-product/technology firms; not enough money to support new companies; VC concentrated in already existing companies, keeping them alive

6. CPROST SIMON FRASER UNIVERSITY Centre for Policy Research on Science and Technology The garden analogy The soil is UBC (mainly but not solely) Seeds are ideas from faculty and students which germinate in the soil, watered by federal research funding The plants grow, fertilized initially by more money from VC and angel investors, and then by alliances and partnerships with big pharma There is some cross-pollination (key people, BC Biotech) Few plants mature and go to seed Generally when blooming the flowers are picked by passers-by (big pharma) and taken home.

7. CPROST SIMON FRASER UNIVERSITY Centre for Policy Research on Science and Technology Necessary vs. sufficient cluster conditions What are the necessary and sufficient conditions that support the formation of a biotech cluster in Canada? Are these region specific? What are the competitive advantages of BC? Necessary (common features): university, labs, government agencies, private firms, human capital (?) Sufficient (conditions for continued existence): at least one private firm with a global reach (Porter), active/interventionist public sector, manufacturing resources, existence of civic association (?), re- investment of profits in local firms Potential test – Catastrophic loss of a node/actor - can a cluster survive without certain nodes?

8. CPROST SIMON FRASER UNIVERSITY Centre for Policy Research on Science and Technology BC biotech cluster characteristics No vertical integration, and little horizontal integration, but 63% of firms recognize there is a cluster even if loosely connected Some companies affirm that they are not part of a network of related firms, since each work in a specific technological niche Friendly and collegial biotech community, even though there are few commercial relations between firms. In general Vancouver biotech industry do not manufacture commercial products, its product is intellectual property itself Firms compete for money, but not for local talent, nor market which is global Firms are able to attract highly qualified personnel from outside the province and the country (in-migration) – around 70% have a PhD degree from outside BC

9. CPROST SIMON FRASER UNIVERSITY Centre for Policy Research on Science and Technology The structure of the cluster BC Biotech Association is the glue that keeps these firms together, providing networking opportunities for members in the industry, for newcomers is the medium to know the community, and for consultants and lawyers key for making contacts Most of those interviewed mentioned the importance of the BC Biotech Association Driving forces: research at UBC, existence of venture capital and angel investors What anchors firms in Vancouver: lifestyle, weather, scenery, social and historical roots in the city Vancouver does more with less: relatively high level of biotechnology commercialization despite a relatively low level of research funding (VEDC, 2003)

10. CPROST SIMON FRASER UNIVERSITY Centre for Policy Research on Science and Technology Biotech across Canada What are nation-wide commonalities of Canadian biotech clusters? Are there major regional differences in biotech clusters? Should there be regional biotech policies? What is the role of human and social capital in determining regional differences in biotech? Are manufacturing facilities needed in every cluster? Do Canadian biotech firms have adequate negotiating/bargaining abilities in the global market?

11. CPROST SIMON FRASER UNIVERSITY Centre for Policy Research on Science and Technology Clusters in BC/Vancouver What are the commonalities of BC/Vancouver clusters? Are there major structural differences among the clusters? What are the determinants of these clusters? What should a BC regional innovation policy be? What is the role of human and social capital in the formation and maintenance of clusters in BC? What is the role of civic associations in the creation and development of clusters in BC? How should governments participate

12. CPROST SIMON FRASER UNIVERSITY Centre for Policy Research on Science and Technology The future: Research questions for ISRN The role of human and social capital in creating Canadian clusters The role of public sector institutions in the Canadian innovation system Innovation and intangible outputs - services and intellectual property Innovation and the enhancement of Canadian civil society The development of innovation policy

13. CPROST SIMON FRASER UNIVERSITY Centre for Policy Research on Science and Technology Future research questions on innovation systems in Canada How should the national innovation system allow more provincial/local steering? In-depth studies of local (metropolitan) innovation systems International innovation and knowledge networks: the role of Canadian firms and clusters How to take advantage of the particularities of the Canadian innovation system: a nation of networks (programs, institutions), public policy networks, inter-institutional linkages and alliances (local, regional, national and international level)