Hybrid Pathways: Diversity & Convergence in Toronto’s Life Science Innovation System

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

2. 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

3. 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)

4. 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 start-ups; also attract global players • PSE system supports development of talent, ‘stars’; quality of place determines retention, attraction

5. 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)

6. 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

7. 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, GlycoDesign • Newer start-ups (mostly small) • SynX, Tm Bioscience, MDS Proteomics

8. II. Biomedical Technology and Devices Firms • Global manufacturers • J&J, Baxter, Medtronics, GE, Agfa • Specialized (national) distributors and CMO’s • SouthMedic, Canadian Hospital Specialties, MediChair • Local manufacturers • Initial start in distribution and repair • Canadian Endoscope, Baylis Medical, SciCan • Manufacturing start-ups • Hart Mobility, Variety Ability, Tash Inc., VisuAide, Cedara • Biotech-BTD, IT-BTD, Material Sci-BTD interface • Pheromone Science, Interface Biologics, Delex Therapeutics, Toxin Alert, VisualSonics, Tm Bioscience

9. 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

10. 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 • McMaster, York • Other regional hospitals

11. V. Regulatory, Supporting Institutions – Provincial, Local • Ontario Ministry of EDT • BCIP consortia (4) • Ontario Bio Council • MaRS Discovery District • TBI, TRRA

12. Life sci vital stats for top 4 CMAs (NAICS 3254, 3345, 3391, 6215)

13. Life Science VC for Selected CMAs Source: Macdonald & Associates Ltd. 2004

14. VC by Sector, Toronto CMA Source: Macdonald & Associates Ltd. 2004

15. Life Science VC Invested 1998-2003, Selected CMAs Source: Macdonald & Associates Ltd. 2004

16. Canada’s Biomedical Technology and Device Clusters Source: Health Technology Exchange

17. 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’)

18. Pathways of Hybridization Type I: Technology Extension

19. Pathways of Hybridization Type II: Technology Convergence

20. Toronto: future prospects • Rise of the hybrid firm? • (NYT: “Is biotech losing its nerve?”) • Toronto’s lead firms are hybrids: • MDS ($1.8B), Biovail ($1.1B) • 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