OBIO Biotechnology Industry Consultation Report
November 2009
Executive Summary
The Ontario government has recognized the importance of the emerging knowledge economy to the province’s future prosperity. The biotechnology industry is an important part of a knowledge economy. The confluence of external and internal factors has converged to create an unprecedented crisis in this sector. The combination of the recession, the high cost of research and development, decreased liquidity and absence of equity investment threatens the survival of many of our nascent companies. Many of our companies’ very survival are being challenged, specifically due to their inability to raise capital and maintain the necessary working capital to continue operations1. A number of them have ceased operations due to the crisis.
Ontario’s biotechnology SMEs, of which 68% are privately owned, develop innovative drug therapeutics, diagnostics and medical devices. The Ontario government has shown commitment to the biotechnology sector, as part of their support for emerging technology industries. However, regulatory requirements and the lead-time between discovery and commercial revenue create unique challenges for SMEs in the bioscience sector, which are not always recognized. Both private and public biotechnology SMEs have come together to form the Ontario Bioscience Industry Organization (OBIO) with the mandate to provide input to the provincial government around actions designed to ensure the long-term commercial success of our industry, and the associated growth in R&D sector jobs and financial health.
This report provides five specific recommendations (see below) to government. The five recommendations focus on changes to existing provincial programs, all of which we believe could be modified within the next fiscal year, and target short-term relief for the Ontario industry. They are based on direct feedback from CEOs of Ontario biotechnology firms in a province-wide consultative process. The process was completed in two stages. Initially, 6 province-wide working groups enumerated CEOs’ concerns and suggestions. The second stage consisted of an online consultation and voting process involving CEOs in the industry. Finally, the report identifies several longer-term opportunities for strengthening the partnership between the Ontario biotechnology industry and government.
Specific Industry Generated Recommendations
1. Increase the 10% refundable Ontario Innovation Tax Credit (OITC) to be more in line with Quebec.
2. Establish a mechanism to monetize Tax Credits quickly, providing short-term cash flow
3. Modify the eligibility requirements of the OETF to allow for smaller funding rounds.
4. Establish a fund similar to OETF for small public companies unable to raise capital.
5. Change the eligibility requirements for BIP to:
a. Remove needs for current market activity
b. Expand the types of companies who can apply
c. Reduce the level of expenditure required
Click here to view the full report online, or click here to download the PDF version.
