December 10, 2014

Canadian Biotech - Back To Business


“Canada is a world leader in science, technology and innovation, and is recognized as one of the most innovative and competitive economies in the world.” A quotation from the Government of Canada web site which I believe is fairly close to reality.

The Council of Canadian Academies prepared a report entitled “Paradox Lost: Explaining Canada’s Research Strength and Innovation Weakness“ which addressed two questions;

1. Why has Canada’s research excellence not translated into more business innovation?

2. How has Canada’s economy sustained relative prosperity despite weak innovation and correspondingly feeble productivity growth?

This commentary only addresses the first question, that is, how can we be more productive in translating research into business innovation?

Canada does have success stories so what are we to learn from these?

We are the inventors of insulin, the electron microscope, the pace maker, instant food and numerous other products. Did you know that Henry Woodward, a Canadian, holds the original patent for the light bulb, subsequently purchased by the Edison Company? But, where were these inventions commercialized?

Biotechnology and the life sciences industry in general, is critical for Canada’s future economic, cultural and social well being. We need continued strong support for basic research and development and increased focus and energy on the commercialization of Canada’s world class research.

I was fortunate to start my biotech career with the development of WinRho at the Winnipeg Rh Institute. I believe this is a success story. WinRho, is manufactured in Canada at the Winnipeg plant which is now part of the operations of Emergent Biosolutions. WinRho, saves lives and contributes to the economic well being of Manitoba and Canada. There are many other research successes in Canada but too 7_CBfew Canadian commercialization successes.

Canada’s bio-economy is significant (about 7% of Canada’s GDP), but we are presently losing ground to the growth and commitment being shown in other countries.

China is investing huge amounts into biotechnology as part of their 5-year plan. Germany, India, Brazil and others are also investing. The US is stepping up its focus on an innovation strategy. Nations aren’t standing still and are making serious investments because they want these jobs.

What do we need to do to improve the translation of research into successful economic outcomes? I suggest two things:

1. A greater emphasis on teaching and celebrating a strong entrepreneurial spirit in Canada

2. Increasing our innovation efficiency by a market or business pull of the technology.

An Entrepreneur is defined “as a person who organizes and operates a business or businesses, taking on greater than normal financial risks in order to do so.” So our biotech companies need to operate more like a business, which means developing and following a business plan which has a realistic and timely path forward to profitability. There was an era in Canadian biotech when the business plans of most companies involved raising risk capital and hoping for a buy out. Today, the Canadian biotech industry needs to focus on timely developments leading to earnings generation. Secondly, there should be a greater focus on having the business pull the technology to commercialization rather than the technology pushing the commercialization.Quote_CB

Innovation is hard work and persistence. The notion that innovation is mere chance is incorrect. Thomas Edison put it succinctly, “Genius (or Innovation) is 1 percent inspiration and 99 percent perspiration.”

The innovator’s job is not to deliver a proven result but to discover and implement what seems to be impossible. This will, by its nature, be risky and involve failures. This is necessary and should be celebrated not criticized. We must train and celebrate entrepreneurs. Innovation is converting assumptions into products and services as quickly and inexpensively as possible. This takes discipline, determination, persistence and even perspiration.

I believe Canadian biotech companies are making the transition to a more earnings based model. Medicure Inc., one of the companies I co-founded, began as a research company focused on the development and commercialization of a cardiology technology from the University of Manitoba. During the development process, Medicure acquired the US commercial rights for the cardiovascular drug, Aggrastat, originally developed by Merck. The revenue from sales of Aggrastat in the US sustained Medicure through some difficult times and has now positioned the company for sustained growth and profitability.

Using this model as our guide, I am as optimistic as ever about the Canadian biotech industry.

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