It’s the overnight manufacturing success that’s been millennia in the making
By Jeff Baker
Biotechnology. Even in 2019, that word alone remains enough to put a shiver down the spines of many people. It can sound familiar-enough, but there’s something behind the term that elicits a hesitance among many.
Maybe your mind goes to such popular portrayals as Audrey Junior, the giant Venus flytrap with shark-like teeth from 1960’s cult-classic movie Little Shop of Horrors, or to Peter Parker being bitten by a genetically engineered spider, giving him spider-like abilities and superpowers.
Or perhaps you’re thinking of Lee Majors’ portrayal of superhuman strongman Steve Austin in The Six Million Dollar Man, who was rebuilt with bionic implants that enhance his strength, vision, and speed. Better…stronger…faster…
Hollywood may make biotechnology seem like a far-off dream, but the sector is real and is helping shape a more prosperous and sustainable future for Canadian industry.
What the heck is biotech?
The United Nations defines biotechnology as any technological application that uses biological systems, living organisms, or derivatives to make or modify products or processes for specific use. Depending on the tools and applications, biotechnology often overlaps with the related fields of bio-engineering, bio-sciences, and bio-manufacturing.
Despite ‘biotechnology’ being a relatively new term – believed to have been first coined in 1919 by a Hungarian engineer – humankind has been using biotechnology in agriculture, food production, and medicine for thousands of years.
It’s only our terminology that’s new; the practices behind this sector are beyond old hat.
When biotechnology meets the world of manufacturing, this is where we get biomanufacturing. Simply put, biomanufacturing uses biological systems to produce commercially important biomaterials and bioplastics for use in medicine, food and beverage, and industrial applications, including detergents and plastics.
Bio is big
Biotechnology and bioscience in Canada is big business.
According to the Ontario-based MaRS Discovery District, the industry drives an $86.5-billion Canada-wide bio-economy that includes health technologies and products, agricultural and veterinary products, food and beverage, and industrial products.
On the Prairies, bioscience and biotech might have a smaller footprint than the industry in Ontario or Québec, but the sector is growing. The industry is starting to take advantage of the natural competitive advantages of the region and play to those strengths.
Figures from BioAlberta, an association representing and promoting Alberta’s life sciences industry, indicate there are more than 400 bioscience-focused companies in that province, employing more than 16,000 people.
Biosciences Association Manitoba reports that the province’s biosciences and biotech sector had more than 5,600 employees generating in excess of $2.5 billion in total industry revenue in 2016.
The 2018 Biotechnology Industry Data Survey, released last September by BIOTECanada, included responses from more than 200 companies across Canada who provided valuable insights into their current and forecast realities.
A key finding of the survey was that the vast majority of biotech firms in Canada employ fewer than 25 people and generate less than $500,000 in annual revenue. However, these small companies are thinking big, with most forecasting rapid and significant growth in both employment and financial performance over the next few years.
Manitoba keeps Canadians healthy
In Manitoba, biotech and manufacturing often means pharmaceuticals and medical support products including vitamins, supplements and health products.
According to Tracey Maconachie, President of Biosicence Association Manitoba, the province is a powerhouse in the fields of bioscience and associated manufacturing; a fact not well-known outside of industry circles.
“Manufacturers in Manitoba are producing many of the pharmaceuticals and supplements taken by Canadians across the country. Chances are you’ll see a Manitoba address on the side of the packaging.”
“We’re actually the third-largest hot spot for pharmaceutical manufacturing in Canada – behind only Quebec and Ontario – and it’s big business in Winnipeg, Steinbach, and other communities,” says Maconachie.
Not without challenges
Like almost every industrial sector, biotechnology firms are facing challenges in securing skilled workers in order to maintain and expand their businesses. In the BIOTECanada report, one-third of companies surveyed identified recruiting and retaining talent as a top challenge to their business.
The issue of securing and retaining talent may be compounded with and be one of the causes of capital access issues for Canadian companies. Investors look for a strong and experienced executive team, while many would-be executives look for a company with a financially- and operationally strong footprint – which often requires investor capital. It’s a chicken and egg situation all too familiar for growing businesses.
Mel Wong, President & CEO of BioAlberta, explained that biotech companies in Alberta face an investment ecosystem that traditionally favours the energy sector as a destination for venture capital.
“There might be lots of capital on the books and ‘out there,’ but investors still tend to be a bit shy in looking beyond oil and gas,” said Wong.
“We still don’t have a significant investment fund, private or public, for the life sciences in Alberta.
“There has been to date, a significant safety net in the sense of public programs – like NRC-IRAP – and some provincial programs on top of that. Larger health delivery agencies and authorities, like Alberta Health Services, do spend money on research and development in the biotech sector, and companies are able to take advantage of that spending locally.”
According to Wong, a good number of biotech companies are simply ‘walking wounded,’ due to the nature of the business and the intense competition for limited investment dollars that chase the next big thing.
“You’ve got a few larger firms that are attracting investors and are making a good go of it, but there’s also a good number that are just hanging on or are considering the inevitable next step.”
The nature of the biotech investment ecosystem means that successful biotech companies are faced with constant pressure from investors to relocate to the United States. Whether it’s for eligibility for funding programs or access to more robust supply networks, this has led to Canada being seen as a great incubator but a poor sustainer of the sector.
What’s the solution?
There is no quick and easy solution at hand. It’s going to take time, effort, and money, but in the end it will be worth it. Canada has to work at it.
Across the Prairies, there is optimism that biotechnology firms and traditional manufacturers can more closely collaborate and improve each other’s products.
Wong and Maconachie both agree the biggest opportunities for the two sectors are in the areas of supply chain and product development.
“We don’t have to send manufacturing off-shore,” says Wong.
“We have great manufacturing capability and capacity in this country, so we just to more closely align the groups and demonstrate that we can make things here competitively. We would love to work more closely with manufacturing companies and their industry associations to bring all of our members together and figure things out.”
Maconachie sees a trend toward a ‘customer pull’ innovation system, where biotech companies are addressing specific needs of a customer, rather than working independently on a hunch and hoping a market will emerge.
“There’s much more of a focus on what the customer wants,” says Maconachie, “and the customers aren’t always the public; they can be the healthcare system and food processors.”
“The products from our industry take a long time to develop; it is costly. And things are heavily regulated, especially therapeutic products and food products, so knowing that there’s a customer who wants what you’re making is key.”
The road ahead
Looking down the road 10-20 years, Jamie Hilts, Dean of the School of Mining, Energy, and Manufacturing at Saskatchewan Polytechnic in Regina, is optimistic about the future of biotech and the opportunities for collaboration and even transformation of the manufacturing sector.
“There’s always going to be a need within industry for specific wood products or steel products; you’re not going to be able to produce everything out of a new biomaterial. What I think you’re going to start seeing is an evolution of materials which are able to use the various composites, which will be friendlier to the environment but also with the aesthetic qualities we demand.”
“I think what you’ll continue to see is the evolution of materials into something cost-effective, useful in its application, but also in how we can create these materials that will have a minimal to zero carbon footprint. There’s even the potential to reduce the carbon footprint to beyond neutral, into absorption territory by using waste as feedstock such as flax straw that would normally be burnt off each fall.”
“Beyond manufacturing, there’s also the potential for the biotech sector to help address energy needs in remote communities across the North. Where there’s diesel generation of electricity, there’s an opportunity to either replace that fuel entirely by changing the systems in place to use biomass or other fuel, or simply changing from regular diesel to biodiesel.”
According to Hilts, an easy intersection for biotech and manufacturing is in the area of plastics. The current focus on the plastic waste in our environment – and its negative effects on both humans and wildlife – means industry is ripe for the large-scale introduction of biomaterials to replace or reduce the use of traditional plastics.
It’s the manufacturers who are willing to think outside the box who will be best positioned to take advantage of this new evolution of industry.
Start by building an industry
In West Central Alberta, along the Highway 22 Cowboy Trail, is the town of Drayton Valley. Located in an area rich with natural resources – water, oil, gas, boreal forest, and arable land – the community is becoming a hotspot for the intersection of the biotech and manufacturing sectors.
Next door to the Weyerhauser sawmill is Drayton Valley’s Bio-Mile, an area of industrial land designed to provide a home to companies focused on creating new products from waste products including biomass from the forestry and agriculture industries.
One of the companies located along the Bio-Mile is BioComposites Group. Family-owned and operated, BioComposites Group is breaking ground by building a value-added industry from the bottom up, based on fibre content from hemp, wood, and other bio-based feedstocks.
The company takes hemp and turns it into products as diverse as erosion and weed control mats, interior automotive components, and building products including insulation, siding, and ceiling tiles. In the development pipeline are other consumer-focused items including seating, commodity packaging, sporting equipment, and recreational and leisure items.
“Where there’s a moulded plastic, polymer, or even glass-reinforced thermoplastic being used,” says Dan Madlung, BioComposite Group’s President & CEO, “there’s the potential to use a bio-fibre product in its place.”
“The hemp fibre is just as strong and durable, and it has the added benefit of being a bio-based material that is much more environmentally friendly than traditional oil-based materials.”
“The hemp we use for our products is Canadian-grown, and we process and manufacture everything right here in Drayton Valley, so it’s keeping the money local and the environmental footprint significantly smaller,” says Madlung.
Fibre for the future
Coming from a background in the forestry and wood products sector, Dan Madlung says that even though the company has shifted into using hemp fibre as its primary fibre, it’s not actually that big of a change.
While the machinery and plant used by BioComposites Group to produce their Terrafibre hemp-based products was originally designed for wood fibre processing, Madlung says it’s not a huge adjustment to use another feedstock.
“Ultimately, fibre is fibre. Where they differ is in the detail of the structure and the chemistry. We extensively researched the properties of all the fibres at our disposal and found hemp to be the best performing for our manufacturing needs.”
When asked about the challenges the company has faced in developing its products and markets, Madlung says the biggest challenges are a lack of knowledge in the market, a lack of understanding by potential investors and lenders, and the issue of securing feedstock in the local market.
“In North America, we’re growing tonnes of cannabis for the marijuana and consumables market,” says Madlung, “while the rest of the world is growing it for the fibre potential. We pretty much consume all the hemp fibre in Canada.”
“We can take every bit of ‘waste’ from the cannabis industry, plus what we grow specifically for fibre, and turn it into higher value products that will help create jobs and additional business opportunities in rural communities that are facing tough economic times.”
Opportunity up in smoke
Beyond hemp and wood fibres, BioComposites Group also uses flax straw and other agricultural residues in their manufacturing process. Normally burnt off in the fall, crop residues like straw from oilseed and grain crops are a cost to producers, reducing their bottom lines.
“We can take that straw, use it in our manufacturing, and in turn create another revenue stream for farmers and grow our own business. It’s taking a waste product, turning it into money, and keeping that money in the local area,” said Madlung.
“Just with the straw residues today, it could be turned into $250-million-worth of value-added products and mean more than 1240 direct jobs across the industry. That’s like building five new sawmills in small, rural communities.”