Going beyond the search for biotech unicorns

Canada is one of the global leaders in the application of biotechnology. We invest heavily in research into the technology and have great opportunity to apply new innovations to our economy, our society and our environment. The problem is that we are fixated on blockbuster innovations, the $1-billion-plus opportunities that the venture capital world calls ‘unicorns.’ There is much more we can and should do to generate benefits from this technology. By all accounts, we are accomplishing a fair bit. While somewhat dated, studies that compare our efforts to other countries suggest Canada, since 2000, bootstrapped its way into the top five nations in terms of scholarly research and into the top tier of the countries patenting new applications in biotechnology. From there the story is less positive. While Canada has delivered some world firsts—new GM crops, new diagnostic tools, new vaccines and drugs and new biofermentation processes—the number of readily visible commercial successes is relatively small. Unicorns remain mostly mythical in this sector in Canada. Most commentators suggest we can and should strive for more world-firsts. While this is the conventional wisdom, innovation is more than just world-firsts and successful first adoption of new technologies or ideas. The returns to research come when the insights are adapted and adopted widely. Undoubtedly new startups and first adopters should be celebrated for their efforts, but the greatest gains come when specific innovations become diffused widely through an economy and society. We somehow need to accelerate both types of use. Getting there is the challenge. There are many hurdles to surmount to get to first-use. The start-up process is fraught with complications. Assuming the research effort generates a clear proof of concept, innovators still need to organize and finance their commercial venture, secure regulatory compliance, reduce to practice and scale up the innovation and proactively market their product. A recent study in the U.S. showed that of 530 bioscience invention disclosures from public research teams in the 2000s, only two successfully entered the market and had sustained revenues. The other 99.6 per cent were mercilessly culled by the rigours of the system. We should be able to lower the cull somewhat by reducing the costs and time to undertake commercialization. Many of our federal and provincial policies and programs work to lower costs for entrepreneurs and first movers: university tech transfer offices, government business service centres, Superclusters and venture capital programs, each in their own way, helps to lower the cost for firms. But that effort is somewhat undercut by the rising costs of regulatory compliance. A recent international study of the cost of introducing a new biotechnology product in agriculture reported that research costs fell 29 per cent in the past decade but regulatory costs rose 23 per cent. Constructing and successfully prosecuting a product now makes up about 38 per cent of the total cash costs of a product and takes more than 17 years. While regulation is needed, we should expect that as we gain a familiarity with a technology we could sharpen and improve the system to lower the cost while still maintaining its integrity. As or more important, we need to shift some of our focus from the problems of first movers to the rest of our economy and society. Patents, licensing revenues and commercial startups are only one way to realize impact. Follow-on use of a technology delivers much higher total returns to society. We need to accelerate uptake and use of new ideas more widely. Potential users, be they small-, medium- or large-sized businesses, households, or governments, all need to be able to trial a new product to see how it will fit their needs. Too little of our programming is designed to assist potential users to actually do so. This may require accelerating investments in programs like National Research Council's Industrial Research Assistance Program, which works with firms, but we may also need a rebalancing in other programming to support more market demand. Strategic public procurement and helping larger firms break down their needs to the scale of our enterprise go some way to helping, but more can and should be done to facilitate trialing throughout our economy and society. In the end, innovation is an iterative process, with inventors, users and society ultimately fashioning the tools and products to our economic and social needs. Governments could do a lot more to fashion efficient and effective regulations, policies and programs to mobilize our entire economy in the innovation enterprise. Peter W.B. Phillips is a distinguished professor of public policy and director of the Centre for the Study of Science and Innovation Policy, Johnson Shoyama Graduate School of Public Policy, University of Saskatchewan. The Hill Times