How to Innovate Life Sciences in Canada
This is an excerpt from Canada 2020’s upcoming report ‘Being Innovative.’ The report will be released in early November, 2016
By Mike Moffatt
Assistant Professor, Western University
There are concerns about the pace of innovation in the life sciences industry — from those inside and out.
One 2015 Globe and Mail headline asked, “Why is Canada’s life sciences sector flatlining?”
There are many perspectives as to the challenges this sector faces, and how policy could improve to grow innovation and global competitiveness in this sector.
Geography is an issue in this sector — there are clusters of life sciences researchers all across Canada. A 2003 report by Simon Fraser University’s Centre for Policy Research on Science and Technology identifies Halifax, London, Montreal, Ottawa, Saskatoon, Toronto and Vancouver as the seven communities with life sciences clusters in Canada.
Life Sciences Ontario estimated that in 2014, 83,000 Ontarians worked for life sciences firms (under one definition of “life sciences”), generating more than $40 billion in revenue for the province’s life sciences industry.
Canada 2020 traveled to the MaRS Discovery District in Toronto. After a tour of Johnson & Johnson’s JLABS across the street, we sat down in a MaRS boardroom with a group of industry leaders, NGOs and regulators to discuss innovation in the life sciences. Here is some of what they told us:
Defining the life sciences:
When Canada 2020 started researching the life sciences industry, we did not have a precise definition of the sector. It turns out, we weren’t alone. Our panel discussed how “life sciences” was an umbrella term for many different areas, including pharmaceuticals, medical devices and (depending on whom you ask), health care, and how there was no standardized definition. Breaking life sciences down into different areas is important, as market structures and policy challenges often differ greatly between areas.
“Health is deemed to be a ‘social’ portfolio and the business and investment and industry and all the things that we’re talking about today are not recognized by health as a portfolio as part of [the federal] government’s Innovation Agenda. One of the big wins in this is educating such that we shift that mindset so that the folks in health understand that they’re here to promote the health and well-being of Canadians and that that actually involves active engagement, understanding and collaboration with the folks who are actually going to bring the new ideas, technology,” one roundtable attendee told us.
The domination of the Canadian non-generic pharmaceutical industry by foreign firms was also a concern. The panel noted that Canada risks having a “branch-plant” sector with the truly innovative work happening in the home markets. The sheer size of multinational players in the area creates a barrier to entry to new firms, but also offers funding opportunities for smaller firms with innovative ideas. Other parts of the life sciences ecosystem, such as medical devices, are seen as having lower barriers to entry.
Some participants saw obtaining early-stage funding in Canada as difficult , with later-stage funding somewhat easier to find. Israel was cited as a country that successfully addressed this problem through a seed funding program with the government contributing 15 per cent of the capital. Others described large bottlenecks on the path to commercialization.
“We have great ideas, but we’re not developing them so they can survive the component that comes after them,” one roundtable member stated.
Engagement with multinational enterprises and the health-care system was cited as a potential solution to the problem of commercializing innovation. commercialization problem.
The role of the Health-Care System:
Canada’s single-payer health-care system was seen as a competitive advantage, as it creates enormous purchasers of life sciences products that can use their buying power to effect change.
Procurement policies in the health-care system would need to change to make this happen. The focus would need to be less on obtaining the lowest cost and more on driving innovation with outcome-based metrics for success, or, as one participant described, it, “running public services with private-sector discipline.”
One participant talked about the need for the sector to speak in a focused and unified voice, which includes “senior political involvement.” Australia was cited as a country that does this well, and concerns were raised about Canada’s ability to compete on the international stage and win global mandates without a unified national strategy.
A second participant felt that Canada was at a disadvantage because this country does not have as many economic development officers in foreign jurisdictions as its competitors do; a cluster in Catalonia, Spain was cited for being particularly effective at attracting foreign direct investment using this strategy.
Finally, another member of the roundtable noted that Toronto’s life sciences ecosystem was not well understood, as research groups had never worked together to map it out, as has been done in some U.S. cities. Roundtable members believed that such a mapping would be of value, as it would identify potential gaps in the system, as well the existing strengths of the sector.
One concern was that while Canada excels at academic research in the life sciences, the country lags behind on commercialization. One participant felt that universities and individual researchers lacked the proper incentives to drive innovation and that the idea of “selling out” creates a cultural barrier to scientists working on commercializing their findings.
Participants in the roundtable were highly optimistic that an innovative life sciences sector would benefit all Canadians.
The development of new medical devices and pharmaceuticals make the lives of Canadians better. Furthermore, innovation can be in how Canadians access their health data, which would allow Canadians to make more informed health and lifestyle decisions. In the words of one roundtable participant, enhanced innovation will result in “benefits to patients, to the economy through reduced health-care costs, and through job creation.”
Strong life sciences clusters can help, but there was recognition that governments have tough choices to make. As one participant put it, “We are good at some things, not good at others, and we need to put our money where can generate the best returns … . The money can’t be everywhere.”
Mike Moffatt is an Assistant Professor at Western University’s Ivey School of Business.
This is an excerpt from Canada 2020’s upcoming report ‘Being Innovative.’ The report will be released in early November, 2016.
Canada 2020 is Canada’s leading, independent, progressive think-tank working to redefine the role of the federal government for a modern Canada. Founded in 2006, Canada 2020 has spent a decade publishing original research, hosting events, and starting conversations about Canada’s future. Our goal is to build a community of progressive people and ideas that will move and shape governments.