Budget 2018: A Platform for Scale and Focus in Canadian life sciences

Published On: March 2018Categories: Editorials, Science & Innovation in Federal Budget 2018


Gordon C. McCauley

CDRD – The Centre for Drug Research and Development

President & CEO

Gordon McCauley

Canadian life sciences can lead the world – but we’re not there yet. The good news is we now have many of the tools to get there.

“Equality + Growth”, the 2018 federal budget offered a sea change for the Canadian research and innovation landscape, and begins to address the decline we have seen in our global research standing over the last decade. But in looking at its impact in terms of the life sciences sector specifically, we need to back up a little to look at where the industry truly is, and why we haven’t yet translated Government’s previous investments in basic health research into a viable and sustainable industrial sector.

For example, just a few weeks ago the successful “Super Clusters” were announced, covering everything from digital technologies to oceans to artificial intelligence, smart agri-food and advanced manufacturing – with these led by industry powerhouses such as Telus and Microsoft. What we did not see amongst that list was a standalone life sciences super cluster– and the primary reason is that Canada is in fact the only advanced pharmaceutical market without a global anchor company, having two of which were prerequisites for the Super Cluster evaluation.

Anchors are well named because the nomenclature describes their role and significance in building an industrial ecosystem. In Canada, we have all of the components to build such anchors, and the data are clear that although there is tremendous inherent value of discovery research in its own right, we absolutely must maximize the impact of that research through the building of new anchor companies if we are to compete globally.

So the significant and long overdue efforts in Budget 2018 focused largely on the funding of basic research (e.g. through increased funding to the granting councils as recommended by the Naylor Report); we need to focus on how the budget, and we as an industry, addresses the translation of such investment into what can become the much-needed Canadian life sciences anchor companies.

For 150 years, Canada has largely relied on the extraordinary abundance of its natural resources to build its economy, but only to the extent that we export those resources in a raw form for others to extract further value. We are at serious risk of doing exactly the same thing with another resource: our incredible scientific research enterprise – especially as public policy makers begin the process of restoring its funding.

Case in point: Canada has a proud history of health research to support innovation, and punches far above its weight on the credibility, competitiveness and impact of that research. With less than 0.5 per cent of the world’s population, we produce 5% of the world’s research publications , with a citation rate that is among the top six nations globally and 43% higher than the global average. We’re 15th in the world on the World Intellectual Property Organization’s “Global Innovation Index”. Yet when we measure the efficiency of our IP, indicative of gaining the economic activity associated with it, we plummet to 57th.

These data suggest that far too often we export this raw material as is – before we have an opportunity to fully exploit its value. Classically, we develop products to proof-of-concept or even commercial validation, and then sell. We are a community dominated in number by small companies struggling to find a scale-up opportunity. And far too often, we see these successes acquired by foreign entities and the jobs, expertise, and economic impact, go elsewhere. As a result, we’re a nation of start-ups not scale-ups. We lead the world in starting companies on a relative basis. But usually when a company shows the potential to be a good scale-up, they get acquired.

Addressing this requires a system-wide approach. The federal government can ensure the viability of the research, development and commercialization pathway through a comprehensive and well-aligned public policy environment that supports basic research, champions the translation and commercialization of that science, and attracts further venture capital investment in Canada. This is one of the primary ways in which we will indeed become a life sciences Super Cluster.

As compelling as the reinvestment in basic research in Budget 2018, is the willingness to renovate and coordinate the innovation programs, such as the Networks of Centres of Excellence, including the Centres of Excellence for Commercialization and Research (CECR) Program. Realigning these programs to be consistent with a public policy goal of scaling-up companies to grow and thrive in Canada is a critical building block in the translation of research and creation of anchor companies. Many of us are working alongside the industry-led federal Health and Biosciences Economic Strategy Table, chaired by Karimah Es Sabar, ”To drive the growth of a thriving Canadian health and biosciences industry that attracts investment, talent and provides quality jobs — an unique opportunity to identify long-term ambitious growth targets, industry-wide challenges and bottlenecks to innovation, and actionable plans to maximize the sector’s potential in the Canadian economy.”

So the good news is that significant effort is being made throughout Canada’s health sciences ecosystem to do things differently. From supporting Canada’s granting councils, to national translational and commercialization vehicles such as CDRD (whose federal funding was extended out to 2023 by Budget 2018), to addressing issues of gender equality in science, and strengthening Canadian companies’ ability to remain at the cutting-edge, Budget 2018 seeks to ensure that Canada’s is home to a well-supported, comprehensive innovation ecosystem; and as a whole, the commitments made in Budget 2018 provide a solid framework and opportunity to bring together national partners and resources to collectively build Canadian life sciences into a true national super cluster, identifying, unifying, building and retaining value in and for Canada.

ii. Council of Canadian Academies