B.C.’s Stemcell Technologies feels the squeeze as U.S. research funding cuts, tariffs hit business

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One of Canada’s largest life sciences companies, Stemcell Technologies Canada Inc., was already contending with tough conditions in the drug development market it serves before Donald Trump was re-elected as U.S. president last fall.

Now, the Vancouver maker of media and instruments used in drug research faces a further squeeze on its business because of Mr. Trump’s MAGA-inspired moves.

Stemcell, which derives 60 per cent of its revenue from the U.S. market, was set Tuesday to see those goods slapped with a 25-per-cent tariff south of the border. The company had prepared for the trade action by shipping a month’s worth of inventory to the U.S. beforehand.

Now, chief executive officer and founder Allen Eaves is waiting to see if targeted retaliatory tariffs from Canada hit his company a second time, as Stemcell imports much of the materials that go into its products from the U.S.

There’s a third potential impact from stateside changes: The Trump administration last month said it would limit overhead funding by the National Institutes of Health to drug researchers and institutions, which could translate into a US$4-billion cut to grants. (Canadian researchers working on projects with U.S. counterparts could also be affected.) It has also frozen consideration of new grant applications to ensure they comply with Mr. Trump’s executive order to stop funding diversity, equity and inclusion initiatives.

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Researchers typically use some of their NIH grants to buy the products sold by Stemcell and rivals such as Thermo Fisher Scientific Inc., including cell separation machines and liquid media used to support and nourish stem cells and tissue cultures used in drug research. Dr. Eaves said NIH-funded researchers account for 24 per cent of Stemcell’s revenue.

“The worry is obviously reduced sales, reduced profit margins. In the long term we have to start thinking about other markets that are more stable,” he said in an interview. Stemcell has 10,000 customers and derives about 20 per cent of revenues from Europe, 9 per cent from China and 3 per cent from Canada.

Dr. Eaves, a cancer researcher and co-founder of the Terry Fox Laboratory with his late wife Dr. Connie Eaves, launched Stemcell in 1993 to serve growing demand for cost-effective cell culture media to grow stem cells. Stemcell revenues expanded steadily over the next three decades, averaging 20-per-cent annual growth and reaching $523-million in 2023. By that year the company was forecasting revenues would reach $2-billion in 2030.

Most of its growth happened earlier this decade owing to a pandemic-era biotech boom fuelled by cheap money and excitement over scientific breakthroughs in several areas.

But rampant inflation, which led to a spike in interest rates, cooled the sector’s prospects and left many early-stage drug developers valued at less than their cash on hand. Many died, downsized or slowed development. That affected Stemcell: Its revenue growth stalled last year, prompting it to cut hundreds of positions. The company now has about 1,800 employees.

“We’ve suffered hugely from that,” Dr. Eaves said. He added that the knock-on effects of changes by the Trump administration “just means our growth will be really slow for the next several years. That would be my guess” unless the government changes its policies. But Dr. Eaves stressed that his company “is okay now. We are balanced in terms of staffing and revenues. We can handle this now, but it’s been costly, and losing people is very sad.”

Asked if Stemcell, which makes its wares in Canada, could move any production to the U.S., Dr. Eaves replied: “No, because I’m a Canadian nationalist.” But he added, “I’m thinking about all these things. We’ll see how things go.” Any such move would come as a last resort, he said.