Economic impacts and benefits of WD contribitions

Introduction

In assessing the economic effects of WD’s investments in life sciences it is important to draw a distinction between the economic impacts produced by the investments and broader economic benefits that have or will be realized as a result of the investments.

Economic Impacts are generally viewed as being restricted to quantitative, well-established measures of economic activity. The most commonly used of these measures are output, GDP, and employment:

• Output is the sum of all expenditures that result from a project or projects. Consequently, in the context of WD’s investments in life sciences, output represents the sum total of all economic activity that has taken place in connection with the investments
• GDP is a measure of the value added to the economy by a project or projects. Since the GDP figure captures the difference between the value of output and the value of intermediate inputs, it represents the net incremental value of economic activity that has taken place. In the context of WD’s investments in life sciences, GDP represents the incremental value added to the economy as a result of the investments
• Employment is measured in terms of full-time equivalents (FTEs) per million dollars of output. In the context of WD’s investments in life sciences, employment represents the number of full time jobs created as a result of the investments

For each of these measures there are both direct and indirect impacts. Direct impacts are the initial, immediate impacts that result directly from spending on the projects. Indirect impacts are the result of linkages in the economy that capture the economic impacts of iterative rounds of spending by individuals and businesses that supply goods and services to the projects. Direct and indirect impacts are often estimated through the use of economic multipliers that reflect structural relationships in the economy.

In contrast to economic impacts, Economic Benefits may be broad in scope, and may include both quantitative and qualitative measures. Economic benefits may also describe long term or downstream activity that would not normally be captured in economic impacts. While economic impacts utilize standard measures that can be estimated for nearly any type of investment, economic benefits and their accompanying measures may vary greatly from project to project. Consequently, it is more difficult to quantify economic benefits across a set of projects than it is to quantify economic impacts.

In the context of WD’s investments in life sciences, economic benefits may include:

• Creation of spin-off companies
• Submission of patent applications
• Award of patents
• Leverage of additional research dollars
• Attraction of researchers to a facility
• Creation of opportunities for trainees or interns
• Long term benefits arising from improved medical therapies.

In the remainder of this chapter we first assess the economic impacts of WD’s investments in life sciences and compare the results to both the economic impacts experienced in other industries of major importance in Western Canada and to the economic impacts reported for life sciences investments in the United States. Next, we describe the nature of economic benefits that have arisen from WD’s investments in life sciences, and present four case studies that are intended to illustrate the range of economic benefits that are attributable to WD’s life sciences investments.

It is important to note that while a comprehensive economic impact analysis is beyond the scope of this project, the assessments presented in this section nevertheless provide a reliable overview of the economic impacts and economic benefits produced by WD’s life sciences investments.

Economic impacts of WD’s investments in life sciences

Approach

The general approach that we followed in estimating the economic impacts of WD’s investments in life sciences consisted of four steps:

• Step 1. Selection of a sample of projects for analysis. We selected a large sample of life sciences projects in which WD has made investments. The sample was representative of WD’s investments in terms of size of investment, nature of investment, and project location
• Step 2. Categorization of project expenditures from the sampled projects. For each of the projects in the sample, we analyzed the nature of the investments and categorized the funds invested into different types of expenditure
• Step 3. Application of economic impact multipliers.  For each type of expenditure we developed and applied appropriate economic impact multipliers to arrive at the economic impacts of the sampled projects
• Step 4. Extrapolation of results. We extrapolated the results from the sample to the entire population of projects.

Each of these steps is described in the following sections.

Sample selection

WD’s investments in life sciences from 2000 to 2006 encompassed 359 projects. Of these projects, 154 were part of the Western Diversification Program (WDP) and Western Economic Partnership Agreement (WEPA). For this study, the 154 projects constituted the population of projects.

From this population, we extracted a sample of 45 projects that was representative in terms of project location and project type of WD’s investments in Western Canada. In addition to the sample of 45 projects, we identified 6 other large projects where WD’s investments exceeded $4 million. Because of their size, all of these 6 projects were examined in detail, and were treated as a separate group.

The sample selection process is shown schematically in Figure 8.1.

Figure 8.1 Economic impacts – selecting the sample population

Table 8.1 Project methodology – Data used in economic impact analysis

	Total Population	Sampled Projects	Large Projects (over $4 million)
Total number of projects	154	45	6
Total WD investment	$130.8 million	$38.8 million	$34.5 million
Average size of WD investment	$0.9 million	$0.9 million	$5.8 million
No. of large projects over $4 million	6	0	6

Categorization of project expenditures

For each of the 45 sampled projects and for each of the 6 large projects, we reviewed the project files, and separated project costs into three categories: equipment, construction, and operations spending. Equipment costs referred to purchases of specialized equipment, such as medical or diagnostic equipment. Construction costs were those relating to the expansion of existing facilities or the construction of new facilities. Operations costs referred to salaries and other day-to-day costs of facilities and projects.

We have disaggregated project costs into the above three components because the economic effects produced by spending in these categories are substantially different. Further disaggregation of project costs into finer categories is not necessary at this level of economic impact modeling.

Figure 8.2 illustrates the categorization of project expenditures.

Figure 8.2 Project expenditure categorization methodologies

 

Figure 8.3 outlines the application of economic multipliers and the extrapolation of results.

Figure 8.3 Economic impact multiplier methodologies

Table 8.2. Estimated economic impact of WD’s investments in life sciences

Economic Impact Estimates		Direct	Indirect	Total
	Output (Spending) (millions)	$130.8	$58.2	$189.0
	GDP (millions)	$55.1	$33.8	$88.9
	Employment (FTEs)	1,143	511	1,654

The estimated total output of $189.0 million is made up of $130.8 million in direct impact (the value of WD’s investments) and indirect impacts of $58.2 million. As a result, WD’s investments can be said to have generated an additional $58.2 million in impacts through the spending of the project recipients. Expressed as a ratio, each dollar of WD investment can be said to have generated a total of $1.45 in output.

The increase in GDP is estimated at $88.9 million. This consists of $55.1 million in direct, and $33.8 million in indirect impacts. Expressed as a ratio, each dollar of WD investment can be said to have resulted in $0.68 in increased GDP.

The estimated 1,654 full time equivalent jobs consist of direct employment of 1,143 full time equivalent jobs, and indirect employment of 511 full time equivalent jobs. Expressed as a ratio, each million dollars of WD investment can be said to have generated 13.9 full time equivalent jobs.

The economic impacts on a per-dollar basis of investment are presented in Table 8.3. (Note that by definition, the impact of $1 of spending equates to $1 in direct output).

Table 8.3. Estimated per-dollar economic impact of WD’s investments in life sciences

Per-Dollar Economic Impact Estimates		Direct	Indirect	Total
	Output (Spending)	$1.00	$0.45	$1.45
	GDP	$0.42	$0.26	$0.68
	Employment (FTEs per million $ output)	9.6	4.3	13.9

Comparison to other industries

The results of our analysis suggest that the economic impacts produced by WD’s investments in life sciences compare favourably to the economic impacts realized from investments in other industries of central importance in Western Canada. As an illustration, in Table 8.4 we compare the economic impacts produced by WD’s investments in life sciences to the impacts produced by similar spending in three of Western Canada’s main industries; Forestry and Logging, Oil and Gas Extraction, and Crop and Animal Production. As can be seen from the table, each dollar invested by WD in life sciences produced increases in output and GDP that are equivalent to or only slightly lower than what would be realized in the other industries. At the same time, each dollar invested by WD produced more full time equivalents jobs than would be realized in the other industries except Crop and Animal Production.

Table 8.4. Economic impacts of incremental spending in selected industries

Impacts of $1 in incremental spending in selected industries		WD Investment in Life Sciences	Forestry and Logging	Oil and Gas Extraction	Crop and Animal Production
	Total Output (Spending)	$1.45	$1.69	$1.40	$1.98
	Total GDP	$0.68	$0.76	$0.85	$0.81
	Total Employment (FTEs per $million)	13.9	10.5	4.6	20.7

Source: Statistics Canada National Open Input-Output Model

It is important to note that the estimates of economic impacts apply only to the time period over which the investment is made. Consequently, the fact that the estimated economic impacts of WD’s investments in life sciences compare favourably to the estimated economic impacts of investments made in these other industries is noteworthy. Relative to these other industries, the majority of economic impacts coming from investments in life sciences take more years to be realized, and the extent of the impacts may be more far-reaching. For example, a study by the World Health Organization¹ found that impacts of life science investments may include impacts relating to long term societal and health improvements. That study identified four categories which capture the additional impacts of health research, a subset of the broader life sciences industry. These categories are:

• Direct cost savings to health care systems
• Benefits to the economy of a healthy workforce
• Benefits to the economy from commercial activities
• Intrinsic benefits to society of improvements in health.

Comparison to economic impact studies of life sciences investments in the U.S.

There have been several studies conducted on the economic impacts of life sciences-related industries in the United States. While the American studies include investments in organizations that are outside of WD’s mandate (the American studies include investments made in for-profit companies), it is nevertheless instructive to compare the economic impacts generated by WD’s investments to those reported in the American context.

A recent example of the American studies is a 2004 study conducted by the Milken Institute, which examined the economic impacts of the biopharmaceutical industry in selected US states.²

As shown in Table 8.5, the Milken study found that in California, each dollar of spending in the biopharmaceutical industry generated $1.65 of in total output, and that each million dollars of spending generated total employment of 21.4 full time equivalent jobs. In Washington State, each dollar of spending in the biopharmaceutical industry was estimated to have generated $1.38 in total output, and each million dollars of spending was estimated to have generated 20.5 full time equivalent jobs.³ (We have included California and Washington State as illustrative examples, as both have established life sciences communities and both are located in the western United States).

Table 8.5. Economic impacts of incremental spending in the biopharmaceutical industry in selected US states

Impacts of $1 in incremental spending in selected US States		California	Washington	WD Investment in Life Sciences
	Total Output (Spending)	$1.65	$1.38	$1.45
	Employment (FTEs per $million)	21.4	20.5	13.9

Source: Milken Institute

From Table 8.5 it can be seen that WD’s investments in life sciences generated total output at a rate that was comparable to that generated by the biopharmaceutical industry in California and Washington State. Moreover, WD’s investments generated employment at roughly 70 percent of the rate estimated for the biopharmaceutical industry in California and Washington, which, is due in part to the emphasis on construction projects in WD’s portfolio of investments.

Economic benefits

As mentioned earlier, economic benefits are broader in scope than economic impacts, and may better demonstrate the breadth of potential and realized outcomes associated with a project.  

In general, however, economic benefits can be difficult to measure effectively because these benefits can be quantitative as well as qualitative. Measuring the economic benefits associated with WD’s portfolio of investments in life sciences is made even more difficult because, notwithstanding the fact that the projects produce benefits that follow WD’s innovation objectives (enhance knowledge infrastructure, increase technology research and development activity, accelerate technology commercialization and adoption, improve linkages, build innovation capacity, and increase access to highly skilled personnel project may produce different types of economic benefits), each project may produce different types of economic benefits.

WD attempts to capture the economic benefits of its investments through the use of performance indicators. Both the economic benefits and the performance indicators may vary from project to project.

For investments such as those made in the life sciences by WD economic benefits can include:

• Enhancements to research capacity
• Building of expertise
• Building of networks and relationships between researchers
• Increased peer recognition
• Leadership in training and research
• Development of new technologies.

These economic benefits may be captured by indicators such as leveraged research funding, additional researchers, revenues, patent applications, spin off companies, and trained scientists.

Because of the difficulties in measurement, the nature and scope of economic benefits associated with WD’s investments in life sciences are best demonstrated through the use of individual case studies. In the following section we present four such case studies (one case study from each province was selected.

• British Columbia Cancer Agency Technology Transfer Project
• University of Alberta Magnetic Resonance Diagnostics Centre Project
• University of Saskatchewan Vaccine and Infectious Disease Organization Expansion Project
• St. Boniface General Hospital Agriculture and Agri-Food Initiative Project.

British ColumbiaCancer Agency technology transfer project

Project Description

The BC Cancer Agency received funding from WD in 2003 to expand its technology transfer and commercialization capabilities. The funding was intended to enhance the agency’s ability in areas such as patent applications, licensing deals and spin-off companies by enabling it to dedicate staff, engage professional services advisors and support staff development.

The BC Cancer Agency received total funding of approximately $1.3 million, of which WD contributed $0.85 million. The details of this project are summarized in Table 8.6.

Table 8.6. BC Cancer Agency, technology transfer project description

Province	British Columbia	Expand BC Cancer Foundation’s technology transfer and commercialization capabilities by: Dedicating staff Engaging professional services advisors Supporting staff development
Client	British Columbia Cancer Agency
Date	2003
Innovation Objective	Technology Adoption and Commercialization
Project Cost	$1,277,800
WD Funding	$850,000
Leveraged Funding	$427,800

Economic Impacts

We have estimated the total economic impacts of this project as:

• $1.75 million in output
• $1.04 million in GDP
• 21.5 full-time equivalent jobs.

Based on WD’s funding of $0.85 million, the impacts attributable to WD’s contributions to the project are:

• $1.16 million in output
• $0.69 million in GDP
• 14.3 full-time equivalent jobs.

The estimated economic impacts of WD’s contribution to this project are summarized in the Table 8.7.

Table 8.7. Economic impacts of BC Cancer Agency technology transfer project

Economic Impact Estimates – WD Committed Contribution		Direct	Indirect	Total
	Output (Spending) (millions)	$0.85	$0.31	$1.16
	GDP (millions)	$0.52	$0.17	$0.69
	Employment (FTEs)	11.3	3.0	14.3

Note: Direct and indirect impacts may not add to total impacts due to rounding.

Economic benefits

Short term benefits

There are many economic benefits associated with this project, as the BC Cancer Agency has contributed to technology commercialization through cancer invention disclosures, patent applications, licensing deals, and material transfer agreements.

Over the short term, the project has exceeded many of its performance targets, such as the disclosure of 33 cancer inventions in 2005, as compared to a target of 23 for 2005. In 2006, this target was also exceeded, with 26 cancer invention disclosures, as compared to the target of twenty-five.

In 2005, 17 new patent applications were made, above the target of 12, and in 2006 the target of 14 applications was also exceeded, with another 17 new patent applications.

Although below target, there was one patent issued and two spin-off companies established in 2006.

The performance indicators for this project, which illustrate the observed short term benefits, are listed in Table 8.8.

Table 8.8. Performance indicators of BC Cancer Agency technology transfer project

Performance Indicators		Baseline	Target	Actual
	Cancer invention disclosures	21	23 in 2005 25 in 2006	33 in 2005 26 in 2006
	New patent applications	10	12 in 2005 14 in 2006	17 in 2005 17 in 2006
	Patents issued	1	3 in 2005 5 in 2006	0 in 2005 1 in 2006
	Licensing deals	2	3 in 2005 5 in 2006	19 in 2005 9 in 2006
	Material transfer agreements	80	55 in 2005 60 in 2006	78 in 2005 65 in 2006
	Spin-off company	1	2 in 2005 3 in 2006	0 in 2005 2 in 2006

Long term benefits

In addition to these short term economic benefits, there are long term economic and societal benefits that are expected to occur. The project was intended to help the BC Cancer Agency achieve effective technology transfer. The spin-off companies and licensing deals generated are expected to lead to the commercialization of new technologies that have the potential to improve health outcomes. By enhancing its ability to manage intellectual property and the commercialization process, the Technology Development Office of the BC Cancer Agency can advance the early detection and therapeutic intervention of cancer.

In the long run, this may lead to reduced treatment costs and enhanced quality of life for cancer patients.

University of Alberta MRDC project

Project description

In 2004, The Governors of the University of Alberta received total funding of approximately $2.7 million for the Magnetic Resonance Diagnostics Centre (MRDC). The project was intended to allow the MRDC to use new technologies to identify, monitor and implement treatments for diseases such as asthma, diabetes and pneumonia. Research at the MRDC will use a Nuclear Magnetic Resonance (NMR) spectrometer, a sample handling robot, and an advanced computer system.

WD committed $650,000 to this project for the purchase of research equipment. The funding from WD was intended to assist with the purchase of the NMR spectrometer and the robotic handling system.

It is expected that research associated with this project will lead to an increase in the number of known disease markers, refinement of the patient-driven medical treatments being investigated and improvements in the equipment and software used in the project. The research may also lead to the development of technologies with applications in health care.

The details of this project are summarized in Table 8.9.

Table 8.9. University of Alberta Magnetic Resonance Diagnostics Centre Project

Province	Alberta	Purchase of NMR equipment at the Magnetic Resonance Diagnostics Centre to support research intended to: Increase the number of known disease markers Refine patient-driven treatments Improve capabilities of equipment and software Lead to commercial applications by development of technologies with health care applications
Client	The Governors of the University of Alberta
Date	2004
Innovation Objective	Knowledge/Research Infrastructure
Project Cost	$2,651,154
WD Funding	$650,000
Leveraged Funding	$2,011,154

Economic impacts

We have estimated the total economic impacts of this project as:

• $3.24 million in output
• $1.08 million in GDP
• 19.6 full-time equivalent jobs.

Based on WD’s funding of $0.65 million to the MRDC, the impacts attributable to WD’s contributions to the project are:

• $0.78 million in output
• $0.23 million in GDP
• 3.9 full-time equivalent jobs.

The estimated economic impacts of WD’s contribution to the MRDC project are summarized in Table 8.10.⁴

Table 8.10. Economic impacts of University of Alberta Magnetic Resonance Diagnostics Centre project

Economic Impact Estimates – WD Committed Contribution		Direct	Indirect	Total
	Output (Spending) (millions)	$0.65	$0.13	$0.78
	GDP (millions)	$0.09	$0.14	$0.23
	Employment (FTEs)	2.7	1.1	3.9

Notes: 1) The analysis assumes that the import share of equipment is 38% (that is, 62% of equipment expenditure would accrue to the Canadian economy); 2) Direct and indirect impacts may not add to total impacts due to rounding.

Economic benefits

Short term benefits

The short term benefits of this project are many, as research at the MRDC has lead to the initiation of new disease diagnostic programs, an increase in research capacity, skills development through training of scientists, building of linkages through the formation of partnerships, and development and use of new technologies.

The project has met or exceeded all of its performance targets. There have been ten new disease diagnostic programs initiated, as compared to a target of four programs. The MRDC has trained 16 people, formed 17 new partnerships, and published five papers. The MRDC has also developed three new technologies, one of which is in use.

Through this project, MRDC has leveraged $0.6 million of cash funding and $1.2 million of in-kind funding.

With the additional equipment in place, the Magnetic Resonance Diagnostics Centre generated additional revenues of $145,000 above its baseline level of $80,000 and increased the number of skilled personnel by one. The total estimated impacts of this additional revenue are:

• $0.20 million in output
• $0.12 million in GDP
• 1.5 full-time equivalent jobs.

Table 8.11 shows the short term benefits of this project, as measured by its performance indicators.

Table 8.11. Performance indicators of University of Alberta MRDC project

Performance Indicators		Baseline	Target	Actual
	Disease diagnostic programs initiated	2	4	10
	Patent applications submitted	0	1	2
	Peer review projects funded	0	2	4
	Increase in capacity	200	1,000	1,000
	Increase skilled personnel	1	2	2
	Number of people trained	0	4	16
	Number of jobs created or maintained	2	2	2
	Number of new contacts	1	1	2
	New revenues	$80,000	$187,000	$225,000
	Number of partnerships formed	2	4	17
	Number of members	2	4	17
	Number of conferences	1	n/a	5
	Number of papers published	2	4	5
	Number of technologies developed	0	0	3
	Number of new technologies used	0	0	1
	Funds leveraged	n/a	n/a	Cash: $577,000 In-kind: $1,200,000

Long term benefits

The MRDC is expected to generate economic and societal benefits over the long term through the development of new technologies with commercial applications. This project at the MRDC is intended to facilitate the commercialization of the current proof of concept that metabolites can be used as disease markers by the development of analytical technologies.

The MRDC has two industry partners for this project, Chemonx Inc. and Varian Inc. Varian is the manufacturer of the NMR equipment for this project, while Chemonx is a University of Alberta spin-off company that develops software to analyze NMR spectroscopy results. To the extent that the MRDC is successful in achieving its goals, these two companies will also benefit through use of their technologies and ultimately, increased revenues.

Over time, this research may lead to the use of analysis of metabolites as a diagnostic tool, along with the associated techniques and medical diagnostic devices that could potentially save millions of dollars in health care costs. Costs may be realized through lower diagnostic testing costs, quicker diagnosis of disease, and faster application of treatment.

University of Saskatchewan VIDO Expansion project

Project description

The Vaccine and Infectious Disease Organization (VIDO) at the University of Saskatchewan received funding in 2003 to assist with cost overruns incurred in the three-story addition to the VIDO building, and to purchase equipment. The total funding received by VIDO for this project was $1.91 million.

Under previous projects, VIDO received funding from WD to construct the building addition and to purchase large equipment. WD’s contribution to this current project was intended to assist with the cost overrun of the building addition and to assist with the purchase of small equipment that costs less than $10,000 per item. WD’s contribution to this project was $1.14 million.

The expansion and new equipment is expected to enable VIDO to conduct new research projects in genomics, therapeutics, delivery systems and diagnostics in state of the art facilities. Among VIDO’s goals is to develop vaccines for the cattle and poultry industries. The research conducted at VIDO is also expected to have human health applications.

The details of this project are summarized in Table 8.12.

Table 8.12. University of Saskatchewan Vaccine and Infectious Disease Organization Project

Province	Saskatchewan	Vaccine and Infectious Disease Organization (VIDO) building expansion completion and equipment purchase to: Conduct research in genomics, therapeutics, delivery systems and diagnostics Use state of the art research equipment Develop vaccines for production and sale to cattle and poultry industries
Client	University of Saskatchewan
Date	2003
Innovation Objective	Technology Research & Development
Project Cost	$1,910,000
WD Funding	$1,140,000
Leveraged Funding	$770,000

Economic impacts

We have estimated the total economic impacts of this project as:

• $2.67 million in output
• $1.03 million in GDP
• 17.7 full-time equivalent jobs.

Based on WD’s funding of approximately $1.1 million to VIDO, the impacts attributable to WD’s contributions to this project are:

• $1.47 million in output
• $0.49 million in GDP
• 8.4 full-time equivalent jobs.

The estimated economic impacts of WD’s contribution to the VIDO project are summarized in Table 8.13.⁵

Table 8.13. Economic Impacts of University of Saskatchewan Vaccine and Infectious Disease Organization Project

Economic Impact Estimates – WD Distributed Funding		Direct	Indirect	Total
	Output (Spending) (millions)	$1.14	$0.33	$1.47
	GDP (millions)	$0.23	$0.26	$0.49
	Employment (FTEs)	5.6	2.8	8.4

Notes: 1) The analysis assumes that the import share of equipment is 38% (that is, 62% of equipment expenditure would accrue to the Canadian economy). 2) Direct and indirect impacts may not add to total impacts due to rounding.

Economic benefits

Short term benefits

In the short term, the project has completed the addition to the VIDO building, purchased and installed the equipment, and hired additional staff.

VIDO has increased its number of staff from 90 to 124. The facility also has seven visiting scientists and 10 trainees, for a total of complement of 141 people. Although below the target of $13 million, VIDO has increased its revenues from $9 million to $11.4 million.

The total estimated impacts of VIDO’s additional revenue and staffing complement are:

• $3.29 million in output
• $1.94 million in GDP
• 64.5 full-time equivalent jobs.

The performance indicators for this project, which demonstrate short term benefits of VIDO’s expansion and equipment purchase, are shown in Table 8.14.

Table 8.14. Performance Indicators of University of Saskatchewan Vaccine and Infectious Disease Organization Project

Performance Indicators		Baseline	Target	Actual
	Staff complement	90	140	124 employees 7 visiting scientists 10 trainees
	Revenues	$9 million	$13 million	$11.4 million

Long term benefits

Over the longer term, there are additional economic and societal benefits expected to result from this project. The purpose of VIDO is to conduct research and development. This project allows VIDO to carry out new research in genomics, therapeutics, delivery systems and diagnostics.

The research activities of VIDO focus on innovative vaccine development, delivery and immune system modulation. Although the main focus of VIDO’s research is the beef, dairy, poultry and swine industries, there are potential human health applications as disease control methods are investigated. It is expected that over the long term, the results of VIDO research will lead to the development of vaccines that will be available commercially.

This project allowed VIDO to successfully compete in the Bill and Melinda Gates Foundation Grand Challenge Initiative, which lead to an award of $US 5.6 million in July 2005 for a five year period. This award, along with other funding, has allowed VIDO to collaborate with Canadian and international universities and companies. These partnerships facilitate the sharing of knowledge and enhance the recognition of VIDO as a research and development centre.

St. Boniface General Hospital Agriculture and Agri-food Initiative Project

Project description

In 2005, St. Boniface Hospital received $7.5 million in funding to establish the Agriculture and Agri-Food Collaborative Initiative. More specifically, this funding was provided to support the construction of laboratories for the Canadian Centre for Agri-food Research in Health and Medicine (formerly the National Centre for Agri-food Research in Medicine) under the Winnipeg Partnership Agreement.

The funding was used for construction as well as purchase and installation of equipment, in order to facilitate collaboration between St. Boniface General Hospital Research Centre (SBGHRC) and the Agriculture and Agri-Food Collaborative Initiative by expanding the research capacity at the Canadian Centre for Agri-food Research in Health and Medicine (CCARM).

As part of the construction activities, one floor of the SBGHRC will be redeveloped, animal facilities will be expanded, and two unoccupied floors of the Asper Clinical Research Institute will be developed to host clinical trial activities.

WD committed $2,500,000 to the St. Boniface General Hospital for this project.

Table 8.15 summarizes the details of this project.

Table 8. 15 St. Boniface General Hospital Agriculture and Agri-Food Collaborative Initiative Project

Province	Manitoba	Establish Agriculture and Agri-Food Collaborative Initiative by: Redeveloping existing facilities, including equipment Enhancing animal facilities Enhancing clinical trial capability and developing informatics infrastructure
Client	St. Boniface General Hospital
Date	2005
Innovation Objective	Knowledge Infrastructure
Project Cost	$7,500,000
WD Funding	$2,500,000
Leveraged Funding	$5,000,000

Economic impacts

We have estimated the total economic impacts of this project as:

• $12.23 million in output
• $5.70 million in GDP
• 98.2 full-time equivalent jobs.

Based on WD’s funding of $2.5 million, the impacts attributable to WD’s contributions to the project are:

• $4.08 million in output
• $1.90 million in GDP
• 32.7 full-time equivalent jobs.

The estimated economic impacts of WD’s contribution to this project are summarized in Table 8.16.⁶

Table 8.16. Economic impacts of St. Boniface General Hospital Agriculture and Agri-Food Collaborative Initiative Project

Economic Impact Estimates – WD Committed Contribution		Direct	Indirect	Total
	Output (Spending) (millions)	$2.50	$1.58	$4.07
	GDP (millions)	$1.08	$0.82	$1.90
	Employment (FTEs)	19.4	13.3	32.7

Notes: 1) The analysis assumes that the import share of equipment is 38% (that is, 62% of equipment expenditure would accrue to the Canadian economy). 2) Direct and indirect impacts may not add to total impacts due to rounding.

Economic benefits

Short term benefits

In the short term, the project is expected to lead to economic benefits through an increase in space available for research and development and skills training. The project is expected to lead to additional research projects being undertaken in the new facility, the addition of new researchers, and demonstrations of the viability of new technologies.

As shown in Table 8.17, performance measurements have been set for this project, which illustrate the expected economic benefits to be observed over the short term. These measurements were not yet completed over the study period.

Table 8.17. Performance Indicators of St. Boniface General Hospital Agriculture and Agri-Food Collaborative Initiative Project

Performance Indicators		Baseline	Target	Actual
	Number of square meters dedicated to R&D and skills training	0	3,450	n/a
	Value of R&D undertaken in the new facility or using new equipment supported by this project	0	$10 million	n/a
	Principal researchers in NCARM	5	11	n/a
	Demonstrations of viability of new technologies	1	8	n/a
	Number of patents filed	2	4	n/a
	Occupancy of Asper Clinical Research Institute (ACRI) building, designated floors	0	100%	n/a
	Square footage of ACRI used for research or business incubation purposes	4,600	28,000	n/a

Long term benefits

There is additional long term economic and societal benefits expected to result from this project. The construction and equipment purchases are expected to facilitate the ability of NCARM to conduct research on natural food products, functional foods and nutraceuticals. Research is expected to be undertaken through non-human studies as well as clinical trials. It is anticipated that successful research projects will be commercialized via a technology transfer mechanism that has already been formalized among project collaborators.  

Additional long term benefits that are expected include an increase in the variety of food and health products that are developed and manufactured in Manitoba. This would increase employment, as well as generate new income streams for the agricultural cluster.

More generally, nutraceuticals and functional foods have the ability to improve human health, such as through protection from chronic disease, and, in turn, reduce health care costs.

__________

¹ Martin Buxton, Steve Hanney, and Teri Jones, "Estimating the economic value to societies of the impact of health research: a critical review," Bulletin of the World Health Organization 82 (10), October 2004, p733-738.

² Milken Institute, "Biopharmaceutical Industry Contributions to State and US Economics, October 2004, available at http://www.milkeninstitute.org/pdf/biopharma_report.pdf

³ Economic impact multipliers were not provided for GDP (GDP).

⁴ Note that this is based on the assumption that 38% of equipment purchase costs leak out of the Canadian economy. This is based on a 2004 PwC study for the University of Manitoba, University of Manitoba Regional Economic Impact Analysis. In the study, import leakage at the provincial level was 38% to 49% for comparable spending categories. We therefore make the conservative assumption that 38% of equipment expenditure leaks out of the Canadian economy, although we would expect that leakage on the national level should be less than 38%.

⁵ Note that this is based on the assumption that 38% of equipment purchase costs leak out of the Canadian economy. This is based on a 2004 PwC study for the University of Manitoba, University of Manitoba Regional Economic Impact Analysis. In the study, import leakage at the provincial level was 38% to 49% for comparable spending categories. We therefore make the conservative assumption that 38% of equipment expenditure leaks out of the Canadian economy, although we would expect that leakage on the national level should be less than 38%.

⁶ Note that this is based on the assumption that 38% of equipment purchase costs leak out of the Canadian economy. This is based on a 2004 PwC study for the University of Manitoba, University of Manitoba Regional Economic Impact Analysis. In the study, import leakage at the provincial level was 38% to 49% for comparable spending categories. We therefore make the conservative assumption that 38% of equipment expenditure leaks out of the Canadian economy, although we would expect that leakage on the national level should be less than 38%.