The billion-dollar question: Where are all the Canadian biotech unicorns?

When some of the world’s biggest investors came to Toronto in September, AI, quantum and defence frequently emerged as discussion topics, along with, of course, resources and infrastructure. Biotech, a field where Canada has a century-long record of world-changing science, was stuck on the sidelines. It fits a pattern. For decades, biotech in Canada is admired in the lab but largely overlooked in capital markets. But as medicine becomes a matter of economic security, that gap is getting harder to ignore.

Strong returns, scarce capital

Over the past decade, the life sciences sector generated the highest 10-year gross returns among all sectors. Notably, it produced 44% of the value of Canada’s 50 largest venture exits, from just 22% of the deals (and 80% of the five top venture capital-backed exits). Yet only about 7% of the capital allocated to Canadian venture funds went to life sciences funds.

Canadian life sciences companies raised $258 million in venture capital in the first half of 2026, a decline of 39% year over year and the lowest first-half total in the series. The $4 billion AI fund that Radical Ventures announced at the summit is nearly 15 times that amount.

We have a strong foundation to build on. Canada has a 4% share of the global clinical trials market representing $3 billion in direct expenditures annually, of which industry-sponsored trials account for $2.1 billion. Moreover, Canada has the highest number of ongoing clinical trials per capita in the G7 with more than 3,000, and Canadian researchers are among the most cited in the world. 

Long, risky and hard to see

Part of the challenge is the product. Only about 8% of drugs that enter human trials are ever approved globally , and the path from the initial trial stage to approval averages more than 10 years. Count the failures, and a single approved medicine can cost more than US$1 billion.

That profile doesn’t fit a generalist venture portfolio or a pension fund’s risk model. It needs specialists who can price scientific risk, a bench strength Canada is only now building.

The sector also has a visibility problem. As Clarissa Desjardins, CEO of Montreal’s Congruence Therapeutics, recently noted on Disruptors: “What biotech does, what we’re great at (is) taking those early-stage academic ideas and turning them into drugs—that’s kind of invisible.”

The missing middle

Canada is good at starting biotech companies, but struggles to scale them:

• Canadian healthcare VC funds are relatively small with an average fund size of $150-300 million, with a focus on earlier company development stages with average investments of $10-20 million. There is a chronic shortage of later-stage scale-up capital from domestic sources.

• In Canadian therapeutics, domestic investors’ participation falls from 42% in early-stage rounds to just 24% in later-stage growth deals (2024).

• In therapeutics rounds over $50 million, international investors make up 76% of the investors and 67% of deal volume.

Biotech investors usually cash out in one of two ways: a sale or an initial public offering (IPO). An IPO lets backers exit gradually while the company stays independent and keeps raising money. Canada hasn’t recorded a venture-backed IPO since 2021, while 13 biotechs went public in the U.S. in the first half of this year alone. That leaves a sale as the default exit.

When regulators signalled that Clementia, Desjardins’ previous company, had the data to seek approval, buyers were ready to pay for certainty. She pressed her board to keep building. “It’ll cost another $500 million of fundraising and it’ll take five years with zero certainty,” they told her. Ipsen of France would later buy Clementia for up to US$1.3 billion.

Such exits create wealth and recycle talent into new start-ups. But the long-term rewards (headquarters, jobs, royalties) accrue elsewhere. In sharp contrast, the U.S. has built anchor companies such as Boston-based Vertex Pharmaceuticals, now worth about US$130 billion, by funding them through years of risk. Canada doesn’t have a single homegrown drug developer of that scale. The top 10 publicly traded Canadian biotech companies have an aggregate market capitalization of $13 billion and employ over 1,500 people. Combined they wouldn’t crack the top 100 of listed American biotech firms in terms of market cap.

Health is security

During the pandemic, Ottawa acknowledged that “a decades-long decline” in Canada’s domestic biopharmaceutical industry had left the country unable to quickly produce its own COVID-19 vaccine. The federal government now funds parts of the sector as “dual-use,” alongside defence. At the same time, China has redrawn the global competitive map. Chinese drug candidates accounted for about a third of Big Pharma’s licensing spending in 2025. Many have already been tested in early human trials and are licensed for a fraction of what they would cost to develop in North America. “They’ve changed the economics of drug discovery,” Desjardins says. In her view, the race for follow-on drugs against well-known targets is largely lost, but Canada can still lead where the science is nascent, including AI-driven discovery for hard-to-treat diseases. But that window won’t stay open indefinitely.

Three shifts could help change the trajectory:

• Mobilize domestic capital at scale. Attract institutional money for the $50-million-plus rounds, managed by specialists who understand scientific risk.

• Sharpen the incentives. Build on recent R&D tax changes to make Canada a more competitive place to develop, and own, intellectual property.

• Set an anchor ambition. Nurture atleast one Canadian life sciences company worth more than $10 billion, employing thousands, within a decade.

Listen to John Stackhouse’s full conversation with Clarissa Desjardins on Disruptors.