Taking a Closer Look at the Canadian Life Science Industry's Top Priorities

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By Chris Rogers

In 1985, Canada came through with a program designed to encourage growth and innovation in scientific research and development. The program, labeled the Scientific Research and Experimental Development tax credit (SR&ED) put Canada in a great position to become a leader in the life science field. Over 20 years later, the face of scientific research has changed, but the SR&ED tax program remains stagnant. The program should be helping Canada excel as a life science leader but it has not been maintained.

Inflation, coupled with the ever rising cost of research, has left the SR&ED program outdated.

The situation for companies looking to do research in Canada is slowly improving but many hurdles remain. When the SR&ED program was introduced the credit cap was set at $2 million. The program remained this way until recently when the federal government announced the cap would be raised to $3 million. This means companies can receive back up to 35% of its first $3 million spent. There is also no real program set up in most provinces for the purchase of the innovative products being produced with all the research money. Another hurdle companies face are the numerous approval processes in Canada. Canada’s regulatory processes are different from the American FDA’s which means there is currently no simple means of ‘across the board’ approval for companies looking to move its products to Canada. Life sciences are forced to compete with other industries in Canada for funding, and with little in the way of a unified strategy or direction for the industry, funding can be difficult to garner.

Grant Tipler is head of the Life Sciences at RBC Royal Bank and chair of The Biotechnology Initiative. In a recent interview with Biotechnology Focus, we asked Tipler to discuss what he felt were the top priorities that he would like to see government take note of in the life science field. Tipler breaks the current problems with Canadian life sciences industry into three key areas, taxes, commercialization and approvals. Tipler has thoughts on how Canada can work to improve in each area.

Tipler has been a major proponent of the SR&ED program for years, but also believes that government cannot simply stop there. “We would like see [the SR&ED] program enhanced,” says Tipler, “federally the limit went from $2 million to $3 million and we would like to see that limit go to $10 million.” Tipler points out that the Canadian Control of Private Corporations (CCPC) provision, which states that to be eligible for these credits, a company must be Canadian majority owned, which adds more problems for companies coming to Canada. “There are some great technologies and companies from the US and we would like to create an environment for them to come [to Canada], expand on their research, commercialize and in turn this will create jobs,” says Tipler. Unfortunately the CCPC provision forces these companies to create separate companies with Canadian owners, a solution many companies will never bother with.

Once a company qualifies for the SR&ED tax credit and it chooses to develop its product in Canada it still needs a purchaser. For Tipler, commercialization is the second key to attracting and retaining business. Tipler notes that if there is a policy in place where government will purchase innovative products, which are developed by companies receiving the SR&ED credits, it would improve the attractiveness of the Canadian life science industry. Moving forward, commercialization has to be the end goal of companies in the biotech industry.

Finally, Tipler sees the last key for the life sciences industry being the Canadian approval process, “at the moment the Canadian approval process is not easy to do business with,” says Tipler. Further elaborating on the problem, Tipler explains, “if we had consistent product approval between FDA and Therapeutic Products Directorate (TPD) that would save, a whole lot of work, and if the FDA’s process is second to none, why is Canada going through that whole process again?” The review and approval process in Canada has become too daunting.

Clearly, a pattern is emerging. Tipler’s three keys could unlock the future of Canadian life sciences. “You can imagine that if you had your product developed here, purchased here, and [Canada] recognized the FDA approval process in the U.S. …that becomes a really compelling story,” says Tipler. The question then becomes when will things change? Tipler believes that government is listening to the industry, but until there is a “coordinated research innovation strategy” delivered by the industry, life sciences could be hard pressed to convince government of the benefits of further change.