Go to the Globe and Mail homepage

Jump to main navigationJump to main content

Merck investing $40-million in drug R&D funds Add to ...

Two years after closing its world-renowned research and development centre in Montreal, pharmaceutical giant Merck & Co. is kicking in about $40-million to a pair of new funds that will invest in early-stage life sciences companies in Quebec and abroad.

The company will announce its investment next week in the funds, which will be managed out of Montreal by Lumira Capital Corp., a venture capital investment firm formerly known as MDS Capital. The Merck Lumira Biosciences Fund, a $50-million capital pool, will invest primarily in Quebec companies, while the $100-million Lumira Capital II fund will have a broader geographic mandate, said sources familiar with the details of the announcement.

Teralys Capital, a technology venture fund manager that manages a combined $700-million from the Quebec government, the Caisse de dépôt et placement du Québec and Quebec’s labour-sponsored Solidarity Fund QFL, will also contribute about $40-million, with the remaining $70-million coming from a mix of institutional and individual investors, the sources said.

A Merck spokeswoman declined to confirm the details, which will be announced at a press conference Monday in Montreal in the presence of two provincial Liberal cabinet ministers.

The presenters will likely play up Merck’s investment as a positive move for Quebec, but the commitment to highly speculative startups will be little replacement for the exodus of thousands of high-paying drug research and manufacturing jobs from Quebec in recent years. The province, and particularly the Montreal area, where Quebec’s pharmaceutical sector is concentrated, have suffered as foreign companies, facing a dwindling pipeline of blockbuster drugs, have rationalized costs and consolidated R&D in fewer global hubs at the expense of their Canadian subsidiaries.

The Merck investment “is a way for Big Pharma to externalize the risks of research and development and reposition themselves to focus only on the latest stages and marketing of drugs,” said Marc-André Gagnon, a professor with Carleton University’s School of Public Policy and Administration who specializes in the pharmaceutical industry. Merck is among several multinational drug companies, including Johnson & Johnson and GlaxoSmithKline, that have been providing seed money to help startups develop new treatments.

Merck typically spent over 10 per cent of Canadian revenues per year on R&D domestically before shutting down its therapeutic research facility in Montreal’s west island in 2010. At the time, it vowed to invest $100-million over five years in research and development in Quebec – an amount Mr. Gagnon estimates is close to what the company spent annually on R&D at its Montreal facility. The Whitehouse Station, N.J.-based company last year committed $5-million to the non-profit Quebec Consortium for Drug Discovery, which supports basic research in hospitals and universities, and $7-million to the AmorChem Quebec life sciences venture capital fund.

Follow on Twitter: @SeanSilcoff

Next Story

In the know

Most popular videos »


More from The Globe and Mail

Most popular