Aiming to Become One of the Top Five LSHT Markets in North America
TheFutureEconomy.ca: How do you assess the competitiveness of Montreal’s life sciences and health technology sector and what are its specific strengths and weaknesses?
Frank Béraud: First of all, this is a sector which represents 56,000 jobs in Quebec, 80% of which are in Montreal, and that generates $5.6 billion for Quebec’s GDP, which represents 1.6% of Quebec’s total GDP. So this is a significant sector in terms of its impact on the economies of Montreal and Quebec. We did a study last year and compared different Canadian provinces and US states on a series of indicators based on their economy, innovation, talent, costs and attractiveness, and Quebec ranked in the top 10, which is quite significant, and is not well-known actually.
We have several strengths that explain this position, and there is a history of excellent science and top-notch researchers in Montreal. In fact, Montreal ranks first in Canada in terms of life sciences innovation. So we are very strong and we are very well known for the quality of our science and researchers, and this is the most important component for life sciences because everything starts with research.
We also have a very strong and diversified ecosystem. We have companies and researchers in biopharmaceuticals, medical technologies, contract research, biotech, health IT, and other segments. So it is a well-balanced sector. That is a key element too because if one sub-sector experiences challenges, like big pharma did a few years back, you have the other components of the ecosystem that are still strong.
“LSHT is a sector of 56,000 jobs in Quebec, 80% of which are in Montreal, and that generates $5.6 billion to Quebec’s GDP.”
Also, over the years we have demonstrated a strong capability to work together, with people from public research and industry talking to each other and working on projects together. That is another element that makes Montreal very competitive and very unique.
On top of that, when you look at the cost of operations, our sector has the lowest in North America. In terms of research and development activities and for operating a company in life sciences, it is cheaper than in Toronto or anywhere else in the US. Although this is not the most important factor, when combined with all our other strengths, it makes us very competitive.
What are some of the weaknesses or challenges in the sector today?
I think one of the things we have to improve is the fact that we mostly have a lot of small and medium enterprises and we need to have bigger companies in our sector. 94% of the companies in Quebec have less than 200 employees. The average number of employees per company is 51 and that includes the big pharma firms that have more than 300 employees. So we need to be able to grow life sciences companies locally and we need to have local access to capital in order to grow in Canada, in Quebec and in Montreal. This is true in Montreal and Quebec but this is true in other parts of the country as well.
Do you see policy measures coming through to fill that financing gap?
Not really. There was a boost of venture capital funding for start-ups announced in the last budget and that is good because you have to have as many start-ups as you can in order to fill up the pipeline because many of them will fail. But I think we need to have a complete chain of financing. We need to have funding available for start-ups but we need funding for companies in the growth phase too. And then we need funding for companies in the late and near commercialization stage, because this is when they are the most attractive for acquisition.
“We are very strong and we are very well known for the quality of our science and researchers, and this is the most important component for life sciences because everything starts with research.”
If we want them to stay Canadian?
Yes, not necessarily every time, but we want to have a few of them stay here. In Israel the model is ‘build to sell’. They build a company and the success indicator is the ability to sell start-ups to larger companies. I think that is all right and there is nothing wrong with that and in many cases, this is what is happening here. But in some cases, we have companies that have been sold to the US for instance, not because of a strategic move by the acquirer, but simply because there was not sufficient capital here in Canada. I would love to see the next Amgen or the next Biogen being a Montreal company because that generates a lot of traction, a lot of local investments and a lot of wealth for the city, the province and the country. So that is something that is still missing in our sector.
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Which markets are companies in Quebec’s LSHT sector targeting?
Outside of Quebec, the companies in our cluster are mostly interested in the rest of Canada, the US and then maybe Europe. Other places like China and the rest of Asia are not a top priority right now, mostly because their number one market is the US.
The Government of Quebec recently releases its Life Sciences Strategy, which stated its goal of attracting $4 billion in investments by 2022. How was the strategy received by the industry?
The Quebec strategy is a great thing for the sector. We can only be very happy with it because there is a vision, there are goals, there are key performance indicators they want to follow, there is an ambition and there is money towards our ambition. Honestly, I have never seen all these elements before in a government strategy, which usually tend to be a collection of different programs and measures without any real cohesion. This is the first time I see such a well-rounded approach. So I think it is very encouraging and most of the stakeholders in the ecosystem are very happy with it.
“We need to be able to grow life sciences companies locally and we need to have local access to capital in order to grow.”
How do you see Montreal InVivo’s role in supporting that strategy?
What we want to do is support the growth of local companies, and I think there is strong support for that in the government strategy. There will also be support for the niches where we excel, and this is one of our top priorities; precision medicine and clinical research in particular. I really like that because this is very much aligned with what we are trying to do as a cluster. In fact, we have had a lot of input into the government’s working committees that led to the creation of the strategy and we are very satisfied to have our recommendations being seen as priorities and being but in place into the strategy.
So your strategy is basically to focus on your strengths?
Yes and to develop new areas of activities like artificial intelligence (AI), for instance. This is one of Montreal’s biggest strengths; we have world-class authorities in AI, and there is a strong AI component in life sciences and health technologies. That is a new and growing sector for Montreal and Quebec, and it is something that will be supported by the government and by the industry as well.
What are the top three LSHT subsectors you believe are the most promising right now in Quebec?
Firstly, anything related to AI and digital health is really strong in Montreal. We have lots of small companies and small projects in medical devices and health IT that will eventually become products, applications and services, and that is the segment where we see the highest growth. I see new tools being created for product development and for discovering new therapeutic ideas for instance. One example is that of Dalcor Pharmaceuticals, which uses genomic information and data mining to develop new drugs. It was formed just over a year ago and received $150 million as a start-up to conduct phase 3 clinical trials in which they use big data to help repurpose an existing drug, discover a new one or discover a new way of attacking a certain disease. Today’s algorithms are so powerful and have a broad basket of applications including some focused on how we dispense healthcare of course.
“Historically, precision medicine has been very strong in Montreal and I think it is going to be the case for years to come as it is now a global trend and we have the critical mass here in Montreal and Quebec to take advantage of it.”
The second subsector I see strong potential in is precision medicine, which is something we have been very strong in here in Montreal. A few years back we launched an initiative to have a more focused strategy on precision medicine and one of the outcomes was to convince the provincial government to launch what they call a structuring project around the sector. In order to apply to that competition, several groups came together and put proposals on the table. Only one was selected for that initial competition but the by-product of that process was the fact that the following year, when Genome Canada launched a competition in precision medicine, Quebec researchers received 61% of the federal funding. One of the reasons for this success was our ability to make people talk to each other which means the researchers had already had those discussions and had ties with the industry so they had an advantage compared to researchers from other provinces. Historically, precision medicine has been very strong in Montreal and I think it is going to be the case for years to come as it is now a global trend and we have the critical mass here in Montreal and Quebec to take advantage of it.
And thirdly, I would say medical technology is very strong. We have the big TransMedTech Institute that was created at Polytechnique Montreal through the CFREF Fonds Apogée, and it is also recognized as being important for Quebec, as part of the government’s life sciences strategy. So we see lots of companies starting up in that space. But the frontier between medicine, digital health and medical devices is increasingly blurred now because there is a degree of integration between the three. Today, you do not see a new drug coming on the market without some kind of biomarker, some kind of device to make sure that you measure the biomarkers correctly and some kind of an app to make sure the patient is taking the right medicine at the right time and in the right dosage. So more integrated health solutions are being put on the market and there are more connections between the different subsectors than there were in the past.
Is it a challenge that Montreal is not very well known internationally for all these impressive developments?
I would say yes, clearly. I think when outsiders think of Montreal, they think of the festivals, the fun, the art and the culture, but Montreal’s economy and the impact of our companies on the global economy is less known. This is true in general and it is also true of our sector. Yes, we do have a role in terms of putting Montreal’s economy, and in particular its health and life sciences sector, on the global map.
“I would say reaching the top five LSHT markets in North America is what we should aim for and I think we have everything we need to get there.”
What is your long-term vision for Quebec’s life sciences and health technology sector?
I would say reaching the top five LSHT markets in North America is what we should aim for and I think we have everything we need to get there. It is going to take time but Quebec is a place where we have access to health data which gives us a competitive advantage over the US for instance. In the future, we will have access to the health data for research purposes, for evaluation purposes and be recognized as the place companies and researchers should come to if they want to do real world evidence studies or if they want to study large populations for any kind of life science research questions. I also see Quebec being a place where the adoption of technology in the healthcare system is the best. It is not the case today, we are way behind on that but that is really where we should try to go and that is really what I see Quebec becoming.
Are you confident this is achievable?
Yes, I am. We still have a lot of work to do but we have good models, we have good things to inspire us as well, and I do not think we are far from our goals. We already have all the ingredients, now we have to turn them into a recipe for success, so let’s all cook together!