Hybrid Pathways Diversity Convergence in Torontos Life Science

Hybrid Pathways: Diversity & Convergence in Toronto’s Life Science Innovation System Meric S. Gertler and Nichola J. Lowe Program on Globalization and Regional Innovation Systems Centre for International Studies University of Toronto Presentation to the 6 th Annual ISRN Meeting Wosk Centre for Dialogue Simon Fraser University, Vancouver May 13 -14, 2004 Innovation Systems Research Network

Toronto’s Life Science Cluster: Mixed Messages • ICF study: one of largest life science clusters in North America • ‘Profile problem’ – ‘hidden’ within a large, diverse economy – No high-profile, large, home-grown dedicated biotech ‘star firms’ – GTA life science: highly diverse mix • Argument: former liabilities becoming virtues Innovation Systems Research Network

Economic value of diversity • Increases variety in knowledge pool (within firms, within city-regions), raising potential for innovation from interactive learning • Decreases risk for individual firms (multiple activities, strengths, sources of revenue) • Increases resilience of RIS overall (a more diversified portfolio; learning, adaptability) Innovation Systems Research Network

Regional Life Science Innovation System • National, provincial institutions shape framework for regional actors, networks, policy initiatives • Interaction between these different scales of governance helps shape unique local characteristics of system, capabilities of actors (firms, scientists, organizations) • Local capabilities, characteristics nurture local startups; also attract global players • PSE system supports development of talent, ‘stars’; quality of place determines retention, attraction Innovation Systems Research Network

GTA’s Life Science Innovation System: Supply Side • Knowledge production: – US-style public $$ for university research (CIHR, NSERC) – But university system dominated by public ownership; both federal & provincial role – US-style star scientist system (recently enhanced: CRCs, CFI, ORDCF, OIT, PREA) • Knowledge exploitation: – US-style entrepreneurial system of firm formation – US-style financial system (private VC, angels, TSX) • Regulatory environment: – IP rights: no Bayh-Dole Act (lots of local variation) – Federal role: Health Canada (drug approval); patent regime; mandatory licensing (birth of generic drug industry) Innovation Systems Research Network

GTA’s Life Science Innovation System: Demand Side • Regulatory environment/purchasing: – Provincial role: Ministry of Health Drug Formulary (listing, pricing) – Hospitals (centralized, decentralized) • Regulatory environment: – US FDA: access to US market is key • Big pharma: – Contracting out research (to meet R&D obligations) – Contract manufacturing Innovation Systems Research Network

Greater Toronto LSIS: I. Bio/Pharma Firms • Brand name (global) pharma – GSK, Pfizer, Aventis, Roche, Merck, Eli Lilly, Astra -Zeneca, Bayer • Generic (local) pharma – Apotex, Novopharm, Genpharm, ratiopharm • ‘Core’ (local) biotechnology – Large • Biovail, Cangene, Draxis, Hemosol, Glyco. Design – Newer start-ups (mostly small) • Syn. X, Tm Bioscience, MDS Proteomics Innovation Systems Research Network

II. Biomedical Technology and Devices Firms • Global manufacturers – • J&J, Baxter, Medtronics, GE, Agfa Specialized (national) distributors and CMO’s – • South. Medic, Canadian Hospital Specialties, Medi. Chair Local manufacturers – Initial start in distribution and repair • – Manufacturing start-ups • – Canadian Endoscope, Baylis Medical, Sci. Can Hart Mobility, Variety Ability, Tash Inc. , Visu. Aide, Cedara Biotech-BTD, IT-BTD, Material Sci-BTD interface • Pheromone Science, Interface Biologics, Delex Therapeutics, Toxin Alert, Visual. Sonics, Tm Bioscience Innovation Systems Research Network

III. Other Firms in the Life Sciences Value Chain • CROs: Biovail CR, Patheon, MDS Pharma Sciences • Capital goods (‘platform technologies’): MDS Sciex, Visible Genetics • Venture capital: MDS Capital, CMDF, RBC Technology Ventures Innovation Systems Research Network

IV. Research, Teaching Institutions • • • U of T Faculty of Medicine, CCBR U of T @ Mississauga (M Bio) UHN (PMH, TGH, TWH), HSC, St. Mike’s Ontario Cancer Institute Sunnybrook and Women’s College Mount Sinai – Lunenfeld RI CAMH, Baycrest Mc. Master, York Other regional hospitals Innovation Systems Research Network

V. Regulatory, Supporting Institutions – Provincial, Local • • • Ontario Ministry of EDT BCIP consortia (4) Ontario Bio Council Ma. RS Discovery District TBI, TRRA Innovation Systems Research Network

Life sci vital stats for top 4 CMAs (NAICS 3254, 3345, 3391, 6215) Toronto Montreal Vanc’r Ottawa Emp 01 23. 5 K 16. 8 K 6. 1 K 3. 2 K Emp LQ 1. 6 1. 0 Est 02 926 546 395 157 Est<50 89. 4% 85. 3% 91. 1% 88. 5% Est>200 2. 9% 2. 6% 1. 3% 2. 5% Est +/- -0. 3% -1. 4% +3. 7% +0. 8% Innovation Systems Research Network

Life Science VC for Selected CMAs Source: Macdonald & Associates Ltd. 2004 Innovation Systems Research Network

VC by Sector, Toronto CMA Source: Macdonald & Associates Ltd. 2004 Innovation Systems Research Network

Life Science VC Invested 19982003, Selected CMAs Source: Macdonald & Associates Ltd. 2004 Innovation Systems Research Network

Canada’s Biomedical Technology and Device Clusters Source: Health Technology Exchange Innovation Systems Research Network

Dimensions of Variety in Toronto Life Science • NIS/RIS: US-European blend • Sectors/knowledge pools: biotech, brand name & generic pharma, BTD • Geographical: home grown, foreign firms; ‘talent’ pool (Mosaic Index +++) • Hybrid strategies (firms): – Within sectors (‘extension’) – Between sectors (‘convergence’) Innovation Systems Research Network

Pathways of Hybridization Type I: Technology Extension Innovation Systems Research Network

Pathways of Hybridization Type II: Technology Convergence Innovation Systems Research Network

Toronto: future prospects • Rise of the hybrid firm? – (NYT: “Is biotech losing its nerve? ”) – Toronto’s lead firms are hybrids: • MDS ($1. 8 B), Biovail ($1. 1 B) • VCs: learning to love hybrids – Now actively orchestrating hybrid firm development • Toronto’s life science ‘cluster’ – Path dependent evolution based on legacy of a diverse regional economy – Well positioned for future sustainable growth Innovation Systems Research Network