OTTAWA — When the COVID-19 pandemic is behind us, one of its legacies will be politicians’ public commitment to breathing life into Canada’s withered pharmaceutical industry.

“Humans have a tendency to forget fast,” said Nicolas Petit, vice-president of commercial operations at Quebec City pharma company Medicago, in an interview with The Logic. “I think we need to consider pandemic readiness as a pillar of national defence.”

That would mean an expensive, sustained commitment to supporting an industry that, like the military, spends years operating below its potential, waiting for when it’s needed.

The Liberals’ last budget promised $2.2 billion over seven years for the life sciences, in both direct payment to pharma companies and grants through research councils and accelerators, plus a further $1 billion in subsidies through their Strategic Innovation Fund.

That’s separate from the Liberal government’s previous subsidies, which include:

• $415 million to French pharma giant Sanofi for a new influenza-vaccine factory in Toronto
• $200 million to Resilience Biotechnologies of Mississauga, Ont. for a factory capable of making mRNA vaccines like Pfizer-BioNTech’s and Moderna’s anti-COVID shots
• $173 million to Medicago for its vaccine research and development and to help build a factory for its nascent plant-based technology

The Conservative platform does not talk about scrapping any of the Liberals’ plans, but does say the Tories would produce “a sector strategy to grow the sector in a well-thought-out way rather than just handing out money” and cooperate with the United States on building continental supply chains for pharmaceuticals.

The New Democrats’ platform includes a pledge for national pharmacare, which would have implications for the industry in Canada that would depend on how the federal government used the massive purchasing power it would have. And an NDP government would create a Crown corporation to research and manufacture vaccines.

“Canada in general has a very strong reputation for fundamental research and clinical study,” said Cole Pinnow, the president of Pfizer Canada, in an interview with The Logic.

U.S.-born and -raised, he moved to Canada in 2018. This country’s basic science, mainly at the university-lab level, is superb, Pinnow said, and Canada is an excellent place to do the trials that test whether new drugs are safe and effective.

What he politely called Canada’s “areas of opportunity,” however, are large: “Development, manufacturing capabilities—both at the small scale and obviously at the large scale—and the commercial environment, which has, through decades of chaotic policy, moved away from sponsoring innovation and access to innovative medicines.”

The Patented Medicine Prices Review Board, a federal agency that sets the maximum prices of patent-protected drugs, tracks research and development spending by the companies it regulates. According to its figures, that spending peaked in Canada in 2007 at $1.3 billion. It fell to $792.2 million by 2014 before an uneven rebound took it to $893.2 million in 2019.

That’s not a full picture, since to be included in the board’s tally, a firm has to sell a patented medicine in Canada. Startups that don’t have products on the market aren’t included; neither are companies that only produce generics, though they could be researching drugs of their own or working on manufacturing improvements that would count if a patent-drug company were devising them.

Still, the board said it had numbers from 82 companies in the peak spending year of 2007 and 101 companies in 2019, so more companies collectively spent less.

In the same period, sales by the companies doing R&D increased from just under $16 billion to $23.1 billion. In 2017, the latest year for which the board has figures, Canada had the worst ratio of sales to research among eight countries the board uses as comparators: France, Germany, Italy, Sweden, Switzerland, the United Kingdom and the United States.

An Industry Canada survey of the life-sciences industry from earlier this year said R&D on a new drug averages US$1.4 billion over 12 to 13 years, and more if you factor in the costs of failed medicines that the successful ones have to cover. Developing a generic copy once patent protection expires takes two to three years and $3 million to $10 million.

That means the patent-protected period, which lasts 20 years in Canada, is critical if you’re in the new-drug business.

Pinnow said that for pharmaceuticals especially, trials and regulatory approvals can chew up a lot of precious time. More is consumed by negotiations over whether new drugs will be included in publicly funded drug plans, and at what prices.

“All of that leads to lost opportunities for patients that want to get timely access to the latest innovative medicine,” Pinnow said.

Pinnow also said that plans by the price-review board, which regulates maximum prices for patent-protected drugs, to revise its benchmarking system in ways that will lower its caps, will not make Canada more attractive to pharma companies.

The federal Liberals have put off implementing those changes repeatedly, citing the pandemic, and they’re now set to apply at the start of 2022. Without mentioning the board by name, the Conservatives’ platform says they would “negotiate constructively with the industry to reduce drug prices while providing long-term regulatory certainty.”

That aside, Pinnow said he hopes the “rolling reviews” Health Canada has used for COVID-19 vaccines will become more common. 

He said the local market is a meaningful factor in decisions about where to research and make Pfizer’s drugs.

“When we think about where we’re going to put our next manufacturing facility, the local environment does matter,” he said. “[Take] Singapore, for example. Singapore has historically put forward large incentives to bring manufacturing and a variety of industries, with the expectation that they’re going to be pure exporters. Canada isn’t viewed that way.” 

To make a drug in Canada, he said, there generally has to be a substantial local market for it, and Canada’s relatively small population doesn’t usually provide the numbers.

Medicago is near the opposite end of the industry spectrum from Pfizer: a Canadian-grown company that doesn’t have a product on the market yet. But it’s spent more than 20 years of research perfecting a plant-based platform for making viral particles critical in producing vaccines and antibodies to treat patients.

Petit said Medicago’s COVID-19 vaccine is at the end of wide-scale Phase 3 trials; the federal government has committed to buying 76 million doses if Health Canada approves it.

“We are doing our transition from an R&D company to a commercial company,” said Petit. 

Medicago’s technology originated at Laval University and Agriculture Canada, which is why the company is based in Quebec City (with an outpost in North Carolina’s Research Triangle, created in partnership with the U.S. Defense Advanced Research Projects Agency). Its Quebec vaccine factory is due to be completed in 2024, with the capacity to make a billion doses a year in an emergency.

Like Pinnow at Pfizer, Petit is an import; he joined Medicago four years ago, after working for French pharma giant Sanofi in India and Central Asia and then spending a brief stint back home in France. He said Canada’s outlook on pharmaceuticals has changed markedly since the pandemic struck.

“Before, discussions were focused on pricing, pricing as a unique reflection of value,” he said. But when a new virus can make you shut down whole swaths of your economy, your sense of the value of a substance that could stop it changes. “Certainly, the pandemic demonstrated that the value of life science at large goes beyond pricing, goes beyond just the product.”

Government co-ordination has helped the broader pharmaceutical industry coalesce, he said. Seemingly simple things like agreeing on standard vials will help make supply chains more resilient.

“A vial company will not be sustainable just with Medicago [as a customer]. So that’s why you need an ecosystem—then it becomes OK,” Petit said. “Everything falls together and works.”

As a relatively small market, Canada’s pharmaceutical industry has not had much surge capacity. Medicago had been intent on developing a flu vaccine; it completely reoriented to researching a COVID-19 vaccine in early 2020, and Petit said that took a leap of faith.

“What do you do? Do you put everything on the ice and pursue this project of a COVID-19 vaccine with many question marks like financing? And the market opportunity—what if we do this and then in one month [the pandemic] is done? You don’t know,” he said.

A bigger industry supported by exports will have more capacity to turn to domestic needs, Petit said.

“Based on a few strong players you will recapitalize, you will re-attract, a strong network of life-science industry,” he said.

Right before Justin Trudeau called the election in mid-August, the Liberals landed a deal with Moderna to open a manufacturing plant in Canada. The terms are not public: in making the announcement in Montreal, Innovation Minister François-Philippe Champagne said what the factory costs taxpayers will depend on the quantity of the factory’s output the federal government buys. But he said the company will also open a research centre here.

We’ve become used to talking about Moderna in the same breath as Pfizer, though Moderna is only 11 years old (Pfizer dates to 1849) and its COVID-19 vaccine is Moderna’s only commercial product—the only one even to reach wide-scale Phase 3 trials.

Moderna established its Canadian division at the end of 2020, tasking a handful of employees with managing the importation and distribution of its COVID-19 vaccine here. It claims over 1,800 employees worldwide; Pfizer has about 78,500, and 879 of them are in Canada.

Through a spokesperson, Moderna declined an interview. But Petit at Medicago said adding the Moderna factory will be good for the industry and for Canada.

“You don’t have one platform doing everything,” he said. “And we don’t know what will strike. So it’s good to not put all your eggs in the same basket.”