"Building Canada's Future in the
President & Chief Executive Officer
RBC Financial Group
Launch of the
Medical and Related Sciences (MaRS)
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
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
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
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
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
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 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
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
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.