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Q&A with Québec Minister Economy Innovation and Exports
comPILed By Shawn Lawrence
Q&A
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The last three years has seen the Government of Québec take an active role in helping to revitalize Québec’s life science sector, whether it’s through backing public-private partnerships, stepping to the plate with financial commitments towards strategic venture funds, or launching programs geared towards nurturing the next generation of leading scientists and researchers. In conversation with Biotechnology Focus, Jacques Daoust, the Québec Minister of Economy, Innovation and Exports, discusses Québec place as a hotbed of creativity and what government is doing to help the province maintain its status as a leading life science jurisdiction.
Biotechnology Focus: The province of Québec has always stressed that the biopharmaceutical, life science and biotech industries are key pillars to its economy. When it comes to these industries, what differentiates Québec from other jurisdictions and how do you think these industries in Québec stack up against international competition?
A: We’ve undergone a lot of change here in the last ten years, and while we aren’t as strong as we once were, I think the industry in Québec is still buoyant. It’s still a good industry and a sector that’s going to grow. You see it when we participate every year at the BIO International Convention; we are keeping pace, if not outpacing the competition. We are also still home to seven out of the ten major players in the biopharma space and we’re always looking for new ways to ensure we maintain this position. Moreover, when it comes to research excellence and being at the cutting edge of scientific discoveries, Québec truly stands out. This comes down to having the talent and infrastructure necessary. As I’ve said we are looking for ways to get better. For example, we have also just opened a very large research hospital that is linked to McGill University, and we will also be opening another in a few months that will be associated with the University of Montréal. Both hospitals will link R&D leaders to cutting
edge research centers and exceptional labs, enabling discoveries. Additionaly, when it comes to the scientific talent in the province, we rank right up there with the best. Our universities in terms of statistics for the number of graduates per capita, is right up there with Boston. In Montréal alone, we have four major reputable universities that act as feeders for our research centres providing some of the best talent worldwide.
BF: You mention you are always on the lookout for new ways to maintain this excellence. What role does the Ministry of Economy, Innovation and Exports play in helping the life science industry thrive in Québec?
A: It’s no secret that the life science industry has undergone a lot of change in the last five to 10 years, both here and abroad, and this change has required us to be more proactive in the way we support this industry. Government subsidies were at one time the thing to do. We had a spray and pray approach; we spray the money and we pray it works. And it wasn’t working. So we’ve changed the way we intervene and help these industries grow, taking on an equity partner position, whether by making financial investments, I stress not subsidies, and by encouraging public and private collaborations. In terms of our financial commitments, we make them through Invest Québec, a bank managed with two funds, propriety funds and an investment fund that comes directly from the Québec government. These funds are used to financially back companies through direct investments and loans. By taking this approach, we become vested partners in their business. For example, if you are a company or a research center and you have a market cap of let’s say $200 million, well maybe we will be in for $30 million invested. We don’t want to be a majority shareholder, we just want to say that we are there when they need the money and we’re ready to be good partners. If they lose money, we lose money. Likewise, if they find success, we will be part of that success. That’s the way we approach it. Essentially it comes down to if government doesn’t have the mentality or the will to develop the industry, it won’t work. We also are very active in terms of trying to attract both foreign businesses to Québec. For example Invest Québec has 12 offices around the world, working in tandem with our ministry, we identify the areas where we want to grow and go prospecting. We’re also prospecting for investments from those 12 offices, in places like Germany, the UK, the U.S, China, and India. So if there’s a specific company that we target in the world, we have an office to take care of it. If it’s necessary, I will even go myself to the country and negotiate with those companies or investors, alongside the president of Invest Québec to tell our story and why they should bring their businesses, their jobs and their dollars here.
BF: What are the biggest challenges facing the industry in Québec and what is government doing to help industry overcome them?
A: I would say it’s no secret that access to capital is the biggest challenge. Businesses have to invest a lot of money into R&D and taking products through for example the clinical trial process. Money is the difference maker and the deal breaker. So we as a Ministry strive to help companies get their hands on this much needed capital. I stress the fact we don’t subsidize, we invest. We do this through our involvement in a number of strategic venture funds and public-private business collaborations. An example of what we are trying to do is the Teralys Capital Innovations Fund, where we have invested collectively $700 million into that fund, and more than 25 per cent of that money is dedicated to the life science sector. We have also partnered with big pharma on venture funds, as was the case with the $50 million Merck Lumira Bioscience fund. The fact is developing these innovative molecules requires money, and we have a responsibility as a government to put our fair share in, in the hopes of attracting money from the private sector. And if through our investment just one molecule ends up with FDA approval or reaches the marketplace, it’s a big win for us, not to mention a big win for the businesses we are trying to support.
I think another challenge, and it’s one that all jurisdictions and industries face, is we have to match the graduates from our universities to the needs of industry. Whether it’s the aerospace, gaming, IT or in this case the life science industry, we have young men and women graduating from universities into sectors where the opportunity to find a job is tough, so we as a government have to work harder at helping match these graduates to the needs of the market. We have, for example, in the last budget a program, it’s a measure that we have where you have passport innovation for your first job as a researcher. If you’re a young graduate and you have a Ph.D. or a post doc you’re given a kind of a passport for your new job in that specific sector. So when you graduate you know that you have a job in a sector where you can grow. We are building new programs onto this, but we will review within another year all our policies in the life science sector so we stay ahead of the game instead of falling behind.
Another challenge we face is the changing dynamic of the pharma industry. All the big players are looking to scale back their internal R&D activities and thus they are changing their business models. For a province that has always traditionally been invested in this space, we have to do our part to keep the big players present, keep the jobs and tax dollars here. This is why we helped set up the NEOMED research centre, a unique consortium that is financed partially by the Québec government, and today has 23 companies working together to advance research in a centre that otherwise would have been left empty. Life sciences is not one company developing a specific molecule alone because it’s almost no longer possible to finance that. So they regroup in labs, they join forces, and that is what a center like NEOMED allows them to do.
BF: Why is this the new business model in life sciences and why do you think it’s the right approach to growing the sector?
A: There is a long list of international pharmaceutical companies that have forged public-private partnerships with health research centres in Québec, and they have done so with our support. And like I’ve said, we have seen a shift in philosophy for many international pharmaceutical companies globally where they looking for new ways to reduce their exposure to risk and that means governments kicking in a helping hand. I’ve mentioned that NEOMED is a very good example of that approach where we invest money alongside other stakeholders. With good partners, and sharing risk, there’s a good chance of finding success. That’s why we want to invest and there is a need. For example, there are times when the banking sector or when private sector just can’t kick in that little bit extra, so when you’re missing 20 per cent of the transaction, we will be there. And we’re uniquely position to do just that. As a former investment banker I used to think that there was no flexibility in doing business with the government. But, to the contrary, I have found that in fact there is even more flexibility in the public sector than the private sector. The private sector is very strict on its risk rule, on the way they manage the file. Government has the flexibility of doing the things you might not normally do, especially in our case if it’s for the greater good of Québec. At the end of the day if we’re bringing new businesses here or helping an existing company towards a big win, all because of a 10 or 20 per cent financial contribution, it’s worth it to us.
BF: On the topic of government initiatives that have helped to bring new businesses and expansion to existing ones, GreenCross Therapeutics recently started construction on a $350 million facility in Montréal and Medicago recently began construction on a new $275 million facility in Québec City. These announcements have really resurrected the biotech and life science industry in Québec haven’t they?
A: I think that the Medicago and the Green Cross deals , the fact they’re creating jobs and investing hundreds of millions of dollars, I think it proves we are on the right track The industry is changing and we’re trying to change with it. It’s the only way we can survive and I think we have become quite good at adapting. We constantly review exactly what we’re doing in the life sciences, because we want to make sure we’re ahead of the game and not behind the game. One thing we have put in place is a project that we call Creativity Québec. Creativity Québec is a form of financing that comes from government, for a specific project where you improve on an existing process or product. In the life science, it’s very important, and we have a budget of $150 million for this, so we think this program can be significant for this industry. Frankly, when you are looking at programs like this as an investor, it’s much easier to find financing from the finance department of our treasury board than if you’re just subsidizing. We think that the policies we’ve put in place, like Creativity Québec, are a good way to help the industry to grow and to be more attractive to bring companies here.
To see this story online visit http://biotechnologyfocus.ca/qa-with-jacques-daoustQuébecs-minister-of-economy-innovation-and-exports/
