Health Committee on May 21st, 2013

[The Chair, Conservative, Joy Smith]

Good afternoon, ladies and gentlemen. I'm Joy Smith, the chair of this committee. I want to welcome everybody here. We have a fantastic committee. There's no bias on my part.

I have to tell you that we've had the most extraordinary and fulfilling study on technological innovation and that we have heard so many new things at this committee this year.

We want to welcome you. I'm not going to be calling on you in the order that's on the order paper. I'll be doing it in a different way. You have a 10-minute presentation, and then we'll go to questions and answers after we've heard from all the organizations.

I'm going to begin with the Association of Canadian Academic Healthcare Organizations. I understand that Dr. Paige and Ms. Power are going to share their time. Who wants to begin?

Ms. Power, would you begin, please?

[Chris Power, Chair, President and Chief Executive Director of Capital Health, Halifax, Association of Canadian Academic Healthcare Organizations]

Good afternoon, and thank you for inviting ACAHO to contribute to this important discussion.

As noted, my name is Chris Power. I'm the president and CEO of Capital District Health Authority in Halifax and chair of the ACAHO board. I began my health care journey as a nurse.

I'm delighted to share the time allotted here today with my colleague, Dr. Christopher Paige, vice-president of health research at the University Health Network in Toronto.

ACAHO is the national voice of Canada's academic health care organizations; that is, the country's research hospitals, academic provincial and regional health authorities, and their research institutes. You may know our organizations for the patient care services they provide to you, your families, friends, neighbours, and communities. However, these organizations are also national resources and economic engines. They are responsible for hundreds of world firsts, innovative technologies and spin-off companies, lists of which we have provided to you in the package containing our brief.

For example, in my own region, one of our orthopedic surgeons, Dr. Michael Dunbar, provided the scientific basis for Halifax Biomedical, which makes tiny beads that allow for precise tracking of any relative movement in bones during surgery long before any other approach can.

One of our anesthesiologists, Dr. Michael Schmidt, helped establish DMF Medical Incorporated, a spin-off company that is now investigating several innovative approaches to protect against cognitive declines after surgery in the elderly.

Dr. Orlando Hung and industrial collaborators are developing inexpensive medical devices that allow for the safer placement of breathing tubes and that provide feedback on the flow of anesthesia medication in the veins.

With these and other examples in mind, we will propose to you that while our country's academic health care organizations have impressive track records, opportunities within our organizations remain unexploited. In our view, what we need in Canada is a national framework or mechanism that allows for the systematic identification of innovations from a publicly funded health care sector that has commercialization potentials; incents commercialization through adequate infrastructure support; and enables the strategic procurement of our own innovations to help generate revenues, bend the cost curve, and spread patient care solutions more broadly.

With this, I would like to invite Dr. Paige, vice-president of research at the University Health Network, to continue our remarks.

[Dr. Chris Paige, Vice-President, Research, University Health Network, Association of Canadian Academic Healthcare Organizations]

Thank you, Chris.

Hello to everyone.

For most of the 35-plus years l have conducted medical research, l've done it in academic health care organizations, where almost 80% of all medical research takes place in this country. Why? This is the research real estate, where the patients, health care professionals, and scientists work together to discover new ways to recognize, prevent, and treat disease. They attract top medical talent from around the world to Canada, and they partner with industry to increase treatment options and test new technologies. Increasingly, they are the basis for commercial activities that, in our view, will turn Canadian investment in health research into fuel for the knowledge-based economy and better health.

My organization, the University Health Network, is home to individuals who have produced history-making treatments and technologies that have changed the face of health care here and around the world. To meet our commercialization challenges, we have a dedicated staff of 12 professionals skilled in commercialization. For our size, this is half to one-third the number a similar institution in the United States would have.

We have also launched the Techna Institute to focus specifically on identifying unmet clinical needs and shortening the length of time it takes to develop and bring products to the market that address these needs. Again, this is funded through donations.

However, I think more can be done. Across our country there is reason to question whether the current model of benefits from academic health care organizations is sustainable and whether we are maximizing our potential.

We depend on charitable donations and foundation dollars to fund the infrastructure necessary to identify commercial opportunities. Our existing programs, while helpful, do not provide sufficient prototype development funding. In our brief you will find a full discussion of the barriers we would like to draw to your attention.

The experience of other countries can help us, however. The small business technology transfer program in the United States funds development of discoveries from the hospital/university sector partnered with small companies. The small business innovation research program, also in the U.S., is a similar program, designed to help the companies themselves.

Another approach may be the credentialling of research hospitals in a manner that ties responsibility for medical innovation to additional infrastructure support funding. This model is seen in the “comprehensive cancer center” designation in the United States. The additional funding, competitively won, would allow the development, application, and commercialization of technology advances.

l would envision a network of 30 to 40 academic health care organizations across Canada developing and sharing innovations in health care delivery, and each of these acting as a local hub to disseminate evidence-based advances to every hospital in the country. This can be tied to an innovation fund, such as the national health innovation fund, that could also assist in leveraging specific funding.

If most provincial spending on health care is restricted to current practice, and federal funding is not tied to the expectation of innovation or improvement, we have a problem. No successful business, particularly not one with such a heavy reliance on technology, will excel without a rational plan to invest in change. That is what we need. We have the opportunity to do this in Canada. We should not leave it to chance.

Thank you.

[The Chair, Conservative, Joy Smith]

Thank you very much. That was extremely interesting.

Now we will go to Dr. Yousef Haj-Ahmad, president of Norgen Biotek Corporation.

Could we have your presentation, please, Doctor?

[Dr. Yousef Haj-Ahmad, President and Chief Executive Officer, Norgen Biotek Corporation]

Thank you very much.

Ladies and gentlemen, thank you very much for the opportunity. It's an honour to be here.

I would like to talk to you mainly about the commercialization of technology. Since we're living in an age of knowledge-based industry, I'll share with you my experience in Norgen and various other companies. I'll begin with a timeline. I've been in life technology and biotechnology from the early 1980s to the present. I earned my Ph.D. at McMaster University in 1986. I was a post-doctoral fellow in Labatt's research department, working in yeast. In 1988, I co-founded Procyon Biopharma with colleagues. Later on, I became a professor at Brock University, and 10 years later, I started Norgen Biotek.

Based on all these years, I came to the conclusion that we have lots of science to start a biotech in Canada. We're not short of good science and good scientists across Canada, but we're lacking in commercialization and successful commercialization. We have too many start-ups, but very few make it all the way.

I concluded that you need three key ingredients to form a biotechnology company, and I would like to talk about biotech; that's my area. You need good science, and there's plenty of good science and good scientists across Canada. You need good, experienced executive teams. Very often, those executive teams are very impressive. They call them high flyers. They come from big pharma. They recruit them to the biotech area, to start-ups. And of course you need the money from venture capital, and we do have plenty of venture capital—perhaps not as freely as we think; nonetheless, it's there.

This is the traditional formula. Over the last 20 or 30 years, we've encountered problems with this traditional formula, and you have seen many biotech companies go public. After a short while, they simply were on life support, and finally, they went bankrupt. What's the problem with science? Professors very often lose interest because they become marginalized as soon as they have venture capital coming in. The golden rule is, first, he who has the money rules. Second, the executives who run the company listen less and less to the scientists. The scientists lose interest in driving the science forward or taking it all the way to the end. The executives' primary focus is merely on raising money, polishing the story, and making more and more presentations to raise more and more money. The venture capitalist loses interest. After a short while, there is a lack of progress and they start to find an exit strategy. Very often, the exit strategy is to take the company public sooner rather than later. Most Canadian biotech companies go public much sooner than their U.S. counterparts. They initiate mergers and acquisitions with other companies. It may not be of great benefit to the technology, but it's an exit strategy for the venture capitalist.

Alternative funding strategies: obviously you can see the traditional one on the left side of this slide. I'm not going to repeat it. The one I followed for Norgen was based on experience and the dos and don'ts from my previous ventures with various other biotechs. Earlier, I relied primarily on parental financing, small business loans, and products and services. This isn't new. Biotech companies, like any other company, knowledge-based or non-knowledge-based, must have some sort of revenue, and this revenue must be deliberately designed to grow over time. You don't need to out-license all the technology. You could license part of your technology, but not everything. Part of it is to finance your growth. Of course, there are research grants. Our National Research Council has a pretty good funding program.

Here is an example of a possible problem: the growth rate versus the burn rate. Most start-up knowledge-based companies have a burn rate, which they characterize by how fast they are burning their cash.

Here I just used hypothetical numbers. As a start-up, you may raise $1 million in the first round and burn it in a few months. When you go back and start to sharpen your skills, you raise $5 million, and you burn that pretty quickly. Then you go for $15 million, and you burn that pretty quickly. But if you're producing and selling some sort of product from your knowledge—you have plenty of scientists—this growth rate will be sustainable, and one day you will achieve sustainability.

These are hypothetical numbers I have in here, but they are not too far from reality.

[The Chair, Conservative, Joy Smith]

You only have four minutes left, Doctor.

[Dr. Yousef Haj-Ahmad]

Perfect.

With this in mind, I set up the Norgen biotechnology company. We started in 1998. The company started in an old library and moved into a much larger state-of-the-art building. We're pursuing the commercialization of technology and the selling of products at the same time.

What is the main focus of Norgen Biotek? The umbilical cord of the company is products, sales, and services. That is growing very nicely, and it provides sustainability.

All four of the areas listed here—diagnostics on demand in resource-limited areas, point-of-care diagnostics, home testing, and prenatal diagnosis—are very important, and are the future for this century. They can be home runs for the company if any one of them succeed.

The company is fully regulated, ISO certified, Health Canada approved, with CE-marked products. In terms of patented technology, we have over 20 patents already issued and 15 pending. We isolate DNA on protein from all kinds of specimens. The products are innovative and excellent in quality.

Who are our customers? With computer technology being the equalizer right now, we sell products all over the world to companies, to universities, and to institutions. We have distribution channels all over the world.

Last century, it was the century of physics and chemistry. This century will be dominated, as you already know, by the digital revolution and by biotechnology.

What is the world's most dominant language at the present time? You can't speak it. You can't read it. You need tools to read it. It's the strings of ones and zeros: that's the digital revolution. That's the age we're living in. It will dominate this century.

What is the other language? It's the code of life. It's also written by “A, G, C, T”—four letters—but they must be in base pairs: “AT” and “GC”. Again, it's like digital.

Those two are the most dominant forms. Technology, specifically biotechnology, will transform lives, will transform companies, will transform countries, and will transform continents.

I would like to conclude by thanking the NRC for supporting our quest to develop diagnostics on demand in resource-limited areas. In my view, NRC-IRAP is the engine of technological innovation in Canada and should be supported as much as possible.

Thank you very much.

[The Chair, Conservative, Joy Smith]

Thank you very much, Doctor. That's quite an amazing presentation. Thank you for giving your insightful comments about the future.

We'll now go to BIOTECanada, to Mr. Andrew Casey, please.

[Andrew Casey, President and Chief Executive Officer, BIOTECanada]

Thank you, Madam Chair.

Thank you for giving me the opportunity today to testify about this matter which is of great importance to the members of BIOTECanada.

Today we are talking about technological innovation, with a particular focus on commercialization and venture capital.

By way of introduction, BIOTECanada is the national trade association representing the biotechnology industry in Canada. Our 250 members are across the country. They represent three distinct spaces within the biotechnology industry. The one we're here to talk to today, of course, is on the health side, but I also represent a number of members who are in the agricultural and industrial spheres. Each one of them sees enormous opportunity out there in the global marketplace. I'm going to dive into a little bit of that here this afternoon.

Looking at the global opportunity, it's an opportunity, but it's also a challenge. When you look at any sort of prognostication about the population and where it's going, we're looking at a population boom over the next 10 to 20 years that's going to take us to somewhere around 8 billion or 9 billion people in the world. We also know that in 1900 you were probably expected to live to around 48 years old, and now you're expected to live to about 80 years old. People's diets are changing. People are getting sicker and living longer. We have a huge health challenge in this world. We also have a challenge in terms of feeding those people, and driving economies that are able to survive in that bio-economy.

The industrial and agricultural side of my membership is playing an instrumental role in changing and transforming other industries.

The health side is an interesting challenge and opportunity, because on the one side, of course, it helps get people healthier, it helps prevent illnesses, and it helps prevents death. But it's also an enormous business opportunity. It's estimated that it's about a $1.6 trillion industry going forward, and growing. There is in there a significant opportunity for the Canadian industry. When I look across my membership and the industry more broadly in Canada, we're very well positioned to take advantage of that opportunity. We have a long history of innovation in this country, and certainly innovation in the biotech industry and sector more broadly, so we have a great opportunity.

If you look at the BIOTECanada membership, it is quite representative of a very diverse industry of innovation across the country. We're found in every region and every province of the country. There are small and larger clusters in each of the provinces that have developed expertise and innovation in research and development. The industry is very well positioned to take advantage of the opportunity. The challenge for us, of course, is that medical development and innovation is extremely expensive. If you take an average drug or medicine, it takes about $1 billion, give or take $200 million or $300 million on either side, to get it from a compound right down to where it's actually in a human body. There are different variations as well. If you go through clinical trials, that can take anywhere from $200 million to $300 million. It's very capital intensive, but it also comes with a lot of risk. You can take about 5,000 or 10,000 compounds, and of those 5,000 to 10,000 compounds only about one will emerge as being used on the human body. You can see along that path that a lot of them don't make it, and yet a lot of money goes into trying to figure out ways to get those into the human body.

As an industry we represent an enormous investment opportunity, but obviously there's a lot of risk that comes with that, and therein lies the challenge. We're a global industry. At the heart of it, we're essentially good ideas. Good ideas are very portable; they can go anywhere. What we need to do in Canada is bring capital to Canada. Capital is a global traveller, it's a world traveller, it likes to go to places where it feels welcome. If you think of it as a regular tourist, it wants to go where it can get free Wi-Fi, maybe breakfast in the morning, and the turndown service at night. You have to put out a welcome mat if you want capital in your country.

When you look at what's going on in the world, other countries see this $1.6 trillion opportunity as well and they're moving very quickly into that space. They're handing out the free Wi-Fi, the turndown service, and the chocolates on the pillow. We have to do likewise; we have to keep pace. What I'm talking about there are hosting conditions. Canada has to be as competitive as other nations in this sphere, in terms of creating hosting conditions so that capital wants to come here.

There are a number of ways that can take shape. Obviously, one of the ways to do that is through an intellectual property regime that is at the very least as competitive as our closest competing nations. We also have to put in place tax incentives and create other investment incentives that will draw capital to this country and investment in the industry.

The government has done a very good job of supporting the industry. We know it invests about $2 billion annually in support of innovation, and the industry certainly greatly appreciates that. We would suggest that we work more closely together, making sure those investments are done as strategically as possible, working closely with industry so that we're in more of a pull mode than a push mode. That's an area on which we could work closely with the government.

The $400 million venture capital fund that was put in place in the 2012 budget is extremely important for the industry. It's important for my small members as well as my larger members. We're working closely with government to find a way to make sure that the $125 million that was set aside for life sciences and clean technology can be accessed by my membership and my industry.

Last but not least, I want to point out that government, while a partner and an investor, is also an important player in the world of paying for the product that does come out of the industry. When looking at that, we have to be careful not to look at drugs as just a bottom-line budget item; we have to look at them more holistically.

This committee is very familiar, of course, with the development of the orphan drug national strategy. We're very grateful for the work this committee has done on that and the leadership it has shown. It's now in the very capable hands of the Department of Health and industry. There is a perfect example of how government can take a look at drug development, getting therapies and medicines to Canadians in a more holistic fashion rather than just a bottom-line budget item. For that, we're very grateful. We're working very closely with the government on this one and looking forward to some very successful outcomes, and certainly access to medicines for Canadians.

I will leave the committee with that.

Thank you again for this opportunity today. I am going to answer your questions after the other presentations.

Thank you very much.

[The Chair, Conservative, Joy Smith]

Thank you, Mr. Casey.

We'll now go to the Toronto Rehabilitation Institute-University Health Network, with Dr. Geoff Fernie.

I understand you have with you another gentleman, Mr. Promise Xu, junior commercialization officer.

I believe, Dr. Fernie, you are making the presentation. Is that correct?

[Dr. Geoff Fernie, Institute Director, Research, Toronto Rehabilitation Institute-University Health Network]

Thank you, Madam Chair.

Yes, the Toronto Rehabilitation Institute is a member of the University Health Network, so Chris Paige in the corner there is my boss. This is an unfortunate coincidence. I have to watch very carefully what I say.

[Voices]

Oh, oh!

[Dr. Geoff Fernie]

The Toronto Rehabilitation Institute is now Canada's largest rehabilitation hospital. It's also grown in less than a decade to be the largest rehabilitation research group in the world. That is due to many of you around the room here supporting the Canada Foundation for Innovation, CIHR, and NSERC over the years, so we're really talking from a position of strength about how to go to more strength.

I have to resist talking to you about the things that we make, the things that we do, but they're things that will all affect you, if not now, then at some point in your lives. They're not the traditional areas of focus that you've heard about in the past. We're developing very practical solutions to common problems—the common problems of how you get your mom up in the morning, get her dressed, and toileted, and bathed, and around, and how you keep an eye on the family when you're at work or when you're out somewhere.

We've successfully launched three start-up companies within the last two years, and we expect to launch another two more start-ups within this next year. So we're speaking from a position of experience, and experience in start-ups primarily, in working with small and medium-sized enterprises.

I think you'll all agree that a major reason why there is no crisis in health care caused by the growing elderly population is actually that lengths of stay in hospital have been reduced through the development of improved medical devices and techniques that permit far less invasive procedures. You can go in and have a heart operation and come out the same day, or at least the next morning. Things are changing. That's what has allowed us to control health care expenditures. Yes, I know they're ramping up, but they haven't gone wild.

What we've really done, as you well know, is we've shifted the burden of health care onto the families. The families are now the largest health care labour force that we have. In Ontario, for example, over one-quarter of families have been providing continuous care for the last two years. Most people would prefer to live in their own homes. The government would prefer that, too, because it saves us taxpayer money. However, familial caregivers are caring for sicker and more disabled people, and they're under growing physical, mental, and financial stress. There are a lot of people under these stresses. There's a huge demand for technology that facilitates greater independence for seniors and helps informal caregivers complete their tasks with greater safety and ease.

One point that I want to make is that it's very important to recognize that not all sectors of the health technology industry are homogenous. You can't treat them all the same, particularly in terms of investment needs for entry. My colleague Andrew has talked about the need for a billion dollars sometimes, or hundreds of millions, to invest in drugs. Actually, new companies in the fields that we work in can often get started with $2 million, with a follow-on of another $3 million or $4 million or $5 million. They're actually below the radar screen of venture capital. Venture capital isn't interested in investment in small companies. Small business opportunities, however, might be more appropriate for Canada since they require much more modest investments, and because they're below the radar screen, they need other mechanisms of financing. We're going to have to be creative.

We also believe in not rushing to license off our technologies to multinationals. It's too easy, and actually the return on the investment isn't that great. You get 5% royalty flow or something. We're really trying to get start-ups going and build wealth first, even if we exit later. Build wealth, build jobs, build a culture of innovation in Canada that we can live on.

I've listed some recommendations and tried to be wise. I've avoided any, except perhaps the last one, that would cost the taxpayer anything.

[The Chair, Conservative, Joy Smith]

We like you, Dr. Fernie.

[Dr. Geoff Fernie]

Thank you, Madam.

The first one is that Canadian research institutions should be encouraged to open their doors to involvement with small and medium-sized businesses. Government incentives such as tax holidays for start-up companies could be put in place and effectively implemented. It doesn't cost anything, because if they don't start up you don't have the tax. If an innovation comes out of a university or a research hospital, then give the company a bit of a break. It's not costing anything. You're just foregoing revenue for a while.

On the other side, business should be encouraged to interact with research. The new pilot program of tax credits to small and medium-sized business that came out of Tom Jenkins' report is a good incentive. It should be expanded with increased interaction, not only with universities but also with research hospitals. It is important that everyone in this room understand that research in health care is largely done in research hospitals.

Third, considerable engineering research is conducted within research hospitals and yet the Natural Sciences and Engineering Research Council funds must be administered by universities, and that's a bit of a nuisance. It is time to open access to NSERC funding to hospital-based researchers, in the same way CIHR operates.

Fourth, too often research proposals to NSERC are criticized for having too much health-related content. This may seem parochial to you, but it's a big irritant to researchers who bridge between engineering and medicine. These government agencies must be reminded that interdisciplinary research, crossing the boundaries of engineering and medicine, should be encouraged.

Fifth, and you've heard this before, our researchers should be rewarded for commercialization activities rather than penalized, as at present. Academic careers and grant funding are judged primarily on easily measured scales that score the number of publications and the status of the journals they appear in. How about this? Why don't we think about not just having a program of Canada research chairs, which is terrific, but about launching a program of Canada innovation chairs? So we set the tone. We set something that reminds the academic world that this is a worthy activity to aim for, that it has status.

Six, consideration should be given to increasing the budgets of the granting councils. Of course, you expect me to say that, but what about designating funds particularly for prototype-making and for intellectual property protection? This way, instead of being cut from the budgets, when you apply for the money they're in a special box. If your research is going ahead, you can apply for access to those targeted funds.

Seven, energy should be directed to reforms of government programs that encourage strategic procurement to encourage Canadian innovation. You heard this from Dr. Strangway the other day, and you heard this also from Tom Jenkins. There are opportunities, particularly in Defence and Veterans Affairs. Unfortunately, in health care, each province has its own program for approval of health devices. Maybe the Minister of Health might be encouraged to work through the FPT process to see if we can get some harmonization to improve this and get rid of some of the difficulties with interprovincial boundaries.

Eight, this one that might cost a little bit of money, but a new Canadian program akin to the small business innovation research program and the small business technology transfer program in the U.S. should be established, particularly to support small businesses and start-ups working with Canadian research and innovation centres. There are three fundamental characteristics that will make such a program successful. First is a real effort in keeping paperwork to a minimum. Researchers hate it, and it stifles innovation and loses opportunities. Second is a year-round and fast application and reviewing process that's relevant to commercial opportunities. Third, and most important, is a strong focus on strategically utilizing public procurement power to actively help small businesses find and secure early customers.

Done.

[The Chair, Conservative, Joy Smith]

Thank you very much, Dr. Fernie. You did very well. Thank you for your very important and very much cutting-edge recommendations.

Now, last but not least, the very important Business Development Bank of Canada, with Paul Kirkconnell, executive vice-president.

[Paul Kirkconnell, Executive Vice-President, Venture Capital, Montreal, Business Development Bank of Canada]

Thank you very much, Madam Chair, members of Parliament. Thank you for inviting us to talk about technology innovation. We're happy to do so.

I'll profile the venture capital operations of the BDC and how they support technological innovation in the health care sector.

As you know, BDC is a commercial crown corporation, the only bank in Canada that is exclusively dedicated to entrepreneurs. We have 28,000 clients, in virtually every sector of the economy.

A small portion of these 28,000 clients are building innovative companies, developing or disruptively applying leading-edge technology. These high-tech entrepreneurs have a high tolerance for risk and ambiguity. These are the businesses BDC venture capital supports.

The past decade has been very difficult for venture capital. The global financial crisis reduced the amount of available risk capital and exit opportunities, and overall lowered returns for venture capital. For instance, in 2010 the Canadian Venture Capital and Private Equity Association reported that venture capital firms invested $1 billion. In 2011 and 2012 respectively, venture capital investments were up slightly, at $1.5 billion each year. That might sound like a lot of money, but these figures are down from a high of nearly $4 billion in the late 1990s. And it’s not only money. To succeed, entrepreneurs also need expertise, mentoring, and networks. All are in very short supply.

A few years ago we did a root and branch study of the venture capital industry to see how we could help stimulate and strengthen it. Following this review, we began to reorganize ourselves in order to better support the Canadian venture capital ecosystem. Crucially, we’ve emerged as an honest broker, trusted to bring together a variety of potential customers, investors, and strategic partners. The road to a robust venture capital industry requires patience and perseverance. That is why I'm pleased to report that our new strategy appears to be showing results. But given the unpredictable nature of venture capital, the road to recovery will continue to be potentially volatile.

BDC's venture capital role in technology innovation is best understood as helping through targeted investments to bring about an industry-wide turnaround in Canada's high-tech entrepreneurs and their industry. We invest in three ways. First, we invest directly in companies through targeted internal funds. These include internal funds in health care, information technology, and energy-clean tech. Our knowledge of the health care sector is broad and deep. Our focus is to support innovation that improves health care efficiency.

Across the world, aging populations are increasing the demand for health care services, while younger people are dealing with chronic diseases like diabetes and obesity. At the same time, the supply of trained physicians and nurses is falling. Consequently, governments and hospitals are trying to make the most of their resources. They are focusing on efficiency and productivity and seeking innovative ways to improve delivery. Fortunately, we have the tools at our disposal that support a rethink of health care. The ubiquity of wireless, mobile, and cloud computing enable new ways of communication, interaction, and data analysis. Advances in genetics, genomics, and diagnostic technology are creating a deeper understanding of disease causes and enable faster and more accurate diagnoses.

Recall that today's entrepreneurs think globally when they scan for opportunities. Helping meet the global need for better health care services is a powerful incentive and way for Canada's high-tech entrepreneurs to succeed. To support Canadian innovation to expand globally, our health care fund will grow new companies and enter new markets.

The second way we invest is indirectly into funds, which in turn invest into companies. All of these funds have decision-making partners based in Canada. Many are managed by Canadians, and all invest significant capital in Canadian start-ups. We're also working hard to attract top-tier international VC funds to Canada that in turn commit to invest a large portion of their funds into Canadian technology. We hope the emergence of a greater number of large, skilled venture capital funds will help return the industry to profitability, thereby restoring investors' faith in the asset class. The recently announced venture capital action plan is an example of a step in the right direction to accelerate reaching that goal.

Third, our strategic investments and initiatives team helps seed very early stage entrepreneurs by mentoring them and helping them grow global businesses. Across Canada, we've helped establish some of the top private accelerators. These are three- to four-month programs where select start-ups are provided with intense learning opportunities to help them grow to a higher level. We've also recently announced a partnership with the Department of International Trade's Canadian technology accelerator, or CTA, program. With hubs set up in four U.S. cities, CTAs allow start-ups to make connections with potential investors in the U.S. Two of these CTAs are completely dedicated to health care in Philadelphia and San Francisco, while the CTA in Boston incorporates health care companies into its program as well.

In sum, we invest directly in companies, indirectly in funds, and strategically into the networks of mentors and investors that make the whole VC ecosystem work. One thing is certain: turning an innovative idea into a healthy company that brings benefits to Canadians—commercialization—is never straightforward or sure. It takes patience and perseverance, money, skills, and networks.

We, BDC, are doing our part to improve Canadian entrepreneurs' chances of successfully commercializing their ideas. It is what we are here for, and we do it in several ways.

Thank you.

[The Chair, Conservative, Joy Smith]

Thank you so much. That was a great presentation, very insightful.

We'll now go into our Qs and As, our seven-minute rounds.

We'll start with Ms. Davies.

[Libby Davies, NDP, Vancouver East, BC]

Thank you very much, Madam Chairperson, and thank you to all of the presenters who are here today. I'm sorry if I won't get to all of you with questions; there are quite a few people here today, so it's going to be difficult.

As the chair said at the beginning of the meeting, it's been a very interesting study and discussion that we've been having about health innovation, trying to really follow the path of what's going on. I think you've helped illuminate some of that today, as to what resources are there and what's lacking in how we get to commercialization.

I'd like to begin with Dr. Paige from ACAHO. In your brief, you say we need a national framework that allows for systematic identification of innovations, etc. I think you're saying that we don't have that, that it's probably quite sort of patchwork. If I understand it, even if we had that, even if we had a system for clearly identifying what is being done, we still don't have the “how” of what kind of adequate infrastructure support is needed.

It's curious to me that a number of you have mentioned the Canadian Foundation for Innovation, NSERC. We've heard from the Business Development Bank. I guess I'm really grappling with what the gap is.

Dr. Paige, you mentioned two models, I guess, that you've looked at in the U.S. A couple of people mentioned those as well—the small business technology transfer program. I'm just curious to know what is it we're not doing or what do we need to do—particularly at the federal end—to fill those gaps?

If you don't even have a way of identifying what innovation is being done, then we're in pretty rough shape, it seems to me. Otherwise it must be almost anecdotal.

Do people get together? Is there a way that this sector interacts, whether you're on the venture capital side or on the academic research side? What kind of interaction is there so that even those of you who are involved—never mind us as public policy makers—actually know what the picture is? What I am left with is that it's very fragmented. Am I right in that, and if so, what do we need to do?

[Dr. Chris Paige]

Thank you. You have hit a number of really critical points, and points where I think we can collectively do something together.

It is fragmented. A hospital like UHN, which is actually four hospitals, and Dr. Fernie talked about one of them, is a living laboratory where innovations are happening, but we don't have the systematic way of making sure every hospital in Canada knows about them as we produce evidence that this is a better way to do something.

In Ontario they created the ARTIC program, which was $7 million. Each hospital puts in what they think are the three most innovative ways of changing health care delivery—a competitive process. Each year one or two are chosen for funding, to take it from “there's good evidence” to “how to roll it out”, in this case across the 25 academic hospitals in Ontario and then beyond. That happens only in the jurisdiction where the funding occurs. That could become a national program. That's where the federal government could have a huge impact by having an innovation fund that would allow discoveries like those to be judged and found worthy to be rolled out.

[Libby Davies, NDP, Vancouver East, BC]

Is there anything now that you could access federally to know what that picture is across the country, in terms of either innovation that's happening or funding? What kind of access do you have at all?

[Dr. Chris Paige]

In the academic hospital sector, that's what ACAHO does. All of the research hospitals in Canada are part of the ACAHO, and on a regular basis ACAHO collects information on such innovations. It would be one of the best ways of exchanging knowledge in that area. But the incentive to do so still remains quite small. The reason why I think just having the list would be important is people would see what's on that list and they would ask “Why aren't we doing this everywhere?” That would be one of the reasons why funding could be found to do it.

In many cases, those innovations are going to save money for the system, if only they could be shown to be effective, and we'll roll them out. We're pretty close to being able to do this. And on the part of the hospitals there is certainly a huge desire to be able to take what looks like the right thing to do and prove it's the right thing to do, provide the evidence, and then learn how to roll it out.

[Libby Davies, NDP, Vancouver East, BC]

In doing that, though, is there an environment of collaboration, or is it also very competitive as people guard what innovation they...? How do we deal with that?

[Dr. Chris Paige]

By and large, hospitals are in it for their patients. Innovations are discussed, and we do roll them out. I think the competitiveness is much less at this end of applied research, applied knowledge, than it is in some other places. No one's going to win a Nobel Prize for coming up with a better way to get your mother out of bed, as Dr. Fernie was talking, and yet it might be the most important thing to do. Right?

I'm not worried about the competitiveness. It's the incentive to be able to take those ideas, prove them, and then roll them out, which is why I like this credentialled hospital network concept, because that would get all the hospitals working together—a little bit of infrastructure money for all of them and they would then be responsible for getting those innovations out, or else they will fail in the next round of infrastructure funding.

[The Chair, Conservative, Joy Smith]

Thank you, Dr. Paige.

We'll now go to Dr. Carrie.