One-trick ponies don't win the race

Dr. Ivan Sierralta Over several years, Alberta has seen local companies make good in areas of advanced technology, like information and communication, energy, gaming, and web-based services and applications. Yet, biotech struggles to gain ground.

Growing a biotech sector is easier said than done. In many areas of biotech, such as therapeutics and pharmaceuticals for example, taking a drug from research and development through to market is a long-term and costly proposition. Drug therapies take years to develop and even longer to test first on animals then on humans. Clinical trials are expensive and require unwavering commitment from both the company and the investors.

While the payoffs are massive, so are the risks. When a product takes that long to be profitable, there are plenty of opportunities for failure along the way.

One seasoned local investor told me his first foray into biotech was an eye opener. When he chose to invest in an Alberta life sciences company developing cancer therapies, he was not prepared for the sheer time his investment would be tied up as the company went through the clinical trials and political hoops required to bring a drug to market.

While he was confident his investment would eventually pay off, he prefers the fast turnaround he experienced with companies in other advanced technology sectors, like sustainable energy.

The other big challenge with many biotech companies is the “one-trick pony” phenomenon. Companies will often form around commercializing one drug therapy, creating huge risk if that therapy doesn’t succeed. Such high risk makes it even more likely that the company won’t receive enough funding to complete clinical trials and bring the drug to market.

Companies are more likely to succeed if they explore other therapies or product lines to fall back on should they hit a bump in the road.

So given the challenges, why try to develop the sector locally? Why should we care if we aren’t developing the next best drug therapy? Why not leave that to the Europeans and the biotech gurus in southern California where the hub of the industry currently resides?

The reason is simple. Canadian biotech companies are more likely to find creative solutions to challenges experienced locally in sectors such as agriculture, forestry and the energy resources sector. We need to build a knowledge and human resources base here for that to happen.

Other industries in Alberta could benefit from a mature biotech sector.

The BSE crisis and the devastation the disease caused to the Alberta beef industry is one example. The focus for that industry is on prevention because a cure is nowhere in sight. That makes one wonder if the prospect of a cure would be more realistic if we had a mature biotech sector here that could work on the problem. Not only would a critical mass of companies make such a prospect more attainable, but a mature sector also attracts the talent that makes innovation possible. Like any other sector, people who work in biotech are attracted to areas that offer good prospects for career advancement.

Another example is the Mountain Pine Beetle infestation making its way into Alberta from B.C. It is unlikely that the Pine Beetle is on the radar of any biotech companies in California. However, with the right pool of talent in western Canada, the prospect of finding a solution locally is much more likely.

As the world calls get louder for cleaner, environmentally sustainable sources of energy, Alberta’s reliance on oil and gas leaves the economy vulnerable. The more Alberta diversifies into new sectors, the healthier our economy is. Diversity also helps to cushion us in the event that one sector is hit by market forces, government policy or other disruptive forces.

Keywords: Ivan Sierralta, Calgary Technologies Inc, advanced technology, biotech, invest, one trick pony, creative solutions, local

News Beats: Technology, Business