Biotech Required for Economic Recovery
Just in case you thought that US companies were the only ones needing a government bailout, think again. Canada’s biotechnology CEOs are calling for an economic stimulus package that includes targeted measures designed to protect $1.7 billion of annual spending and preserve high-value “21st century” jobs in Canada in the face of a severe economic times. These measures include a one-time cash refund on tax losses, an exemption from capital gains tax on the next two years’ of investment, and changes to the Scientific Research and Experimental Development (SR&ED) credit program to support the sector during the economic downturn.
“We are asking for immediate targeted measures in order to protect Canadian world class technologies from competitors in the US, the UK and other countries, where governments are making significant commitments to protect their biotechnology industries in recognition of their social and economic value,” said Rainer Engelhardt, Chair of the Board of Directors of BIOTECanada and CEO of Eulytica Biologics Inc., Ottawa. “Ultimately, our goal is to get through this downturn and have the high value jobs inherent to this industry stay in Canada.”
BIOTECanada’s proposed economic stimulus package includes three key measures. A one-time redemption for unused tax losses would be available to SMEs with revenues less than R&D expenses and be limited to the lesser of $20 million or twice a company’s annual R&D expenditure. An exemption from capital gains tax is proposed for investors making new direct investments in 2009 and 2010. Both measures require companies to reinvest in Canada. Changes to the SR&ED program to process refunds quarterly rather yearly and an expansion of program eligibility to all firms engaged in research and development in Canada will create a competitive stimulus to support more domestic jobs and investment.
“With limited sources of financing available for the industry, many Canadian biotech companies are wondering where their next six months of operating cash are going to come from and need the Canadian government to take immediate action,” said Andy Sheldon, President and CEO of Medicago Inc., Québec City. “For the industry to survive, we need a commitment from our government to facilitate investment and provide short term relief.”
Without an immediate cash infusion and tax support, $1.7 billion in annual R and D spending, thousands of Canadian jobs and even Canada’s long term economic prosperity are at risk according to Canada’s national biotechnology trade association, BIOTECanada.
“Canadian governments have done the right thing in supporting major investments in post-secondary education and basic research because that research ultimately saves lives. As Canadians and as entrepreneurs we want to see that investment bear fruit,” said Gordon McCauley, President and CEO of Allon Therapeutics Inc., Vancouver. “Our recommendations are targeted measures aimed at protecting these investments, in order to spur Canada’s economic recovery, and get these advances in the hands of physicians and patients.”


