Natalie Yeadon is founder and CEO of Augmentios, host of the Breaking Innovation Paralysis podcast and author of A Strategic Blueprint to Cure Canada’s Innovation Paralysis in Life Sciences.

I spent two decades launching cancer medicines in Canada and the United States, including Herceptin at Genentech. Again and again, I watched discoveries start in Canadian labs and reach patients, investors and headquarters somewhere else first.

Canada has no shortage of science. This year, UHN, Canada’s largest research hospital, put it simply: “Canada’s weakness is not discovery. It is the distance between invention and scale.”

Closing that distance doesn’t have to start with more money. It can start with better terms.

The money for discovery is already stretched.

Look at the Canadian Institutes of Health Research (CIHR) spring 2026 Project Grant competition. Of 3,344 applications, 439 were funded, a success rate of 13.1 percent. To fund that many, CIHR applied “an across-the-board reduction of 23.5%” to the budgets it approved. The average winner asked for about $1.25 million and received about $936,000.

When about one application in eight succeeds, and the winners get three-quarters of what they asked for, every publicly funded discovery is precious. Yet too often we license it once, watch the company sell early, and see the returns leave.

None of this is new. In 2015, Peter Morand, former dean of science and engineering at the University of Ottawa, described in Research Money the catch-22 facing young companies: matching-fund rules they can’t meet, Scientific Research and Experimental Development tax credits that pay out only after the work is done, and no U.S. Small Business Innovation Research-style grants to de-risk them enough to attract venture capital. A decade later, his diagnosis still holds.

Five reforms that change the rules

Here are five reforms that change rules and terms, not grant budgets:

1. One simple licence, and a scorecard for the granting councils.

Every Canadian university negotiates spinout licences its own way, and founders can spend months on terms before they raise their first dollar. A standard express licence, such as the Simple Agreement for Innovation Licensing (SAIL), would make those terms fast and predictable.

Budget 2026 commits Ottawa to modernizing the federal research granting councils’ commercialization policies. Build a standard licence into that work, then measure it: how many spinouts each council’s funding produces, how long licences take to sign, and how many of those companies are still operating in Canada five years later.

Cost: a template, a funding condition and a public scorecard.

2. If public money built it, build it here or pay it back.

Seven of Canada’s 20 largest therapeutics exits were foreign acquisitions worth more than US$1 billion each, about 71 percent of the total value, according to the adMare Institute. Chinook went to Novartis, Fusion to AstraZeneca and Bellus to GSK.

Not every sale is a loss. But a company built on publicly funded research should agree to build here for a set period. If it moves its headquarters or intellectual property abroad before then, it repays the public funding it received, with interest, and the amount shrinks each year it stays. It keeps its IP and can still raise foreign capital.

The federal Pharmaceutical and Life Sciences Sector Task Force’s report points the same way, asking Ottawa to align its programs with “explicit expectations around retained IP, jobs and infrastructure.” Budget 2026’s proposal to register changes in patent ownership would make those moves visible.

Cost: nothing up front. It’s a condition on money already being spent. Measure: how much publicly funded IP is still held in Canada five years on.

3. Capital managed by people who know life sciences.

Ottawa’s new Venture and Growth Capital Plan reserves $200 million for life sciences. Its $75-million early-stage and $675-million later-stage streams, run by BDC, are open to every sector. Yet a drug can need rounds of $50 million or more to get through late-stage trials, and Canadian health care venture funds invest $10 million to $20 million on average.

Reserve a life sciences share of the $675 million, with stages defined by clinical milestones rather than revenue. As BDC and Export Development Canada merge, keep a dedicated life sciences team. The new Build Canada Exchange, which brings experienced professionals into government, could recruit people who have built these companies.

Cost: money already announced, managed by the right people. Measure: the share of $50-million-plus rounds led by Canadian investors. The Innovation, Science and Economic Development Canada (ISED) consultation closes November 23.

4. Make the budget’s new tax tools usable.

Budget 2026 gave life sciences more than most founders realize. The Canada Growth Incentive exempts up to $15 million in capital gains per person, per qualifying business, so founders can build bigger before they sell, and do it again with their next company. An enhanced rollover defers tax when they reinvest the proceeds in another Canadian company.

Two gaps remain. The incentive pays the same whether a founder lists in Toronto or sells abroad, so a top-up for staying Canadian would reward the outcome we want. And most startups can’t afford the tax and legal advice to find and use these measures. A fixed advisory voucher through the National Research Council’s Industrial Research Assistance Program (IRAP), which a small company could spend on that advice, would close the gap.

Cost: a modest voucher, paid only when a company uses it. Measure: how many small life sciences companies claim each measure.

5. Make Canadian health systems the first customer.

Ontario now requires hospitals to favour Ontario and Canadian suppliers. But a preference only decides who can bid. A Canadian device that costs more up front but sends patients home sooner can still lose to a cheaper import, because the department that buys it rarely sees the savings.

Wound care shows how this plays out. Negative-pressure wound therapy kits cost far more than gauze, so purchasing departments restricted them. Yet the dressings are changed every two to three days instead of once or twice a day, saving nursing hours, and wounds heal faster. Purchasing saved on paper; the hospital lost.

Score bids on outcomes and the total cost of care, not the sticker price. And let the hospital that adopts an innovation keep the savings it creates across the patient’s journey, to spend on something else.

Cost: a new scoring sheet and a budget rule. Measure: Canadian innovations adopted by hospitals.

Measure what matters

On the Pharmaceutical and Life Sciences Sector Task Force’s 39 recommendations, the government says only that it is “currently assessing” them. Whatever Ottawa adopts, give each reform one accountable owner, and publish its measure every year.

What to do now

• ISED: build a life sciences share and a specialist team into the $675-million stream before November 23.
• Federal research granting councils: adopt a standard spinout licence, a build-here-or-pay-it-back term and a public scorecard.
• Finance: fund an IRAP advisory voucher, so small companies can use what this budget offers.
• Provinces: score health procurement on outcomes, and let hospitals keep the savings.

Canada already pays to make the discoveries. These five reforms would help us keep them.

See also: New “blueprint” for Canada’s life sciences sector can boost commercialization and keep growing companies at home

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