Policies to Boost Bioproducts

---

BY PATRICIA NICHOLSON

This article is the final instalment in a four-part series on bioproducts.

During a speech to the Montreal Board of Trade (Montreal, QC) on Sept. 18, Paul Martin, MP — who is expected to succeed Jean Chrétien as prime minister in February 2004 — stressed the importance of pursuing transformative and enabling technologies. One of the examples he touted was environmental technology.

Martin is not alone among elected officials — from all tiers of government — in supporting bioproducts. In August, the federal government pledged $100 million in funding to encourage construction of new ethanol plants.

Federal Mandate

The Kyoto Protocol is one obvious driver at the national level, but not all federal programs that support the bioproducts sector are as apparent as ethanol plants. The broad-based nature of the sector, which embraces technologies ranging from biodiesel to functional food ingredients, means that support for bioproducts comes from several federal ministries. Agriculture and Agri-Food Canada, Industry Canada, Natural Resources Canada and Environment Canada are at the forefront of federal involvement, along with research and funding agencies such as the National Research Council of Canada (NRC) (Ottawa, ON) and the Natural Sciences and Engineering Research Council of Canada (NSERC) (Ottawa, ON).

Kathryn Howard, director general of Industry Canada’s Life Sciences branch, says the bioproducts sector is viewed as a key element of several federal initiatives.

“Bioproducts, bioprocesses are one of two priority areas under the Canadian Biotech Strategy — the other being health innovation and the applications to the health industry of biotech,” Howard says. “Certainly there is great recognition that these products will help us meet our Kyoto commitment and reduce the amount of organic chemicals in our economy through different uses for organic wastes and so on. So the support that you find, as opposed to specific policies, would be under policies for existing programs relating to climate change, the reduction and elimination of organic pollutants, our Innovation Strategy, and policies for economic growth and job creation. So it’s a more horizontal approach.”

Bioproducts are expected to play a pivotal role in Canada’s Innovation Strategy. “If you want to go back to the goals of the innovation agenda, many of them will be aided in part certainly by the advancement of bioproducts and bioprocesses, whether it’s our commitment to double R&D, whether it’s increasing the number of new graduates as well,” Howard says. “It’s one of the areas that is cited as a major contributor to those objectives.”

John Jaworski, senior industry development officer for Industry Canada’s Life Sciences branch, says one of the ministry’s roles with respect to the Innovation Strategy is to promote bioproducts as an area of opportunity. Industry Canada has a number of sector branches that deal with different segments of the bioproducts industry, and the ministry is also looking at implications for those sectors in other industries, from manufacturing to natural resources to chemicals.

“What Industry Canada is also trying to do is dovetail this and the introduction not only of the life sciences technology, but also related supporting technologies such as information technologies and nanotechnologies and so on, as a way to be able to give Canadian industries a real boost in terms of their competitiveness internationally,” Jaworski says.

Governments also have clout as consumers. Procurement programs, under which governments preferentially purchase certain products, are other possible avenues of support for the bioproducts sector.

“The (federal government), as a procurer, represents a huge opportunity to showcase these biomaterials,” Howard says. “Currently, the federal government is developing a list of Canadian manufactured products and is considering the development of several showcases.

“But at the same time it will be very important to make sure that these products meet standards and codes,” she adds. “So it will involve working with organizations like the Canadian Standards Association to ensure that the existing standards don’t unnecessarily exclude bioproducts, and at the same time that standards are created that take into account the environmental benefits.”

Howard says the government’s capacity to support bioproducts extends beyond funding, promoting and purchasing.

“The stewardship role of government is very important, particularly with respect to increasing our capacity as regulators to assess the new technologies for both economic and environmental performance,” Howard says. “That lines up nicely with our commitments also under the innovation agenda for smart regulation.”

Industry Insight

Human resources and adequate funding are issues that haunt the whole biotech industry, and bioproducts are no exception. Rick Smith, president and CEO of Dow AgroSciences Canada Inc. (Calgary, AB) and chairman of BioProducts Canada (Ottawa, ON), says two issues that could use government attention are skills problems and access to capital for early stage bioproducts companies.

“That’s one of the challenges in the innovation agenda,” Smith says of the skills issue. “One of the sectors that was identified was knowledge, performance and skills.” Canada has great research programs and no shortage of entrepreneurs, but Smith says many Canadian biotech companies rely on managerial talent imported from the much-larger U.S. biotech community.

But long before they can start shopping for foreign talent, Canadian companies must get past the proof-of-principle stage and into equity funding to support commercialization. This, Smith says, can be a difficult task.

“It’s the early stage funding for some of these innovative ideas and validation that I think is one of the bigger challenges,” Smith says. “If we had a process where we had some initiatives provincially, federally — that would make it easier. These people would spend more productive time getting to a more conclusive commercial offer.”

Beyond that stage, Smith says infrastructure becomes the issue, such as the cost of building facilities.

“There’s a capital tax issue, and I think one of the options that has to be considered for the bio-economy is some kind of a tax holiday, or at least some form of tax relief,” Smith says. “It gives people like the VCs — but more likely the other players who might want to be the marketers of this technology — more incentive to get more engaged earlier.”

Provincial Perspective

Manitoba has a strong base in bioproducts, including Dow BioProducts Ltd.’s (Midland, MI) WoodStalk™ plant in Elie, Man., and Winkler, Man.-based Schweitzer-Mauduit Canada Inc., which makes paper products from flax straw.

But Allen Sturko, Life Sciences project manager with Manitoba Research, Innovation and Technology, says the province is trying to build more opportunities in this sector. Addressing skills and training issues is one priority.

“The province wants to not only retain the knowledge background — and that would be through scientists and other people in the area — but also attract where possible, both on the research side but also to work with companies,” Sturko says. “Certainly the province has training programs that would work with various sectors to ensure that they’ve got skilled employees to work in these industry sectors, and certainly works very closely with industry to ensure that we’ve got the training programs in place to support it.” Manitoba is also trying to build on some of its stronger bioproducts capacities. Sturko says one key role of government is to provide a strong R&D infrastructure to support the industry. The province has recently made substantial investments in the nutraceuticals and functional foods sector.

“We’ve worked with the University of Manitoba to establish what’s going to be known as the Richardson Centre for Functional Foods and Nutraceuticals. And that centre will do the early evaluation of bioactive compounds, developing the extraction technology to maintain bioactivity, and doing some of the early evaluation with respect to the efficacy,” he says. “In addition to that, within the St. Boniface General Hospital Research Centre has been established the National Centre for Agri-Food Research in Medicine. And that facility will be used for . . . ensuring efficacy and also safety of the bioactive compounds that people are studying.”

Sturko explains that such investments are expected to reap benefits beyond basic research, such as spinoff companies.

Municipal Focus

At the municipal level, local strengths must be matched to industry needs. Smith cites the United Counties of Stormont, Dundas and Glengarry (SD&G) in eastern Ontario as an example of a municipality that has built a strong specialty in bioproducts.

James de Pater, executive director of the Stormont Dundas and Glengarry Community

Futures Development Corp., says SD&G has had a strategic focus on bioproducts for several years. Local success stories include homegrown companies such as Natunola Health Inc. (Nepean, ON) — a producer of plant-oil gels for cosmetic ingredients and food additives that runs a facility in Winchester, Ont. — and foreign companies such as Alltech Inc. (Nicholasville, KY), which produces enzymes in Chesterville, Ont.

SD&G is affiliated with the Ottawa Life Sciences Council (Ottawa, ON) and maintains relationships with universities in Ottawa, as well as with the NRC.

“We try to stay in front of these research agencies, just generally to understand where the industry is going, where the opportunities are,” de Pater says. “Specifically, there may be some of these technology commercialization opportunities that we could effect here in this region. And then we have a full development program to help make that happen: we have business development services, we’ve got venture capital, we have a loan portfolio. So there are a number of tools to take ideas and concepts and turn them into businesses here in this region.”

An integral part of SD&G’s services is navigating access to federal and provincial funding through initiatives such as the Canadian Adaptation and Rural Development fund and the Ontario Small Town and Rural Economic Development Infrastructure Program.

“We’ve been a really active proponent — an advocate — in terms of accessing programs on behalf of companies that are trying to exercise these opportunities,” de Pater says. “In terms of a local region trying to do something, that’s huge. We have literally attracted and obtained millions of dollars on behalf of some of these projects.”

Another important capacity that de Pater sees for governments is to ease some of the uncertainties of the industry.

“In many cases you’ve developed products the market has never seen before,” he says. “So there’s a huge risk getting that product on to the market . . . And again there’s enormous risk keeping that company alive while you’re doing that. So I believe there’s a risk-mitigation role that the public sector has to play. If Ontario wants to be part of the biotech scene internationally, it needs to mitigate some of the risks here. That’s been the lesson so far: that countries that have done that are pushing ahead.”

In order for Canada to push ahead, de Pater says the public sector’s involvement in building the bioproducts sector is “critical.”

“This is all pioneering stuff. We’re heading in a new direction here, and so much of what we’ve looked at over the last five years is very much at a concept phase,” he says. “To go from a scientist who has an idea and has a proven technology, to turning that into a facility in Ontario that’s producing products and employing people and having a positive economic benefit — there’s an enormous role for the public sector to help push this along.”