Navigating Geopolitical Shifts: Canada’s Innovation Strategy for the Life Sciences Sector
Sep 11, 2025 @ 12:00 pm - 1:30 pm EDT
Executive Summary
The virtual panel brought together sector experts to identify obstacles and propose actionable policy and industry responses. Panelists highlighted three primary challenges: volatile global capital flows and intensified international competition that reduce investment predictability; a persistent shortage of sustained late-stage and institutional capital that often sends value abroad; and regulatory and infrastructure constraints — slow approvals, limited regulatory capacity, fragmented clinical-trial systems, and shortages of lab space and experienced scaling talent.
Recommended responses focused on coordinated, long-term public-private action. Panelists urged the development of a durable national industrial strategy aligning R&D, procurement, trade, talent policies; catalytic public capital and structured mechanisms to mobilize pension funds and institutional investors; and expanded non-dilutive translational funding to bridge the “valley of death.” They also recommended protecting and modernizing regulatory review capacity with faster review tracks and regulatory incentives, reforming fiscal tools such as SR&ED and clinical-trial tax credits, and removing interprovincial frictions for trials and health data.
Industry steps include investing in differentiated platforms, adopting AI across discovery and development, and accelerating trial operations. Panelists identified Canada’s comparative advantages — world-class AI research and an ethical AI reputation, under-connected but valuable health data, strengths in biologics and medtech, and geopolitical neutrality that can attract firms.
The discussion concluded with a call for next steps: create a cross-jurisdictional task force, pilot catalytic co-investment funds, and set measurable targets to anchor innovation, IP, and economic returns in Canada. Priority timeline: pilots within 12 months, and formal strategy within 24 months, with clear metrics.
Summaries from the panel (4–6 bullets per question — anonymized, ordered by emphasis)
Q — What are the top three challenges currently hindering innovation in your sector?
- A global “whiplash” in investment and intense international competition: panelists repeatedly described rapid geopolitical shifts that have made capital flows uncertain and created a scramble among jurisdictions to attract life-sciences investment. This reduces predictability for Canadian firms.
- Insufficient, uneven access to capital (especially late-stage): speakers emphasized a gap in sustained venture and growth capital in Canada; large deals and exit value are often driven by international investors so much of the economic return leaves the country. Pension funds and institutional investors were flagged as under-allocated to domestic life-sciences.
- Regulatory performance and slow approvals: delays and capacity constraints in regulatory review were named as a persistent barrier to launching innovations and attracting investment; panelists urged protecting/augmenting regulatory capacity to reduce delays from 3 years to a months when the approval has already been given in one of the ICH countries.
- Talent and infrastructure bottlenecks (lab space, experienced executives): early-stage companies often struggle to find ready-to-move-into lab space and “been-there-done-that” executive talent to scale companies.
- Lack of a cohesive long-term industrial strategy / low R&D intensity: several panelists pointed out Canada’s low R&D as % of GDP and the absence of a multi-decade industrial strategy, which undermines consistent signals to investors and talent.
Q — How should the government and industry respond to enable long-term innovation and competitiveness?
- Signal quickly and decisively — champion life sciences as a national priority: panelists urged governments to send unequivocal signals (strategy + budget) so Canada is seen as “open for business” for life sciences investment. Short-term gestures won’t suffice — they want a durable commitment.
- Create and fund a cohesive industrial strategy that ties R&D, trade, talent and procurement together: recommendations included a 10–20 year plan, clear sector targets, and aligning procurement to industrial objectives so government becomes an early adopter and market-maker. Examples were given of other small countries that adopt this model.
- Mobilize patient capital (pension funds / co-investment) and expand non-dilutive tools: panelists proposed mechanisms to bring Canadian pension funds and institutional investors in (co-syndication, dedicated funds, carve-outs) plus strengthen non-dilutive programs (IRAP, grants) to improve funding across stages.
- Streamline and protect regulatory capacity; use regulatory incentives: protect Health Canada’s review capacity, introduce or modernize incentive regimes (e.g., orphan-drug-style incentives, fee waivers, faster review tracks) to make Canada a faster launch market.
- Industry should build platforms, adopt AI, and speed trials: private sector actions include investing in differentiated platforms (human-cell/organoid models, data-generating platforms), adopting AI for drug discovery, and accelerating clinical trial operations (citing examples of fast local trial timelines).
Q — Key recommendations and next steps for enhancing private-sector R&D investment in Canada
- Attract and retain late-stage capital (create Canadian vehicles / incentives for pension funds): propose dedicated Canadian science/innovation funds or a percentage-pledge from large pension pools, to keep returns and reinvestment domestic. Incentive to VC will be required to support this requirement to increase ROI of pension funds. Panelists stressed leverage effects — public catalytic capital attracts larger private co-investments.
- Modernize fiscal tools — SR&ED, clinical-trial credits, patent incentives: update SR&ED, introduce targeted tax credits (clinical trials), and consider patent-box or other IP incentives so finance levers better reward R&D and scale-ups.
- Expand non-dilutive translational funding and carve-outs: increase and tailor grants/programs for the translational “valley of death” (bench→clinic), and consider specific carve-outs in VC programs to seed life-sciences growth.
- Make Canada an easier place to run complex clinical studies and commercialize: reduce administrative friction across provinces (data portability/interprovincial barriers), speed trial start-up timelines, and promote domestic clinical trials tied to Canadian IP (panelists noted only a small share of trials originate from Canadian innovation).
- Targeted infrastructure and platform investments: invest in next-gen lab/platform infrastructure (organoids, organ-on-a-chip, human-derived models, data platforms, new equipment generating new types of data) that generate novel data as a competitive differentiator.
Q — What new opportunities or comparative advantages can Canada exploit?
- Ethical AI leadership and AI-accelerated drug discovery: Canada’s strong AI research base and reputation for ethical AI can be leveraged to accelerate drug discovery and data analytics — panelists urged faster private-sector adoption and rapid investment to capture first-mover advantages.
- Health-system data and a coordinated national clinical-study environment: panelists pointed to Canada’s rich (but siloed) health data as a potential competitive asset if provinces reduce barriers and Canada builds an easy, unified environment for complex trials.
- Biodefense / dual-use tech as national-security rationale for funding: framing life sciences investment as part of health and national security (biodefense, pandemic preparedness) opens additional funding and policy channels. Examples were given of companies that pivoted to pandemic response via existing government partnerships.
- Niche platform leadership (precision biologics, medtech, smart implants): Canada can double down where it’s already strong — biologics, precision medicine, certain medtech — and act as an early adopter (procurement) to scale those wins (example: data-rich smart implant case cited).
A window to attract companies and talent amid global shifts: with geopolitical uncertainty elsewhere, Canada’s neutral reputation and high-education talent pool create a timely opportunity to attract companies, Canadian ex-pat entrepreneurs to bring or run their (next) company in Canada and create anchor jobs — but speed and clear policy signals are essential.
This summary has been generated with the assistance of AI tools.
