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An Emerging Canadian Biotech Real Estate Niche

Written by Posted On Tuesday, 25 June 2002 00:00

Federal Industry Minister Allan Rock told delegates at the Global Biotechnology Forum during the recent BIO 2002 conference -- the largest biotechnology gathering in history -- that Canada is a world leader in the field of biotechnology, second only to the United States. He boasted that Canada has over 400 biotechnology firms distributed across every region in Canada. Influential international politicians from countries including Germany, Ireland, the U.K., Australia and Taiwan were similar biotech cheerleaders, all striving to present their country as number two in the battle for biotech leadership.

To substantiate Canada's position in this potentially huge industry and to support the government's C$200 million commitment to biotech, Minister Rock unveiled two new publications at the conference that explain why biotechnology is the type of industry Canadian communities and governments would benefit from encouraging.

  • Follow the Leaders: Canadian Innovation in Biotechnology, a book that profiles 21 biotech professionals and firms (For more information, visit
  • Beyond Borders, an Ernst & Young report on the state of biotechnology in Canada, including investment in research and product innovation. (For a copy, contact Ernst & Young at

"Our industry is maturing on an international scale," said Carl B. Feldbaum, President of BIO (Biotechnology Industry Organization), in reference to the global emergence of companies and technologies that capitalize on the attributes of cells and biological molecules, such as DNA and proteins.

The growth of biotechnology is evident on may levels, not the least is the scale of BIO 2002, the recent international meeting in Toronto. BIO's 1994 convention, held in Toronto, was attended by about 2,000 delegates from 21 nations, staying in three local hotels. Eight years later, BIO 2002 was back in Toronto commandeering 15 hotels to house the more than 15,000 delegates, thirty per cent of whom were from more than 48 countries outside North America.

In January 1993, the biotech index was 0.6 per cent of the total Toronto Stock Exchange Index. As of March 2002, the biotech segment was 3.2 per cent of the index with 26 companies in the top 300, according to a senior Canadian research analyst. Research and development spending has reached C$2 billion in 2002 - double 1998 levels -- and Canadian biotech revenues are expected to exceed C$5 billion this year. Canadian biotech firms cover a range of sectors including health, agriculture, environment, food processing, natural resources and aquaculture.

Although each province has at least a few biotech companies, biotechnology in Canada is concentrated in three significant clusters: Quebec (Montreal), Ontario (Toronto and Ottawa) and British Columbia (Vancouver).

Why are new biotech companies expected to flock to these clusters rather than springing up across the country?

"Fifty percent of the cost associated with (developing a biotech company) is linked to personnel, so the first thing to look for is a good technical base," said Michel Leonard, President of Staubach Canada Inc., a Canadian commercial real estate leasing firm, with a specialty in biotech, that negotiates "built-to-suit" contracts for their biotech clients.

"Why is Toronto on the radar screen? Why is Montreal on the radar screen? Why is Ottawa on the radar screen? It's because of higher education. In the next 5 years, we expect the (clustering) to continue because of education, because of what universities are doing -- universities are incubators for biotech research."

When Staubach launched its biotech client services ten years ago, this real estate business was fueled by venture capitalists. Now, specialized life sciences companies that know little about leasing and development rely on Staubach's focus "on representing the user of space instead of representing the owner." The expansion of biotechnology has led to a major line of real estate business, one that promises to expand as this industry grows to multibillion-dollar proportions.

But in spite of breakthroughs in mapping the human genome, cloning animals, isolating human embryonic stem cells, developing insect-resistant crops and creating dozens of new medicines, many Canadians feel government "cheerleaders" are too quick off the mark.

"We don't know where this is going to go, and that's what makes it so xciting" was a common expression at the conference. Those in opposition to the biotech movement argue that "we don't know where this is going" is the best reason to slowdown since biotechnologies are too new to trust absolutely.

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