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Quebec’s plan to nurse Montreal’s battered pharmaceutical sector back to health

Philippe Walker lost his job last February. Worse, the molecular biologist who headed AstraZeneca's R&D centre in Montreal was given the dreadful task of announcing the lab's closing to his 130 fellow researchers.

"It was heartbreaking," he recalls. Mr. Walker, a Swiss national who moved to Canada in the mid-nineties, could have packed his bags and gone anywhere. But the thought never crossed his mind.

Mr. Walker chose Montreal as the Canadian site for a neuroscience lab specializing in treatments for chronic pain. He oversaw the construction of the research centre that opened in 1997. And in the past nine months, he has worked tirelessly to give the doomed lab a new lease on life.

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"If big pharmaceutical companies are no longer going to conduct their early-stage research in-house, then we are going to be the ones selling it to them," says a fiery Mr. Walker.

Enter NéoMed, a new not-for-profit research organization whose mission is to bridge the gap between academic research and life science companies. Starting from the best projects put forward by universities and research centres, it will develop promising molecules to a stage where pharmaceutical companies would acquire them, explains Mr. Walker, NéoMed's chief scientific officer.

Unveiled yesterday, NéoMed is Quebec's new response to the disruptions in the life sciences industry that have knocked down Montreal's pharmaceutical sector.

The industry has been losing sleep. And it is not because it can get Viagra at cheap generic prices, as Pfizer's new ads proclaim, following a Supreme Court decision that shortened by two years the blue pill's protection from competition.

Big life science companies have been letting thousands of scientists go, as it is proving harder, and costlier, to discover drugs with wide commercial potential – so-called blockbusters. They now concentrate on late-stage research, which is less risky.

There are few places in Canada where the pain has been felt more acutely than in Montreal, which had attracted research centres over the years thanks to a generous drug reimbursement policy. One after the other, AstraZeneca, Sanofi-Aventis, Johnson & Johnson, Wyeth-Ayerst, Merck and Pfizer have announced lab closings and layoffs.

As a public-private partnership, NéoMed is rising from those ruins with a $71.5-million initial investment. AstraZeneca Canada donated its research facility in the Saint-Laurent suburb Technoparc and its equipment, as well as the intellectual property on three painkilling molecules the British-Swedish company was working on. It topped this estimated $35-million gift with $5-million in financing. Pfizer Canada also chipped in $3.5-million.

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The Quebec government is offering an $8-million grant and a $20-million interest free loan that NéoMed should start to reimburse when its sales exceed $60-million.

The money is coming from a new $125-million five-year fund for research partnerships announced by the Parti Québécois government in Tuesday's budget.

The fund is one of the consolation prizes offered to the pharmaceutical industry for the cancellation of the province's overly generous drug reimbursement policy. Since this industrial policy had passed its expiry date, this is a wise decision the Liberals should have made earlier.

"We are adapting our policies to the new ways the pharmaceutical industry is conducting business," Finance Minister Nicolas Marceau said at a conference in NéoMed's lab.

This slant in favour of "open innovation" is inspired by a new generation of collaborative research labs. One such lab is the Centre for Drug Research and Development, headquartered at the University of British Columbia, in Vancouver.

The B.C. government just funnelled an additional $29-million on top of its initial $25-million grant to the institute. The CDRD has supported 135 research projects and advanced 80 technologies toward commercialization since it was launched in 2007.

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Will such support fix Montreal's ailing industry? Mr. Walker says he is already in talks with 10 contract research organizations and other firms that could conduct R&D in the lab.

He also hopes to pursue the research on AstraZeneca's molecules. The different projects should give work to 120 researchers two years from now.

But many of the researchers laid off in the Montreal area have already moved away in search of interesting work, to Boston and other pharmaceutical hubs. And you have to wonder how promising AstraZeneca's molecules are if the multinational company is willing to give them away after reviewing its research portfolio.

But for Quebec's pharmaceutical industry, which has been battered by bad news, hope comes in small doses.

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