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Speeches

 

"Building Canada's Future in the Knowledge-Based Economy"

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News Release

Gordon M. Nixon
President & Chief Executive Officer
RBC Financial Group
Launch of the
Medical and Related Sciences (MaRS)
Discovery District

Toronto, Ontario

May 12, 2003

It is a pleasure to be here today for the official launch of the Medical and Related Sciences (MaRS) Discovery District. As the name suggests, this is an ambitious project. It is about linking science, entrepreneurship and finance to create new commercial opportunities and good jobs for Canadians. It is about positioning Canada in the knowledge-based economy. It is about generating future wealth to sustain a high quality of life for Canadians.

It is also noteworthy that we are launching the MaRS project at the same time that the world is celebrating the 50th anniversary of the findings on the structure of DNA by James Watson and Francis Crick. This research led to the Human Genome Project and now to the challenges of genomics and proteomics, which will loom so large in the activity at MaRS here in Toronto.

Like any ambitious project, MaRS is based on the vision and commitment of a small group of people who have spent enormous time and effort to bring this project to the point where today we can celebrate its official launch. A number of people deserve special recognition for this achievement, including the MaRS Discovery District Board of Directors and founders.

I also want to acknowledge Tony Fell, Chairman of RBC Capital Markets and Susan Smith, President of Royal Bank Technology Ventures for their early involvement in MaRS on behalf of RBC Financial Group. Susan's group, by the way, will become one of the first tenants of the MaRS project.

To understand why MaRS matters, it is important to see it in the context of the challenges facing our country. Our governments have done a good job in restoring the fiscal health of this country to the point where budget deficits have been eliminated, public debt is being reduced, and budget surpluses have provided the room to lower taxes and direct new spending to areas of priority.

This macroeconomic environment is positive for future investment and growth in our economy. But it is not enough. If Canadians are to sustain a high standard of living in an increasingly competitive world, and to reverse the widening gap in living standards between our country and particularly the United States, then we must become much better at turning new ideas into new products, services and processes.

As has been pointed out before, we are better off than our grandparents not because we have more of what they had, but because we have new and better things such as the Internet, sophisticated new pharmaceuticals, powerful microprocessors, and new wireless technologies. Successful societies are those that can both develop new ideas and successfully commercialize them.

It is here that Canada has lagged. Compared to our G-7 partners and other advanced economies such as Sweden, Switzerland and Denmark, our spending on research and development has been disappointing. As a percentage of GDP, our spending on research and development is the second lowest in the G-7.

We rank 13th among the nations of the Organization for Economic Cooperation and Development (OECD). Yet unless we invest in research and development we will not generate new ideas for commercialization. The low level of investment in research and development helps explain why Canada ranks second last among the G-7 nations in domestic patent applications, on a per capita basis, and a lowly 16th among OECD members.

While basic research infrastructure and grants have improved in Canada, we still have some distance to go if we are to meet the federal government's target of becoming one of the five most research-intensive economies by the end of this decade.

So we must become much more focused on those areas of opportunity for Canada, not by driving down wages, but by developing high-value goods and services, which the rest of the world wants to buy, and which provide a high standard of living for Canadians. We are a small country competing in a global marketplace, so we must find ways to create competitive advantages in areas where we see opportunity.

MaRS is a bold and ambitious project to correct some of these failings by facilitating research and development, and its commercialization.

It will be a place where scientists can incubate new companies, share costly equipment and ideas, and build a cluster where science, finance, professional service providers, and mentors can meet in a supportive environment.

Canadians are now being given an outstanding opportunity to do good science and in many instances this science has commercial potential. We must match the improved research opportunities in Canada with conditions to encourage commercialization. This will not only attract more talented Canadians to return home, but foreign talent as well.

Indeed, retaining and attracting talent will be one of our greatest challenges in the years ahead as nations compete for the best and brightest. Unless we create attractive opportunities, many of our own best and brightest will be tempted to go elsewhere. But by investing in new research opportunities, we are already attracting talent home. Let me give just two examples.

One is Aled Edwards who, despite strong efforts to keep him in the United States returned to Toronto where he is a professor at the University of Toronto, a key researcher in the University Health Network, and a founder of Affinium Pharmaceuticals, a promising drug discovery company.

Dr. Edwards' talent was most recently recognized when he was appointed chair of a three-year Anglo-Canadian research initiative, the not-for-profit Structural Genomics Consortium. Its research will be conducted in Toronto and at Oxford University, in collaboration with the European Bioinformatics Institute.

The other is Marco Marra, another talented Canadian attracted back to Canada from the United States.

Dr. Marra led the team of scientists at the Michael Smith Genome Sciences Centre that was the first in the world to sequence a corona virus that is believed to cause SARS. He is also an associate professor at the University of British Columbia.

We can also take pride in the publication last month of the complete DNA sequence of Chromosome 7 by researchers at the Hospital for Sick Children through a team led by Dr. Stephen Scherer. This was an enormous undertaking, which required 15 years of work and collaboration by 90 scientists from 10 countries. This Canadian contribution to the Human Genome Project opens the door to unraveling the mysteries of a significant number of diseases.

It is this high quality of Canadian talent that provides encouragement for investment in research and its commercialization.

MaRS is also based on the assumption that there is a high and exciting level of convergence taking place among the various sciences. It is noteworthy that MaRS stands for Medical and Related Sciences. Today's bioscience revolution would not be possible without major advances in the information and computing sciences. Chemistry, information technologies, software, data management, mathematics, and nanotechnology will all be a part of MaRS.

So you can see why this area has been designated Toronto's Discovery District. In this district alone, MaRS will be linked to eight teaching hospitals, 37 research institutes and one of North America's leading medical schools at the University of Toronto.

But while the centre of the MaRS project will be situated in Toronto's Discovery District, it is more than just a Toronto initiative. It is the core of a biotechnology corridor that links research and commercialization activities from Ottawa, down through Kingston and west to Hamilton, Guelph, Waterloo and London. Governments, the private sector and universities have collectively invested well over $1 billion in the research capacity of the universities and research hospitals of these communities in recent years.

They have done so because they agree with the U.S. National Academy of Sciences that "biological sciences are likely to make the same impact on the formation of new industries in the new century as the physical and chemical sciences have had on industrial development in the last century."

At both the federal and provincial levels, we have seen the creation of many research foundations and institutes, including the Foundation for Innovation and the Ontario Innovation Trust. And the budgets of many existing research councils have been increased.

This increase in funding has been based on what John Evans, in his Killam lecture two years ago called a new "Public Research Contract".

What this contract means for government, he said, is "a much higher level of investment than previously provided to Canadian universities for their traditional role in the creation and transmission of knowledge. For universities, the commitment is economic and social return on public investment and particularly jobs and wealth created in Canada."

A substantial investment by the University of Toronto, the Government of Ontario, and the Government of Canada in MaRS is a clear signal they take this challenge seriously.

This is the challenge of commercializing new knowledge discovered in Canada.

We want to see to the fullest extent possible that the new knowledge that is generated in Canada leads to its production here so that the resulting wealth and jobs flows to Canadians. We want to end the old pattern of invent in Canada, produce elsewhere, then import the finished product back to Canada. But that means we have to become much better at commercialization.

As Industry Minister Allan Rock has said, "what we don't do well enough is to bridge the researcher and the marketplace. We don't do a good enough job in commercializing research. We haven't yet developed what they call a 'receptor capacity' in business to take the new idea from the lab and bring it to the marketplace to the point of sale."

But to succeed in commercialization, we have to overcome several challenges - and MaRS is a response to them.

First, we must create an environment that encourages young scientists to consider the possibility of commercialization of their ideas, and match them with the facilities and advice they need, as well as early-stage capital. MaRS is a response to these needs.

Second, we must take new ideas though the "valley of death" - that very early stage in the life of an idea where the level of risk is at its highest and financing is most difficult.

This is where proof of concept or proof of principle is established. But it is also where many good ideas can die from a lack of relatively modest funding. Again, MaRS can play a role in meeting these needs.

And finally, we must be patient enough to allow promising ideas to develop and reach a stage where more of their value can be captured. While early-stage commercialization capital is vital, what is just as important is the capacity for a company to take its discovery as far along the approval chain as possible, since by passing each threshold of clinical testing it adds value to its discovery. The challenge of getting a new drug from the lab to the patient can take years and cost hundreds of millions of dollars.

We face a major challenge in building up Canadian companies in the biosciences. And while MaRS cannot address these issues alone, it can help to bring the right parties together.

Statistics Canada recently reported that in 2001, some 102 bioscience firms raised $980 million of venture capital. However, 78 firms reported they failed to meet their financing targets.

Clearly, we need to deepen the pool of investment capital if we are to build a successful bioscience industry in this country. Some progress is being made. For example, the recent federal budget removed barriers to pension plans and other institutional investors becoming more active as sources of venture capital.

But we have to do much more to develop a financing system that can deal with the high risk and long lead times that characterize the world of bioscience. MaRS means that the world of science and the world of finance have become neighbours. Those neighbours need to talk more frequently with one another.

Our goal should be to design a financing system that not only takes new ideas and young companies through the early stages of development, but which also helps build Canadian-based companies that have the scale and scope to succeed in the global marketplace. This would also help build a Canadian receptor capacity for new ideas flowing through MaRS and similar initiatives elsewhere in Canada.

In today's risk-averse market environment, financing for bioscience is especially difficult. Yet there is a growing list of young companies that are burning through their existing financial resources with only limited prospects for new rounds of financing.

At the very least, we should remove barriers - for example, by allowing publicly traded bioscience companies to sell their unused R&D tax credits in flow-through shares, just as we already allow mining companies to do. Or, alternatively, we should allow R&D expenditures to be treated as allowable expenses in limited partnerships. Surely, the methods used to finance the bringing of our natural resources to the surface should be available to bring our knowledge-based resources to the world.

We at RBC Financial Group are looking at ways that we can help to build Canada's future economy. One example is RBC Technology Ventures, where we have created four commercialization funds to help start and develop knowledge-based companies in conjunction with universities and inventors.

Other examples include our support for the National Angel Organization, and our research project with Queen's University on the management skills needed to create and sustain growth.

But perhaps the time has come for the world of finance and government to review the regulatory, institutional and tax systems and consider changes that could be made to ensure that Canada has a financing system that meets the needs of the future economy.

As a company that has always taken a leadership role in supporting Canada's knowledge based economy, RBC is willing to participate fully in any such review.

Ultimately, the success of our economy, and our ability to sustain and support a high standard of living, will depend on our ability to start and to grow Canadian companies.

MaRS is at the centre of an exciting future for this city, this province, and this country. It represents a bold response to the challenge of building a knowledge-based economy, of linking the lab to the marketplace so that the work of our talented researchers will lead to better lives for people and a stronger economy through new jobs and new companies.

We owe an enormous debt to the small group of individuals who conceived this project and gave so much to make MaRS a reality. Given its potential for Canada, it is up to all of us to work for its future success.

Thank you.

 

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