"Science powers commerce," Canadian Prime Minister Stephen Harper remarked in 2010. In those three words, the prime minister
summarizes a massive effort by various stakeholders to create a "brain gain" in Canada to strengthen its positioning in the
world of research and technology. Despite declining investments by big pharma in recent years, the country has created a number
of innovative ways to incentivize R&D throughout its vast geography.
Rémi Quirion, Chief Scientist of Quebec
Chances are that Canada is not the first country that comes to mind when thinking of important pharmaceutical markets: dwarfed
by its US neighbor, Canada, which has a population of 35 million, would seem to have a tiny market (USD 326.9 billion in the
US versus USD 21.9 billion in Canada). Yet, according to IMS Health, the country has the seventh largest pharmaceutical market
in the world.
Gilles Patry, CEO of Canada Foundation for Innovation
As well as having one of the largest pharmaceutical sales market, Canada also has a thriving research community, a fact that
is not widely known. "Canada has not been aggressive enough to sell itself," said Rémi Quirion, Chief Scientist of Quebec.
"The world is small enough that if Canada does not promote itself, others will leave the country behind in the dust. Waiting
for people to call us will not work." Perhaps Quirion's remarks are reflective of Canadians' tradition of politeness and modesty;
however, the country is taking steps to make a name for itself in the research segment as well. "Canada has gone from an era
of 'brain drain' in the early and mid-1990s to an era of 'brain gain', with some of the most brilliant researchers from around
the world now being attracted to this country because of its commitment to research," says Gilles Patry, CEO of Canada Foundation
for Innovation. "With 0.5 percent of the world population Canada produces 4.1 percent of the peer review journals around the
world and five percent of the most highly cited papers. As we say, Canada is really punching above its weight." Now the challenge
is spreading the word.
Sue Paish, CEO - LifeLabs
Last year, Forbes Magazine rated Canada the number one country in the G20 for doing business, and according to the World Bank,
Canada leads all G7 countries in average economic growth between 2002 and 2011. According to American magazine Entrepreneur,
Toronto and Vancouver are currently ranked as the eighth and ninth best ecosystems for startups worldwide.
Since 2006, the federal government has invested over CAD 9 billion (USD 8.71 billion) into science, a rare feat compared to
many other countries since the economic recession. As former Minister of State (Science and Technology) Gary Goodyear states,
this investment has been "a significant turnaround fostered by an attitude that was completely contrary to what many other
countries were doing to battle their debts and the economic downturn."
UNITY IN DIVERSITY
Gary Goodyear, former minister of state (science and technology)
Canada is one of the world's most heterogeneous nations. Individuals from every corner of the planet have come here throughout
the country's brief existence to live permanently. The ability to have a successful career and quality of life in Canada is
second to none; the Economist Intelligence Unit ranked Vancouver, Toronto and Calgary as the third, fourth and fifth most
livable cities worldwide in 2013. The country attracts immigrants worldwide to live and work; walking down Yonge Street in
downtown Toronto, you're likely to hear at least a dozen different languages being spoken within a couple of blocks.
Réjean Hébert, Quebec's Minister of Health and Social Services
The fact that Canada's unique demographics are spread across the second geographically largest country in the world has resulted
in some adaptations. Medical services are therefore mostly concentrated in a few urban centers spread across massive expanses
of land. Sue Paish, CEO of diagnostic service provider LifeLabs, comments that "community diagnostic labs are characterized
by the need for high volume, exceptionally efficient, reliable and accessible delivery of lab services to geographies that
in this country are significant and to other countries are unfathomable."
Jacques Dessureault, president, Valeant Canada (Crédit photo: Marc-André Grenier, collection de l’Assemblée nationale du Québec)
Home care is an excellent way to adapt to the challenges of a large geographical footprint, and so seems to be a good option
for Canada, which currently spends the least in investing in long-term care out of developed countries. The OECD has indicated
that prioritizing home care can result in savings of up to one percent of GDP. In Quebec, which has the second fastest ageing
population in the world after Japan, that one percent could total CAD 3 billion (USD 2.9 billion). Quebec's Minister of Health
and Social Services, Réjean Hébert, indicates that the implementation of autonomy insurance would help cut costs in the long
run. "At the moment, disabled people have to move from one institution to another corresponding to their needs," Hébert explains.
"Autonomy insurance will re-provide the right for disabled and the elderly to choose where they want to live and to get the
services they need."
CANADIAN HEALTHCARE: PARALLELING EUROPE?
Christian Scheuer, president and CEO, LEO Pharma Canada
Canada operates a single-payer healthcare system in which the majority of services are provided by private entities, which
are paid for at the provincial level. The Canada Health Act of 1984 stipulates universal coverage for all insured health services
as administered by the country's ten provinces. Medication is covered on a province-by-province basis. The split between public
and private healthcare is roughly 70 to 30 percent.
Deborah M.Brown, president of EMD Serono Canada
"Canada is perhaps the only developed market with an emerging market growth outlook," says Riad Sherif, president of Novartis
Canada. "It is a mature and well-established market with strong processes in licensing, registration, reimbursement, and assessment
of drugs. Yet it also has an emerging market growth outlook, which means a positive outlook expansion if you do the right
Michael Seckler, CEO of Ferring Canada
Because healthcare is managed by each of the ten provinces, pharmaceutical companies have to look at Canada as ten individual
markets, as each has its own regulations regarding pricing and reimbursement. "Canada actually parallels Europe in terms of
pricing, reimbursement and market access," remarks Michael Seckler, CEO of Ferring Canada. "The country has a challenging
product launch environment and requires careful considerations to provincial and private payer reimbursement. We have to be
cleverer to communicate our value proposition to payers and other stakeholders. We take this very seriously and at Ferring
we start consideration of market access as early as possible in product development and life-cycle management planning."
Brian Lewis, president and CEO, MEDEC
According to LEO Pharma Canada's president and CEO Christian Scheuer, the complexity of the Canadian system has created an
opportunity for some pharma companies to reinvent their business model. "There are so many stakeholders to engage with today
that it creates a system or a network," says Scheuer. "From an internal organizational perspective, it would imply that access
and scientific affairs are now as important as sales and marketing when engaging with the marketplace."
DRUGS: COST OR INVESTMENT?
Kevin Leshuk, vice-president and general manager of Celgene Inc
Part of the challenges come from having an incredibly complex and multi-layered system. Deborah Brown, president of EMD Serono
Canada, comments that "for such a vast geography with a population the size of California, to have 10 decision makers in healthcare
makes no sense. We are duplicating costs over and over in the healthcare system." Brown also points to the inefficiency in
monitoring prescriptions. "In terms of cost utilization efficiency, I think that adherence must be tackled, particularly with
proper use of medications. Pharmaceutical companies in Canada need to determine if patients are actually taking their medications
correctly or often enough, which would reduce costs. This populace perspective on the freeness of drugs can result in patients
not being adamant about taking medications or having a poor diet. Because EMD Serono is in the specialist area, it is a unique
challenge for us to offer value, particularly given the cost of many of the company's products."
Claude Perron, General Manager of Shire Canada
"Regarding the provision of public access and drug approval, Canada ranks 26 out of 32 developed countries," says Valeant
Canada president Jacques Dessureault. "On average, only 20 percent of products get reimbursement. Clinical data repositories
do not even provide a positive response to half of the brands seeking public reimbursement. It is a very tough environment
to do business because of the opportunity of an ageing, socialized, and organized healthcare system combined with pressure
on the system."
Barry Fishman, president and CEO Teva Canada
Because health-related products are often considered a simple line-item in a provincial budget, "there is a tendency in procurement
to only look at price," says Brian Lewis, CEO of MEDEC, Canada's national medical technology association. "A device might
have a price that is higher for the operating room (OR) and when you are in a hospital the OR can only grow so much because
budgets are cut into silos there. The downstream effect of the product is that re-hospitalization and retreatment are reduced
because of the device's value but the amount that those considerations are accounted for when products are purchased is not
RARE DISEASES: CANADA'S RARE CHALLENGE
Russell Williams, president of Rx&D
One of the most evident examples of the difficulties of Canadian market access is seen with medications for rare diseases.
Canada is the only country in the G8 that does not have a formalized orphan drug policy. There are about 200 medications available
in Europe and the US that are currently out of reach for Canadians apart from a Special Access Program (SAP), which grants
exceptions for quickly needed unapproved (and often expensive) drugs. Orphan drug companies, the majority of which are small,
tend to think that because the price of patented orphan drugs are based on the median price of developed states in the EU,
that Canada's prices are too high, despite having a population bigger than many European countries.
Paul Lucas, president of Life Sciences Ontario
Kevin Leshuk, vice-president and general manager of Celgene Inc., noted that advances in the formalization of a policy must
be in tandem with funded formal access mechanisms to become a reality. "If Canada only improves the front end through R&D
incentives or tax credits without focusing on the intellectual property and reimbursement components then we are not truly
improving the future for patients living with rare diseases," comments Leshuk. "The lack of a formalized orphan drug designation
in Canada highlights us as a laggard country compared to other countries where most if not all have some form of recognized
orphan disease policy."
Jim Keon, president of Canadian Generic Pharmaceutical Association
Claude Perron, General Manager of Shire Canada, points out that "innovative medications need to be seen as what they are:
an investment in our healthcare systems, not a cost. This integration of innovation into the healthcare system should lead
to improved health outcomes and efficient use of resources." As such, Shire Canada has made substantial efforts to establish
itself in the rare disease field, particularly in lysosomal storage diseases.
GENERICS IN CANADA: CHALLENGE OR OPPORTUNITY?
Michael Brogan, president, IMS Brogan
Canada has enjoyed a strong generic industry for decades. The majority of generic drugs sold in Canada are also manufactured
in Canada, with more than 95 percent of manufacturing and research for generics taking place in Ontario and Quebec, employing
more than 14,000 Canadians. In 2012, 63.2 percent of all prescriptions in Canada were filled by generic pharmaceuticals, yet
comprised only 24.4 percent of total drug expenditure (CAD 22.1 billion, or USD 21.38 billion). According to Teva Canada president
and CEO Barry Fishman, "63.2 percent is too low and should become closer to the US level of approximately 80 percent. The
Canadian generic industry and other key stakeholders are working to ensure appropriate levels of generic utilization."
Has Canada’s generics public policy failed?
"Both public and private payers encourage the use of generics when they are available, to ensure that healthcare dollars are
allocated effectively," notes Fishman. "We have to get our message of 'same quality, better price' to encourage higher levels
of generic usage in the Canadian healthcare system."
TURNING SCIENTISTS INTO SALESMEN
Canadian, Top 10 Corporations*(Purchases), MAT December 2012
Canada has tremendous resources at its feet for research and innovation: the Canadian federal government has committed to
over 500 new projects, buildings and laboratories in the last seven years. Life science is one of the most important sources
of jobs and drivers of economic growth in Canada, along with aerospace and IT.
Is Canada’s intellectual property regime competitive?
Despite all this great research, Canada's unique problem appears to be its inability to connect business development and entrepreneurship
with this great scientific capacity. So, how can Canada use its immense research infrastructure to turn locally produced science
and technology into commercial success? This has partly been done through the restructuring of the National Research Council
(NRC) in early 2013. John MacDougall, president of NRC, noted that despite research investment in Canada being in the middle
of the OECD countries, innovation performance is in need of improvement. By placing a greater emphasis on commercial research,
reaching a balance between basic and commercial research will allow for more effective commercialization of science produced
in Canada. McDougall describes this process as "working from the market back, rather than from discovery forward, while balancing
the innovation system more appropriately to extract more value from NRC's investment."
Raphael Hofstein, President and CEO of MI
A particularly innovative example of this push towards commercialization has been demonstrated through the collaborative efforts
of 16 research institutions in Toronto. This resulted in the establishment of a centralized organization in 2007 called MaRS
Innovation (MI), funded by the Canadian government and membership fees by each of the 16 institutions. Raphael Hofstein, president
and CEO of MI, explains that MI's "sole charter is to improve on commercialization with a minimum of CAD 30 million (USD 29.03
million) for five years. Our 16 members in downtown Toronto generate significant intellectual property for the MI pipeline,
which stands to transform Toronto's performance as a research commercialization hub within the larger Canadian scene." MI
chooses the most promising of several hundred ideas with which it is presented every year to take to market, with the assistance
of big pharma.
John MacDougall, president of NRC
Another way in which big pharma can continue maintaining R&D in Canada is through outsourcing. However, according to John
Sampalis of local CRO JSS Medical Research, the industry for CROs in Canada is fragmented. "Canadian CROs conducting Phase
II and III trials also face the challenges of globalization of the business, by which large pharmaceutical companies have
forged relationships with large CROs. Regional affiliates are expected to work with those large CROs, therefore denting market
availability for Canadian CROs," says Sampalis. "In the absence of business, smaller Canadian CROs cannot expand their service
offering, and will stay small, become smaller or disappear. This affects the entire principle of why research is supported
by the Canadian government, which is to provide work to local CROs and universities and promote that research activity and
development in Canada."
BRINGING IN THE BIG BUCKS
Patrick J. Cashman, president and general manager - Lundbeck Canada Inc.
The biggest challenge for local biotech companies in Canada, as is the case in many countries worldwide, is access to capital.
The number of venture capitalists investing in Canadian biotech has decreased significantly in recent years, and as much as
by 60 percent in 2012 compared to 2011. Since the economic recession in 2008, VCs are generally much more risk-averse, since
an unsuccessful investment could spell bad news for them. "There is a degree of risk-taking in terms of investment population;
people must be prepared to fail with investments in drugs," comments Nick Green, president of Therapure BioPharma Inc. "You
have to understand the market, be prepared to take risks, and be capable of analyzing opportunity as well as acting and managing
John Sampalis, CEO, JSS Medical Research
Fernand Labrie, CEO of local biotech company Endoceutics, notes that "there have been many attempts to facilitate and provide
more funding. However, the way in which this funding has been processed has been far too diversified, spread thin across too
many agencies, all of which need to exert independent judgment on the value of the submitted projects. There is too much division
of a limited expertise. Funding is easier in the US, but the limited knowledge of venture capitalists regarding the scientific
value of the projects and of the potential of the life sciences industry is also problematic."
Andrew Casey, CEO of BIOTECanada, notes that the establishment of a competitive public policy framework will help to attract
capital investment. "You need to find a way to reward investment in the industry in Canada," says Casey. "However that reward
is structured, the industry would welcome it, since you are essentially putting out the welcome mat. Successfully growing
a company in Canada will ultimately lead to the growth of new companies, which in turn grows the industry.
Nick Green, president and CEO - Therapure Biopharma Inc
Tax credits, while often a common point of reference for biotech companies worldwide, play a vital role in the secretion of
Canada's own biotech industry. According to Investissement Québec, the net cost of one Canadian dollar expenditure in an eligible
research project in Quebec can be as low as 36 cents, resulting in savings of up to 64 percent.
Fernand Labrie, CEO - Endoceutics
Furthermore, despite the downward trend of venture capitalists fuelling the pipeline of local biotech companies, a number
of big pharmaceutical companies have made commitments to various funds throughout the country. Lilly established a CAD 150
million (USD 145.16 million) partnership fund with local fund of funds Teralys Capital, GSK committed CAD 50 million (USD
48.39 million) to establishing a Life Science Innovation Fund, and Merck Canada has invested CAD 40 million (USD 38.71 million)
into a biosciences fund with local venture capitalist group Lumira Capital. These kinds of investments are perhaps indicative
of a new pharma model in the making.
Andrew Casey, CEO of BIOTECanada
However, not everyone is inclined to agree with this model. As Youssef Bennani, site head and vice president of R&D at Vertex
Canada, describes, "Companies in Canada are often built to be sold or partnered, and therefore have a finite timeframe with
which to work, mostly driven by venture capitalists and investors. That unsustainable mechanism has to change; otherwise you
will see no improvement in output." In order for this to happen, Benanni continues, "the Canadian pharmaceutical community
needs to strategically revamp their investments, commitment and goals to create a sustainable pharmaceutical business the
way Bombardier has done in the aeronautic space."
LOOKING FOR THE PHARMA BOMBARDIER
Mark Lievonen, president and CEO of Sanofi Pasteur Limited
Many in the industry agree that the creation of a pharmaceutical version of Bombardier, which would promulgate greater economic
activity in Canada, is unlikely to happen except through consolidation. "Biotech companies are being acquired more quickly
as big pharma seeks to add products to their sales and development portfolios," remarks Tony Cruz, Chairman and CEO of Transition
Therapeutics. Transition, which in-licenses drug candidates to advance from Phase I and proof of concept (POC) to Phase II
trials, offers big pharma a unique solution. "Big pharmaceutical companies need to broaden their pipelines, which is becoming
their biggest expense. Transition's model is an easy way to mitigate their risk by outsourcing the broadening of their pipeline.
They can now make better decisions having POC data available on additional drug candidates to reduce risk in prioritizing
programs for later stage development."
Tony Cruz, Chairman and CEO of Transition Therapeutics
Gail Garland, CEO of the Ontario Bioscience Innovation Organization (OBIO), states that "the development of procurement policies
will encourage companies to stay and grow in Canada. Ontario companies are developed to become world exporters, but selling
in Ontario and Canada will better contribute to their longevity here as Ontario-based companies." OBIO's Capital Access Advisory
Program (CAAP) helps to develop and build the industry beyond seed-stage companies. In the field of medical devices, over
80 percent of locally made products are sold outside of Canada. "If the FDA approves a Canadian product, the producer will
feel more comfortable selling that product in an American jurisdiction," remarks BD Canada's vice president and general manager
North America Frank Florio. "Those integrated biases and long time relationships between multinational sales teams and doctors
or administrators make it hard for a small local company to convince customers it has something more innovative that can deliver
Youssef Bennani, site head and vice president of R&D at Vertex Canada
Mark Lievonen, president of Sanofi Pasteur Canada, says that Canada's challenge is translating research into products and
services that attract investment in Canadian companies. "Canada needs to enhance its biopharma ecosystem through a mixture
of multinationals, strong biotech companies, and home-grown success stories that can compete in the global market," Lievonen
explains. "If Canada could develop ten biopharma companies with significant R&D and manufacturing capacity, each generating
CAD 1 billion (USD 970 million) per annum, then you start to build a critical mass of large scale companies that can support
and contribute to the overall ecosystem."
Quebecois creativity in innovation
Dr. Niclas Stiernholm, president and CEO of Stem Cell Therapeutics (SCT) acknowledges that there is great possibility for
small biotech companies to become a division or a unit of a large pharmaceutical company. SCT is Canada's only public company
dedicated to advancing cancer stem cell discoveries into novel and innovative cancer therapies. The company's focus on novel
cancer stem cell therapies is further strengthened by the acquisition of Trillium in April 2013, a private biopharmaceutical
company with a strong interest in cancer stem cells and immunology. Stiernholm, former CEO of Trillium, comments that Trillium
was not going to sustain due to venture capital funds running out of patience, money and interest. "In order to continue its
work, the best solution was to merge Trillium into a publicly traded company and raise money in the public market", he adds.
FOCUS ON YOUR STRENGTHS
Nicolas Marceau, Minister of Finance and the Economy - Province of Quebec
"Big pharma companies are not in the business of establishing huge research laboratories themselves," says Reza Moridi, Minister
of Research and Innovation of Ontario. "They prefer to invest in VCs. Through them, big pharma invests in various smaller
projects, universities, research hospitals and other research centers. We realized this in Ontario, and consequently created
the Ontario Venture Capital Fund in 2008. This was a CAD 205 million (USD 198.38 million) fund, and attracted about CAD 750
million (USD 725.78 million) worth of investments from the public and private sector." The province of Quebec has also demonstrated
its continual commitment to forging strong relationships between industry and academia. As Yves Bolduc, official opposition
health critic of Quebec states, "Given Quebec's solid investment in research and infrastructure, particularly with universities,
this will create attractive partnerships for pharmaceutical companies and ultimately be a strong driver of the province's
economy. For example, Hôpital St-Luc is creating a new CAD 2.3 billion (USD 2.22 billion) research center for the University
of Montreal, and will be the biggest in Canada. McGill University is also building a new research hospital valued at CAD 1.4
billion (USD 1.35 billion). Hôpital St-Justine has invested CAD 1 billion (USD 970 million) into modernizing its facilities."
Max Fehlmann, president and CEO - NEOMED
Canada has also invested greatly into personalized medicine and genomics. According to Roche Canada's president and CEO Ronnie
Miller, "30 percent of GPs in British Columbia have already seen a patient who has had a genetic review to determine the best
treatment. That is a major change in thinking, and the genetic mapping of all Canadians could create huge savings in healthcare
costs." Roche Canada has therefore placed a great emphasis on personalized and precision medicine in its portfolio, and the
federal government has invested billions of dollars for research at genomics institutes throughout the country, such as Genome
Canada or the Ontario Genomics Institute.
Diane Gosselin, president and CEO - CQDM
Many multinationals have demonstrated their commitment to Canada through a number of high profile investments in innovation
funds and research centers. Roche has invested CAD 190 million (USD 183.86 million) in a global clinical development site
in Mississauga, Ontario, one of six in the world, and also selected the Montreal Heart Institute as its global research hub
for cardiometabolic diseases. In 2011, Merck invested CAD 33.2 million (USD 32.12 million) in modernizing and expanding its
manufacturing facilities in the country. In 2010, Sanofi Pasteur invested CAD 101 million (USD 97.73 million) in a new R&D
facility for vaccines.
Riad Sherif, President of Novartis Canada
BMS is another company to bet on Canada's potential. "BMS Canada is one of the organization's largest affiliates worldwide
and one of the most active in clinical research. We have been a front-end research leader in Canada. We have invested CAD
50 million (USD 47.75 million) in 2012 alone into clinical trials, and we have 50 compounds in development so there is a lot
of potential. BMS Canada has partnered with some of the leading academic institutes, such as the Institute for Research in
Immunology and Cancer (IRIC) in Montreal", says Teresa Bitetti, general manager BMS in Canada. She concludes: "Canada has
everything that is needed for strong R&D activity – an educated work force, a stable economy and global world-class leading
Gail Garland, CEO of the Ontario Bioscience Innovation Organization (OBIO)
Frank Florio, BD Canada's vice president and general manager North America
Quebec vs. Ontario
Niclas Stiernholm, President and CEO of Stem Cell Therapeutics (SCT)
Reza Moridi, Minister of Research and Innovation of Ontario
Ronnie Miller, president and CEO, Roche Canada
"Imagination is more important than knowledge." –Albert Einstein
The Canadian life sciences ecosystem has all the right parts in place to become one of the most attractive hubs in the world.
The country's exceptional infrastructure, emphasis on research and science, immense talent pool, and highly regarded education
system all play a role. Ultimately, it is up to all stakeholders involved to ensure that these various dots are connected
and packaged in a way that shows their value.