Industry Committee on Oct. 23rd, 2012

[John Carmichael, Conservative, Don Valley West, ON]

Thank you, Chair.

I have one question, and I'll try to condense it.

Morgan, I'd be remiss if I too didn't endorse your product. I would feel that I had missed an opportunity. We'll leave that where it is.

Chris, you talked earlier about leadership as a driver. We've had the opportunity to hear from a number of different educational institutions, and I've had the opportunity personally to visit a couple of incubators. I've seen a variety of different and very exciting environments, with different compensation plans or ownership plans for IP, etc.

One of the questions that came out of that is whether, from a commercialization perspective, researchers—those working in that environment—really know whether they're going to take their product to commercialization or whether they have that opportunity. I'm just wondering about it. From a leadership perspective, you talk about leadership as the driver being as important.... I'd like to go from Chris to Pierre to Brigitte.

How do we ensure that we're maximizing our reach into these incubators and pulling the very best and the brightest out, particularly when you talk about entrepreneurialism and a lot of these other factors that I think affect whether or not we're going to have success?

[Chris Lumb]

I would say that we don't try to reach in and pull out the best and the brightest, unless it's highly obvious. We're not prescient enough to know which entrepreneur at an early stage has an idea that will really make it. We always get surprised. In fact, most early-stage companies start with a vision and a plan that doesn't get realized. The successful ones realize their success in a way that's different from what they originally envisioned.

We think it's better to create an environment where we support a relatively larger number of entrepreneurs. We encourage people to come out of universities and the community into organizations like this. We provide them with the support they need. They pass capability tests along the way to determine how much support they get, but we don't really try to hand-pick winners. If we could, we wouldn't be running incubators.

[Dr. Pierre Meulien]

I very much agree with Chris. It's a brilliant question, because I think it hits on a key issue in terms of how we maximize what comes out. We run large-scale projects, and each one is $10 million over four years. The principal investigator might be very interested in publishing his best work, but might not necessarily be the person who is going to recognize an opportunity for commercialization.

That's why we need to be more proactive in putting entrepreneurs in there, embedding them in the projects and getting that value-added aspect. That's what we try to do in a much more proactive way.

With regard to the way we're organized, we have six genome centres across the country. Their job is not only to raise money—it's a 50-50 match—but since a lot of them have business development backgrounds, to go into those projects and pull the best things out.

[Brigitte Nolet]

For our companies and with our industry, because we're at the end of commercialization and bringing products to market, it has a lot to do with having these global development wings within our companies that actually go from country to country to look for the best and brightest research.

We have people in Canada who partner with our global headquarters, and they are willing to come to our countries or to different provinces to meet people who are doing this type of research.

We will often organize events, whether at a bioconference or specifically here in Canada, where we will have some of these global research business development folks come up to meet Canadian researchers and understand more about science. They will often sign confidentiality agreements between themselves so that they can further explore what might be under development and decide whether a partnership can be developed.

That is certainly a big part of where the larger companies go; it's trying to find the right research. We have people who specifically work to find the right “gems”, as we call them.

[John Carmichael, Conservative, Don Valley West, ON]

When you are doing that on a global basis, are there one or two things that we as Canadians could do to enhance your shopping experience and your ability to bring it home to Canada?

[Brigitte Nolet]

The key is how innovative that invention is, whether it meets an unmet need, how unique it is, and whether that research makes sense.

A big part is the quality of the research. The other part, as we were discussing earlier, is about the business environment and whether there is enough stability in the market to be able to work that research in that market and be able to see it through to commercialization.

Our global CEO, the head of global pharma from Switzerland, was here yesterday. He gave a speech to our employee base here in Mississauga. When we asked him what he thought about pharma and what he thought about diagnostics, which is in Laval, he said the number one differentiating factor for the pharmaceutical side that he has noticed in his six months on the job is intellectual property.

[The Chair, Conservative, David Sweet]

Thank you very much, Mr. Carmichael.

Now we'll go on to our last questioner, Mr. Regan, for five minutes.

[Geoff Regan, Liberal, Halifax West, NS]

Thank you, Mr. Chairman.

First let me mention that I'm going to ask the committee to take a moment at the beginning of our meeting on Thursday to consider the motion that I gave notice of this morning and that you're aware of, which would call on the committee to study the changes to the SR and ED program that are contained in parts 1 and 4 of Bill C-45, the second budget bill, which is before the House today.

[The Chair, Conservative, David Sweet]

You had mentioned that to me. For logistics, Mr. Regan, are you okay if we do that at the end of the meeting? It's my understanding that we have a full panel of witnesses for that meeting.

[Geoff Regan, Liberal, Halifax West, NS]

I wouldn't necessarily see it taking very long. I'd prefer it at the beginning, but you're the chair.

[The Chair, Conservative, David Sweet]

I will go with whatever the majority of the committee feels.

[Geoff Regan, Liberal, Halifax West, NS]

Thank you.

Meanwhile, I know that Mr. Guay has been dying for the last hour to answer the question that I began to ask, if he hasn't forgotten, about best practices for patent examination around the world that Mr. Elliott referred to.

[Robert Guay]

We do have some suggestions in mind. We didn't intend to discuss them today, simply because we didn't feel that we were getting into that level of detail.

As I mentioned earlier, in terms of general notions I think patent expertise is really important. What fits into that is having the right expertise to do the search and examination work that is required at CIPO. I think CIPO is doing a tremendous job in trying to improve their standards.

Ideally, a company like RIM would like to see CIPO considered as a top search authority internationally. I know there has been tremendous progress so far. CIPO probably needs to stay on that track and perhaps even go further than what has been accomplished so far. That's one area that potentially could benefit CIPO.

In terms of examination, I think CIPO has already done quite a bit of work in trying to leverage the examination work that's done by other patent offices around the world. I think that's really important.

We don't want CIPO to recreate the wheel. We don't want them to recreate the work that has been done by other patent offices around the world, the ones that are viewed as being at the top of the group in terms of the quality of the examination that's done. I think CIPO needs to continue and perhaps do even more leveraging of the examination work that is being done in other jurisdictions.

[Geoff Regan, Liberal, Halifax West, NS]

Thank you very much.

Mr. Lumb, you said that we're not prescient enough to know which entrepreneur will make it. Isn't that precisely the problem, when government says that instead of letting businesses decide when they're going to spend on R and D, we're going to decide or have a body that grants money for R and D?

[Chris Lumb]

That's another big question. If you're talking about reductions in SR and ED and more directed R and D, that's a pretty interesting question, and there's lots of room for debate about that.

At the micro level of early-stage companies, clearly we think that creating an environment that enables entrepreneurs to succeed is the right way to go. At the same time, it is okay for the country to have national priorities and direct R and D towards national priorities. As long as the government doesn't get carried away with that, it's an okay thing.

[Geoff Regan, Liberal, Halifax West, NS]

That's a pretty safe answer.

[Chris Lumb]

But it's fraught with implementation danger, I would say.

[Geoff Regan, Liberal, Halifax West, NS]

Okay. Speaking of that environment, Dr. Meulien, you talked about the innovation continuum and how we have to get that right. What does that require?

[Dr. Pierre Meulien]

It requires excellent science, which we have in Canada. There are now loads of reports that say we punch above our weight in terms of how good we are at research. It's the rest of the continuum that we're concerned about.

How risky does the VC community think we are? We know that we're risk-averse, so it's very difficult to get that first round of capital into a small SME that has some interesting stuff to do. It's that portion of the innovation continuum that we need to support. We need to take more risk. This would balance the SR and ED stuff. We need a balanced approach between direct and indirect investment.

[Geoff Regan, Liberal, Halifax West, NS]

In view of the problem that Mr. Lumb identified about determining who is going to succeed and picking the winners, the government has been particularly inept. How do you do that directed—

[Dr. Pierre Meulien]

I think there are ways. I believe a sector-specific analysis can help us here. It's self-serving, I know; we're in genomics, so we're very interested in bioeconomy.

Canada has a huge footprint in forests, fish, agriculture, etc. The OECD said that the future bioeconomy is going to be 4% of GDP in OECD countries by 2030. Canada should have a bigger part of that pie than anyone else. Sector-by-sector analysis will be key for that.

[The Chair, Conservative, David Sweet]

Thank you, Dr. Meulien.

Go ahead, Mr. Lumb.

[Chris Lumb]

The way to do what you're suggesting in strategic sectors is to invest in infrastructure that can be widely used by both academic institutions and industry, not to choose particular company winners. That's the way to do it.

[The Chair, Conservative, David Sweet]

Thank you very much.

Before I thank all the witnesses, Mr. Elliott, if there's ever a place where you can be shameless in promotion, it's Ottawa.

With that I'll say thanks to all the witnesses for all the knowledge you've provided to the committee.

The meeting is adjourned.