UHN calls on governments, private sector to boost investment in life science

University Health Network is calling on governments, pension funds and pharmaceutical companies to boost investment in life sciences to help shore up the Canadian economy during the trade war with the United States.

The hospital network lays out its blueprint for action in a coming report called From Discovery to Global Supplier. UHN plans to release the document later this month and provided The Globe and Mail with an early copy.

The report says Canada has a strong legacy of creating new drugs, medical devices and technologies such as artificial intelligence, but has done a poor job building companies that use those innovations for Canada’s economic benefit.

Kevin Smith, UHN’s chief executive officer, said the report is part of a larger effort from the institution that began last year when the Trump administration made dramatic cuts to science funding. UHN has since hired dozens of global scientists through its Canada Leads program.

The White House has also announced some tariffs on pharmaceutical products and demanded drug makers move production to the U.S., putting pressure on them to move operations out of countries such as Canada.

Dr. Smith said Canada needs to act more urgently. He drew comparisons to countries such as Denmark, where Novo Nordisk A/S – the maker of the blockbuster drug Ozempic – is an economic powerhouse, despite the company’s roots in the Canadian invention of insulin, or Ireland, where a favourable tax code has drawn many pharmaceutical manufacturers.

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“Our science stacks up against the best in the world,” Dr. Smith said in an interview. “Canada can’t sit back and look for excuses. Well, we’re not as big as the United States. We’re tons bigger than Ireland. We’re tons bigger than Norway and Denmark.”

The report lays out dozens of recommendations for different orders of government and other players in the system, including venture and institutional capital. It puts forth timelines, including some actions that can be taken in the next 12 months.

But it says the most important priority is to fix procurement and make government “the disciplined first customer” for Canadian innovations. That would include steps to set adoption targets and clear away interprovincial red tape, so companies don’t have to spend time rewriting applications for multiple jurisdictions.

Brad Wouters, UHN’s executive vice-president of science and research, said a huge percentage of Canadian tax dollars are directed toward health care, but that “we don’t use it as a lever for our procurement to support Canadian startups, Canadian businesses.”

“In fact, we make it really hard for them to access that market at all,” he said. “We actually, in the vast majority of cases, ask them to go find success somewhere else, demonstrate proof of principle and value, and then come back.”

The UHN blueprint also calls on industry to buy from and integrate growing Canadian companies into their supply chains.

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The report’s second major priority is to do with capital and intellectual property. It calls on institutions, such as research hospitals, to put commercialization in their mandates, and make it a part of board accountability. The document also calls on provincial pension funds, such as OMERS and Ontario Teachers’ Pension Plan, to anchor more domestic Series B+ funding rounds.

The report supports Ottawa moving forward with a “patent box,” an idea that the federal government has explored that would give preferential tax rates on gains from IP based on work developed and owned in Canada.

Dr. Smith said the goal is not to force domestic investment at the cost of bad returns, but to create a market where investing in Canada is as attractive as investing elsewhere, which would also end up benefitting Canada’s economy.

“I would never say, ‘CPPIB, you should make a bad investment because it might help Canada,’” he said, referring to the Canada Pension Plan Investment Board. Instead, “the terms and conditions and the environment I live in, make it as attractive as the U.S.”