Good afternoon, Mr. Chairman and members of the committee.
My name is Andrew Booth and I'm the chief commercial officer at STEMCELL Technologies. I appreciate the invitation to address you here today.
STEMCELL is Canada's largest biotech company. We have over 1,400 employees worldwide, with over 1,000 in our headquarters in Vancouver. Our catalogue of over 3,000 products is used by research scientists, universities and pharmaceutical companies around the world, enabling life sciences research.
Business has been good. Fiscal 2018 revenues were approximately $200 million and we hired over 350 people. We're on track to increase revenues another 25% in this fiscal year. We added over 125 employees in the last quarter alone. We have 90 open positions today and a plan to hire over 3,000 more people in the coming 10 years. We're a proudly diverse, proudly high tech and also proudly Canadian company.
In short, when the Minister of Innovation, Science and Economic Development, Navdeep Bains, talks about building Canadian anchor companies, he's talking about companies like ours. Indeed, Minister Bains has visited our facility in Vancouver, as have Minister Champagne, Minister Sajjan, MPs Terry Beech and Pamela Goldsmith-Jones, as well as MPs Michael Chong and Erin O'Toole. I believe all would agree that STEMCELL is a role model Canadian company that is succeeding globally.
We are, in large part, believers of the government's innovation agenda. That said, there are still disconnects between the stated goals and the means taken to achieve them. Bill C-97 is a case in point. Specifically, we would like to bring your attention to the changes that the bill recommends to the scientific research and economic development tax credits, or SR and ED. We believe it was an excellent decision to remove the so-called profit cap on the enhanced SR and ED credits and associated refundable portion of the SR and ED system. It should help self-funded companies grow without undue investor pressure to exit at an early stage. This may, in turn, result in fewer companies moving intellectual property and corporate headquarters outside of Canada.
Unfortunately, the government has missed an opportunity in failing to also address SR and ED's taxable capital measurement. It is our view that this was a mistake. The taxable capital measurement reflects a “small is beautiful” approach to innovation, which does not align well with the government's stated goals to grow and keep world-leading tech firms here in Canada. It also tilts the playing field away from companies that have larger capital investments in things like manufacturing, infrastructure and test equipment. These companies are inherently stickier and more likely to endure in Canada over time.
We would propose replacing the taxable capital cap with a sliding scale where a 1% enhanced SR and ED credit is granted to companies that reinvest half a per cent of their gross revenues into SR and ED-eligible research and development. This enhanced credit would be capped at a maximum of 20% above the base rate for those companies that invest 10% of revenues or more into R and D.
As small and medium-sized enterprises generally reinvest higher proportions of available revenues in R and D, the government could continue to encourage the start-up community without reducing incentives for larger firms, which continue to invest and grow into anchor companies. At STEMCELL alone, we would estimate that this change would result in the immediate hiring of 20 to 25 research scientists.
By making slight adjustments to the technical nuts and bolts of the policy, the federal government can better support Canadian tech companies of all sizes. This will help develop and maintain not only economic value and jobs in this country, but also the sort of intellectual property portfolios that will be the true engines of the economy in the 21st century.
Once again, I thank you for your time and I look forward to taking any questions.