10 minute read

Q&a

Q A & Mark Schaan, with Director of Industry Canada’s Pharmaceutical Sector Directorate

1.What is the Pharmaceutical Sector Directorate, Manufacturing and Life Sciences Branch and what is its mandate?

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Industry Canada’s mandate is to help make Canadian industry more productive and competitive in the global economy, thus improving the economic and social well-being of Canadians. More specifically, the Department works to ensure that the Canadian market is efficient and competitive; that science and technology, knowledge, and innovation are effective drivers of a strong Canadian economy; and that competitive businesses are drivers of sustainable wealth creation.

Within this, the Pharmaceutical Sector Directorate (PSD) provides industry analysis and policy advice to encourage innovation and to increase the competitiveness of Canada’s life science industry. In particular, PSD contributes to policies to advance commercialization for life science products and therapies and to retain and grow the life sciences footprint in Canada, including manufacturing, partnerships with academia and research centres, research and development, and small-and-medium-sized enterprises (SMEs).

2.Tell us a bit about your role as director, pharmaceutical sector directorate, manufacturing and life sciences branch?

PSD works with other groups within Industry Canada, with other federal departments, and with provincial governments on issues that affect the sector. We aim to be the centre of expertise on the industry in Canada, working to understand both global and domestic trends and their implications for industry in order to provide strategic advice to government on sectoral and industrial policies.

Our position within the Manufacturing and Life Sciences Branch (MLSB) provides a unique platform for us to understand the linkages between life sciences and other industries. The breadth of MLSB’s scope, including steel, aluminum, machinery and equipment, pharmaceuticals, medical devices, business services, textiles, apparel, consumer products and emerging technologies, allows us to understand the shared opportunities and challenges between our sector and others.

As well, we help drive a policy agenda that broadly supports general industrial competitiveness, including work on global value chains, and supports for commercialization.

3.Is it wrong to assume your function is somewhat like a go-between for government and industry?

As public servants, one of our core roles is to provide professional, candid and frank advice to political decision-makers. This requires significant outreach to industry and other stakeholders in order to be informed and knowledgeable on the wide purview of sectoral issues – everything from overall industry trends to the technicalities of the impact of a specific regulation. We work

the study finds that successful firms need to consistently have an innovation that can be put into practice, is patentable, has a commercial market, and is something for Which someone is Willing to pay.

closely with colleagues within the Department, and within the broader Government arena to understand how their policy work will impact the industry and to identify areas to use policy levers to meet broader policy goals while also stimulating growth of this important sector.

4.What are some of the key issues industry wants to get before government? Likewise what are some of the productivity and competitiveness issues facing the Canadian life sciences sector?

The sector has been undergoing a significant transition, both worldwide and in Canada. Each sub-sector within the larger life sciences industry is facing unique shifts: declining research and development productivity and the “patent cliff” hitting innovative pharmaceutical firms; a new pricing model and increasing complexity in product development for generics; and a continued challenge in accessing financing and increased selectivity in pursuing new drug candidates for small and medium-sized enterprises. At the same time, there is an increased focus on safety and quality from regulators, cost-containment on the part of drug plans, increased complexity in the science of new medicines, and a growing focus on emerging markets.

This has placed an increased emphasis on partnerships across the sector – whether with small firms on product development, with academia on research, or with contract service providers in looking for new models for innovation and manufacturing.

As a result, the competition for investment is even greater, highlighting the need for Canada to remain internationally competitive.

This shift and its implications for Canada is an issue industry has worked hard to articulate to the Government of Canada. This includes highlighting the changing nature of R&D, the importance of partnerships with Canadian institutions and firms, the growing nature of the contract manufacturing and contract research sector, the continued importance of venture capital and early-stage financing, and the role of intellectual property in shaping business decisions.

All of these issues speak to the changes underway in life sciences and the shared effort to position Canada for success in new and emerging business models.

5.Part of your mandate has been improving conditions for investment and innovation performance in the sector, are we on the right path? What needs to happen to get there?

Guided by the 2007 Science and Technology (S&T) Strategy, the government has taken action through successive budgets to support knowledge creation, develop and attract top talent, and promote business innovation. In fact, since 2006, more than $9 billion in new resources has been committed to support science, technology and the growth of innovative firms. These investments keep the Canadian economy strong, create high-quality jobs and ensure that Canada is a premier destination for the world’s brightest minds and leading companies. However, while Canada is now globally recognized for its research excellence, there remains great opportunity for growth in productivity, private sector investment in R&D and the commercialization of new products and services.

In light of this, and informed by the Review of Federal Support to Research and Development (Jenkins Panel), the federal government has shifted its business innovation approach to one that emphasizes demand-driven initiatives and the growth of innovative firms, including those in the life sciences sector. The government is doing that by doubling support for SMEs through the National Research Council of Canada’s (NRC) Industrial Research Assistance Program and by using procurement to build demand for innovative products and services. The government is supporting access to venture capital by investing $250 million to establish private-sector-led national funds of funds, $60 million to support business incubators and accelerators, and a further $100 million through the Business Development Bank of Canada (BDC) to invest in firms graduating from business accelerators. The government is also deepening partnerships by transforming the NRC into a business-oriented research and technology organization, creating a new credit notes program to help SMEs access research and business development services, and establishing a concierge service to ensure businesses can easily access federal innovation support programs.

In essence, the path to innovation success is about setting the right conditions for the growth of Canadian companies and helping them bring new ideas to market. Recognizing the efforts of competing countries to grow knowledge-based economies, our strategy involves optimizing federal investments, facilitating partnerships, and targeting areas of strength and opportunity. The focus is on finding ways to further incent the private-sector to drive innovation and growth. In doing so, we will continue to work with Canada’s life sciences sector to improve its global competitiveness.

6.The PSD-MLSB has published several reports and case studies with examples of international best practices. What findings did you make that might serve as examples for how to do things here in Canada? i.e. International Patent Strategies for Biopharmaceutical SMEs in Canada. Can you expand on some of the messages in these reports, i.e. recommendations, or some of the key findings?

The Directorate aims to be a centre of expertise on the life sciences sector. To do that, we’ve continued to pursue research and analysis that broadens our understanding of the actual operations of the sectors and the trends that are emerging.

Our study on International Patent Strategies for Biopharmaceutical SMEs in Canada, for which we partnered with a leading Intellectual Property (IP) firm, underscored the importance of appropriate patent protection in companies’ success.

The study finds that successful firms need to consistently have an innovation that can be put into practice, is patentable, has a commercial market, and is something for which someone is willing to pay. Successful patent strategies require management in their formation and execution, seek to find consistent alignment between the patent strategy and the business strategy, ensure rigour in cost control, and anticipate answers to difficult questions from potential investors and partners.

At a roundtable with industry in January 2013, a group of leading analysts from across the life sciences sector outlined a number of key trends, including the growing importance of biologics and biosimilars, the opportunities to align Canada’s specialities with the needs of emerging markets, the rich capacities of Canadian scientific centres of excellence, the diverse and solid manufacturing footprint Canada retains in phamaceuticals, and the niche areas where Canada may have a comparative advantage for new investments.

All of this underscores the changing business model and its driving trends are offering opportunities for the pharmaceutical industry in Canada. We continue to factor these findings into our work with firms and on policy files that impact the sector.

7.In November 2012, at the OBIO AGM you made the statement that Canada is now a mature pharmaceutical market, can you expand on this thought?

It simply means that Canada is a developed economy with a lucrative and well-established pharmaceutical market.

8.Firms are exploring new ways to increase revenues and de-risk drug development, including increasing collaborations, can you comment on this? For example, at the OBIO AGM you also spoke about partnerships and acquisitions as well as the growing number of multinational enterprise (MNE)-led venture capital funds, is this a trend that has continued in 2013?

As indicated earlier, the pharmaceutical sector is experiencing rapid change in the face of emerging global trends. Globally, pharmaceutical R&D productivity has been in decline with fewer and fewer new molecular entities coming to market and receiving approval compared to 10 years ago. Declining research productivity has led to thinning product pipelines and has necessitated a solid rethink of the pharmaceutical R&D model of many large firms. Many analysts indicate that large pharmaceutical companies can no longer rely on the traditional business model where major blockbuster drugs were developed and manufactured in large in-house facilities. In order to de-risk drug development, improve productivity and increase revenues, pharmaceutical firms are increasingly moving away from the vertically integrated model and adopting new strategies focused on diversification, open innovation, R&D networks, risk-sharing partnerships and outsourcing.

While large pharmaceutical companies have adopted various approaches to R&D in this new model, firms are increasingly looking at external partners including biopharmaceutical SMEs for new sources of innovation. They are creating formal divisions that can directly partner with external collaborators at a very early development stage, and creating translational research partnerships with academia to bridge the gap between scientific discovery and the delivery of promising candidates to the pharmaceutical MNE pipeline.

This has led to a number of large pharmaceutical firms developing research and commercialization partnerships through the support of the Networks of Centres of Excellence suite of programming, an initiative of the three federal granting councils: the Canadian Institutes of Health Research (CIHR), the Natural Sciences and Engineering Research Council (NSERC) of Canada and the Social Sciences and Humanities Research Council of Canada (SSHRC). For example, the Québec Consortium for Drug Discovery, a Business-Led Network of Centres of Excellence, has worked with firms to develop research platforms to aid drug discovery. Similarly, the Centre for Drug Research and Development (CDRD), a Centre of Excellence for the Commercialization of Research (CECR), supports partnerships in the development of particular technologies and therapies. In addition to these programs, pharmaceutical companies have also made a number of investments in Canada’s academic sector including in basic research by funding research chairs in universities and projects in institutions such as the Montreal Heart Institute.

While large pharmaceutical firms have a long history of partnering with Canadian biopharmaceutical SMEs, they are also starting to participate in venture capital funds within Canada as another means to more easily access R&D opportunities in Canada.

Outsourcing has also led to considerable growth of the contract service provider subsector, including opportunities for contract manufacturing and services related to all forms of research, including clinical trials.

All of this highlights the unique opportunities these trends hold for Canada in all subsectors of the broader life sciences industry.

To see this story online visit http://biotechnologyfocus. ca/?p=8679

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