Six Reasons Why Saskatchewan Is Becoming A Hub For Life Sciences –

Canada’s heartland, traditionally known as “The Breadbasket of the World”, has a new identity emerging. And it couldn’t have come at a better time.

With breakthroughs in biotechnology, pharmacueticals, biopharmacueticals, nutraceuticals, and diagnostics (human, animal, food, environmental, plant), researchers in the province of Saskatchewan have earned the reputation as some the world’s top authorities in the life sciences sector, and are fueling the province’s emergence as a center for life sciences activity.

As these discoveries advance from research to development to commercialization, the overwhelming value, and potential, of the sector becomes a staggering reality.

Recent news that life sciences captured 32% of VC invested in the US in 2003, and the continued international acclaim garnered by Canadian life sciences companies help explain why Saskatchewan has focused on growing its indigenous agriculture, bio and advanced technology markets.

Saskatchewan’s plan to position life sciences as one of its primary economic growth mechanisms is both pragmatic and promising. The province is poised to capitalize on this trend and to see it through as one of its chief investment strategies.

Indicators

Saskatchewan continues to evolve into one of the nation’s most attractive investment destinations, particularly in the advanced technology and resource sector.

KPMG’s international study entitled The Competitive Alternativesm (January 2002) reviewed business costs in 115 cities in the G-7 countries, Austria and the Netherlands. The study concluded that Saskatchewan’s four major centres (Regina, Saskatoon, Moose Jaw and Prince Albert) are cost-competitive in all 12 sectors studied. The province is particularly competitive in biomedical research and development (Saskatchewan average is 68.1), electronic systems testing and development (63.0), software design (78.3) and Web development (76.7). Note that 100 equals the indexed, average cost of doing business in the U.S.

Moreover, Saskatoon, the base of operations for the province’s life sciences cluster, ranks sixth overall among cities in the G-7 countries, fifth in biomedical R&D, sixth in pharmaceuticals manufacturing, eighth in software development, and fifth (for lowest costs) out of 86 selected cities in North America, Europe and Japan in a recent KPMG study comparing business costs in biomedical R&D.

Infrastructure

The city of Saskatoon, with a population of just over 200,000, has developed a critical mass of private companies and research facilities, sparking new growth and development in the life sciences sector. The city is home to University of Saskatchewan, the province’s largest research institution, and one of Canada’s largest clusters of research organizations.

The cluster includes the most comprehensive range of life science colleges in the country, all with strong research programs and an extensive network of academic resources.

Unique in Canada is Saskatoon’s Institute of Agricultural and Rural Environmental Health, a facility dedicated to studying the health effects of agricultural exposures on rural populations.

Housing more than 116 organizations in 18 buildings is Innovation Place, one of North America’s most advanced research parks for agriculture, pharmaceuticals and the environment. Its commercial facilities support the local research and development community and contribute over $248 million per year to the economy of Saskatoon and Saskatchewan.

Also on campus is the Saskatchewan Drug Research Institute, linking the pharmaceutical industry to Saskatchewan drug researchers in all areas of development.

At more than $130 million USD, the new University of Saskatchewan-owned Canadian Light Source is one of the largest scientific projects in Canadian history. Operational in spring 2004, it will be among the most powerful synchrotron science facilities in the world and feature dedicated access for commercial resources in a wide range of areas from chemistry and geochemistry to pharmacology and proteomics.

As a complement to the University of Saskatchewan, the University of Regina has major research strengths in several areas, including health, energy and the environment, and informatics. Home to several interdisciplinary units conducting intensive health research, University of Regina houses the province’s only gerontology research centre.

Both universities rely on an extended network of additional research capabilities through hospitals, rehabilitation and long-term care facilities.

Incentives

Saskatchewan businesses enjoy substantial industry and tax advantages, particularly those in life sciences research, development and manufacturing.

The “Saskatchewan Advantage” features lower land and housing costs; a highly skilled workforce; a diversified economy; a reasonably priced and reliable supply of electricity, natural gas, water and telecommunications services; a comprehensive, quality education system; and a health care system that is second to none.

Specific to those in commercial ventures, Saskatchewan has the lowest corporate income tax rate in Western Canada for manufacturers and processors (as low as 10%) and a 6% provincial tax credit on equipment purchased for manufacturing and processing.

The life sciences sector benefits from a 100% federal tax deduction for qualified research and development expenditures, a 15% provincial tax credit on scientific research and development expenditures, as well as significant support through funding programs such as the Strategic Initiatives Fund, the Science and Innovation Fund, and the Agriculture Development Fund.

In addition, Saskatchewan provides new employers with employee training grants to a maximum of $5,000 per employee and a maximum of $150,000 per company.

Inter-relationships

Saskatchewan is a hub of activity in life sciences. There is a strong tradition of innovation and multidisciplinary capabilities in life science research at the University of Saskatchewan, the University of Regina as well as through organizations such as Ag-West Biotech, Saskatchewan Nutraceutical Network and Bioproducts Saskatchewan, among others.

Provincial organizations come together to share resources, including comprehensive databases and studies, as well as to facilitate knowledge and technology transfer through the support, development and growth of local manufacturing consortiums.

Investment Access

Investment in life sciences enables the discovery, development and commercialization of some of the world’s most innovative ideas, concepts and products.

The province’s life sciences experts seek funding from variety of national sources, including the Canadian Science and Technology Growth Fund Inc., Canadian Medical Discoveries Fund Inc., Foragen Technologies, Primaxis Technology Ventures Inc., Lombard Life Sciences and GrowthWorks.

Emerging interest from local VC sources, such as Crown Ventures Fund Inc. and Golden Opportunities Fund, strongly support the Saskatchewan life sciences sector and look to partner with project proponents exhibiting the academic-entrepreneurial balance that will best fit their ROE needs.

Investment Saskatchewan Inc., with $609 million under management, is in the best position to invest in commercially viable life sciences companies with a Saskatchewan base of operations. The corporation, which is governed by an independent board of private businesspeople, can invest up to $50 million annually.

With a mandate to improve the availability of private investment capital in the province, the corporation is committed to finding new ways to ensure capital is available for businesses that will contribute to the economic growth of Saskatchewan. In doing so, Investment Saskatchewan may serve as a facilitator, an investor in funds, and at times a strategic direct investor in larger projects.

Given its size, Investment Saskatchewan is as flexible as it is innovative in deploying funds, directing investments to a wide range of early stage and growth companies for advanced product development (prototype established), initial capitalization, expansions and acquisitions.

Innovators

There is no lack of recognition for Saskatchewan’s respected life sciences experts. Recent breakthroughs and acknowledgements enhance the value of their work, as well as its commercial prospects.

The National Research Council – Plant Biotechnology Institute entered into a partnership with Chromatin Inc. for technology that will allow the simultaneous introduction of multiple genes into plants without disrupting the plant’s own chromosomes.

Performance Plants Inc. and the Ontario Genomics Institute (OGI) have entered a partnership to fund promising genomics research and identify high-value commercial opportunities in academia.

Maple Leaf Foods and Pyxis Genomics Inc. announced the launch of the first commercial application of its DNA traceability system in the Canadian pork market.

All indications are positive that Saskatchewan’s new identity as “life sciences central” is gaining attention.

Roger Wyse, Managing Director, Burrill & Company, a life sciences merchant bank in California, says Saskatchewan’s image as a supportive place for innovative biotechnology companies is getting through.

“One of our companies Pyxis Genomics is located in Saskatoon, so we have direct experience with Saskatchewan’s environment for biotechnology,” Wyse said. “Saskatchewan is doing a lot of things right in providing an attractive, nurturing climate for early-stage companies.”

The author, Lanis Anthony, can be reached at 306-787-7273 or at lanthony@investsask.com. For more information visit the Saskatchewan Industry and Resources’ web site at www.ir.gov.sk.ca, or the Agwest Biotech web site at www.agwest.sk.ca.