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BC’s Biotech Leaders are Growing Up and Going Global

By March 8, 2017No Comments

B.C.’s innovation-driven biotech leaders are stepping on to the world stage and generating $14.4 billion a year in economic effect in the process.

Vancouver-based Stemcell Technologies, for example, has emerged as a global presence with customer support and distribution hubs in Canada, the United States, Europe, Asia and Australia, and annual revenues reportedly topping $150 million.

But as impressive as that figure sounds — and it is by Canadian standards — it represents only a tiny fraction of a $1-trillion-plus global industry dominated by truly giant players in the United States, Europe and Asia.

Switzerland, the U.K., Sweden, and even Israel, are all home to health sciences companies in the S&P 500. Canada has none.

The world’s top 10 life science and pharma companies have annual revenues ranging from $25 billion to $75 billion and thousands of employees, while more than 80 per cent of B.C. biotech companies have fewer than 10 employees, according to LifeSciences B.C.

Can Stemcell grow up to compete with life sciences, biotech and drug companies that increase in size with every successive acquisition?

“Absolutely Stemcell can join the ranks of major global companies,” said CEO Allen Eaves. “The company already is a global player — our high quality products that enable life sciences research are used in labs around the world.”

“By continuing to produce great products that are developed and manufactured by our world-class scientists right here in Vancouver, we plan to reach over $1 billion in revenue and over 6,000 employees by 2030,” he said.

Originally a spinoff of the Terry Fox Laboratory at the B.C. Cancer Agency charged with commercializing new tissue and cell culture materials for cancer research, Stemcell is emerging as global leader in the development of tools for research and regenerative medicine that produces more than 2,500 products sold in at least 90 countries. The company has also established a research lab in the United Kingdom, its first outside B.C.

It is that global reach that has local tech watchers excited about the company’s true potential.

“Stemcell has a prime opportunity to take that next step, more than any other biotech in B.C. or Canada for that matter,” said Susan Ogilvie, spokeswoman for the industry association Life Sciences B.C. “They have the global reach and resources and they have a pretty solid footing in their business.”

“The money in this sector is astronomical,” said Ogilvie. “In just one generation, it’s gone from hundreds of millions to billions and billions, and trillions are right there. The growth is so exponential you wonder where it’s going to stop. I don’t know, but with healthcare costs climbing maybe (government budgets) are the only limitation.”

Countries all over the world are faced with aging populations and high expectations for care and life expectancy, according to Andrew Booth, chief commercial officer for Stemcell Technologies.

“The projected cost of delivering on that promise is potentially crippling, but like every big problem the world has to solve, we look to technology to solve it,” he said. “That serves to create a really compelling environment for investment in biotech, where there are a lot of gains to be had.”

But in B.C., historically, when great R&D is proven, it gets on the radar of a large company that simply buys it and moves the technology out of Canada.

“Despite having a great research community in Canada, we are lagging behind on building commercial enterprises that can really service that global marketplace,” he said. Canadian companies “haven’t been able to figure out how to commercialize and scale up the technology that is here.”

Large established companies have a global sales force, logistics and distribution capabilities that allow them to deliver technology around the world already in place.

“That’s a very difficult thing to recreate,” said Booth.

That said, Stemcell Technologies appears to have succeeded.

Organic Growth

There are a handful up and coming local firms that are prepared to grow organically.

“The classic biotech model is to raise a bunch of money and then work internally on a product,” said AbCellera CEO Carl Hansen. “Usually, the company is built to be sold.”

AbCellera’s shareholders would do very well should the company be acquired by a larger player, but Hansen is determined to increase the business, securing steady cash flow by selling access to its technology and taking a stake in the drugs it helps to develop.

U.S. drugs giant Pfizer placed a large bet on AbCellera’s functional antibody discovery platform earlier this year, the fourth in a series of such deals with large pharma companies.

In addition to research resources provided by their senior development partner, AbCellera will receive up to $90 million in upfront money, milestone payments and royalties contingent on Pfizer’s commercialization of antibodies generated by the collaboration.

“We’ve been approached by two or three groups interested in acquisition, but it would be short-sighted to sell,” he said. “Our vision is to grow this company in Canada. We are on a very steep trajectory and we have big plans for where this can go.”

Some assembly required

Burnaby-based Clarius recently received approval in the U.S. for its hand-held-to-iPhone ultrasound device, which it manufactures in B.C.

“These are really high-value items that require a great deal of labour,” said CEO Laurent Pelissier. “We want to grow the company in B.C. and it makes sense for us to keep close control of manufacturing costs and quality. It’s really important.”

Clarius ultrasound devices are literally hand-held at just 500 grams (about 1 pound). One model is designed to look deep into the abdomen and chest, while the other is a higher frequency version that can reveal structures closer to the surface in high resolution.

Both were approved by the U.S. Food and Drug Administration in December and by Health Canada in January.

Ultrasound machines typically used in a hospital setting cost between $50,000 and $200,000 new. Clarius’ hand-held mobile units sell for about $10,000, a price they hope will fit the budget of general practitioners.

“Doctors are increasingly familiar with the technology, even those outside the practice of radiology, so, ultrasound has found its way to the point of care,” Pelissier said. “We envision every doctor having an imaging device in their hands, like a visual stethoscope.”

Hospitals may have several ultrasound machines, including a bedside unit in the emergency room, but they are rarely found in clinics or doctor’s offices.

“Until now, they have been too complicated to use and too expensive,” he said.

Clarius employs 60 people, a number that will likely double by the end of the year.

“We have started selling the products and there is a lot of interest from doctors, so we will be expanding our manufacturing operation,” he said. “We hope to put ultrasound technology in the hands of every physician who needs it.”

The series

B.C.’s economy has always relied on an abundance of natural resources. But a combination of accelerating forces including demographic change and the adoption of new technology is driving a shift in our economy toward new ways of generating wealth.
Now, more than ever, B.C. needs innovation to develop new products, new processes and new jobs to build the economy of the future.
The Sun has launched this monthly series to look at innovation in B.C. and how businesses and governments are responding to the challenge of nurturing that next big breakthrough. The series will narrow in on a variety of sectors.