Go Big or Go Home: The Mindset Canada’s Health Science Sector Needs
- Although Canada is known for its world-class health research, it struggles to commercialize its health innovations. Canada’s lead in R&D is also compromised due to decreasing private and public investment. To succeed, we must ensure there’s a steady pipeline of companies positioned for scale up.
- Innovation in the creation of new pharmaceuticals, medical device technology and digital therapeutics are the biggest opportunities for Canadian health companies to impact the global health industry. Developing Canada’s expertise in digital health is key to competing in these spaces.
- Innovation without adequate talent and capital is hollow. We can’t build a robust ecosystem without nurturing all of the components required for companies to grow and prosper in Canada.
Health management and innovation are crucially important and are intricately linked. We need to move away from the artificial separation that currently exists between them in order to improve healthcare and grow our health tech sector. We need to take a holistic approach to solving the challenges of our health innovation ecosystem while aligning the different interests of the many contributing members of the community including government, academia and industry.
What is the current state of Canada’s health sciences sector?
Canada has a global reputation in the health sciences; our science is recognized as world class and we have a long and celebrated history of innovation. Moreover, our healthcare system has been – and we hope continues to be – beneficial to Canadians.
“Creating a national health innovation strategy that brings together government, academia and industry will be the most important first step in addressing our challenges.”
While Canada has some of the fundamental elements of creating an innovative health sciences environment, we have not been able to pull them together to form a highly efficient, globally competitive industry sector. A robust health innovation ecosystem is one that supports our own innovation, retains and benefits from value creation, and supports a growing number of companies and jobs, while improving the lives of our citizens.
What are the major challenges and solutions for the health sciences sector in Canada’s future economy?
Lack of talent and capital have been quoted on an ongoing basis as the fundamental limitations of growing our sector. The health sciences sector is also the most regulated industry sector in Canada because its products must be granted government approval before they can be sold. Further, the government is also the biggest customer of these health products in Canada. We need to use this strong connection to bind the industry versus fracture it. In Canada there has been a great deal of tension between Health and Innovation as the discussions have been more about pricing than shared value creation. This we hope is changing.
“It has been a challenge for Canada to effectively translate research into commercial products. The health sciences sector is still struggling in that regard, partly due to a lack of access to capital and talent for innovative Canadian health start-ups to scale up.”
“Health and Bioscience” is one of the six Economic Strategy tables the Federal Government formed in 2017. Re-evaluating the relationship between government and industry is one of the key subjects the Economic Strategy table is tackling. This is a good first step to get these two silos talking to each other about what we must do to win.
Data is another common denominator to mobilize economic potential in our country. We are told that we have a national healthcare system but actually, we have provincial healthcare systems that do not talk to each other enough. If we truly want to take advantage of our amazing health data, it has to be on a national level. Each province is responsible for its own healthcare management system. Any company developing innovation must work with each province individually – this is remarkably cumbersome and inefficient. Instead of duplicating efforts in different provinces, we need to have a national health strategy that drives the health sector forward on a national level.
“In Canada there has been a great deal of tension between Health and Innovation as the discussions have been more about pricing than shared value creation.”
Creating a national health innovation strategy that brings together government, academia and industry will be the most important first step in addressing our challenges. In the interim to work closely with industry to address critical gaps in the ecosystem is paramount. The Economic Strategy table has set out broad recommendations and now we need to drill down and get specific as the goals are very ambitious and will only remain as goals unless we get granular on how they will be accomplished.
How competitive is Canada’s health sciences sector on a global level and what must we do to increase our competitiveness?
About half of the overall budget for research and development (R&D) in Canada goes towards health and life sciences research, and so it is a dominant element of the national research budget. The bulk of Canadian R&D in health research is performed in universities and hospitals. That fundamental research is necessary to bear the fruit for new discoveries that have the potential to become new therapies. Canada has always punched above its weight with respect to science and R&D, but we will lose this ground if we don’t increase our investment, particularly at the early stages of development.We need to equip Canadian investors and entrepreneurs with the right opportunities to scale up. In April 2018, the Council of Canadian Academies concluded that Canada’s international standing as a leading performer of research is at risk due to a sustained slide in private and public R&D investment.
“In the absence of large anchor companies, the health sciences sector cannot become a mature and sustained industry within Canada’s future economy.”
It has been a challenge for Canada to effectively translate research into commercial products. The health sciences sector is still struggling in that regard, partly due to a lack of access to early-stage capital for innovative Canadian health start-ups to scale up. That’s where organizations like Accel-Rx have a role to play. We’re focused on ensuring companies have access to the right capital and people at the right time. We are creating a pipeline of high potential growth companies that have the ability to become the much-needed anchor companies for our sector. In the absence of large anchor companies, the health sector cannot become a mature and sustained industry within Canada’s future economy.
If we want to have anchor companies and sustain their growth, we have to consider later-stage capital as well. We need to get large investors like the pension funds more engaged and interested in the sector. Without the sustained large capital funds we can’t grow our anchor companies and keep them in Canada. We also need to examine our public markets and their competitiveness relative to the rest of the world.
“Canada has always punched above its weight with respect to science and R&D, but we will lose this ground if we don’t increase our investment, particularly at the early stages of development.We need to equip Canadian investors and entrepreneurs with the right opportunities to scale up.”
I also think we underestimate how important the cultural element is to our perennial Canadian challenge. Every CEO in Canada should have a sense of urgency; Canadians are known for our diplomacy but perhaps this is holding us back in business. Our American neighbours are bolder and think on their feet. In Canada, Series A rounds might reach $40 to $50 million but are closer to $10 million, while in the US they are routinely $100 to $200 million. I do not think we can match the US, but we need to imbibe Canadian leaders and entrepreneurs with the philosophy of “go big or go home”.
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What is Accel-Rx and what is its mission in support of Canada’s future health sciences sector?
Accel-Rx was created to ensure there was a pipeline of investor ready companies that have the potential to become the next anchor company in Canada. Accel-Rx aims to address the capital and talent gap between pre-seed and Series A funding for health innovation companies. We invest directly in the companies, but also focus on the entrepreneur. It is all very well to address the access to capital issue, but if a company does not find the right people at the right time, it is not going to move at the pace it needs to. Canada does have a talent gap and one way of tackling this is to nurture our own entrepreneurs. We have developed programs to do just that. Accel-Rx is a national accelerator and so we look at opportunities across the country. But it is not a conventional technology accelerator with a defined cohort and one size fits all boot camp. In the health industry, understanding the different gaps within each company is crucial, so we essentially have to customize our approach towards helping each company. We consider each company individually and pair them up with the right expertise, strategy and commercial plan. We’re focused on the commercial pull and it’s been said we do more with less than anyone else. That’s the value we’re adding to the landscape.
“With the right mentorship, financial leverage and talent nurturance, we will develop more high growth companies in Canada.”
We want more of these companies to stay and grow in Canada. Accel-Rx wants to nurture great entrepreneurs who can build their companies to a point where they attract significant investment and are on the road to becoming the country’s next large anchor health tech company. As I mentioned, the Economic Strategy table has called for doubling the size of the sector, as well as high growth companies by 2025, and you can’t do that without a pipeline of outstanding companies. We have to work together to make this happen.
What are Canada’s biggest opportunities in the health sciences sector?
We need to make tough choices. First of all, Canada has certain research and geographic strengths that we should capitalize on. Because of the nature of health science, new and innovative pharmaceuticals are some of Canada’s biggest opportunities. Medical device technology and digital therapeutics are other areas where Canada can make its mark on a global level. Digital health is a fundamental piece of the new Digital Technology supercluster and we need to mobilize our technical expertise in order to become globally competitive in this area.
“We need to imbibe Canadian leaders and entrepreneurs with the philosophy of “go big or go home”.”
Secondly, we need to place more emphasis on wealth creation. This means we must connect innovation to capital and talent. With the right mentorship, financial leverage and talent nurturance, we will develop more high growth companies in Canada.