If innovation were the measure, the Canadian life sciences sector would be rich indeed.
“Canadian researchers are coming up with very innovative techniques and solutions,” said Antonio Lopes, Export Development Canada’s Global Accounts Director and Sector Lead for life sciences.
According to the Canadian Trade Commissioner Service, the University of Toronto has one of the largest medical schools in North America and produces more peer-reviewed research papers than any other in the world. And, as the Globe and Mail reported last year, University of Toronto researchers have developed a biodegradable polymer “scaffold” that accelerates bone-tissue regeneration. Meanwhile, researchers at McMaster University’s Stem Cell and Cancer Research Institute have invented a process that converts skin to blood. The University of British Columbia’s Life Science Institute’s Personalized Medicine Program is developing a genetic test that predicts response to drug therapies and incorporates this information into a computerized decision support tool for family doctors. The tool will use this genetic information to enable safer and more effective prescribing for patients at risk of an adverse drug reaction.
In Canada, life sciences companies often have their genesis in research supported by clinical, medical and educational institutions after which they migrate into solutions or products that can be used in real life.
“The challenge is to get these innovations commercialized,” Lopes said, “by targeting foreign countries and understanding issues including regulations, reimbursement and access to capital, all of which impact their ability to go, grow and succeed.”
Globally, the healthcare market is worth $6.5 trillion and grows at an average rate of 8.2 per cent. In Canada, there are more than 2,000 companies, mostly SMEs in the space. Their interests span the research and development and manufacturing continuum and focus on developing diagnostics, biotech, pharmaceuticals, digital health and medical devices, research and related services. In short, Canadians are into everything in the sector, and, they’re committed to doing all of it well, Lopes said.
“Historically, Canada has been a leader in providing government support for research institutions through various government-funded sources, which has enabled the ecosystem to thrive and grow, especially in breakthrough areas such as oncology, genomics, personalized medicine and biotechnology,” Lopes said. “Some of that research goes into potential product development and into the clinical study phase. And, the results of this research have helped differentiate Canada as an innovative country, but also one with an outstanding global brand associated with top-quality life sciences and health-care solutions. Some of this research is migrating internationally and positioning Canadian companies at the forefront of commercialization and adoption globally.”
Lopes said Canada has several small pharmaceutical companies as well as large foreign players who have set up shop in Canada because they can access Canada’s scientific research and experimental development tax credits (SR&ED) and clinical environments, which are always of a high quality.
“On the medical device side, there’s still a solid ecosystem of extremely innovative companies that are very specialized in their products,” said Joanne De Franco, who, until June, was the sector adviser for EDC’s light manufacturing team, responsible for the life sciences, advanced manufacturing, plastics and packaging and logistics sectors. (Her replacement is Bryan Sirois, firstname.lastname@example.org.)
When it comes to Canada’s exporters in this sector, the target market tends to be the U.S., “not just because it’s next door and has a huge population, and not just because there are so many places to target, but mainly because you can price your product much higher,” De Franco said. “Some medical device companies, however, will go to Europe so they can sell into regions such as Africa because their product’s price point makes them attractive to buyers in developing markets.”
ExportWise spoke with Lopes and De Franco to discuss the opportunities in the sector.
Tell us about your role and responsibilities at EDC.
Our role is to develop an awareness within the Canadian life sciences and healthcare ecosystem of the services, products and solutions, as well as the overall industry knowledge, connectivity and matchmaking that helps companies in this cluster achieve growth opportunities outside of Canada. To that end, we, as a team, regularly provide mentoring, active product engagement with the regional small business and commercial markets teams, regularly speak at conferences and symposiums and participate in partnership engagements throughout Canada where we often lead industry discussions.
What kind of companies export in life sciences?
The majority of companies in the life sciences and health-care sector are export-oriented and can be tied to the following segments: pharmaceutical, nutraceutical, biotechnology, personalized medicine, medical devices, digital health, telemedicine and healthcare services.
Where are the export opportunities for companies in life sciences now?
Most companies in the life sciences and healthcare space find themselves first targeting exports to the U.S. and Europe and then making themselves successful in Canada. Export engagement is the lifeblood of this industry as population growth, lifestyle, discretionary spending, pricing, aging population and disease all play a role in helping target foreign countries where Canadian products will be needed.
Are there Canadian supply-chain opportunities for companies in this sector?
Absolutely. We recognize that Canada only has a few $1 billion-plus leaders (mainly in pharma) who have significant global supply chains. As a result, it is important for Canadian companies to have access to Canadian and global supply chain leaders. We work with our colleagues at Global Affairs Canada (GAC) to facilitate global supply-chain mechanisms by introducing small Canadian companies to large international players in this segment who look to either buy Canadian products, distribute them globally as part of their product offering, work through licensing agreements or develop joint-venture strategies that help lift Canadians into the rising tide of innovation.
What are the characteristics of the life sciences companies that do well exporting?
It is easy to say that Canadian companies are extremely innovative and leading edge. To that end, success is measured in being able to produce the next-generation product or solution that is both cost effective and improves patient outcomes. Ultimately, to survive companies need to think bigger, better and faster than their predecessors and in every segment, we see Canadian know-how and innovation stand out as best-in-class.
What are some of the mistakes that companies in this sector make when it comes to exporting?
The most significant mistake a small company can make in this sector is thinking they can go at this alone. To be successful in this global arena, you need to understand the nuances of each region, the regulations, the reimbursement mechanisms, the leaders, the local partners and the environment and build from that learning a group of mentors and champions who will support and rally behind you. Life sciences and health care are a complex and interwoven fabric of specialized players who need to not only develop knowledge but, most important, relationships.
What should companies in this sector know about exporting that they do not know?
In every region in Canada, there are associations and organizations whose purpose is to facilitate knowledge, connectivity and active engagement in this space. Plus, the federal and provincial ministries are regularly and actively engaged in helping Canadian companies grow and export more. There are a plethora of granting, financing and educational agencies that can provide support to meet your short-long term needs. We recommend companies get plugged in to these various organizations, understand from them what the market is looking for and what they need to do to meet the local regulatory and reimbursement requirements.
How can EDC help companies in life sciences and health care?
EDC provides a number of product solutions that have long helped Canadian companies grow. These include risk mitigation, improvement in financial liquidity and matchmaking and connectivity. Our Accounts Receivables Insurance (ARI) products help mitigate foreign buyer risk all the while providing liquidity alongside their main financial institutions, helping them access capital so they can develop their products and services and successfully complete their go-to-market strategies. Our financing solutions include our export guarantee and how we leverage our guarantees to support earlier-stage companies in the space that have filed for the government’s SR&ED tax credit program (Scientific Research and Experimental Development Tax Credits). These solutions help companies monetize their buyer contracts, facilitate acquisitions or build out the working-capital needs companies have in order to grow. Likewise, our active and engaged participation in mentoring companies, triaging their needs, supporting their connectivity into the ecosystem and helping them gain an access point to foreign markets, whether that be through finding champions, connections or knowledge, is quite beneficial.
Who are two groups in this sector that EDC should be working with that we are not working with?
One of the most important needs for at least 40% of the over 2000 companies in Life Sciences in Canada is access to equity and investment capital. EDC is working closely with many domestic and foreign angel investors, family offices and endowment funds, venture capital and private equity funds to marry the need in this ecosystem to the players that can provide such support. Compared to our neighbour to the south, Canada has a much smaller equity ecosystem so it is important that we do more by opening the doors to foreign participants and activate an interest in Canadian companies as well as enrich the success of our own investment groups in Canada.
Global Accounts Director – Sector Teams and Sector Lead for Life Sciences
Sector Advisor, Light Manufacturing