Mark Taylor has a front-row seat to the development and launch of some of Canada’s greatest health-tech innovations as the leader of the licensing and commercialization team at Toronto’s University Health Network (UHN), one of the largest health-care and medical research organizations in North America.
Gene therapy to treat rare diseases in a single dose, devices that recognize brain tumours using artificial intelligence and a simple blood test that accurately diagnoses if you have cancer and, if so, what type are just some of the medical breakthroughs that are being developed and fine-tuned in the country’s biggest city.
“It generally takes lots of money and risk mitigation to get these kinds of products to market, but our approach is to develop and test internally in the hospital setting before we license product or start companies,” Taylor said. “We’ve been very lucky to have some world-leading wins here and we’re glad to be able to share our successes with the community.”
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For example, Avrobio Inc., which develops gene therapy to treat cancer and rare diseases, has gone from startup to a public offering on the Nasdaq in just three years with the help of the team at UHN’s Technology Development and Commercialization office.
But even outside of programs such as UHN’s, Canada has amassed an impressive list of health-tech companies with global appeal. There’s Vancouver-based Stemcell Technologies Inc. — a biotech firm that develops cell cultures and cell isolation systems for researchers — which ships its products to more than 70 countries and has been growing by at least 20 per cent annually since its launch in 1993.
Or Toronto-based Newtopia Inc., the fourth health-tech startup launched by chief executive Jeff Ruby. Multiple Fortune 100 companies in the U.S. now use the company’s software to promote employee weight loss and substantially reduce employer-paid health plan costs.
With an abundance of clinical talent, hospital support and a current government keen to keep investing in innovation, it seems Canada is creating the perfect ecosystem for continued health-tech growth. The question plaguing many industry leaders, however, is whether the country has the infrastructure and skillset needed to sustain this branch of innovation.
The medical devices industry alone was valued at US$6.2 billion in 2015 and is projected to grow to $8.6 billion by 2020, according to Emergo, a regulatory consulting firm that specializes in global medical device compliance.
On the surface, Toronto, in particular, provides the ideal launching pad for health-tech innovation because it has a highly educated and skilled workforce collaborating within a network of world-class hospitals willing to test technologies in real-world practice, said Cameron Piron, chief executive of Toronto-based Synaptive Medical Inc.
“The talent here is unique and highly diverse and when you’re tackling problems (in health care) you need the best and the brightest,” he said.
The city’s talent base has enabled Synaptive’s founders to launch several Canadian-based medical startups over the past 10 years, the latest of which develops robotics to provide better ergonomics and visibility for surgeons while operating.
Avrobio co-founder Christopher Paige, a senior scientist at UHN, said the research hospitals and their strong association with top universities across the country create ideal synergies for innovation.
“The research hospitals put researchers and top clinicians together in an environment where unmet clinical needs of our patients are pretty obvious — a highly motivating environment to make a difference,” he said.
But industry veterans say this isn’t enough to sustain the growth of health-care technologies over the long term.
They point out that even though Toronto is among the top biotech hubs in North America (along with Boston and San Francisco), it has nowhere near the commercial recognition of those two U.S. cities.
“Collectively as an industry we’ve started to do some of the biggest deals in the world here, but we don’t publicize these wins as much as we could,” Taylor said. “Our science is top notch, but it’s underrepresented from a commercialization perspective.”
Organizations such as UHN are helping to change that, he said, but there’s still a long way to go.
As well as the lack of local recognition, Taylor said there is a lack of local talent who have the necessary management skills to bring innovative startups into the big leagues.
“We never saw the lack of C-suite as a potential problem, but now, generally speaking, people who are coming in to lead these companies are Americans or Canadians who left decades ago and are coming back,” he said.
An even bigger issue may be the lack of overall understanding that the rules of typical tech innovation — that is, develop a product and rush it to market before the competition — don’t necessarily apply to health tech.
“As we see talent moving into this space from the tech market, they are shocked by the amount of work that goes on behind the scenes,” Synaptive’s Piron said.
Piron said the industry is more like aviation or automotive, where products are thoroughly tested before launch and governed by myriad regulations.
“This is a very serious industry that leverages technology, but needs a solid infrastructure behind it,” he said.
Case in point, Synaptive in November voluntarily recalled its neurosurgical guidance system due to a software defect that could raise the risk of brain damage during surgery. Fortunately, the recall happened before any patients were impacted.
Adding to the challenges that health-tech startups face are patient privacy issues that don’t apply to other sectors to the same degree.
“Starting a health-tech company comes with a firm appreciation of health first, including adhering to privacy laws and regulations and being radically transparent throughout the process,” Newtopia’s Ruby said. “The ‘move fast and break things’ approach just doesn’t work in health tech.”
A lack of long-term capital investment is yet another key issue.
“There’s a lot of support for startups, but a lot less for those of us who have proven ourselves,” said Stemcell’s chief executive Allen Eaves, who adds that just four per cent of his company’s sales are in Canada.
“We need health care to be profitable, yet we keep focusing on cost containment in provincial (health-care) budgets — if everyone works hard to save money, then we need to get engaged in the application of new innovations.”
The four-year-old Council of Canadian Innovators (CCI) wants to clear the often rocky path from startup to scale that currently plagues some of the most innovative tech firms.
Made up of more than 100 CEOs from the fastest-growing technology startups (18 of whom, including Eaves, come from health-tech companies), CCI is working with governments to ensure its members have a seat at the table when it comes to decisions around strategic standards, regulations and certifications.
“There are a lot of regulatory pain points in how health-tech companies get their products to market here compared to other jurisdictions,” said Dana O’Born, CCI’s director of strategic initiatives. “Our health-tech companies are keen to work with government to work out these kinks and all our members want to play a role in the development of policy.”
But even with all the growing pains, industry leaders say they are optimistic that things are improving every year, especially given the desire for better technologies while cutting costs.
“Long ago, the public sector thought they had to be the owner of innovation, but now they see the value in renting it from sectors like ours,” said Patrice Gilbert, chief executive of PetalMD, a Quebec City-based company that digitizes hospital schedules for 48,000 users across 150 health-care facilities. “The private and public sectors are getting better and better at finding common ground.”
Inherent in moving the dial forward in health care has to be an overall change in mentality around what health care in Canada should be, Newtopia’s Ruby said.
“We want to keep people healthier longer rather than perpetuating the sick-care system we currently have,” he said. “That should be our ultimate goal.”
Ruby, too, expects health-care costs to be increasingly offloaded to employers and insurers, because “there is no way” Canada’s current system will be able to sustain itself for much longer.
Since 2014, health spending per capita has increased by an average of 1.7 per cent annually to an estimated total of $253.5 billion in 2018, with no signs of slowing.
“As that happens, there will be more and more economic motivation to invest in companies like ours,” he said, “I absolutely see the tide changing in the years to come.”