A venture-backed Canadian biotechnology industry is in its infancy, but faced with hostile capital markets, start-ups need clear exit plans. Consolidation's already started.

Genzyme is that rare biotech company that is both profitable and diversified. To finance its entrepreneurial businesses without diluting its original shareholders, it has issued separate "tracking" stocks for its various wholly-owned divisions: Tissue Repair, Molecular Oncology, and its General division. The financing strategy brings tax advantages and a way to incentivize managers. But skeptics worry that it adds a complexity that will scare off investors.