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The Canadian biotechnology industry enjoyed a banner year in 2006, according to the findings of the 2007 Ernst & Young Beyond Borders Report. Among the highlights listed in the report, Canadian biotech companies set record numbers in terms of capital raised and financing.
The total capital raised by the Canadian biotech industry in 2006 increased by 79% to reach US$1.8 billion, beating the previous record of US$1.3 billion set in 2003. It was also the first time Canada had two financings of over CDN$100 million in a single year.
Further proof in the report that industry is doing well is that half of the 82 Canadian public companies are sustainable without needing to raise capital in the near term, unless they wish to rapidly expand or make acquisitions.
More good news for the industry is that pipelines are maturing, with more products making it to late-stage clinical trials. In addition, privately held Canadian biotech companies are now stronger and more mature than ever before. This trend is in co-relation with the fact that more private companies are holding out longer while awaiting its later stage clinical trials before going public.
But 2006 was not without its shortcomings.
The industry's market capitalization dropped by 2%, from US$13.2 billion to US$12.9 billion and venture funding in all provinces declined significantly. In general, venture funding in private companies decreased from US$313 to US$205 million.
In total, Ernst & Young tracked only 42 venture investments in private companies, compared with 51 in 2005. The average venture round was US$4.9 million, which decreased from US$6.1 in 2005. Moreover, there were only two IPO's in 2006 that raised US$10,000,000 as opposed to the four that raised US$160 million in 2005.
Although 2006 was a banner year for financing, it was a selected group of companies that the milestone relied upon. Ernst & Young estimated that only half of the public companies and 10 of the private Canadian biotech companies fit into this category.
Translated, access to capital is still limited is still an issue for many Canadian biotech firms.
