Plunge in oil price seen as opportunity for Alberta biotech sector
Alberta’s biotechnology sector could benefit from plunging oil prices and the flow of investment away from the energy industry.
The province has long courted companies involved in high-tech health and drug development, only to see them leave for the U.S. or other provinces.
"They eventually follow the venture capital money,” said LorneTyrell, a former dean of medicine at the University of Alberta, who is founding director of the Li KaShing Institute of Virology.
“If we can maintain the venture capital here and establish the companies here, then we do have a chance of success."
Alberta’s medical biotechnology sector currently brings in annual revenues of about $1 billion and employs around 14,000 people.
But with the fall of oil prices, investors are looking for new places to park their money, and that’s creating opportunities for biotech, according to the head of Alberta Innovates Health Solutions, the provincial body tasked with supporting the medical biotechnology sector.
“I can see the biotech sector growing rapidly in our province actually, and creating a new industry that we wouldn’t have imagined possible in Alberta until the last year,” said Cy Frank.
Working with venture capital groups
Frank is involved with both federal and provincial initiatives aimed at boosting the industry.
“In fact, we are working with venture capital groups as we speak to create more of a focus on health and health care as an opportunity.”
Frank said Alberta is well positioned to take on biotech giants like Quebec and British Columbia, because it offers a single integrated health-care system. Alberta Health Services, created in 2008, manages every aspect of health for the province’s four million residents, from ambulances, to hospitals, to mental health, to cancer care.
That creates huge opportunities for companies to test and develop medical devices, treatments and technologies, Frank said.
When oil prices were high, little attention was paid to the biotech sector. Companies like Isotechnika, an Alberta biotech darling a decade ago, left the province and re-emerged as Aurinia Pharmaceuticals Inc., based in B.C., but operating with mainly U.S. venture capital. Biomira, which was working on a treatment for cancer, moved to the United States in 2007 and became Oncothyreon.
Both companies were involved in the slow and costly process of drug development. Tyrell says they couldn’t compete with oil and gas for investment dollars.
"Because it takes money and it takes time. And venture capital money in Alberta invested in oil and gas, and that has a turnaround time that's much faster. And many of the other things have a turnaround time that's faster. Biotech you have to be patient but in the long run the payoff can be great."
But now that oil has lost some of its lustre, proponents of the medical technology business say the time is right.
“Maybe its because of the oil situation but we’re getting a lot of interest from people now that was not there even a year ago,” said Frank.
