So what happens if you fail to complete a course by a certain level? For example, for Biology physics is required to be completed by second year. Does anyone know what happens if you don't?

Well generally your program ends up being extended by an extra semester or year, which is needed to make up the credit (equivalent to if you took the course and failed it).

I've only heard of people in engineering in situations like this, so I'm unsure if it applies to whatever you're in. Usually they end up taking a kind of semester or year in limbo where they aren't really a first or second year, and they retake courses they failed while also taking easy courses to boost their mark. Sometimes the streams they're trying to get into will make exceptions and let them take some of the courses they didn't fail the prerequisites for in that time.

Dunno if that helps much.

I'm assuming you're in second year Bio now?

I'm really not sure what would happen, but I assume you'd be able to either switch into another stream that doesn't require Physics (like Psych) or you might be allowed to stay in the program if you register for the course in the summer. I don't think its a huge deal until you go to graduate (but if you still haven't completed it by then, its a very big deal). If the course is full (as I think both Physics currently are) then they will probably be a bit more lenient.

However, you should talk to an academic adviser ASAP. While I can't see it being a huge deal, its a very real possibility. So yeah, do that.