Canada’s life sciences sector can help boost the country’s productivity and economy but faces several challenges in doing so, say industry participants.

These challenges include attracting investment in a highly competitive global environment, lack of domestic investment, accessing sufficient capital for scaling companies, and regulatory gaps that hobble innovation, they said during a webinar by the Canadian Science Policy Centre.

Canada also needs an industrial strategy that puts life sciences at its centre and provides the necessary budget, policies and alignment of federal departments to deliver on this strategy, they said.

“There is a huge opportunity [for the life sciences sector] to transform the Canadian economy,” said Dr. Jason Field (photo at right), president and CEO of Life Sciences Ontario, who moderated the webinar.

“We’ve got the talent but we need to fill these caps in terms of [capital]funding and returning the economic benefits – the benefits to Canadian patients – of developing these innovations here,” he said.

“We need a cohesive strategy,” said Karima Es Sabar (photo at left), founding CEO and general partner at Vancouver-based Quark Venture LP, a global venture capital firm. “We are the only G7 country that still does not have an industrial strategic plan or policy, whether it’s around R&D and innovation, whether it’s on talent, trade or infrastructure.”

Other top-tier countries have industrial strategies aligned with trade, talent, R&D, innovation and big infrastructure, and spend an average of just under three percent on R&D, she noted.

Canada spends just 1.75 percent of its GDP on R&D and that percentage is dropping, she said. “It’s abysmal. It’s completely out of line with the level of education that we have in this country, the level of talent that we have.”

Canada needs to create an environment with policies and a budget focused on growing an innovation economy and be a champion in continuously promoting this at home and abroad, she added.

“If [we] never even mention science and innovation and growing an innovation economy, how is anybody going to be interested in bringing their investments here?” Es Sabar said.

Other countries, such as the U.S., the European Union, Japan and Australia all have specific incentives to support the direct development of their life sciences sectors, said Stephanie Michaud (photo at right), president and CEO of BioCanRx, which invests in leading-edge immune oncology research translating world-class technologies from the lab into early-phase clinical trials.

Other countries’ incentives for their life sciences sectors include tax credits, grants, regulatory support, fee waivers and reductions, and greater market exclusivity.

Canada offers none of these incentives specifically for its life sciences sector, on top of which companies have to comply with rigorous regulations and conditions, Michaud noted.

There is a gap between Health Canada and Innovation, Science and Economic Development, “between our regulator and the group that’s responsible for industrial strategy,” she said.

“There’s a real need for a regulator at Health Canada to say, ‘Canada is open for business and this is what we’re going to do for you in order to have you come here and develop our own technologies and really support our innovators here in Canada.’”

Canada needs to build a supportive, aligned ecosystem

Wendy Zatylny (photo at right), president and CEO of BIOTECanada, said Canada’s approach  is probably unique among countries in splitting government policy and procurement.

In most cases, governments can use procurement as a mechanism for supporting their industrial policy objectives, she pointed out.

“But in life sciences [in Canada] it’s different because we have industrial policy under one department . . . tasked with growing the sector, and then we have approvals and the regulatory side that is in a department that has a different mandate.”

Along with this lack of federal alignment, Zatylny pointed out that while the regulator is federal, it is provincial governments that are responsible for administering and delivering health care services, deciding which new medicines and treatments will be funded, and reimbursing life sciences companies. “There’s a disconnect in that,” she said.

Anne Stevens (photo at right), vice-president of business development at Vancouver-based AbCellera, said partnership and collaboration between multiple levels of government is very important in advancing Canadian life sciences companies that are growing as anchor companies.

“I think the ability of the government to make impactful and really meaningful investments in technology that’s going to move the needle and have commercial relevance and a huge impact on patients’ lives is really important, and is something the government should continue to do,” she said.

Canada needs to build an ecosystem that allows for the intellectual property to advance to a stage that actually gets in to clinical trials, to give the health care system the experience with the innovations being generated by academic centres and new biotech companies, Stevens said.

“All too often we don’t have the pieces in place to help those technologies advance and mature and our patients don’t get access to that,” she said.

“Ultimately we get left behind in the launch and approval of the products,” she added. “It’s too long a time and gap between accessing the therapies that are often born here in Canada.”

Alexandre Le Bouthillier (photo at left), founding partner and CEO of Montreal-headquartered Linearis, which has an AI-powered analytical platform for analyzing metabolomic biomarkers, noted that

Canada has dropped to No. 17 on the 2025 Global AI Index and, in some rankings of AI education and awareness, to No. 48.

“We all know this [AI] is a big opportunity. We don’t invest enough,” Le Bouthillier said.

“But if we take a year or two to decide if we’re going to invest, then the battle is lost for Canada.

Speed in investment is critical.”

Likewise, “if it takes three years to adopt [AI technologies] in Canada, we’re also at a disadvantage,” he said.

In this time of geopolitical changes and shifting international alliances, Canada is well-perceived by other countries as a good, reliable partner, he said.

Specifically in AI, Canada has pioneered initiatives – such as the non-profit LawZero organization led by Université de Montréal professor Yoshua Bengio – to develop safe and ethical AI that benefits society and Canadians are able to work easily with international colleagues, Le Bouthillier said.

Access to sufficient capital is a huge barrier to growth

Zatylny noted that Canada’s life sciences sector has secured about $30 billion in investments over the past seven years.

“But we still can’t achieve full success and full potential without that sustained access to venture capital and non-dilutive funding,” she said.

BIOTECanada is calling on the federal government to commit to a $350-million Life Sciences Venture Capital Initiative to unlock $1 billion in total investment, matched two-to-one with private capital.

Research shows that Canada’s life sciences companies provide excellent returns on investment and are well represented in exits, said Bethany Moir, senior director, public affairs at Vancouver-based AdMare BioInnovations, which helps build life sciences companies and industry-ready talent.

A report by RBCX that looked at the top venture-backed exists in Canada across sectors found that 11 of the top exits – or 22 percent – were life sciences companies, most of them focused on therapeutics. Also, 44 percent of the exit value was from life sciences companies.

AdMare itself has played a significant role in creating 38 companies that have gone on to raise $2.5 billion in risk capital and created more than 1,000 jobs across Canada, Moir said.

However, research by AdMare shows that anchor companies are essential to a thriving life sciences ecosystem and Canada doesn’t have enough of these large companies.

Other AdMare research shows that during the last 10 years, there has been a seven-fold increase in the amount of investment flowing to Canadian life sciences companies.

Nevertheless, Canada’s life sciences sector is still under-funded compared with the U.S. and other countries in terms of the number of companies receiving investment and the size of the deal.

As for investor type, accelerators, universities and governments are playing a significant role at the startup stage, or pre-Series A funding, Moir said.

The middle stage of companies’ growth, or Series A and B funding, sees a fair mix of domestic and international investment, she added.

However, the late-growth stage is dominated by international investors, who comprise more than 75 percent of investors in deals of more than $50 million.

“The biggest group that receive the returns on investments are pension funds. But not many of them are Canadian pension funds – a couple, but not many,” Moir said. “It shows the opportunity for Canadian pension funds and institutional funds getting in the game here.”

It’s important to support Canadian innovators at home “in a really cogent way,” so they’re able to make the choice to stay in Canada and grow their companies here, she added.

Also, when Canadian companies do exit, it’s usually through an acquisition or merger by a foreign company, typically in the U.S. That means the IP, talent, innovations and other benefits flow out of Canada.

“It makes the case that there’s a huge opportunity for greater Canadian participation [in investment], so we can keep the value that we create here in Canada and that can be reinvested to keep our sector going,” Moir said.

“There’s a misconception that investing in life sciences doesn’t provide good returns,” Le Bouthillier said. “We know this [sector has] one of the best results, not only in Canada but in other countries.”

If the federal government implements mechanisms to incentivize investment, including from public pensions, there’s always matching investment, he said. “Every dollar that we invest, we can generate $12 to $15 with co-syndication of other investors from attracting more investors.”

Lack of domestic investment for scaling up companies

Es Sabar pointed out that Quark Venture invested in 32 companies over the last 10 years through the Global Health Sciences Fund, which is focused on bioscience investments in therapeutics, vaccines, medicines, digital health, AI and convergent disruptive technology companies.

Twenty percent of those companies were Canadian, yet when it came to investment needed to scale up, “there wasn’t a single Canadian company that you could raise Canadian funds for,” she said.

“There were not monies from Canadian pension funds that were willing to put money up. They were all U.S. pension funds,” she added.

“The problem is that when you start scaling up, there is nobody to step up because our pension funds don’t invest in Canadian technology and innovation,” Es Sabar said.

“But they’re investing in the U.S. and Europe,” she said. “Why isn’t five percent of that [investment] a fund for Canadian science and innovation?”

Other countries, such as Germany, Holland and Switzerland, have “scaffolds” for building public-private partnerships, including partnerships with foundations and not-for-profits, in a collective endeavour to build big platforms and big infrastructure plays, Es Sabar said.

In the U.S., the life sciences sector generates about US$2.9 trillion, about 10 percent of the country’s GDP. In comparison, Canada’s life sciences sector contributes about $2 billion, or about 2.6 percent, to the country’s GDP.

Canada also has a challenge when it comes to Canadian companies and organizations adopting homegrown technologies, including new medical treatments and devices.

Es Sabar noted that Canada had one of the first companies to have a smart medical implant, with Vancouver-based Canary Medical’s AI smart knee, which has now been implanted in 14,000 people and is shown – through real-time data – to save the health care system money.

“But we are not an adopter. Not a single hospital in Canada is using this device,” Es Sabar said.

Le Bouthillier said Canada’s long-term innovation plan must start now, must be creative and must focus on the country’s strengths.

This includes using AI to create the next-generation medical platforms that are generating new types of data that will fuel the next economy, he said. “I think there’s an opportunity to encourage the creation of those new types of labs, new types of platforms that over time will stay and be part of this long-term innovation.”

Canada needs to follow the examples of Australia, South Africa and other countries where there’s incentive for local companies to make sure that clinical trials, whether it’s for therapeutics or diagnostic devices, can be run quickly, Le Bouthillier said.

“And if it’s successful, it should not take three years to approve,” he said. “It’s about the platform and the speed of adoption of our own creation.”

Michaud said BioCanRx did a retrospective analysis going back 20 years on the number of clinical trials in Canada.

The analysis found that, in accordance with Statistics Canada data, Canada does very well in terms of the number of clinical trials in the country.

“But when we interrogated that data set to ask how many of those trials are based on Canadian innovation, the numbers were really shocking. The number was four percent,” Michaud said. “It’s really due to that lack of translational funding,” she said, which is required to take laboratory and scientific discoveries into practical applications, such as new medical treatments or devices, that benefit patients.

Although Canada has a Biomanufacturing and Life Sciences Strategy, “we need a coherent approach to recognizing that conveyor belt [of development], of really understanding all of the different pieces,” Michaud said.

Es Sabar noted that Canada is still spending 80 percent of its health care funding on the “acute” end of the health care system, instead of on preventive and primary care.

“Preventive and primary care have simply declined in this country,” she said. “Our monies are spent in hospitals where people are in critical situations.”

Instead, funding should go to preventing illness and disease, including through new innovations such as AI-powered technologies, which will have a huge impact in reducing health care costs and enable Canada to do more preventive and primary care, Es Sabar said.

Life sciences is not just a “nice-to-have” sector

For Canada’s life sciences sector, health and economy “aren’t really separate conversations. They’re very, very much linked to life sciences as the bridge between the two,” Zatylny said.

Yet despite some progress that has been made, “certainly the pace of regulatory review is not keeping up with innovation and in fact is slowing down,” she said.

Given the Mark Carney government’s plan to cut federal department spending by up to 15 percent over the next three years, “we want to sure that we are protecting Health Canada’s capacity to be able to keep processing the [new drug and medical device] approvals in Canada and keep the regulatory pipeline moving,” she said.

Zatylny said BIOTECanada, as part of the International Council of Biotech Associations, knows that these associations’ respective governments have identified life sciences as a priority growth sector and they’re actively looking at streamlining or minimizing regulations as a way of attracting investment.

“That tells me that we’re not the only ones in the game. In fact, everybody’s fighting for the same piece,” she said.

“If we want to stay in the race, we have to move quickly to send very positive signals around our attractiveness or potential for attracting [investment] as a market,” Zatylny said.

Moir from AbCellera said the federal government, which has committed to increasing spending on defence and national security, has the opportunity to look at how life sciences can contribute to dual-benefit technologies that benefit the broader population but also have unique applications that can help military veterans and biodefence.

Wendy Hurlburt (photo at right), president and CEO of Life Sciences BC, said Canadians need to have a big conversation about how to make sure we don’t shut down the country’s economy again – as happened with the COVID pandemic – if there’s a potential global public health risk.

“We really need to be thinking about what type of country do we want to be, what type of economic levers do we want to have?” she said.

“Our challenge as a sector is to really come together, collaborate with government, and help government develop whatever the strategy is to grow the life sciences sector,” Hurlburt said.

“We can’t wait for government to do that. We have to help them understand what this policy can be and how it is going to be for the benefit of Canadians,”

Webinar moderator Field pointed out that the combined market cap of the top three biotechs listed on the NASDEC is larger than the entire Canadian oil and gas sector, which consists of 120 companies listed on the TSX and TSXV combined.

Those three companies are decades-old and have experienced rapid growth, he said, which indicates the potential of the life sciences sector to be “a huge opportunity to transform the Canadian economy.”

Life sciences must be viewed as part of Canada’s core economic security and national security imperative, Field said. “It’s not just a nice-to-have, it’s not just another sector.”

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