The Canadian environment for innovation and business development in the biotechnology industry: a firm‐level analysis

This paper is an empirical study of firm‐specific characteristics in the Canadian biotechnology sector. The research context examines the national system of innovation and regional infrastructure in place for the biotechnology industry. Literature on the Canadian biotechnology industry is not as extensive as studies on the US biotechnology industry. The current analysis shows that the Canadian sector is innovative and outward looking. One group of firms is more research oriented and the other is more product/process oriented. The first group emphasises the need to expand their science base through increased funding including inward foreign investment. The second group emphasises organisational needs such as improved feedback from product development and manufacturing to R&D; the development of manufacturing capabilities; the need to find new Canadian buyers; and the internationalisation of R&D through outward foreign direct investment. Place‐specific characteristics matter to the process of innovation and commercialisation for both groups: firms with high levels of R&D intensity seek access to scientists, universities, pharmaceutical companies and funding. Firms with low levels of R&D intensity seek access to manufacturing facilities and customers. An analysis of geographic or sectoral variation in strategies could not be accomplished due to data limitations. However, the results show the importance of Canadian participation in the internationalisation of innovation and commercialisation of biotechnology products. Such a trend needs to be considered in Canada's international negotiations pertaining to policies and regulations of international trade and investment (both inward and outward foreign direct investment) in biotechnology products.