Martin government follows through on commitment to assist Canadian firms in moving products to market

Speech from the Throne

Commercialization was front and centre in the Paul Martin government’s first Speech from the Throne (SFTT) as it laid out the broad strokes of a reinvigorated innovation strategy. Outlining its vision of a 21st Century Canada that is “a global leader in the commercialization of bright ideas”, the SFTT maintains and extends the message that Martin intends to utilize S&T as a key economic and social driver. More immediately, the SFTT and the prime minister’s reply the following day combine to position incoming national science advisor Dr Arthur Carty to lead the commercialization charge and develop a national science agenda.

The two presentations also throw down a pointed challenge to the National Research Council (NRC) to position itself as a central mechanism for the government’s commercialization plans.

By building on Canada’s primary vehicle for industrially focused R&D and technology transfer, Carty will be tasked with integrating and focussing that capacity with Canada’s universities, colleges and businesses. In a letter to staff, Carty welcomed the SFTT reference to the NRC, adding that the details will become known in the weeks ahead. He also stated that there was more work to be done.

“There is a need to build upon the strengths and best practices in commercializing research in national laboratories, universities and other institutions, to create an integrated, comprehensive system for supporting the creation and growth of small and medium-sized enterprises,” he wrote. “Integrating our research program with an expanded NRC-IRAP program, with a new focus on fast-growing companies and new sources of risk financing, will be important elements of such a strategy. We believe that single window access to a full range of R&D, commercialization and innovation services will add a new dimension to technology transfer from public sector laboratories.”

Curiously, the eight-paragraph section on S&T in the SFTT was not delivered by governor general Adrienne Clarkson. The omission was apparently inadvertent and it did little to dampen the speculation over the place S&T will occupy in the government’s agenda leading up to a likely spring election.

While many within the S&T community do not anticipate the Budget delivering a full-blown S&T component, there are high expectations that it will contain enough to provide a clear indication of the direction S&T and commercialization will be going in the months ahead.

“The Throne Speech adds another layer of context and detail (for S&T) and it sticks to the principles. Early-stage financing, commercialization and tech transfer. They’re the primary focus,” says Peter Nicholson, a senior advisor within the Prime Minister’s Office (PMO). “I see the NRC beefing up its commercialization capability. I think that’s the right direction. Then there’s the issue of resources and how quickly that can be done. The NRC has a lot of potential to play a big role but at this point it’s a matter of mandate definition and focus.”

In the past, Martin has referenced organizations in other countries such as the Battelle Corp in the US and the Fraunhofer Institutes in Germany as possible models. The NRC is reportedly developing a scenario that would see it conduct far more contract research (see related article on page 3).

NEW CONCEPTS

The SFTT and PM’s reply, while reiterating and reinforcing the S&T message being developed by Martin over the past few months, introduced a handful of new concepts. Martin pledged that Canada will significantly boost spending on R&D geared towards the needs of the developing world. And his strategy for cities incorporates the concept of the social economy, tying social systems to economic activity.

Martin first unveiled his vision for the integration of S&T and foreign policy in his Montreal speech last September (R$, October 3/03). But his reply to the SFTT is the first time he has actually pegged the level of assistance.

“Our long-term goal as a country should be to devote no less than 5% of our R&D investment to a knowledge-based approach to develop assistance for less fortunate countries,” stated Martin.

It’s unclear exactly how much Canada currently spends, but Nicholson says it’s nowhere near the new target. Based on the latest estimated national total for R&D ($22.45 billion), Canada would have to spend $1.12 billion on R&D targeting the developing world.

Although the SFTT is by definition vague, it did provide a few clues as to how Martin plans to tackle the challenges associated with growing world class technology firms; arguably the most important task facing the new government. With an emphasis on small firms, the SFTT outlined the two most prominent gaps in the commercialization process: access to early-stage financing and the capacity of small firms to conduct R&D.

The Business Development Bank of Canada (BDC) was cited a mechanism that may be strengthened as a source of venture capital (VC) in emerging sectors such as biotechnology, health, environment and nanotechnology. The suggestion is to increase the capital available to the BDC for VC, following the $190 million announced in the last Budget and in addition to the $270 million BDC had in its VC portfolio as of March/02.

The mention of several emerging industries in the SFTT prompted reactions ranging from mildly optimistic to highly positive.

For the slumping biotechnology industry, the SFTT provides welcome attention to a sector in which many start-ups are facing a serious financing crisis. According to the BIOTECanada industry association, the Martin government’s willingness to address its concerns bodes well for the future.

“The speech is a marker for us. It acknowledges the need to move toward a greater level of commercialization for biotech products,” says Kate McCready, BIOTECanada’s director of communications. “We’ll take the message from the Speech From the Throne to develop policy further and continue our door knocking.”

McCready says she and other BIOTECanada officials have already had a fruitful discussion of the issue with John McKay, parliamentary secretary for public private partnerships reporting to Finance minister Ralph Goodale.

Jeremy Terow, BIOTECanada’s director of government relations, says his organization currently favours the Health Innovation Canada model being developed by Dr Henry Friesen and others (R$, January 28/04). He acknowledges that the current state of the government’s finances will play a role in the speed with which industry concerns can be addressed.

“We’re trying to be realistic in our approval because the government has financial constraint issues,” says Terow. “We’ll support minor tweaks at this stage but we’re also all over Friesen’s proposal. He has Martin’s ear.”

Reaction from the emerging nanotechnology sector is somewhat more muted. Dr Neil Gordon, a Montreal-based consultant and president of the Canadian NanoBusiness Alliance, says nanotechnology has been mentioned in key government speeches before. But skepticism is building as specific commitments or initiatives are still pending.

“There’s no evidence of government trying to strengthen the industry. In other countries, it’s an obsession. Seven countries now spend more than $100 million a year on nanotechnology and it’s principally for industry,” says Gordon. “Canada needs to focus on nanotechnology and specific applications. The Canadian government could buy things in the area of new products and create home markets for Canadian companies. “

Gordon asserts that the additional resources committed to the Business Development of Canada in the SFTT would be better spent trying to establish markets for emerging products.

“I’d be more excited if Health Canada invested $100 million in nanotech products rather than the BDC investing in orphan companies. There are already a ton of orphan companies in Canada with no market for their products and 40% of them are in Quebec.”

Gordon adds that in the nanotechnology industry, the value chains are controlled by multinational corporations based in other countries, leaving Canada at a distinct disadvantage.

“You need to create sustainable industries because if there are no jobs, graduates from Canadian universities will go elsewhere,” he says. “We need a few highly focused areas and to put lots of money into them. We need to apply the infrastructure we have to industry.”

The inclusion of the environment in the list of technology sectors prompted a positive reaction from Sustainable Development Technology Canada (SDTC), a pre-venture fund established in the 2001 Budget and capitalized with $350 million in financing.

“By investing in Canadian start-ups beyond the R&D stage, the Government has demonstrated its understanding of what is required for Canada to become a world leader in providing global environmental solutions,” stated SDTC chairman James Stanford.

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