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Overview of Canadian Biotech Sector Going Forward

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Overview of Canadian Biotech Sector Going Forward

In Canada, the biotech sector has been shown consistent growth over the past several decades. While Covid-19 and the search for vaccines or therapeutics have undoubtedly increased interest in the sector, much of the growth witnessed over the past year has also been due to other factors. With scientific advancements such as genetic sequencing opening the door to more innovative research, the sector as a whole has been viewed very optimistically by investors. These advancements make breakthroughs in drug development much more likely and have also drastically cut down the time and resources required in the research and development phase of the process.

Worldwide, a so-called “patent cliff” has changed the landscape of the biotech and pharmaceutical industry over the past decade. With the patents on many of the largest drug names in the world expiring, business models are being reshaped. Companies find themselves needing to reprioritize the way they allocate their resources and conduct their operations. With massive revenue streams expiring, many larger companies with expiring patents may be looking at consolidation with smaller companies who have promising drugs in the development phase to replace these revenues.

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While Canada is not known as a major player on the world stage, venture capital firms have started to show interest in Canadian companies in the biotech and pharmaceutical space, with a record $1.05 billion being raised in 2019. This interest by these venture capital firms demonstrates the confidence of private equity in Canadian biotech companies is strong and that many see the real potential for Canadian startups to make an impact.

Investor sentiment for IPOs in 2020 was another great signal for the Canadian biotech sector. Two of the largest IPOs on record took place last year with two cancer drug makers, Repare Therapeutics and Fusion Pharmaceuticals, debuting on the NASDAQ. These companies both have a number of promising drugs in the development pipeline, which could prove to be highly profitable if they make successfully through trials

Another factor driving growth is government support. The availability of funding during the research and development phase for smaller companies is vital to success. In Quebec, the provincial government announced $75 million to fund early-stage life science companies. Aside from funding, governments can also incentivize companies to open up within Canada by attracting talent from around the world. Programs like the Government of Canada’s Future Skills Centre provides free online services that connect skilled immigrants with employers, addressing many of the concerns companies have regarding a lack of skilled labor.

The biotech and pharmaceutical industry in Canada is well-positioned for growth in 2021. As scientific advancements continue to create efficiencies within the drug development process, more companies will be looking for attractive places to set up. Through a combination of incentives and programs, Canada will continue to be an appealing choice for companies and investors.

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Sources

https://www.pharmaceuticalprocessingworld.com/impending-patent-cliff-threatens-billions-of-global-prescription-drug-sales/

https://www.ic.gc.ca/eic/site/lsg-pdsv.nsf/eng/hn01768.html

http://www.biotech.ca/wp-content/uploads/2018/06/Canadas-Biotechnology-Industry-Infographic-En.pdf

https://www.theglobeandmail.com/business/article-repare-shares-soar-in-nasdaq-debut-as-montreal-cancer-drug-developer/

https://www.theglobeandmail.com/business/article-quebec-provides-more-funding-for-surging-canadian-biotech-sector/

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