Is Quebec's unique commercialization model on the verge of being dismantled?

By Dr Peter Morand

In 1999 the Quebec government created Valorisation-Recherche Québec with an investment of $100 million followed by another $120 million in 2000. VRQ was tasked to use this investment to elevate the capabilities of research teams in specific sectors to leverage additional funding from the federal government and to amplify the commercialization of the results of university research.

In order to execute on the latter mandate, VRQ provided seed money in 2000-01 for the creation of four "Sociétés de Valorisation Universitaire (SVUs). These were MSBi (later MSBiV), Univalor and Valeo in Montreal and SOVAR in Quebec City. With the consolidation of MSBi-MSBiV and Valeo to create Aligo Innovation in 2014 there are now three SVUs in the province. Each SVU is funded jointly by its general partners (universities and research organizations affiliated with it) and the Quebec Ministry of Economy, Science and Innovation (MESI).

Valorisation = government derisking

Gilbert Drouin, founding CEO of VRQ, was a strong believer that the quality and intensity of research performed in Quebec's universities carried with it great opportunities for innovation and economic gain for the province. When I spoke with him recently he was emphatic that "the creation of the SVUs over 15 years ago was a key decision taken by the province to be able to compete in the global marketplace."

Everyone knows about the "valley of death" stage of transforming a laboratory invention into a product or service that will gain a share of the prevailing market. The SVUs have been singularly successful in "valorising" promising technologies to the stage when they become attractive to the private sector. That the three SVUs are linked with all of the province's universities and affiliated hospitals has resulted in a unique and well-coordinated model to accelerate the commercialization of research results.

The performance evaluation of the SVUs over the past three years carried out by the ministry shows that the SVUs were involved in over 850 valorisation projects related to about 1,000 invention disclosures generated by their partners. Collectively, the SVUs delivered an economic impact for the province in the order of $190 million which gives a leverage ratio of 10:1 for the investment made by the province over that period.

Quebec also has some highly successful, complementary sectoral innovation-oriented organizations such as NEOMED Institute (therapeutics), Consortium Québécois sur la Découverte du Médicament (CQDM), MEDTEQ (medical devices) and the Consortium for Research and Innovation in Aerospace in Quebec (CRIAQ). All have industrial partners and SVU-initiated projects often interact with these organizations as they move further along the commercialization pathway.

The range of valorisation activities of the SVUs is determined by the arrangements in place with each of its partners. In some cases the research organization delegates the management of its IP portfolio to the SVU, while in other cases the SVU will become involved once the research organization has filed or is ready to file for IP protection.

In all cases the first step by the SVU is an in-depth analysis of the project from a commercialization perspective (technology readiness level, viability, role of researcher, type of IP, market positioning) before making a decision to initiate the valorisation process and allocate significant resources.

Once begun, the SVU expert assigned to the project will work with the researcher(s) to define the valorisation plan for the product or service, access appropriate funding, establish a viable management/governance structure (if a startup is involved) and identify potential partners, all of which will advance and accelerate the commercialization process. Depending on the technology/service, the time to market can vary considerably and the SVUs have acquired the experience and know how to accompany projects with that in mind.

Quebec has developed a commercialization model with an impressive track record that is amply documented in the metrics used by the ministry to monitor performance. Moreover, the CEOs, Anne-Marie Larose (Aligo), Pierre Pedneau (SOVAR) and Jacques Simoneau (Univalor), have an excellent working relationship and meet regularly to find ways to complement and refine their respective valorisation/innovation activities. None of Canada's larger provinces has such a well-integrated and functional valorisation/innovation network.

Funding cuts

One has to wonder why the Quebec government, which showed great foresight 15 years ago in creating the SVUs, has recently made significant cuts in its annual support. Even with the financial straits faced by the province and, in a climate of global economic uncertainty, it would surely make better sense to fine tune and reinforce the infrastructure that has made a significant impact on increasing the export of products and services and on job creation in Quebec.

Ironically, this year's provincial budget includes $15 million for an early-stage seed fund, something for which the SVUs have made a strong case on many occasions. With their extensive collective expertise and experience in selecting promising upstream technologies as valorisation candidates, the SVUs are well positioned to ensure that these funds are used wisely.

Another issue concerns the federal government's Canada Economic Development for Quebec Regions. When the economic climate was more favourable (2002-07), repayable loans totaling $7.65 million were made available to the SVUs. Now the SVUs are saddled with repaying these loans when they also have to cope with diminished funding from the province. Quebec has painstakingly put in place an innovation model that works but there are worrying signs it is on the verge of being dismantled.

The incoming federal government has made a strong commitment to work with the provinces and Innovation minister Navdeep Bains, recently stated in the House that "We will work with anyone who has a plan to grow the economy and create jobs."

Now would be a good time to build on what Quebec already has in place with the federal government as a partner.

Peter Morand is past president of NSERC and has been an independent director on the board of SOVAR since 2009. petermorand@rogers.com