1. SIMON FRASER UNIVERSITY Faculty of Applied Sciences Leonardo Summer Institute LESSONS LEARNED FROM STUDYING THE VANCOUVER HUMAN BIOTECH CLUSTER Monica Salazar, msalazar@sfu.ca School of Communication, PhD candidate Centre for Policy Research on Science and Technology- CPROST Simon Fraser University, Vancouver, Canada MIT, Cambridge, June 2005

2. SIMON FRASER UNIVERSITY Faculty of Applied Sciences Leonardo Summer Institute Outline presentation 1.What is a cluster 2.Overview of Vancouver biotech cluster 1.Garden metaphor & necessary environment 3.Lessons learned (what can we tell about the industry) 1.Firms 2.Policy-makers 3.Socio-cultural aspects 4.Conclusions: Cluster studies issues

3. SIMON FRASER UNIVERSITY Faculty of Applied Sciences Leonardo Summer Institute What is a regional cluster? Porter (1998): Clusters are geographic concentrations of interconnected companies and institutions in a particular field, linked by commonalities and complementarities; usually there is a large firm with global reach. Asheim & Isaksen (2002): Clusters are regarded as places where close inter-firm communication, and social- cultural structures and institutional environment may stimulate socially and territorially embedded collective learning and continuous innovation.

4. SIMON FRASER UNIVERSITY Faculty of Applied Sciences Leonardo Summer Institute 2. Overview of the human biotech cluster in Vancouver  Innovation Systems Research Network national project: 26 case studies on regional “clusters” across Canada, including high-tech and traditional sectors. The network is conformed by researchers from various academic backgrounds.  Biomed companies in Vancouver region: 90 firms, mainly small (# employees), young companies (after 1995), various phases of development  Third largest cluster in Canada, 7 th in North America, but the fastest growing  Highly intensive in R&D spending, more bio-stars than Toronto and Montreal  Mainly spin out of U. of British Columbia: high survival rate (75% over 5 years old)

5. SIMON FRASER UNIVERSITY Faculty of Applied Sciences Leonardo Summer Institute Biotech cluster …. continued  Lead firm: QLT (1981), highly successful, global reach company.  No manufacturing capacities, main “product” is IPR (US patents).  Neither tech collaboration nor competition: each firm works in a niche technology/disease (see following slides)  Joint ventures (R&D alliances, production and marketing agreements) mainly with US pharmaceutical companies.  No vertical integration: suppliers not important, not local customers.  Little competitions for local talent, although its availability is crucial. And, firms are able to attract highly qualified people from other places.

6. SIMON FRASER UNIVERSITY Faculty of Applied Sciences Leonardo Summer Institute FIELDS OF STUDY# FIRMS Therapeutics29 Diagnostics9 Bio-Products5 Bioinformatics4 Virology3 Neuroscience2 DISEASES# FIRMS Cancer20 Infectious9 Cardiovascular6 Inflammatory6

7. SIMON FRASER UNIVERSITY Faculty of Applied Sciences Leonardo Summer Institute TECHNOLOGIES/ TOOLS# FIRMS Genomics7 Drug delivery7 Proteomics6 High-Throughput Screening6 Bio-processing4 Lab reagents3 Gene-therapy3 Environmental2

8. SIMON FRASER UNIVERSITY Faculty of Applied Sciences Leonardo Summer Institute 1.2. Garden metaphor City landscape: Beautiful by nature Nursery: University of British Columbia, and others Seeds: ideas from local scientists and grad students Seeds germinate, plants grow, thanks to lots of water: first by public R&D funding, second by risk capital (angel investors & venture capitalists) Fertilizers: alliances with pharmaceutical companies Pollinators: key actors (private investors, board members) Vendors: local civic association BC Biotech, Leading Edge BC (provincial agency) Flowers (IPR) are taken by passers-by. What will happen with the plants?

9. SIMON FRASER UNIVERSITY Faculty of Applied Sciences Leonardo Summer Institute Necessary environment for biotech companies to flourish  Attractiveness of the city-region: quality of life, lifestyle  Research from the Univ. of British Columbia and research money (to maintain it)  Talent pool  Availability of risk capital  Strong civic association (BC Biotech)  Biotech buzz and vibe  These are the conditions, so what needs to be done?

10. SIMON FRASER UNIVERSITY Faculty of Applied Sciences Leonardo Summer Institute 3.1. Lessons learned: firms’ perspective  Human capital: How to attract and retain talent, considering that highly qualified personnel come from all over Canada and the world (around 70% of firm employees with a PhD).  Flexible working arrangements, equity positions  Networking and joint-ventures: How to build long- lasting partnerships with big pharmaceutical companies, considering that Vancouver companies mainly sell intellectual property rights to these companies.  Good legal advice and support (patent lawyers)

11. SIMON FRASER UNIVERSITY Faculty of Applied Sciences Leonardo Summer Institute Firms ….. continued  Technology development : How to maintain a variety of products/technologies in the pipeline, not to rely on one blockbuster.  Knowledge management : How to keep and foster linkages with knowledge producers (researchers at universities).  Firms should focus more on D (development) rather than R (research).

12. SIMON FRASER UNIVERSITY Faculty of Applied Sciences Leonardo Summer Institute 3.2. Lessons learned: policy-making  Federal government:  Need to provide more research money or, at least, to keep a regular flow.  Provincial government:  Good provision of health care and education  Need of an innovation policy, mandate and/or champion  Support to clusters Is the province the locus, or should be the city-region? Leading Edge BC: Is marketing enough?

13. SIMON FRASER UNIVERSITY Faculty of Applied Sciences Leonardo Summer Institute Policy-making …. continued  Municipal government:  Provision of adequate physical infrastructure: airports, telecom, public transportation, etc..  Maintain/improve quality of life: amenities, environment, security  Foster “creative cities”: policies for attracting firms (business climate) & people (people’s climate), promotion of arts & culture  Local civic and industrial associations:  Key roles: Networking and mentoring and in a lesser extent lobbying government  Conglomerate the industry: they are the glue that keeps firms together

14. SIMON FRASER UNIVERSITY Faculty of Applied Sciences Leonardo Summer Institute 3.3. Lessons learned: importance of socio-cultural aspects What is special about Vancouver?  Beautiful by nature  The best place on earth to live and work  Lifestyle (environmentally friendly, skiing and sailing on the same day, availability of organic products, etc.)  All this is “given”, although we need to take care of it.

15. SIMON FRASER UNIVERSITY Faculty of Applied Sciences Leonardo Summer Institute Socio-cultural issues … continued  Entrepreneurial and risk-taking culture  Various private initiatives to support and incentive entrepreneurship Vancouver Enterprise Forum VANTEC Vancouver Angel Technology Network Telus New Ventures BC Western Universities Technology Innovation Fund Technology, Innovation, Management and Enterprise (TIME) Centre (an incubator)

16. SIMON FRASER UNIVERSITY Faculty of Applied Sciences Leonardo Summer Institute 4. Conclusions: emerging issues in cluster studies  Propose new definitions and types of clusters, not just traditional Porter’s approach  For instance, ISRN results point to some common characteristics of Canadian high-tech clusters: Highly dependent on global knowledge flows Local users-suppliers relationships less important, because of global linkages Local talent pool crucial Usually research coming out of universities and government labs important, but not enough to promote emergence of clusters

17. SIMON FRASER UNIVERSITY Faculty of Applied Sciences Leonardo Summer Institute Conclusions …. continued Two issues are emerging:  Clusters and regional innovation systems in Canada are limited to city-regions. It is an urban phenomenon.  The geography of talent (see R. Florida) says that some locations are more attractive than others: What anchors firms? What anchors people? Do firms attract people or do people attract and create firms? If people are first, what is needed then? Need to do more research on ‘creative cities’: urban economies (no localization economies), quality of place, cultural diversity and tolerance.