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Glaxo establishes health research fund in Canada

The company logo of GlaxoSmithKline is seen on the headquarters building in London in 2006.


Canada's venture capital resources got a $50-million shot in the arm Thursday from global drug giant GlaxoSmithKline PLC , which has set up a research fund to invest in early stage projects with the potential to create new medicines.

The GSK Canada Life Sciences Innovation Fund will put money into projects at Canadian universities, research institutions or small companies, with the goal of commercializing the innovative work under way there, said Paul Lucas, the head of GSK's Canadian subsidiary. It will provide the risk capital needed to turn discoveries into real products, he said. "We want to prime the pump … to ensure a continuous flow of new medicines that can be brought to market."

The fund will seek out "great science and good ideas in the field of life sciences, whether it is medicines or vaccines," added Moncef Slaoui, global chairman of research and development at GSK. It will then invest in the projects and provide mentorship and coaching to the "visionary scientists" to help start or spin off biotech companies.

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GSK will take equity positions in these firms, but will not own them outright. They will be free to sell products on their own, or form partnerships with GSK or other drug companies.

The new fund will not support basic scientific research, Mr. Slaoui said, but will invest in work that is closer to commercialization and needs help to get to market. In some cases, the technology could be years away from becoming a marketable product, he said.

Worldwide, there is a shortage of venture capital to get ideas to the marketplace, Mr. Slaoui said, and the new fund will help fill that gap.

Indeed, in Canada the lack of venture capital money has been a serious issue and has discouraged entrepreneurship, said Richard Rémillard, executive director of Canada's Venture Capital and Private Equity Association. The demand for financing has gone up, but the supply of available funds has been dropping for many years, he said. As a result, "any new capital supply is welcome."

The new fund will be managed by GSK and its worldwide venture capital arm called SR One. The company has similar funds already operating in Britain and the United States.

British-based GSK does not have a stand-alone research centre in Canada, but does development work on flu vaccines here, and already has some partnerships with Canadian research organizations and universities. It has manufacturing facilities in Toronto and Quebec City.

"Canada has great science" and has a very strong health sciences sector, with world-leading research going in vaccines and infectious diseases, Mr. Slaoui said. But it is often overlooked despite its top researchers and medical science infrastructure.

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Reporter, Report on Business

Richard Blackwell has reported on Canadian business for more than three decades. At the Financial Post and the Globe and Mail he has covered technology, transportation, investing, banking, securities and media, among many other subjects. Currently, his focus is on green technology and the economy. More

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