Country Report: Canada - Pharmaceutical Executive

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Country Report: Canada

Pharmaceutical Executive


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 investments."


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."


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Source: Pharmaceutical Executive,
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