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Guillaume Simoneau/Consulat

Dr. John Bergeron pulls his car off Highway 40 in west Montreal and turns into a desolate parking lot beside a sprawling complex of buildings. Walking across the parking lot, he greets two men. One of them is Dr. Ronald Guttmann, who, like Bergeron, is a retired McGill professor who has spent many years working on the discovery, development and commercialization of new drugs. The third man is Dr. Samir Mounir, a scientific entrepreneur and former team leader at BioChem Pharma, which at one time was Canada's biggest homegrown medical-sciences company.

The three men have come to tell me about their plan to stanch the bleeding from the recent closure of numerous Montreal drug research labs. One of them is right in front of us: These buildings housed laboratories abandoned in 2010 by the New Jersey-based pharmaceutical giant Merck & Co. Today the place is deserted, save for us and a crew of gardeners who are tidying up the grounds before the campus is turned into condominiums.

In their heyday, Bergeron explains, the Merck labs had an annual budget of approximately $90 million and employed nearly 300 scientists. "Lots of major discoveries were made by teams of scientists collaborating with re-searchers at hospitals and universities in Montreal," Bergeron says. "This is a place that made a huge contribution to international medical research."

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The three scientific entrepreneurs outline their dream of enlisting support from governments and venture capitalists to relaunch the Merck campus as a centre for public-private drug research and commercialization roughly modelled on the hugely successful European Molecular Biology Laboratory, in Heidelberg, Germany. They point out that Merck's facility is just one of many west-Montreal research centres shuttered by international drug companies in recent years. "It's a long list," says Bergeron, who in 2002 co-founded and helped raise close to $100 million for Caprion Proteomics, a Montreal-based drug development company. "It's hard to keep track of all the drug companies that have shut their labs."

After a few minutes comparing notes with Guttmann and Mounir, Bergeron itemizes a veritable Who's Who of the world's largest brand-name drug makers: AstraZeneca, Boehringer Ingelheim, GlaxoSmithKline, Johnson & Johnson, Pfizer, Sanofi-Aventis and Wyeth-Ayerst (which was subsumed into Pfizer in 2009). In each case, says Mounir, executives in the United States or Europe decided to shut their Canadian research operations, resulting in the loss of scores of high-paid scientific jobs. "They've all moved their research out of Canada to places in Asia, Europe and the U.S. with bigger drug markets and better research commercialization prospects," says Bergeron. "It's a disaster for Canadian science, and for our economy, too."

Part of Bergeron's concern is that Canadian science has a poor record for commercializing discoveries outside this sort of foreign-owned corporate lab. Indeed, life sciences accounted for less than 2% of the equity raised on the TSX and TSX Venture exchanges in 2013. Bergeron notes that our only achievement to garner a medical Nobel, the discovery of insulin, produced spectacular wealth—product sales of $10 billion (U.S.) annually—but not in Canada.

Other examples of Canada's failure to capitalize on its breakthroughs include the discovery in 1965 in Montreal of CEA, the first blood-based biomarker for cancer to be granted U.S. government approval. The Montreal General Hospital obtained just $300,000 for the rights to test the drug, which Bergeron estimates generates more than $1 billion (U.S.) in sales annually. More recently, an arm of the Public Health Agency of Canada developed a promising vaccine for the Ebola virus, which it licensed for $205,000 to a U.S. company that flipped it to Merck in 2014 for $50 million (U.S.). "We have a very long, sad history of coming up with scientific winners," laments Bergeron, "and then giving them away to be commercialized in other countries."

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With annual sales of $1.3 trillion (U.S.), the world pharmaceutical market is matched by few other sectors. The same is true in profits: Over the 10 years ending in 2012, the 11 largest global drug companies made $711 billion (U.S.) in profits; their CEOs took home a total of $1.6 billion (U.S.).

The giants—of whom the largest half-dozen by revenue, in descending order, are Johnson & Johnson, Novartis, Roche, Pfizer, Sanofi-Aventis and Merck—emphasize that the world gets a lot of research in return for all that money. But that is not as true as it once was. Fed by huge revenue streams from drug-dependent populations in North America and Europe, as well as booming numbers of drug consumers in emerging markets like China and India, drug companies are spending lavishly to acquire new drugs through acquisitions rather than developing them in their own labs: In 2014, the total value of mergers and acquisitions in the life-sciences sector (of which pharma is by far the largest component) topped $300 billion (U.S.). The second quarter of 2015 saw deals worth $72 billion (U.S.), including the $13-billion (U.S.) purchase of U.S.-based Salix Pharmaceuticals by Valeant Pharmaceuticals International. The Montreal-based company rose from the remains of Biovail Corp., once Canada's largest publicly traded drug company. Through an aggressive strategy of acquiring companies and licensing drugs with under-appreciated profit potential, Valeant briefly became Canada's largest company by market capitalization earlier this year, until its share price tumbled after its practice of sharply increasing drug prices was questioned in the U.S. Congress.

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The life-sciences industry still invests a lot—an estimated $150 billion (U.S.) annually—on drug development. But it's easy to see why M&A is an appealing alternative to R&D. Sometimes big spending on research leads to a blockbuster drug. A product like the anti-cholesterol drug Lipitor can cost up to $2.9 billion (U.S.) up front, according to a U.S. study. But Lipitor racked up sales of $13 billion (U.S.) in its best year. Often, however, companies have invested hundreds of millions developing drugs that proved unmarketable because they weren't sufficiently safe and effective.

Drug companies that do hit upon winning discoveries can print money for years thanks to patent laws and scientific data-protection laws that grant them long periods of market monopoly. Only after the patents expire can generic drug makers like Canada's Apotex bring lower-priced versions to market, taking cost pressure off consumers and their private and government insurers.

Most of the recently abandoned drug laboratories in Montreal were built in the 1990s after the federal government agreed to pass legislation that substantially increased drug patent protection, to 20 years. In return, international pharma companies promised to sink 10% of Canadian annual sales back into R&D in Canada.

That quid pro quo was piloted by then-prime minister Brian Mulroney in a prelude to the 1988 U.S.-Canada Free Trade Agreement. "The legislation was intended to stimulate investment," Mulroney said in 2012. "It did precisely that." The remark was addressed to an audience of drug-industry lobbyists and executives at an event sponsored by Rx&D, the national association of brand-name drug makers. Research spending, Mulroney said, came to "more than $20 billion in total by the pharmaceutical industry you represent in the last 20 years, fully in line with the promise that 10% of sales would be invested."

These days, the brand-name drug companies continue to lobby Canadian trade negotiators to further extend patent protection, confirms Rx&D's president, Russell Williams, who, like his immediate predecessors Murray Elston and Judy Erola, is a former politician whose purview included government pharmaceutical policies at either the provincial or federal level. With Parliament visible behind him through the windows of Rx&D's Ottawa office, Williams reiterates Rx&D's argument that stronger patents will encourage R&D investment.

In the negotiations leading up to the Comprehensive Economic and Trade Agreement (CETA) between Canada and the European Union, which was largely completed in 2014 and now awaits ratification in Europe, the European drug makers and Rx&D pressed for, and won, an increase in drug patents from 20 to 22 years in cases of regulatory delay (that is, where government safety concerns delay introduction of a drug). This matches the arrangement in the European countries that are home to many of the world's largest drug companies. Canada freely ceded similar drug patent extensions within the new 12-nation Trans-Pacific Trade Partnership (TPP), which includes Japan and the U.S., the countries that are home to all of the Big-Pharma firms not based in Europe. "A competitive intellectual property regime is crucial," says Williams. "We are losing ground in the global competitiveness battle when it comes to research. That's why we have worked so hard to catch up within the CETA."

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Williams, like his predecessors, makes it sound as if Canada had a domestically based industry that acted of its own accord. But the country's great pharma hope, BioChem Pharma—which had enjoyed generous support from the Quebec government—was sold for $13 billion in 2000 to the British giant Shire, which soon gutted BioChem's R&D program. Canada has Valeant, it's true. But apart from not being research-oriented, the country's one sizable brand-name player is headquartered in Canada mostly for tax advantages. (Valeant declined to have anyone from the company be interviewed for this article.) What Canada does have, in diminishing quantity, is branch plants of global companies that, in deciding where to invest in research, can shop for jurisdictions much more freely than a consumer can shop for drugs.

According to data from the Organization for Economic Co-operation and Development, pharmaceutical R&D in Canada was slashed almost in half between 2000 and 2013, from approximately $620 million (U.S.) to $320 million (U.S.). During the same period, American pharma R&D quadrupled to $48 billion (U.S.). Federal government data indicates the brand-name drug industry's investment in Canadian R&D slipped from the 10% of sales it once promised to less than 4.5% in 2013. That figure represents a 16% drop from 2012, even though patented drug sales in Canada increased 6.5% to $13.6 billion that year.

In 2011, according to the Canadian Generic Pharmaceutical Association (CGPA), the brand-name drug makers spent as little as 1.4% of sales revenue on discovery science. In a survey of eight rich nations, CGPA found that the aggregate ratio for R&D spending to sales was dramatically higher: 20.1%.

The Canadian R&D numbers may overlook drug companies' investments in academic collaborations, and in thousands of clinical trials involving hospital patients, and other direct and indirect research costs, Williams cautions. According to a survey conducted for Rx&D by KPMG that factored in expenses such as research money spent by Canadian subsidiaries outside Canada, regulatory compliance costs, charitable donations and grants to health organizations that may support research, and donations to educational and community groups (including sports teams and arts groups), brand-name drug makers "spent an estimated $1.276 billion on research and development in Canada in 2013." Even so, with 2014 sales of $18 billion, by KPMG's numbers, the industry would have to increase R&D expenditure roughly 50% to meet the 10% of sales figure it once promised.

Even after this catch-all estimation of research spending is factored in, Williams himself reiterates that Canada is falling behind in attracting investment. "If we want to excel, we might have to do heavier lifting," he says. And that means Canada should implement patent terms that not only match but actually outdo Europe's, he argues. "I would be aggressively competitive. Where Europe has eight-year limits, I would make it 11."

Marc-André Gagnon, a professor of public policy at Carleton University who specializes in the pharma industry, says Rx&D's argument is as empty as west Montreal's abandoned research centres. While the industry formally committed to increasing R&D in return for stronger patent protection from the Mulroney government, Gagnon notes, it has offered no such commitment while pressing for even stronger protections within the CETA and the TPP. If the CETA patent extensions had been applied in 2010, it would have increased the cost of patented drugs in Canada by at least 6.2% in that year, he calculated in a 2014 analysis.

"I see no reason the industry will invest more in R&D because we keep extending patent protections," says Gagnon. The vast bulk of the brand-name pharmaceutical industry's R&D investments now go to countries like China, India, Russia and Brazil that have far weaker drug patent protections than Canada's, he points out. (The attractions they do offer include lower labour costs and better access to those much larger markets.)

Not surprisingly, the generics industry—whose lobby group, the CGPA, represents nine firms with 2014 sales totalling $5.2 billion—also doubts the sincerity of Big Pharma's pledge to increase R&D in exchange for longer patent protection.

The counteroffensive mounted by the generic industry, which includes both Canadian- and foreign-owned companies, relies on people like Terry Creighton, vice-president of global government affairs for Teva Pharmaceutical Industries, which is Israeli-owned and ranks second in the Canadian sector after Apotex. Creighton worked with a global group of generics executives who attempted to persuade TPP negotiators that the interests of the generic industry should be reflected alongside those of the brand-name industry in trade agreements. The CGPA says the generic industry fills 67% of Canadian prescriptions, yet accounts for only 23% of the $23 billion Canadians spend on them annually, for a savings to governments of $13 billion.

The TPP, Creighton noted, is the largest trade agreement ever negotiated, involving about 40% of world trade. Given the deal's significance, she lamented, "it's remarkable there's been so little debate. One reason for this is the incredible secrecy" that surrounded negotiations.

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The lack of debate is all the more striking considering that the TPP presents a new front in the global battle between brand names and generics.

The brand-name giants pushed for extended patent protection not just for traditional drugs but also for the new class of biotech-derived drugs known as biologics. The generics industry argued for shorter patent exclusivity, specifically for biologics, with the strong support of Australia, New Zealand and Chile.

Biologic drugs are produced using biological processes rather than the chemical synthesis that creates conventional drugs. Biologics are expensive to develop, and costly to use: Annual treatment for one patient can cost between $25,000 and $200,000 (U.S.). In Europe, sales of biologics are expected to swell from $13 billion (U.S.) in 2014 to $23 billion (U.S.) in 2019, according to Alan Sheppard, a U.K.-based analyst with the medical-data company IMS Health. He adds that by 2018, biologics will account for half of European spending on pharmaceuticals. Canada shows the same trend: Four of Canada's five top-revenue pharmaceutical products are biologic, with total annual sales of more than $2 billion in 2014, the CGPA says.

"The new blockbuster drugs are in-creasingly biologics," Sheppard told a September summit meeting of the International Generic Pharmaceutical Alliance in Toronto, drawing special attention to Solvadi, approved in the U.S. and Canada in 2013 for hepatitis C treatment. Solvadi cost $84,000 per patient for a 12-week treatment at the time the drug was launched; Sheppard predicted its global sales could reach $34 billion (U.S.) annually by 2019. "Solvadi has triggered a controversy never seen before," Sheppard said. Along with similarly priced cancer biologics, it is adding costs to health-care budgets that are "pretty much unsustainable," Sheppard warned, while noting that Italy and Spain have capped spending on Solvadi and the U.K. has delayed patient access to it. Physicians working in Canada's federal prison system—where hepatitis C infection levels among inmates are estimated to be as high as 30%—say Ottawa appears to be restricting access to treatment in an effort to contain costs.

The class of drugs known as biosimilars offers cost savings in the same way that generic drugs do compared to brand-name drugs. The 19 biosimilar drugs that are currently approved for marketing in Europe are up to a third cheaper than their biologic counterparts. Inflectra, a biosimilar recently approved in Canada for the treatment of rheumatoid arthritis, is currently available in 26 countries across Europe, where it costs about 35% less than its brand-name counterpart, Johnson & Johnson's Remicade, which generated $800 million in Canadian sales in 2014.

"Medicine budgets will become unsustainable with the surge in innovation," argued Sheppard, "so optimal use of generics and biosimilars will be essential to ensure affordability." Biosimilars now account for half the overall biologics market share in many European countries, he noted. In New Zealand and Poland, Sheppard said, patients are being switched from biologics to biosimilars, and Finland has also accepted that biosimilars, once they're approved by regulatory agencies, can be used interchangeably with biologics.

At a time when some generic drug makers are beginning to make large science investments in biosimilars, which can cost up to $200 million (U.S.) to develop, shorter periods of "data exclusivity"—during which a biosimilar maker may not use the innovator company's data to get its product approved—could deliver rich rewards for Canadian R&D, according to Creighton. While the U.S. offers 12-year data exclusivity for biologics, and Canada offers eight years, Australia, New Zealand and Peru fought to have the TPP limit data exclusivity for biologics to five years. While the details of the TPP have not been released, officials indicated a compromise was reached on the issue at the 11th hour.

Toronto-based Apotex has prioritized the development of biosimilars within a 10-year, $2-billion R&D budget. With R&D expenditures of 12.5% of sales last year, Apotex can boast that its scientific spending overshadows that of almost all the brand-name drug companies in Canada. As a group, CGPA companies invest approximately 15% of sales ($450 million) in R&D in Canada each year.

The recent generics summit in Toronto was told by Jeff Watson, president for global generics at Apotex, that Europe leads the world in approving and utilizing biosimilars; meanwhile, Health Canada is still developing its policies regarding the products. Unlike its counterparts in the U.S. and Europe, Ottawa's drug agency rejects the term "biosimilars" and calls the drugs "subsequent-entry biologics." For now, Watson noted, Health Canada has warned provincial drug plans that its approval of individual biosimilars is not a declaration of equivalence to biologics. That message echoes the position of Rx&D, which warns no less than four times in a short text about biosimilars on its website that they cannot be used interchangeably with biologics.

Watson was not the only executive at the generics industry meeting in Toronto to raise questions about Health Canada's approach to biosimilars. Michel Robidoux, president and general manager of Sandoz Canada (the generics wing of Novartis) and chair of the CGPA's Biosimilars Board, said Health Canada's approach to the biosimilar drug Inflectra, which costs 25% less than its reference product, Remicade—a biologic drug with $800 million in Canadian sales in 2014—diverged markedly from Europe's. Robidoux noted that Health Canada approved Inflectra for rheumatoid arthritis, but not for inflammatory bowel disease (IBD), saying that the data was not convincing.

This puts Canada at odds with Europe. According to Jim Keon, president of the CGPA, the majority of prescriptions for Inflectra in 26 European countries are for IBD. The European Medicines Agency concluded that the data Health Canada based its IBD decision on was "not clinically relevant" in light of overall evidence, according to Dr. Elena Wolff-Holz, a member of the agency's Products Working Party.

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If the traditional model of pharma R&D is problematic for Canadian jobs, science and health budgets, there is hope in some circles for a new model being kick-started with government funds in places like MaRS. The science mecca—MaRS originally stood for Medical and Related Sciences—is located in downtown Toronto in the same place insulin was first tested on a patient.

MaRS may be best known to some for its reputation as a white elephant lacking tenants, but both brainpower and excitement were palpable on a September day as Brad Duguid, Ontario's Economic Development Minister, took the podium to make an announcement. Arrayed behind him at MaRS was the president of the University of Toronto, the presidents of five of Canada's largest teaching hospitals, the director of Canada's leading cancer research centre, and a slew of senior research staff from U.S.-based Johnson & Johnson, which is the world's largest and most diversified health-care company, with 2014 sales of $74.3 billion (U.S.). "You can't help but get excited about the strength of Ontario's bioscience cluster," Duguid told the audience of scientists and biotech entrepreneurs in the atrium of MaRS's complex, which has both public and private funding. "We've been pursuing this investment for over a year. And we've just landed a very big fish."

The big fish in question was a Johnson & Johnson "incubator lab," or JLAB. Modelled on similar facilities in San Diego, San Francisco, Boston and Houston, the Toronto facility will occupy an entire floor at MaRS, which is designed to help commercialize—although the preferred word is "develop"—medical discoveries from the vast sprawl of publicly funded hospitals, universities and government research facilities that directly employ 83,000 people in Toronto. MaRS, neighbouring U of T and the city's hospital district, is the scientific centrepoint for Canada's research-intensive health industries, to which the provincial and federal governments devote over $150 billion annually, and private payers $70 billion.

Backed by a $19.4-million grant from the government of Ontario, J&J had agreed to make an "anchor investment" at MaRS, explained Duguid, that will "act as an engine" for the development of promising new drugs and medical technologies. Doing this, he explained, will "accelerate the growth of Ontario's life-sciences start-ups while connecting Toronto to Johnson & Johnson Innovation's network of collaborators and investors." Just exactly how much J&J was actually investing of its own money at MaRS was a business secret, Duguid acknowledged. How distinctions between the Canadian and American systems for health care and universities might effect the JLAB did not come up. But to the relief of those worried by the closure of Canadian research operations by international drug companies (including a facility that employed 120 in Montreal, shuttered by J&J in 2012), Duguid confirmed that J&J's investment was at least larger than the subsidy that helped attract it to MaRS. Public-private investments like the JLAB, Duguid said, will "propel Ontario to the forefront of innovation, while creating a more diverse economic climate."

To understand the significance of the JLAB news, explained MaRS's CEO, Ilse Treurnicht, it was important to see Ontario's huge medical system, which accounted for 11.5% of the province's economy as of 2013, "as a springboard for global markets." There will be more than 200 organizations employing close to 6,000 innovators at MaRS, she noted; with the arrival of JLAB, MaRS will double its lab space for life-sciences commercialization, and help Canadians to better capitalize on their huge public investments in medical research. "The engine is now humming," Treurnicht proclaimed. "This takes us one more important step closer to building Canada's health economy."

Melinda Richter, JLAB's San Francisco-based head, had a similarly upbeat message for the MaRS crowd. "We have not chosen to come to Toronto by chance," she said, noting Toronto's abundance of medical smarts and "strong start-up ecosystem." Backed by J&J's trident of consumer products, pharmaceutical and medical devices, Richter continued, the JLAB would offer Toronto's researchers and entrepreneurs access to the company's network of 125,000 employees in 60 countries—all "with no strings attached."

MaRS has a Quebec cousin of sorts in NeoMed, a drug-discovery incubator with two facilities: the west-Montreal laboratories vacated by U.K.-based AstraZeneca in 2012 and the Laval labs that used to be occupied by GlaxoSmithKline. "If we want to have a life-sciences industry in Canada," says NeoMed chief scientific officer Philippe Walker, "we have to have strongholds, and we have to adapt to a model of drug development that has changed worldwide."

NeoMed, which was founded with financial support from AstraZeneca and the Quebec government, employs some 290 scientists, roughly double what AstraZeneca did when it operated the labs, says Walker. When the international pharma giants began divesting from R&D in Canada, explains Walker, who came from Switzerland to Canada as an AstraZeneca executive during the wave of investment in the 1990s, "we had to do something. We cannot accept that this continues. So we identified a gap in their system in the area of early drug discovery. Ideally, we go up to the point of clinical proof of concept, which is when Big Pharma becomes really involved."

NeoMed is continuing investigational work on several molecules inherited from AstraZeneca; it also gained a vaccine development unit from GlaxoSmithKline when it closed its Laval lab. "In addition to the scientific understanding of the drug development, we provide an array of services to design and commercialize," says Walker after describing NeoMed as a "boutique hotel" for drug companies. "We're translators who understand the language of academic science, Big Pharma and venture capital."

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Against the general trend, there is one Big Pharma company that has recently invested in Canada: In 2011, Swiss-based Roche spent $190 million to locate one of the company's six pharmaceutical development sites in Mississauga. A $7.8-million contribution from Ontario helped seal the deal.

Nita Arora, North American head of clinical operations for Roche, warmly endorses Canada's prowess in conducting clinical trials. It's an area in which Canada's publicly financed universities and hospitals are international leaders, and where the public health system delivers access to patients willing to participate in drug trials. "The fact that great science comes out of Canada is part of what made [Roche executives] confident," Arora says.

But as Arora acknowledges, the actual science behind the innovations being tested in its clinical trials is not done in Canada but at other Roche locations, such as Switzerland and California. In the new world of drug discovery and development, she argues, the "old-time model" of investment in integrated facilities like Merck's shuttered labs in west Montreal is not sustainable. "We can't continue to keep investing in facilities that develop compounds, so many of which aren't successful," she explains. In the new model, large drug companies partner with publicly funded institutions like hospitals and universities to finance the research infrastructure needed for scientific discoveries. That means they can devote their own resources to scouting for those discoveries in commercialization hubs like MaRS, nested within vast, publicly financed medical-research complexes.

Despite Roche's decision to locate a development facility here, says Arora, Canada lacks appeal for investment in pioneering medical science due to a technological problem that the federal and provincial governments have failed to resolve.

The hottest international centres for drug development are increasingly located within large health systems that have invested in expensive data-collection systems that can be harnessed for genomics research aimed at developing "precision medicines" that target patients' individual genetic makeup. It's an area where Canada—which lags almost every other developed country in building capacity for electronic health systems capable of generating "big data" resources useful in drug research—is "woefully lacking," according to a federally commissioned report on health-care innovation released last July.

The same message resounded in June at a conference on personalized medicine sponsored by a battery of drug companies at Vancouver's Centre for Drug Research and Development (CDRD), which was seeded with $25 million from the provincial government and $8 million from Ottawa.

According to CDRD CEO Karimah Es Sabar, British Columbia—which has Canada's best health data systems—can outcompete other Canadian jurisdictions in research. By "derisking" corporate investments in drug discoveries, Es Sabar explained, the CDRD helped nourish start-ups like QLT Therapeutics (developer of Visudyne, an optical drug it licensed to Valeant in 2012) and AnorMED, which was sold to San Francisco-based Genzyme for $580 million (U.S.) in 2006. But even so, the diminishment of pharmaceutical companies' direct investments in basic science in Canada leaves a gap, Es Sabar acknowledged. "Pharma has realized that early-stage drug development is not their core strength."

Jim Woodgett, director of Toronto's Lunenfeld-Tanenbaum Research Institute, which ranks in the top 10 biomedical research institutes worldwide for science quality, agrees. "The pharmaceutical industry is moving away from expensive, sustained investments in fundamental science," he says. "All around the world, the industry much prefers to scout for discoveries it can license, or biotech firms it can buy." And as the industry retreats from the sort of investment that once made west Montreal's corporate labs hum, he observes, a significant chunk of what it now calls R&D is actually just product development. Meanwhile, "other countries than Canada, including India and China, have proven more attractive for large-scale clinical trials," he notes.

Like John Bergeron in Montreal, Woodgett is a tireless advocate for the investment in fundamental science required to nourish new drug development. And, again like Bergeron, he is highly skeptical of government programs that divert money formerly earmarked for fundamental science toward commercialization. In recent months, Woodgett and Bergeron have pressed ministers and top science mandarins to stop paring federal investments in biomedical research, which are down at least 25% in real dollars since 2008. Woodgett also wants the industry to start living up to its commitments to Canadian science. "When we don't have any head offices here in Canada," Woodgett warns, "it's all too easy for the industry to retract to Basel or Boston."

Hubs for the commercialization of medical research like MaRS, NeoMed and CDRD may come to play important roles in bringing medical discoveries to the attention of companies like J&J that have the resources to develop blockbuster drugs, Bergeron accepts. But compared to Montreal's abandoned research centres, he argues, boutiques like MaRS and NeoMed so far offer little more than the hope that miracles may some day happen.

As the drug industry retreats from in-house research in Canada while escalating its efforts to mine the offerings of Canada's publicly financed scientists and health systems for profitable discoveries, it's beginning to look like the public is paying twice for drug development: the first time by paying for publicly financed research within the health system; the second time by paying higher drug prices for longer periods due to the extended patents drug companies claim are necessary to incentivize their much-diminished scientific investments.

The drug industry's new strategy is shrewd, Woodgett says. But it makes him wonder: "Why are we bending over backwards for patent rights?"

Patents, Woodgett notes, are granted by governments in order to reward inventors for taking risks and investing in discovery-making research. "We haven't negotiated very well," he says wryly.

The solution, says Woodgett, is not to roll back patents on drugs but to require the drug industry to honour the deal it made 30 years ago to invest in R&D.

"When you have these sorts of bargains," says Woodgett, "you should hold their feet to the fire."

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