Restoring the Glory of Canada’s Life Sciences Sector

The life sciences industry, like several others in Canada, has cycled through its fair share of triumphs and tribulations over the last few decades: financial crises (the 2000 tech bubble and the 2008 to 2009 financial crisis), challenging regulatory environments, policy measures affecting the uptake of new medicines by the health care system, contraction of the pharmaceutical’s industry local research and development (R&D) activities, and the loss of our capital markets, institutional investors, and several venture funds that were active in the space. The result: The life sciences infrastructure, both human and physical, that had painstakingly been built over the first few decades of the industry’s existence, has slowly but surely eroded such that Canada has now lost its place as a leader in life sciences and is struggling to keep up.

It took a pandemic to provide the industry with its first tailwinds in over a decade: the recognition that it was not only critical to the health and well-being of Canadians but also to the health and well-being of the economy. Mobilized by the urgency to help and act quickly, its stakeholders representing the diverse and often opposing interests of the public and private sectors, collaborated closely together to pivot and provide real-time solutions and guidance to the government on questions such as vaccines, therapeutics, diagnostics, and personal protection equipment. The mobilization and collaborative spirit of the industry did not go unnoticed as it led to the government’s renewed appreciation for our sector and its commitment to rebuild it with the Biomanufacturing and Life Sciences strategy (BLSS). Anchored on the five pillars of governance, research systems & talent, businesses, public manufacturing capacity, and world-class regulation, Canada’s BLSS is unequivocally a great first step in the right direction.  

Challenges for the Canadian Life Sciences Sector

Unfortunately, the BLSS is just one part of the solution, and significant gaps remain to be addressed, including:

• More affordable wet lab space for biotech companies
• Better research and development tax incentives, if not a total modernization of the government’s Scientific Research and Experimental Development tax incentives
• More support for the creation of anchor companies and the venture capital sector

Creating or updating policy measures that can address these outstanding gaps in the life sciences industry are necessary as they ultimately contribute to the scaling of our biotech companies and increase our chances of retaining valuable intellectual property and talent in Canada. Though necessary, these measures are not sufficient as they mainly target the private sector portion of the industry, leaving behind the public sector, which deals with the academic research enterprise. 

In life sciences, both the private and the public sectors invest in and contribute to biopharmaceutical R&D, and additional public-sector investment generates additional private-sector investment. Many of the drugs we rely on today like Lovastatin, Metformin, Ceradase, or Imatinib are the result of private and public contributions to R&D. Recognizing the interconnectedness and complex interplay between these sectors, Robert Asselin of the Public Policy Forum recently highlighted that Canada lacks a comprehensive policy strategy targeted at encouraging the scaling of our advanced industries such as that seen in high-income nations, including in the US, with their recent Inflation Reduction and CHIPS Acts. The new direction taken by the US industrial policy (and other high-income countries such as the UK, Germany, and Japan) reflects a broader government intervention beyond R&D to support technological development from idea to market. As Asselin points out, “The organization of science policy is the most overlooked feature of modern industrial policy.” Canada’s outdated policy is creating “a bigger and deepening division of innovative labour between universities and private firms; universities being tasked with research while industry being tasked with application.” 

The Role of Academia

Nonetheless, beyond research, universities have a critical role to play in local economic growth by providing not only scientific knowledge but also technical information and innovation, as well as skilled workers. With the decline of industrial research laboratories, research universities are being asked to play a more central role in the knowledge-centered economy through the technology transfer of their discoveries, innovations, and inventions. The problem is that there is an expectation that publicly generated intellectual property arising out of the academic research enterprise will seemingly make itself to industry. This is an unrealistic expectation given the decline in funding to university-based research in Canada, and the financial constraints imposed upon the university technology transfer offices.

The reality is that the outputs of university research still require significant capital, coordination, and integration, for which appropriate incentives are necessary. As university missions expand to include economic development (of which the translation of university research is a major part), to unleash the innovation potential of university research, there is a need for conducting scholarly activities that deal less with fundamental research than with translating basic research into commercially viable processes and technology. Researchers, universities and granting agencies desperately need to recognise the value of applied research, intellectual property, industrial collaborations, and academic entrepreneurship to the advancement of a researcher’s career. Measures and incentives that target the academic research enterprise are therefore critical and are a necessary first step in bridging university-based research to innovation. The second step is providing the appropriate measures and incentives to the specialized organizations that support translational research activities including commercialization.

Indeed, the challenges faced by the academic enterprise to produce clinical, commercial, and financial outcomes from translational research have led to the emergence of different business models and mechanisms, including the Canadian Network of Centres of Excellence for the Commercialization of Research (CECR) and third-party organizations like the Canada Foundation for Innovation, Genome Canada, and others. Leveraging specialized infrastructures and specialized talent, CECRs were created to finance and commercialize intellectual property and university-based translational research in focused areas such as cancer drug development, cell therapy and regenerative medicine.

Underscoring both the value of geographic specialization and the importance of the local in the global economy, the CECRs and Genome Canada are but a few examples of unique programs and business models created in Canada to fill the translational research gap. These programs also underscore the role that governments and public policies must play in fostering economic growth. As highlighted by Maryann Feldman in her paper, governments and public policies must focus on the larger and longer-range goals and steer away from the private-sector constructs such as return on investment (ROI). Unfortunately, the ROI construct is too often employed by governments in their public policies such that programs seeking short-term results and unrealistic sustainability goals often fall short of contributing to economic growth and ultimately get abandoned (like the CECR program). In the public sector, ROI should be measured over decades and with longer-term goals such as building intellectual property, talent, and companies.   

Creating a Science Policy for Canada

Canada needs to desperately double down with a comprehensive science policy for life sciences that targets both the public and private sectors as they are interconnected and interdependent. In the public sector, the reality is that Canada currently needs to triple down if it wants to catch up and compete with other major economies. In the context of ever-decreasing public and translational research funding, the Canadian academic research enterprise is no longer able to valuably translate ideas to market. Caught between a rock and a hard place, the research enterprise can only give away its intellectual property to foreign interests in exchange for precious research dollars. A reform of the public research enterprise and its incentives is desperately needed to drive and capture university innovation. What better place to begin with than fostering economic growth with policies and measures that support the research enterprise’s contribution to it, namely the generation of innovation through academic and translational research activities? Policies that recognize and promote the value of regional specialization and local contributions to the global economy will provide an additional step in the right direction. 

Post-pandemic, the life sciences industry and overall economy have not yet reached a full clean bill of health. Let’s make sure we provide both with the appropriate policy measures to get back into shape. If Canada is to lead and win in life sciences, governments need to create policies and invest appropriately, universities and granting agencies need to embrace translational research and skills-based talent, and companies need to foster local innovation and talent to scale. The pandemic brought the life sciences stakeholders together to collaborate for the greater good of Canadians. Working together, with each sector doing its part, we can foster economic growth and reclaim Canada’s place at the forefront of the sector.