Evidence of meeting #43 for Industry, Science and Technology in the 41st Parliament, 1st Session. (The original version is on Parliament’s site, as are the minutes.) The winning word was rim.
A recording is available from Parliament.
12:10 p.m.
Conservative
Mike Lake Conservative Edmonton—Mill Woods—Beaumont, AB
What does that look like in practical application? You were talking about the four things you do within your office for innovators.
12:10 p.m.
Chief Executive Officer, TEC Edmonton
What it specifically looks like is a lot of support activity to help researchers understand whether they have a commercializable idea or technology, and if they do, working with them to help decide what the best way to commercialize is. Is it to licence it out to an existing company? Is it to create a spinoff?
If it's to create a spinoff, we give a lot of support activity to help that happen. We might negotiate with the university to get, for example, access to research labs for an early-stage company so that they don't have to replicate in a company capital assets that might already exist in the university. It's things like that.
The willingness of the university to support this is high at the University of Alberta, and it results in good numbers. Lots of spinoffs happen, and the proportion of spinoffs to patents is very high as a result of this focus by the administration.
12:10 p.m.
Conservative
Mike Lake Conservative Edmonton—Mill Woods—Beaumont, AB
Morgan, I'm going to come to you now.
Mr. Lumb talked about Waterloo, and you have some experience there. Historically there was a point where RIM was a startup. Maybe you could speak to the types of services that were available at the time and how important those might have been to you.
October 23rd, 2012 / 12:10 p.m.
Director, Government Relations, Research In Motion
Sure. I think the story is fairly well known that one of our co-founders, Mike Lazaridis, actually left the university before he graduated, but he did go back to be the chancellor; I think that counts for something.
12:10 p.m.
Voices
Oh, oh!
12:10 p.m.
Director, Government Relations, Research In Motion
In terms of what services were offered then compared with now, it's totally night and day. People are starting to realize the value of—pardon the term that's used a lot—collaboration, in the true sense of the term. Some of the things you're seeing now, in present-day supports, include startups going into Communitech, from whom I believe you heard at a rate of more than one startup a day. There are things such as bringing IRAP officials and such people as accountants and lawyers right in there with them. They're starting to realize that you need to create that whole system
To Mr. Lumb's earlier point, I think there's a better understanding and more of a cachet with being an entrepreneur now. Especially at the University of Waterloo, to be an entrepreneur is the cool job to do, and it's becoming less un-Canadian to make money and be successful. This is certainly a mindset that has changed rather recently.
12:15 p.m.
Conservative
The Chair Conservative David Sweet
Thank you very much, Mr. Elliott and Mr. Lake.
We'll go on to Mr. Stewart.
12:15 p.m.
NDP
Kennedy Stewart NDP Burnaby—Douglas, BC
Thank you, Mr. Chair, and my thanks to the witnesses this afternoon.
My first question is for Ms. Nolet. I'm wondering whether the relationship between patent length and R and D investment is linear. We've heard a little bit of discussion about it fluctuating. Would you describe it as mostly linear, or do you think that...?
12:15 p.m.
Director, Government Relations and Health Policy, Specialty Division, Hoffmann-La Roche Limited, Canada's Research-Based Pharmaceutical Companies (Rx&D)
I think if we look at past results from the $93 million in 1987 to the over $1 billion nvested now, we have seen an increase that is quite linear in relation to changes in the Patent Act and what that has meant for pharmaceutical R and D.
12:15 p.m.
NDP
Kennedy Stewart NDP Burnaby—Douglas, BC
If we extended the patent length another 10 years, do you think we'd encourage...?
12:15 p.m.
Director, Government Relations and Health Policy, Specialty Division, Hoffmann-La Roche Limited, Canada's Research-Based Pharmaceutical Companies (Rx&D)
Did you say another 10 years?
12:15 p.m.
NDP
Kennedy Stewart NDP Burnaby—Douglas, BC
I mean, if it's linear, then the longest protection length would result in the most R and D.
12:15 p.m.
Director, Government Relations and Health Policy, Specialty Division, Hoffmann-La Roche Limited, Canada's Research-Based Pharmaceutical Companies (Rx&D)
The key for us is looking at the environment as a whole, looking at all of the elements and seeing how they can be made stronger. Canada is a small market compared with other markets—we're about 3%—but that doesn't mean we shouldn't be out there fighting for what is rightfully our share of that research and development, so that's what we do, and that's what we want to continue to do. For us it's about creating the best possible environment and making the best possible improvements so that we can get the greatest investment possible into the country.
12:15 p.m.
NDP
Kennedy Stewart NDP Burnaby—Douglas, BC
When I was at a reception the other day, somebody from the pharmaceutical industry said she would like to be able to directly compete with the university researchers for discovery grants.
Is that something you would consider useful to your company?
12:15 p.m.
Director, Government Relations and Health Policy, Specialty Division, Hoffmann-La Roche Limited, Canada's Research-Based Pharmaceutical Companies (Rx&D)
I've never actually thought about that. We do a lot of work with local universities, and there are lots of academic research organizations we work with. We support many of them in their ability to apply for grants. We're working with the Montreal Heart Institute quite closely, and they are looking at a number of different grants for the research they are trying to do around the world.
It's a good question. I'd have to go back and ponder it with the industry. I'll have to get back to you on that.
12:15 p.m.
NDP
Kennedy Stewart NDP Burnaby—Douglas, BC
I have a question for RIM. Your success is obvious. I'm wondering how much the government had to do with it. How much public money do you think has gone into RIM over the years, including or excluding indirect tax credits?
12:15 p.m.
Director, Government Relations, Research In Motion
It's been a lot. We were a recipient of an early IRAP grant when they were above the bagel shop, and there was a TPC grant back in the 1990s, which was a very good investment by the government. I sign off on the royalty cheque every year, so I know it was a good investment. I wish I could make some as good as that. As well, SR and ED for sure has been relatively large for us.
Right now we're averaging, not including the recent changes, about $150 million a year in tax credits, which is also a good investment. Not to go into tax law, we pay over $1 billion in federal taxes a year. That's a great investment. We're not selling that much in Canada; that's our sales internationally, and the profit's coming back home.
12:15 p.m.
NDP
Kennedy Stewart NDP Burnaby—Douglas, BC
Maybe I could follow up on that with the rest of the witnesses.
Do you agree with the changes to the SR and ED tax credit?
12:20 p.m.
Chief of Staff and Vice-President, Legal Affairs, Canada's Research-Based Pharmaceutical Companies (Rx&D)
From our perspective, there are changes to the SR and ED tax credits that have potential negative impacts on our member companies. The impact depends a lot on the company's business model, so it depends where you sit and how your business model is structured.
We were speaking earlier about the SR and ED definition, and that's a slightly different issue. That's regarding how R and D is calculated and measured, and that is a concern for all of our member companies, because we're not counting correctly.
12:20 p.m.
Director, Government Relations, Research In Motion
It cuts our support by a third.
12:20 p.m.
President and Chief Executive Officer, Genome Canada
I think we need a balanced approach for SR and ED regarding direct versus indirect. That balance in not going one way or the other is important.
12:20 p.m.
Chief Executive Officer, TEC Edmonton
Also, a reduction of support for capital rather than labour is the opposite of what should be done if we want to focus on increasing productivity. If we support spending more on labour alone, that's not contributing to productivity. We want return on labour, so we should be supporting capital investments as well.
12:20 p.m.
Conservative
The Chair Conservative David Sweet
Thank you, Mr. Lumb and Mr. Stewart.
Now we go on to Mr. McColeman. You have five minutes.
12:20 p.m.
Conservative
Phil McColeman Conservative Brant, ON
Thank you, chair.
Thank you to the witnesses for coming.
I have a couple of different questions. We'll start with Dr. Meulien.
You talked in your opening remarks about a very fast-tracked collaborative model that you've developed, and the way I interpreted it—and correct me if I'm wrong here—is that it breaks down that barrier of the proprietary nature of the IP or whatever the innovation is. I'd like you to expand a bit more on that and perhaps even relate an example or two, if you have them, of how this has worked, because it intrigued me in terms of the fast-track nature of what you're trying to do and how that process could actually be a huge winning process for companies.
I'd be interested, too, in Ms. Nolet's commenting on whether the people you represent are involved in these types of models to break down those barriers that exist.
12:20 p.m.
President and Chief Executive Officer, Genome Canada
The best way to explain is through an example, as you suggested.
The first one is the Structural Genomics Consortium, which started with one pharmaceutical company joining a high-throughput technology-driven arrangement led by a Canadian researcher and linking up with the Wellcome Trust Fund, a group in Oxford University. That produces 25% of all of the protein structures available in the world, and that goes directly into a shared database.
Since then, eight pharmaceutical companies have joined this consortium, and we're now just entering phase three of its life. The interest from the pharmaceutical companies is that they get access to hundreds and thousands of things, whereas if they were just one-on-one with a research group, they would be doing 10 or 20 things. It's the scaling of what the technology can do. At scale this is incredibly productive and, as I say, is one of the most productive precompetitive research consortia in the world.
The other one, believe it or not, is in the energy sector. Four or five of the big Canadian-based oil companies have joined together in a genomics-based project, the goal of which is the remediation of tailing ponds and looking at microbial communities that live in the bitumen in the oil sands, trying to liquefy that oil and make it more easily extracted.
You can see why oil companies would think of that. It's a high-risk field. Who knows whether it's going to work or not? They believe in putting a few million bucks in there to see what the feasibility is, and they do that precompetitively, so the data is shared among everyone. Everyone has access to it, and then down the line they can be competitive. They can file their own patents based on work they would do in-house afterwards, and it's the same for the pharmaceutical companies in the Structural Genomics Consortium.
This is a model, and we can see companies doing more and more of this kind of work. It's not anti-IP, right? It's a precompetitive stage before the competition really starts, and it just speeds up the process. We know that pharmaceutical companies are struggling to get new products out the door, and sharing of data upstream will speed up that discovery process and allow them to compete down the value chain.