Further Understanding Health Innovation. Why? and Why not!

by Derrick Rancourt

In their new study The Land of Stranded Pilots: Challenges facing the health technology innovation system in Canada, the University of Toronto’s Impact Centre suggests that Canada’s health technology system is flawed for three reasons: 1. Poor alignment between researchers and funding with commercial objectives, 2. A convoluted system with overlaps and gaps in funding and assistance, and 3. A healthcare system that deters Canadian health technology innovations.

2. Convoluted System. Instead of the minefield of short term funding from different federal and provincial agencies, Canada needs a system equal to the US’s Small Business Innovation Research Program. Small companies including university spin-offs can procure $150K to pursue prototyping and proof of concept studies, followed by $1M to prepare for product launch. When I did scientific review for this program, I saw the launching of Next Generation DNA sequencing and CRISPR, the two most impactful technologies in genomics today.

1. Poor Alignment. As I have previously indicated, most Canadian scientists do not understand that governments invest in research to create wealth via company creation. However, I cannot blame them for not getting more involved in tech commercialization. Based upon my own experience it’s difficult to raise venture capital (VC) when more R&D is required before a product can be launched.

3. Deterred Innovations. Although I haven’t experienced healthcare’s stonewalling of local innovation, this has happened to my students. One example is Surface Medical who won the 2015 Manning Innovation Award. Before their success, they were forced to trial their product in Canadian jurisdictions other than Alberta. Although our centralized Health Services can give Alberta a competitive advantage, this may not be the case for Health Innovation.

AHS’s procurement processes need to support local startup companies. If not we risk their departure to greener pastures. Furthermore AHS’s procurement process may undermine Edmonton’s aspirational target of becoming Canada’s Health City. AHS should stop talking out of both sides of their mouth. If they are going to brag about benefits of centralization, they also need to acknowledge their stonewalling.

ABCtech is doing what it can to improve the health innovation landscape in Alberta. In addition to applying pressure to public procurement in general, and AHS in particular*, ABCtech is attempting to change the innovation funding landscape in Alberta. In our effort to diversify our economy, we have discovered that Alberta was replete of small and medium tech companies. Our research suggests that this was occurring because startups, with no products to sell in foreseeable future, turn to venture capitalists (VCs) for funding.

VCs understand the concept of intangible assets, whereas banks do not. The only problem is that VCs promote early exit strategies including acquisition by multinationals. This does not support the growth of industry sectors in Alberta. In order to address this problem, ABCtech is launching TechInvest, an Alberta-based bank that will support Alberta startups based upon assessment of intangible assets. This innovative approach will encourage local Alberta startups to grow in Alberta rather than simply being sucked down to the United States (US).

*Reference. Is Public Procurement Broken? – May/June 2018, Alberta Council of Technologies Society.

Derrick Rancourt is a professor in the University of Calgary’s Cumming School of Medicine, where he chairs the Graduate Science Education’s Professional Development Taskforce. He has also represented heathcare on the board of the Alberta Council of Technologies since 2007