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Industry Comparison by GDP and Percentage of the Economy Note: Data based on preliminary 2009 GDP figures. Sources: Source Data - Statistics Canada, CANSIM Table 379-0027 Methodology - Industrial Biotechnology. December 1, 2008, 4(4): 363-366. doi:10.1089/ind.2008.4.363 © BIOTECanada 2010 Canada’s Biotechnology Companies by Sector Source: Canadian Life Sciences Database © BIOTECanada 2010 Why biotech is different from other technology • Pure science • Highly Regulated • Longer development cycles so longer time to revenue • Large amounts of patient capital needed for development © BIOTECanada 2010 Sustainable Capital Formation The innovation is here, but the risk capital required to sustain R&D in the long-run is lacking. Canada’s biotechnology industry requires $1 billion annually to sustain itself. This is capital from all sources: • • • • Private equity and venture capital Public markets Commercial banks Governments Source: Biotech 2010 Life Sciences: Adapting for Success, Burrill & Company © BIOTECanada 2010 Biotech Venture Financing 2007 Q1 Q2 Q3 2008 Q4 Q1 Q2 Q3 2009 Q4 Q1 0.00% Q2 Q3 2010 Q4 Q1 Q2 -7% -20.00% -40.00% -56% -60.00% -80.00% -100.00% Canada Sources: Thomson Reuters, PricewaterhouseCoopers © BIOTECanada 2010 United States Facilitating Sustainable Capital Formation: Flow-through Shares A flow-through share is: • A type of share allowing corporations to transfer exploration and development expenses to investors. • Investors can use these expenses as deductions against their personal income tax. • Eligible corporations are those involved in the exploration, production, and processing of certain commodities: • Mining • Oil and gas • Renewable energy Economic Impact of Flow-through Shares in Canada’s Biotechnology Industry Source: PricewaterhouseCoopers LLP, Economic Impact of Flow-through Shares in Biotechnology Industry Global Innovation Initiatives Support Program Australia -Venture Capital Limited Partnerships Program (VCLP) -Biotech Venture Fund Value of Program •Flow-through taxation treatment on investments. Foreign investors in the fund are exempt from capital gains tax on their share of any profits made. •$250 million fund intended to help commercialise technologies of emerging biotech companies. China Emerging Technologies Fund •$9.2B investment over 2 years specifically earmarked for emerging technologies including biotechnology. France -Research Tax Credit •Research tax credit equal to 30% for expenses less than $159M a year. No research tax credit ceiling. •Establishment of a $206.5M biotechnology fund to support domestic biotech research and development. -National Biotechnology Fund Israel -Capital gains tax exemption -National Biotech Fund Source: BIOTECanada Research Services © BIOTECanada 2010 •Capital gains tax exemption on investments in research-intensive companies. •$80 million life sciences venture capital fund. Global Innovation Initiatives Support Program Singapore -Relief for Capital Losses -Industry Alignment Fund Value of program •Losses incurred from the sale of shares can be set against the investor’s other taxable income. •$1B fund directed at connecting public- and private-sector researchers and driving investment in R&D. Taiwan -Shareholder Investment Tax Credit -National Biotechnology Fund •10% ITC on investments in biopharma stock. Corporations receive a 20% credit. •Public-private venture capital fund valued at $315M (planned to go up to $2.18B within 10 years). United Kingdom -Venture Capital Trust Scheme -Strategic Investment Fund for Advanced Technologies •Income tax relief, capital gains tax relief, and relief for capital losses for individual investments in venture capital trusts. •$1.09B fund directed at research-intensive technologies including biotechnology. United States -Therapeutic Tax Credit -Small Business Innovation Research (SBIR) grants •50% refundable credit for emerging health-care SMEs. •Increases to grant funding programs; maximum awards increased up to $1M. Source: BIOTECanada Research Services © BIOTECanada 2010