Sanofi Pasteur president outlines measures for keeping biopharma sector competitive

Strong research base essential

Canada's biopharmaceutical industry is struggling. With a lack of large innovative players and a fractured business ecosystem amplifying competitive challenges, the goal of developing and sustaining a vibrant sector is coming under increasing scrutiny. As the president of Sanofi-Pasteur, one of Canada's top-ranked pharmaceutical R&D performers, Dr Mark Lievonen is well positioned to assess Canada's innovation strengths and weaknesses and offer solutions to help ensure the sector's continuing viability.

In a wide ranging interview with RE$EARCH MONEY, Lievonen says a strong biopharmaceutical cluster is essential going forward, augmented by enhancements to Canada's intellectual property (IP) regime and growth in domestic manufacturing capacity. His views on the current state of the biopharmaceutical industry and medical research in Canada underline the need for a concerted, multifaceted action plan to develop a culture in which innovation and entrepreneurship can flourish.

The following is an edited transcript of the interview following Lievonen's address to the MexDay in Canada conference in Ottawa on June 11th.

R$: What's your take on the state of medical research in Canada?

ML: We've got a lot of money being invested in early stage R&D — CIHR, Genome Canada, universities and the programs are in place. It's a really important part of it. Canada does very well in those areas — we have great academic institutions and medical research centres. A case can be made that more could be done. We need to put more into it to get more out of it.

Our issue is down the road, it's more downstream. A company like ours has world class R&D, manufacturing, global mandates but there's not a lot of that activity going on elsewhere. So we all have the issue of commercializing research. What does that really mean? We have a real funding challenge creating companies getting things commercialized and getting critical mass.

At the end of the day, we're not getting companies created that are adding value and bringing products to market. Investors are looking at that and saying, ‘Why should I invest and at the same time we have all this promising research so how do we actually get it catalyzed?' We need some success stories and we have a number of biotech companies that are on the verge of that — some companies that have some products licensed or are getting closer to licence. Hopefully there will be some successes that come forth and that will provide some return on investment to investors and help drive this.

R$: What are your observations on the current state of biopharmaceutical sector?

ML: I think the biopharmaceutical sector is struggling. I spoke today about clusters and I think that's incredibly important. That's what we need to generate and what we need are large companies like ourselves, smaller companies, service providers, financiers, academics, to really get the biopharma industry to where it needs to be. We have some opportunities from the commercialization viewpoint. MaRS Innovation with Rafi Hofstein is doing a great job of pulling together the different institutions. I'm also the co-chair of a private sector advisory committee between the Ontario and Quebec governments. We've talked about the Ontario-Quebec corridor and having a life sciences corridor within that. If you actually put the two provinces together and you consider that a cluster, it would be pretty strong on a comparative basis with the rest of the world.

R$: In your address, you stated that Canada doesn't do a good job of exporting biopharmaceutical innovation. How do we lag behind other industrialized nations?

ML: We do not have a lot of export of biopharmaceutical products. Clearly Sanofi Pasteur does — 95% of our production is exported — but if you look around there are not a lot of other companies exporting products to other markets. As a sector we would lag behind the median for Canada

In terms of having a vibrant industry, I do think IP protection is extremely important. I don't know how you can have an innovation culture without it, even as a symbol. How can you say you want to be innovative and then have IP that's not meeting up with standards with the rest of the world?

We've seen products prematurely genericized which takes hundreds of millions of dollars out of the revenue stream which is going to affect the R&D investment. There are talks between Canada and the EU on topical issues like data protection, patent terms restoration, right of appeal — these are all fundamentally important issues.

Patent term restoration is an issue where it's taking longer and longer to get these products into the market and by the time you do there's very little time. Now all of the G-7 except Canada have patent term restoration. IP is something we need to get right to help support a culture of innovation.

The other area is strategic or innovative procurement where government is a first adopter and spender on procurement, not just to get the lowest costs but to derive the best value for the country or for the taxpayers.

R$: Report after report has highlighted Canada's low productivity and weak competitiveness, but there doesn't appear to be any government initiatives to address this. Are you a pessimist or optimistic about Canada's future as an innovation nation?

ML: I'm an optimist by nature but I'm concerned because we are behind. The good news is we're talking about it but we have to as a country grasp that it's a serious issue. One is public outreach. What is this innovation issue and why is it important to productivity? Productivity will ensure success — you'll expand the business and grow and use people in other ways. If it doesn't happen, that's when we'll have issues. We're fortunate we have a lot of natural resources and a lot of our economy is based on that. When oil prices go up, our market goes up. We can continue to rely on resources but that's not building an innovative nation.

R$: Scaling up of small firms is a tough question for policy makers. Is it the place of government to put programs in place to try and stimulate that or would you leave it up to the general economic environment?

ML: On the funding side, things have been advanced like flow through shares which I think would be very positive . It had a significant impact on oil and mining. It's the kind of government policy that could drive this industry and help bring financing. There are some challenges with the SR&ED program — making it available to publicly traded companies or other ways of modifying it. There really is a problem funding companies at the early stage. We also need the commercial successes to give people the confidence to invest.

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