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We'll call to order the 41st meeting of the Standing Committee on Industry, Science and Technology.
The committee is here in beautiful Saskatoon. We had a wonderful morning, starting with breakfast with Genome Prairie. Then we went off to the synchrotron and had an excellent tour there. We went to Agriculture and Agri-Food Canada. We went to the research centre. The campus of the University of Saskatchewan was another excellent visit.
We have two panels this afternoon, the first panel dealing with agricultural biotech and the second panel dealing with higher education, government, and innovation support.
We have four organizations represented in the first panel. First of all, from Ag-West Biotech Incorporated we have the president and CEO, Mr. Perry Lidster, and second, we have the vice-president, biofuels and bioproducts, Mr. Ron Kehrig. From Genome Prairie we have Jerome Konecsni, the president and CEO.
Did I pronounce that correctly?
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Oh, I wasn't close at all.
Voices: Oh, oh!
The Chair: Second, we have the director of communications, government relations, Ms. Carol Reynolds. From the National Research Council of Canada, we have Mr. Roman Szumski, vice-president life sciences—welcome again—then we have the acting director general, Plant Biotechnology Institute, Mr. Wilfred Keller. From the University of Saskatchewan we have the director of business development, vaccine and infectious disease organization, International Vaccine Centre, Dr. Paul Hodgson.
We have up to five minutes for each organization for an opening presentation. We'll start with Ag-West Biotech and work our way down the panel. Then we will go to questions from members.
Mr. Lidster, Mr. Kehrig, who's speaking on your behalf?
Okay, Mr. Lidster, you may begin at any time.
First of all, we'd like to express our thanks for having the opportunity to address the standing committee on the topic of biotechnology in support of agriculture.
The agriculture-biotech economy is one of the fastest-growing and innovative sectors in this province, a combination of public and private entities networked to incubate scientific advancement and develop commercial opportunity.
Organizations such as Ag-West Biotech represent a unique model of capitalizing on the commercial opportunity resulting from research developed in these clusters.
The structure of Ag-West Biotech Inc. is that of a not-for-profit, international membership-based organization that promotes and facilitates the application of life sciences and technologies for the benefit of Saskatchewan and Canada. Ag-West Biotech is an independent, arm's-length organization that supports the commercialization of biotechnology, which makes us unique.
We actively seek funding from the Saskatchewan Ministry of Agriculture and federal, and other provincial, sources. Ag-West operates on a $900,000 per annum operating budget, which is a contribution from Sask Agriculture.
Our commercialization activities are centred around agricultural biotechnology, human health and wellness, animal health and nutrition, and biofuels and bioproducts. Ag-West serves as a catalyst to build partnerships and develop alliances among industry, research, and producer groups, with the objective of commercializing innovative products or processes.
We're able to provide direct investments. We have a $4.6 million seed capital fund that facilitates co-investment and provides venture support to start-ups or expanding small- and medium-sized enterprises. We're able to lever in other funds from other areas.
The company champions equitable regulatory policies that allow companies to remain competitive.
So we're pretty much a full-service organization in the commercialization train for the technology.
We have a track record that goes back to 1989. Ag-West has invested $10.4 million in 57 projects involving 45 companies, creating approximately 1,268 person-years of employment during those 19 years. Ag-West investments have allowed investee firms to leverage an additional $74.3 million from other sources.
The total aggregate GDP-impact of Ag-West Biotech in those 19 years and $10.4 million in investment was approximately $760 million since 1989. In our time of existence, we've generated an economic ratio of return of $55 for every $1 invested, and we produce a tax-recovery ratio of approximately 8.3:1. Those returns do not reflect the fact that most of the start-up biotech firms do not make a profit for the first 7 to 10 years; so we have another 7 or 10 years of investments coming to fruition.
The challenges of technology commercialization, from benchtop to profitable company, are many—and we try to deal with as many of those as we can. Early-stage technology companies require financing, some mentoring, path-finding, and the support of an equitable regulatory environment.
Early-stage technology companies are usually under-capitalized, and in fact are almost always under-capitalized, both in terms of human and financial support. They rely on risk capital and granting sources for funding their research and development activities. Small firms rely on family members, grants, and venture capitalists.
Those organizations that rely on venture capital often lose control of their company by the second or third round of financing, or will sell their emerging company to a larger entity with patient capital behind them. Often these processes mean that the full value of the commercialized technology is not captured within Canada, but taken to another jurisdiction.
The federal government can be instrumental in facilitating a higher level of success through strengthening the existing non-partisan organizations, such as Ag-West Biotech Inc., and partnering with them to strategically provide financial support to start-up companies. The mechanism for support already exists within such organizations to administer programs and projects.
The availability of risk capital, particularly at the pre-beta site testing stage, and going on into scale-up operations, needs to be increased. With additional federal support, networking opportunities will obviously increase.
Each year, Ag-West reviews 25 to 30 investment prospects, but due to limited resources, it can only invest in one or two per year. We feel that the hit ratio could be much greater; it could be 20% to 25%, if the resources were available for us to do that.
Ag-West's future strategy is to facilitate a continuum of investment to support SMEs, small and medium-sized enterprises, to develop technology from laboratory to commercialization. We want to get the technology as near to commercialization as we possibly can without seeking venture capital and other public sources of investment.
Our recommendation is that the federal government departments have an opportunity to provide much-needed incremental financing to the growth and development of biotechnology, based on SMEs. Ag-West Biotech Inc. recommends that incremental financial investment capital be provided on a long-term basis, that is, for 10-plus years, using existing mechanisms and infrastructure with a proven record of success. Investment capital should apply to beta testing and early commercialization activities specifically used to support proof of concept, scale-up, and development of manufacturing processes.
I thank you for the opportunity to make this presentation.
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Thank you very much, Mr. Chair.
Good afternoon, ladies and gentlemen.
[English]
We would like to thank the chair and the committee for the invitation to appear at this meeting. I am joined by Carol Reynolds, our director of communications and government relations.
Genome Prairie is one of six regional genome centres established by Genome Canada in 2000. Our corporate office is located in Saskatoon, and we also have an office in Winnipeg, Manitoba. We manage and support large-scale or big-science genomics projects in Manitoba and Saskatchewan.
With our partners, Genome Prairie has supported more than $160-million worth of research projects since the year 2000, and this has generated nearly 3,000 person years of knowledge-based jobs and training opportunities in agriculture, animal and human genomics, bioinformatics, instrumentation development, and bioethics. We work with all levels of government, universities, industry, our partners across the Genome Canada network, and not-for-profit organizations in implementing this national strategy and approach to genomics and proteomics that is catching worldwide attention for its innovative approach to managing large-scale research. As well as managing the research, we are committed to providing public education and awareness services to the general public.
Genome Prairie's role as a regional centre involves provincial fundraising as well as providing international linkages and collaborations. To date we've been successful in establishing research connections with New Zealand, the United States, Australia, the Netherlands, China, Taiwan, and India.
Mirroring Genome Canada's innovative business model in fundraising and approach to large scale, we facilitate the development of genomic networks in areas where our region has a particular scientific strength and capacity, such as plant and animal genomics, infectious diseases, and, yes, human health. In the role of facilitator, Genome Prairie brings together industry, government ministries and agencies, universities, research organizations, and the public, in support of strategic priorities to the Canadian public and the global community.
Regionally, Genome Prairie works with many of our colleagues who are seated with us at this table: the University of Saskatchewan, the University of Regina, the University of Manitoba, Agriculture Canada, VIDO, the National Research Council, PBI, the provinces of Manitoba and Saskatchewan, and the ministries that are in support of research.
One of the key observations and recommendations we'd like to make today is that Canada's agricultural biotechnology cluster is poised to claim a leadership role in crop genomics research. In a recent international review of position papers, which are strategy documents identified by scientific teams and their partners across Canada—they're called Genome Canada's “position papers”—the two top-rated papers were on crop genomics for a healthier Canada and bioproducts. This verifies the bias we have sitting on this side of the table for the importance of agricultural biotechnology to Canada. A panel of 27 international experts who are economists, scientists, and policy analysts agreed with the case that was made for the socio-economic benefits for a significant investment in agricultural biotechnology and the application of genomics. But also what it validated to us was that there is a Canadian advantage. That was one of the things the committee recognized: there is a Canadian advantage in this area. It was well articulated in those position papers.
Based on this Canadian advantage and the significant social and economic benefits that could be derived from Canada, we see it as imperative and important that the federal and provincial governments work collectively and collaboratively to support research projects and the infrastructure, so we maintain and build on our leadership role. It is a very competitive environment globally and we'll talk about that a little bit. I'm sure some of my colleagues will reinforce that message.
Genomics tools can be applied to address world issues such as global food and energy shortages, climate change challenges, and environmental sustainability. By fostering research networks and commercialization partnerships, organizations like Genome Prairie, Agriculture and Agri-Food Canada, PBI, the University of Saskatchewan, producer groups, and many Saskatchewan and internationally based companies are encouraging the translation of this research into real products and real crop varieties.
This is an example of our entrepreneurial advantage--the fact that a collaborative spirit and a strong sense of teamwork have been established in this cluster. And it's growing and improving year by year.
In order to maintain Canada's agricultural leadership in the production of crops that are important to Canada, it is important that Canada takes a leadership role. I'm talking about crops like canola and flax that are very significant and important to Canada. Genomics and proteome research are necessary to improve the productivity, durability, and healthy nature of these products. For example, we can accelerate the development of this research by the implementation of a new facility, like a plant accelerator, that will move the research more quickly into new crop varieties.
On our competition in this area, facilities like this exist in Europe, and there's a new facility being built in Australia. They will have the advantage of being able to move research more quickly into new varieties. So it's imperative that we maintain our competitive advantage and keep up with our competitors.
The Saskatchewan research infrastructure is a strong one. We've talked about it here. This is our knowledge advantage.
I talked a bit about the number of jobs that have been created by this genomic research. An estimated 3,000 post-doctoral grad students have been involved in these projects since 2000.
By promoting and funding world-class excellence in agricultural research--Genome Canada will only fund projects that receive an excellent rating by an international peer review--we have consistently proven that the infrastructure here is at a level of excellence. But the research and investment are ongoing. Crop research is a continual effort, and we face continuing challenges in adapting to climate change.
Thank you very much.
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Thank you, Mr. Rajotte.
I thank the committee for inviting the Plant Biotechnology Institute of the National Research Council to give this short presentation on agricultural biotechnology.
[English]
For over 90 years, the National Research Council has successfully played a leadership role in providing scientific knowledge and innovation to meet the constantly changing needs of Canadians and Canadian industry. Dedicated to enhancing Canada's economic growth and the public good, NRC anticipates and performs research and development of an international calibre.
We promote scientific cooperation and act as a catalyst that levers research and development funding from all sectors. We transfer our technologies to industry through licensing agreements, create spinoff companies, and we incubate new firms.
This year, the National Research Council is celebrating its 60th year of research and innovation in Saskatoon, and we are proud of our contributions to the well-being of Canadians. Some of these contributions include the development of canola in partnership with Agriculture and Agri-Food Canada, the University of Manitoba, and the University of Saskatchewan. The Canadian canola industry is now valued at over $11 billion annually--as it provides a nutritionally superior edible oil--and it's playing an increasingly important role in the reduction of transfats in our diets.
The contributions include the development of biotechnologies that can be employed in crop improvement. As an example, we partnered with AgrEvo--which is now Bayer CropScience--and Agriculture and Agri-Food Canada in the development of herbicide-tolerant canola. These new canola varieties are now grown on more than 90% of Canada's canola acreage, and have generated a positive economic impact in excess of $500 million.
In partnership with Agriculture and Agri-Food Canada, we have recently generated and publicly released the world's largest canola genomics database, which comprises over half a million gene tags. We are currently an active member of an international consortium that is doing the complete genome sequence of one of the three plant species that comprise canola.
Our research and commercialization strategy is very closely aligned with the Government of Canada's science and technology strategy, particularly as it relates to the creation of an entrepreneurial advantage and a knowledge advantage. For example, NRC-PBI is engaged in research to enhance crop productivity and yield to address the rapidly rising global demand for food. Using cutting-edge genomics technology, our scientists have identified genes that appear to be associated with drought tolerance, enhanced vigour, and nutrient use efficiency, thereby reducing requirements for costly fertilizers.
We are developing environmentally friendly renewable bioproducts, such as vegetable oil products that can be developed into advanced polymers, lubricants, and biofuels. We're also committed to employing research strategies to further enhance the health of Canada's citizens. For example, we are identifying natural bioactive substances in plants that can reduce the incidence of neurodegenerative diseases, such as Alzheimer's.
We are a strong believer in the power of partnerships to achieve national goals for innovation and competitiveness. We believe that networking at the regional, national, and international levels is essential for success. For instance, NRC has developed a proactive policy for international collaborations. Through formal agreements that have been established with India, China, and Germany, NRC researchers are studying oil seeds, pulses, and natural bioactive compounds to enhance human health and wellness. NRC is an active player in the Saskatoon ag-biotech cluster where complementarity is established through collaboration, reducing duplication.
NRC-PBI has established a 10-year strategic alliance with Dow AgroSciences Canada to improve the seed and oil quality of canola. As a result of this, Dow is now expanding its R and D efforts in Saskatoon by more than 50%. It's another example of where sustained federal investment leads to private sector confidence and investment in a region.
NRC is working in partnership with Agriculture and Agri-Food Canada in developing a national bioproducts program that will include the development of biofuels, biomaterials, polymers, and other chemicals from agricultural biomass.
NRC-PBI established an industry partnership facility in 2003, which now houses seven innovative small companies developing a range of new products and technologies. We also strongly believe in nourishing small and medium-sized enterprises who play an essential role in Canada's innovation system, as you well know.
For example, our work on analyzing the chemical components of plants has resulted in the creation of a new company, Saponin Incorporated, which is pioneering the development of a potential new bioindustrial and biopharmaceutical crop referred to as the “Prairie Carnation”.
As you can see, Canada is very well positioned to capture the tremendous potential offered through research and development on agricultural crops. Our strengths as a nation reside in the fact that we possess more than 60 million hectares of arable land, which places Canada in the enviable position of being able to produce a wide range of foods, environmentally friendly bioproducts, biofuels, and biopharmaceuticals beyond the needs of our own citizens. We thus have the opportunity to export products and contribute to a global bioeconomy that has been valued in excess of $500 billion.
In order for Canada--
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My apologies. I'm going to go overtime now for sure.
Voices: Oh, oh!
Dr. Paul Hodgson: Historically we have focused on veterinary diseases. However, the convergence of human and animal health has expanded our mission to the health of all species. This expertise was recently recognized by funding from the Bill and Melinda Gates Foundation for a single-shot vaccine for tuberculosis.
Since our inception, VIDO has helped Canadian producers compete globally and ensure the safety of our food supply by applied research into animal diseases and, more importantly, the commercial development of the resulting discoveries.
VIDO's success is quantified by several factors. First, we actually have seven vaccine products in the marketplace, including five world firsts for agricultural diseases of animals. One of these, termed Pneumostar, was the first recombinant vaccine for cattle--actually, for all animals. From 1975 to 2000, a total investment of $65 million into VIDO has resulted in economic savings of approximately $1.3 billion.
Recently we partnered with UBC and Bioniche Life Sciences Inc. in the development of a vaccine for cattle against E. coli 0157:H7. This is the bacteria that was implicated in the Walkerton water tragedy. In 2007, this vaccine was recognized internationally as the best new veterinary product for livestock as part of the Animal Pharm Industry Excellence Awards. It crosses the bridge between human and animal health, because the bacteria does not cause disease in cattle, only humans.
To complement this, we've had over 450 different research agreements since 2000, worth more than $55 million, and more than 80 U.S. patents issued. Most of these are licensed to major biotech and pharmaceutical companies, such as Merrell, Schering, Pfizer, Novartis, and Wyeth.
VIDO is also an active player in the Saskatchewan ag-biotech cluster. We have spun off three companies and helped several start-up agricultural companies get established. One of these was already mentioned, Saponin Inc. We are also partnering with international initiatives, particularly right now with India and China.
With the convergence of human and animal health, our research and development is focusing on platform technologies that apply to these species. Moving forward, VIDO will continue with our strategic vision through a combination of new initiatives. Some of these examples include the International Vaccine Centre. This $146 million biosafety level 3 facility will allow Canada to respond to emerging infectious diseases and enhance Canada's international reputation for vaccine research.
Recent reports suggest that between 60% and 80% of disease outbreaks have animal origins. This includes agricultural animals. InterVac will be one of the most advanced facilities in the world and, certainly, one of the top five in Canada. The annual operating funds required for VIDO InterVac are expected to exceed $20 million.
The Pan-Provincial Vaccine Enterprise, PREVENT, was incorporated after a successful application to the Networks of Centres of Excellence for Commercialization and Research. Its success demonstrates the close alignment between VIDO's strategic objectives and Canada's science and technology strategy. PREVENT will enhance the commercialization of vaccines by moving the technologies further along the value chain and reducing the risk for potential licensors, filling the so-called funding gap. By helping take innovations from the lab to the market, society as a whole benefits. VIDO's role will be focused on vaccines for food and water safety.
The Research Alliance for the Prevention of Infectious Disease, RAPID, was recently funded by the Saskatchewan Health Research Foundation. RAPID has links to prevalent diseases, particularly in high-risk populations. One such disease with direct animal associations is the West Nile virus.
It is my thought that the government has been visionary in its funding of large-scale capital projects for science. However, there are challenges associated with these projects. For example, the cost of capital projects in western Canada has increased dramatically. Specifically, the cost of InterVac increased over two and a half times, and we now have a funding shortfall approaching $20 million.
In addition, it is essential to implement a mechanism for providing secured operating funds for these facilities, such as VIDO InterVac, if they are to be effective in promoting Canada's science and technology strategy. It is not practical to expect these facilities to function at maximum capacity through traditional competitive operating grants.
In closing, I would suggest that VIDO is one of the foremost vaccine research organizations in the world, regardless of the way you determine success. The addition of InterVac will strengthen Canada's competitive advantage in vaccine and infectious disease research, an area identified as strategically important to our country.
Thank you, Mr. Chair.
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First of all, I would say that Canada does have a rapidly growing biofuels industry, as do many other countries in the world. Biofuels and sustainable energy are going to play an important role worldwide. Unfortunately, there is no magic bullet to our energy needs as we move forward, but certainly conservation and other aspects are important.
With respect to biofuels, our capacity in this province is in the order of 342 million litres, counting the plants that are in construction and commissioning stages. Another 160 million-litres capacity in second-generation biofuels is in the offing, both through a thermal process with the group at Nipawin, and also in hopes that Iogen Corporation would select a site within Canada that is within our province, and that would move us forward.
We see the first-generation biofuels under the renewable fuels standard being an important first step, but clearly the move is towards biomass to energy, and second- and third-generation fuels are going to be extremely important in Canada.
We have a research cluster actively focused on biofuels development. Really, we view biofuels as being part of a biorefinery, integrated into food production and feed production. Our utilization of our land base is very important. I think we have to look at the environmental footprint of production and processing, and care for ecologically sensitive lands as we move forward.
I think Canada has a very strong record of stewardship on that front. I don't see any reason to think that our move towards the biofuel sector can't be managed and handled appropriately in that context.
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I guess from VIDO's perspective we're in a somewhat enviable position of having interacted with companies for approximately 35 years. That's created a reputation for us with these companies. I mentioned we had 80 patents. Patents by themselves are nothing but a money sink. When you license those patents that's when it becomes valuable. So the enviable position we're in is that when I work with companies now, especially the big pharmaceutical companies, most of the applied research VIDO does--because we tend to be very applied--is already licensed before a discovery is made. As we move that forward, not only are the pharmaceutical companies paying for the research or granting them an option to take over that research at the same time, but we're passing the patent cost to them. So that's one strategy VIDO has used.
We've also remained very focused. I think that's key. VIDO knows what it's good at, and tends not to drift from that strategy or strategic focus.
From a company perspective I think one of the things I mentioned was that the new NCE, or the Networks of Centres of Excellence, has changed its approach somewhat in recognizing that there seems to be this funding gap and the whole purpose of the Pan-Provincial Vaccine Enterprise is to take the later-stage vaccine research and add value to that. By adding value we're moving it along the value chain and reducing the risk to pharmaceutical companies. Vaccines are a little bit different from traditional drugs because the only population you're concerned with is healthy. At this point there is no therapeutic vaccine. It's all prophylactic or disease-preventing vaccine.
So that's very challenging for a pharmaceutical company to look at. Until recently it's been a relatively unattractive market because the only purchasers are governments, which, especially in Canada, have been very effective in reducing their costs. Until recently Prevnar and the HPV vaccine have come forward, and they tend to be at a much higher cost. I think the HPV vaccine from Merck is about $380.
The other thing Canada could do to potentially enhance that commercialization for vaccines that are of public health importance is something New Zealand did. Again, I think Canada sits back too much and says we're not big enough. Why not? New Zealand had a problem with meningococcal infections in their children, and the government did an advance market commitment with Novartis. They had a vaccine developed for that specific population relatively rapidly.
With respect to commercialization, I think that can happen if the government's willing to support initiatives for new vaccines with some sort of advance market commitment that would encourage the companies to come in a little bit earlier.
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I think this is clearly one of the areas that the research community here, the cluster, is talking about: finding ways to more effectively manage intellectual property and work with industry.
We talked earlier in my presentation about genomic networks. These networks include scientists like Dr. Keller. They include canola producers, flax producers, wheat producers, and they also include companies that are involved in the processing. When we put together projects and priorities, all of them participate in brainstorming, developing the project ideas, and prioritizing them, so the ideas that are brought forward include a full market perspective--science as well as the business perspective.
When we put together these research project teams, part of the discussion is how we manage the intellectual property, how we do it in such a way that it enables the optimization of the research so the biggest return is received from our public investment in that research. There are ways to do that. At the precompetitive stage the research can be accessible to all. Then, when individual companies invest in their own particular discoveries, they own that right. There are many different models, ways to bundle the ITs. That's done in the context of project ideas and teamwork. One of the solutions we have to managing the commercialization process and getting more private investment is having them involved from the beginning, while these project ideas are being developed.
You have the whole value chain represented in those networks. The farmers won't grow a crop if it's not going to get anywhere. They have to be able to make money. This industry has to make money.
This visit out west is quite an education for the Quebecker-living-in-a-city that I am. To hear people describe the wonderful possibilities that science is going to give Canada is kind of exciting; it is very exciting.
One aspect of all this stands out in my mind. I was a communicator in a former life--I worked in radio for 35 years--and I think in terms of the ability of the scientific community to join with the politicians to sell what you're doing to Joe Canadian, you fail miserably.
The Government of Canada spends or invests or loses, whatever word you might use, billions of dollars every year in science, innovation, research, be it grants, investment in infrastructure, all kinds of things. This is money that leaves the pocket of somebody who has earned it--Joe Canadian--goes to the federal treasury, and ends up in the scientific community. Please give me something for my money.
I have not heard one single person since the beginning of this study not asking for more money. Everybody thinks they would be better and they would find even more marvellous things if they had better tools, better toys. And as far as toys go, we saw the synchrotron this morning. The difference between a young guy and a man is the price of the toys; there we met a real man.
I would like to hear, from those of you who would like to reflect publicly on that, about the performance of the scientific community in selling its importance, its results, its pride, to the Joe Canadian who pays for it.
I want to wrap up with a couple of questions.
What we hear, certainly in Ottawa and across the country, is that in terms of basic research over the last 11 years, the actions taken by the federal and provincial governments have, in the view of the research community in Canada, reversed a lot of the brain drain. From a basic research point of view, they say that Canada is doing fairly well, just to be very basic, but that from a commercialization point of view we're not doing well. That's certainly what we heard from the panel yesterday in Manitoba.
As a committee, one of the things we're looking for is examples of success: why did they succeed and how do we emulate that success?
To Mr. Hodgson, I've toured VIDO before. Unfortunately, we didn't have time to tour it today. You talked about commercialization successes; vaccine products have been talked about. Can you highlight for the committee why these successes happened? Were there commonalities you can point to there to say that these are some factors involved, that these are things we should emulate, and that these are some policies we as a committee should consider altering?
Can you talk about your successes and how they were actually achieved?
Again, our institution is about 33 years old. From a very early stage, VIDO recognized the importance of intellectual property and patenting. So I guess from a very early age, if you want to talk of business sustainable, competitive advantage, basically a patent does nothing else but give you the right to sue. So the companies that come in now and work with us feel very comfortable that we've kept the notes, we have the due diligence in place, to actually protect them as they take a product forward.
The seven vaccines I talked about initially were vaccines created some time ago now, over various stages--over the last 20 years, even. VIDO initially started out with a spinoff company called BioStar. BioStar actually marketed and sold those products and actually had a revenue of about $2.6 million a year. They went on to out-licence that and sell that off, primarily to Novartis Animal Health.
So even when I talk about our commercialization success, most of our vaccines are now marketed by international companies, not necessarily Canadian companies. So I think that's still a challenge in Saskatoon. As someone mentioned, we all work together, we all know each other. I think Saskatchewan, and Saskatoon in particular, have done an incredible job of making this cluster work. But I think we're still finding some challenges in bringing larger companies here, and I don't know how we would approach that.
What we can do is really enhance the effectiveness of the start-up companies. The one that's been mentioned a couple of times today is a company called Saponin. They make adjuvants. From a vaccine perspective, there's another company called Prairie Plant Systems that's looking to make vaccines in plants.
I think we can work with those companies to help them succeed, and that's something we try to do. From a success and policy perspective, anything you can do to enhance the success of those companies--whether it's tax breaks for angel investors, whether it's new labour-sponsored funds, or whether it's putting money into that--I think that's going to be incredibly advantageous.
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Members, we'll welcome our second full panel of guests.
We have with us four organizations again. First of all, from Innovation Place, we have the vice-president of research park operations, Mr. Ken Loeppky; second, from the Saskatchewan Institute of Applied Science and Technology we have president and CEO, Mr. Robert McCulloch, and also we have the executive director, public affairs, Ms. Patricia Gillies; third, from the University of Saskatchewan we have the vice-president of finance and resources, Mr. Richard Florizone, and the managing director, industry liaison office, Mr. Doug Gill; and fourth, from SaskTel, we have the vice-president, corporate counsel and regulatory affairs, Mr. John Meldrum—John, I think you've been before this committee before—and we have the director, regulatory affairs, Mr. Duncan Kroll. Welcome.
We will go in that order, with each organization having up to five minutes for an opening statement, and then we'll go immediately to questions from members.
Mr. Loeppky, we'll start with you.
:
Thank you, Mr. Chairman.
I'd just like to give thanks for the opportunity to come and speak in front of this group.
I thought I'd start by talking a little bit about the background of Innovation Place. Innovation Place is a crown corporation wholly owned by the Province of Saskatchewan. It was started with a research park in Saskatoon in 1977 when a lease for land was secured with the University of Saskatchewan. The first building was built in 1980. The research park expanded into Regina in 1998, when a similar agreement was signed with the University of Regina. Today we have 22 buildings on the two parks, 17 in Saskatoon and five in Regina, and the total investment to date is about $230 million.
As I mentioned, the first building was built in 1980 and was occupied by five tenants. There are now 185 tenants in the research parks, who employ about 3,500 people. In 2007 the economic impact from the tenants' operations in the parks was just under $600 million of economic activity for the province of Saskatchewan. Indirect employment is estimated at over 7,000 jobs. Overall, 62% of the clients who work in the research park are in business. And in fact in Saskatoon, as a mature park, it's even higher at just over 85% private sector tenancy. Of those tenants, 71% have fewer than 10 employees, so they are small companies. In 2007 we actually saw the establishment of eight start-up companies in our parks.
Some of our observations are that there are many ways to enhance commercialization. Research parks, we believe, are part of the solution. All university-related research parks in Canada struggle to deliver infrastructure, and primarily the issue is the high cost to deliver the infrastructure to support technology sectors. The business model requires a high rent when you have high input costs. That's not necessarily conducive to small and medium-sized businesses, and definitely not conducive to start-up companies.
We believe we're an example of a successful university-related research park. As a matter of fact, I think we're the only one in Canada that has an ownership structure like ours. We attribute that success to the relationship we have with the two universities here and to the financial support from our provincial government. As I mentioned, that government support is not common across Canada.
We encourage the committee to consider the university research park model as part of the solution for enhanced commercialization in Canada and to consider ways to support growth of research parks.
Thank you.
:
Thank you, Mr. Chair. Like Ken, we very much appreciate the opportunity to speak to the panel today.
I'm speaking on behalf of our organization, SIAST--the acronym more commonly used around here. I'm privileged to serve as the president of a four-campus institution. We have campuses in the beautiful Saskatchewan cities of Prince Albert, Saskatoon, Moose Jaw, and Regina. We serve about 12,000 full-time students, almost 30,000 individual course registrations, and we're very proud that we graduate nearly 4,000 students each year.
I hope our brief builds upon the submission you received from ACCC, the Association of Canadian Community Colleges, back in April, entitled Making it Work. I know you can count on SIAST--in fact, as a board member of ACCC, you can count on all of us in the college and institute sector--to work with you on Canada's science and technology plan. We're very proud of our work. Let me just begin with a few brief points that are built upon in our report, beginning perhaps with links to industry.
At our institute we're very proud that we have over 700 people who serve on our industry advisory committees. That gives us a very strong connection to local and regional industry and also some national connections.
I'm proud that we recently had a meeting with three of the leading potash producers in our province--PCS, Mosiac, and Agrium. They were talking not only about their human resource needs but also about their applied research and technology needs. That's what I want the panel to hear, that you can count on the institute and colleges in our province. So the first is industry links.
I hope the panel might also consider the role that colleges and institutes play in applied science. We really are the organization--our faculty and staff--that can take good bench research to the next level. We do a lot of testing of materials, testing of protocols.
We hope the panel might consider direct support to the colleges and institutes. We're pleased to see some changes, for example, with CFI eligibility that have opened the doors to institutes, but perhaps some targeted funding to us would be very helpful in these applied research projects.
The third point that I'd like to build on is really based upon support for students. The ACCC submission highlighted the need for support for internships and co-op students in many areas. Again, we are very proud, and I've been told by Ken's colleagues that almost 40% of the staff at Innovation Place are graduates of technical institutes--the technologists, the lab assistants. These are the foundational staff that really make applied research and general research work. We hope the panel might consider investment in internships and some unique support for co-op kinds of activities.
Finally, as I noted in the document on science, we're really proud of some of the partnerships we've built. We're pleased with the partnerships we have in our provincial institutions, with Dr. Florizone and his colleagues. We have a number of “two plus two” partnerships. But I submit that we've only scratched the surface on those kinds of activities. What I mean by two plus two is building from a technology program into degree programs so that students can explore all sorts of options.
We're pleased with the relationship in our province, but also proud that a number of institutions from outside of Saskatchewan have looked to SIAST for partnerships. We have a number of agreements with Alberta and British Columbia students.
As a subset of that, if I can just build on partnerships, I want the panel to know how proud we are of the partnerships with aboriginal institutions and organizations in the province of Saskatchewan. While the panel is focused on science and applied research, of course, I think we have to, in western Canada, give due consideration to opportunities and the science needs of aboriginal students.
My final comments are that we are delighted that nearly 20% of our student population--with particular emphasis on our Prince Albert Woodland campus, with almost 40% of our students--are of aboriginal ancestry. But this is another area that I urge the panel to build on.
With that handful of comments, other details are in the submission, and I look forward to questions. Thank you.
First off, on behalf of the University of Saskatchewan, welcome to our beautiful city and province, particularly on this wonderful prairie summer day.
Thank you for the opportunity to appear before you. Here with me today is my colleague Doug Gill, who is the managing director of our industry liaison office.
My objective today is to first give you a brief overview of our innovation and science and technology cluster at the University of Saskatchewan. Then I'd like to share some thoughts, as we started to talk about this morning, on what is for us our single largest issue with regard to science and technology, and that is the funding of operating costs for major scientific facilities.
At the University of Saskatchewan we're proud to be in our 101st year. To give you a sense of the scale of the institution, we have over 20,000 students, 7,000 staff, and 13 different colleges. We've created an innovation cluster that is a global leader that we believe will continue to benefit Saskatoon, Saskatchewan, and Canada.
One of the unique elements of our cluster is that we're one of the only universities in the country that has that unique combination of human, animal, and plant sciences with our colleges of medicine, nursing, pharmacy, nutrition, veterinary medicine, and agriculture and bio-resources. Adding to that are, of course, VIDO and our new International Vaccine Centre, together with the biomedical imaging beam lime at the CLS, creating a very unique cluster and capability in the life sciences.
It's those types of combinations that have helped us to be a leader in innovation. Our overall research revenue at the university is now more than $140 million, more than double what it was 10 years ago. So we are in a growth trajectory and seek to continue to build on our success in research.
One of the early successes that paved the way for this level of achievement, and you've heard about it already from Ken Loeppky, is Innovation Place. It's one of the most successful university-related research parks in North America. Ken shared with you some of the stats. With 150 clients, 2,700 employees, it's a very significant entity and a great success story. Actually, as you travel around the world you realize it's one of the early success stories in science and technology parks, having been there in the early eighties. I spent some time in the U.K., and I can say that a lot of countries are probably 10 years behind where we were in Saskatchewan in establishing these types of facilities.
Of course, the other aspect to our cluster, our major science facilities, as we spoke about this morning, is that across the country there are approximately 10 pieces of major science infrastructure, that is, greater than $100 million. Two of them are here in Saskatoon. One is the Canadian Light Source, and the second is the International Vaccine Centre.
As you heard, the CLS is an international facility. It has researchers and funding partners from across Canada and around the world, capital funding from four provinces, active researchers from eight provinces, and, as I understand, we're working on P.E.I. and Newfoundland to get them on board as well. CLS is a very ambitious industrial science program, targeting 25% of its beam time to industrial partners and cost recovery, and we're on track to working towards those goals.
But as I mentioned, the CLS isn't the only major science endeavour. There's also the International Vaccine Centre, the $140 million facility on track to be constructed in 2010. When it is completed it will be the largest containment level 3 research facility in western Canada. What that means is you'll have the capacity to investigate--I think you heard about it already from our colleagues from VIDO--and conduct research on those level 3 diseases that are at the boundaries of animal-human health, some of the hottest topics in public health these days, such as avian influenza, West Nile virus, and SARS.
As you've heard from VIDO, the predecessor organization of InterVac, this facility will have an impact well beyond Saskatchewan borders. For example, we know from VIDO that their calf scours livestock vaccine saved an estimated $5 billion in economic losses per year across North America. So it's a very significant economic impact that you can have directly or indirectly through these types of facilities.
That gives you a bit of history of where we've come from as an institution and where we are today in terms of contributing to Canada's research excellence. Looking forward, of course, we see a range of opportunities and barriers to our continued success in research, but the single biggest issue for us is funding the operating costs of major scientific facilities, such as CLS and InterVac.
The Government of Canada's vision for science and technology is really to build a sustainable national competitive advantage in science and technology. I think from your tour this morning you've had a sense of how major facilities like CLS and InterVac will bring that vision to life, creating those critical masses that can bring together people and investment from across the country and around the world.
As you know, we don't have a framework or single agency to deal with operating costs for major scientific facilities. The CLS currently receives funding from a variety of provincial and federal partners, including NSERC, CIHR, NRC, and Western Economic Diversification Canada. And while we're grateful for this, we also recognize that other nations, such as the United States, have a single agency.
So our key recommendation to you, to give you a bit more detail, is that the Government of Canada provide a program of sustainable funding for major scientific facilities like CLS and InterVac.
The program, I think, should have a number of key features, which we can talk a little more about. It should, for example, provide funding over a five-year timeframe, to give some stability. The program should likely include the requirement of some modest provincial contributions. We believe science and technology is primarily a federal responsibility, but requiring some provincial matching would ensure that major labs continue to serve the needs of their local communities. As well, obviously the industrial targets are a very important component of this.
I want to be clear that we're happy working with our current funding partners, but we do see benefits to the public of establishing a single agency such as this. It would provide more focused and effective oversight of the facilities, a little more monitoring of their strategic goals, a potentially stronger link between government strategy and their direction, and perhaps enhance capacity to create industrial partnerships.
I've covered a lot of ground. I know we'll talk more about this in questions, but to summarize, I hope I've left you with a clearer picture of what our cluster is here and some of the major issues and how we might work together to resolve this issue of operating costs for major facilities.
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On behalf of SaskTel, I would like to thank the committee for inviting us to appear.
Just to orient new members of the committee, SaskTel is the incumbent phone company in the province of Saskatchewan and is owned 100% by the provincial government.
On the launch of its study, the standing committee stated that “Science, research and development underpin Canada’s position in the knowledge economy, where strength depends on capacity to innovate and stay ahead of the technological curve.” We couldn't agree more. We believe that improvements in our quality of life and standard of living will depend on our increasing success in bringing scientific and technological innovations to life.
In Saskatchewan, with its widely dispersed population and its natural resource base, we understand the implications of the scientific and technological discoveries and applications, and the benefits they provide. Technology and innovation have been at the core of this province since its inception.
SaskTel has taken a lead role in this regard, delivering the world's finest communications technologies to customers and communities across the province. This year SaskTel will have spent 100 years building a world-leading communications network for Saskatchewan, carrying a wealth of information into the households and businesses of this province every day.
Since 1987 we have invested more than $3.1 billion in our Saskatchewan network. And our work continues in 2008, with ongoing efforts to deliver higher bandwidth, expand our cell coverage, and provide the latest communications and entertainment services to our customers.
Looking ahead, most authorities agree that one area of Canadian science and technology strength and opportunity is information and communications technologies, ICT. In 2007 the federal government report, Mobilizing Science and Technology to Canada's Advantage, identified the ICT sector as an area to focus more of our energy and resources on. Prior to that, the Telecommunications Policy Review Panel observed that in Canada, and throughout the world, ICTs had emerged as significant drivers of economic and social change. The panel concluded that ubiquitous access to affordable and reliable advanced broadband services should be available in all regions of Canada by 2010, and recommended that it be a central goal of a national ICT strategy. The review panel made it clear that in order to maximize Canada's potential, we need to leverage our geographic and demographic diversities and give everyone an opportunity to contribute to building a stronger, more prosperous country, no matter where they live. Broadband access will be the key to this full participation.
Internet access has become an essential communication tool for people in Saskatchewan. Businesses and residences want access to a range of entertainment, learning, communications, and business functions. Broadband access and greater bandwidth are increasingly being demanded as Saskatchewan experiences unprecedented economic prosperity. For the burgeoning oil and gas, mining, and agricultural sectors, most of which are located in rural and remote areas, broadband is essential in order to improve their productivity and competitiveness.
At SaskTel we believe we are leading the way in Canada in bringing digital cellular and high-speed Internet service to rural areas, but there remain many unserved and underserved areas in Saskatchewan—in particular, many farmers, businesses, and first nations communities in the southern part of this province. However, as is generally agreed, market forces alone will not provide ubiquitous broadband access. Despite private sector involvement, government intervention in the form of subsidies will still be required for many high-cost service areas in rural and remote regions of Saskatchewan.
Canada is rightly proud of its achievements in ensuring universal coverage of local telecommunications services in all regions through its national subsidy fund. Yet, in our view, there is an increasing need for advanced telecommunication services that go beyond the traditional telephone service.
Unlike some parties who argue that the national subsidy fund for rural and remote local service should be eliminated or significantly reduced, SaskTel believes consideration should be given to expanding the subsidy program to include other services, such as rural broadband access and, possibly, rural cellular.
SaskTel notes that in the United States, the FCC is currently reviewing its Universal Service Fund. One larger form under consideration is the creation of three separate funds for rural areas to support broadband, wireless service, and providers of last resort—those providing local service.
SaskTel believes the time for ad hoc programs that achieve partial results is over. Broadband access should be expanded to all parts of Canada, urban, rural, and remote, as rapidly as possible.
Again, we thank the committee, and we'd be pleased to answer any questions.
:
Thank you very much for the question.
We have to be reminded that, particularly for our northern folks, coming to Prince Albert is a big move; I hope everybody is familiar with that. If we were to ask people to come from a northern reserve to Saskatoon, it probably would be comparable to any of us moving to New York.
We try to make sure that we deal with support at a number of levels. First of all, at each of our campuses we have aboriginal support centres and we try to make sure that students can get help as they're moving through the program. But we've also found it helpful to set up transition programs for particular areas in which there is a large demand, so that students aren't just forced to walk in on September 1 and be expected to run with the program. We're trying to make sure that students get an orientation. We found it particularly helpful in some of our health sciences areas to do some advanced prep work, and that's been really helpful as well.
But as you point out, there are still many challenges, and we need to consider and have been trying to consider some particularly targeted programs whereby we would take the education on reserve. We're really proud that with the Kawacatoose First Nation we offer a licensed practical nursing program right on reserve. We've done similar work with Montreal Lake Cree Nation.
These are the kinds of efforts we need to undertake. We need to be more flexible. I think you'd find that at the institutions across the province, the enrollments are increasing because we are starting to pay attention to the importance of education.
I'm sure Richard may want to comment on the number of aboriginal students at the University of Saskatchewan. Our numbers are going like this...and I think that's very positive for all of us.
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Many of us on the board wear different hats. For example, I have a private sector background, so I have a partial hat, I suppose. But specifically on the board now there are about three members with that private sector experience.
I referred this morning to being chair of the governance and nominating committee for the CLS board. This challenge has been a topic of intense thought and debate for us. We have a goal. We've designed our board structure to be from 14 to 18 members, just in line with good governance—not too big, not too small.
Since we have had to pursue and have welcomed multiple partnerships with different provinces, many of our funding arrangements have come with requirements for board seats. So, for example, Alberta has two seats on the board. That's fantastic. B.C. has another member. This is all wonderful, and it's part of building partnerships. Speaking as chair of the governance and nominating committee, though, it creates a challenge in terms of attracting private sector participation. You have only a certain amount of latitude and you try to work through your partners to get the nominations.
That's probably not the main challenge, though. Believe me, I and the entire CLS board would welcome more senior-level engagement. I can tell you more about how we're accessing that senior-level engagement with industry in ways other than through the board, but with respect to the board, the way we've been successful—we talked about the two solitudes between industry and the university—is to continue to have that ambitious industrial target and build the team to pursue those targets, to build the partnerships. Once we've built those partnerships, they're then turned into the board-level relationships.
For example, this morning you've heard about the work we did with AREVA around mine tailings. Now we have the former CEO of AREVA on our board.
It's a lot of hard work, and attracting those senior executives onto the board is really one and the same issue as the industrial research and the relationship between the university and industry. There is a gulf there. We think labs such as the CLS and InterVac/VIDO are closing that gulf. We'll continue to work on it, but it's a tough problem.
As one of the other ways we're trying to engage senior leaders, we're saying that maybe it's easier to get CEOs if you don't try to drag them into the board where they're dealing with budgets and day-to-day things. So we've created a new body.
Mr. McCulloch, I just have a comment with regard to the built-in biases against community colleges. I think you're absolutely right, but I think things have changed, and I'm not sure we get that message out to young people. When I go to my schools and tell them that a commercial construction project manager can now make $120,000 a year in Manitoba, people don't believe it. I'm not sure that message is getting out there. So there may be some work to do there.
Mr. Florizone, one of the questions I asked in Ottawa with regard to big science projects was what the benefits to Canada are. We've seen your project today. We visited the level 4 lab, the disease control lab, in Winnipeg. And one thing you're not talking about is third-party success.
In Manitoba, Smith Carter Architects and Engineers Inc. is now involved in almost every level 4 lab in the world. They've benefited from $1 billion of work in the couple of years since they built that lab. Cangene is another one that's benefited hugely from that. You've spoken about UMA Engineering Ltd. here that has basically worked on future synchrotrons. I think that is something you should be talking about. We just heard about it in passing, and I think it should be front and centre. It would be easy to convince me to fund you $20 million a year if you told me that the spinoff has been this, this, and this.
I don't think we have those numbers very clearly. But I tell you, in Winnipeg it was very clear from Smith Carter Architects that the benefits have been huge. They've doubled their volume and doubled the number of employees. And that's only one firm. I think you should probably put that one front and centre.
So that's one of the comments. With regard to SaskTel, one of the comments we had this morning was that some of the start-ups and some of the smaller companies in the technology field were having a hard time getting on with bigger companies like SaskTel, because they're not tried and proven, if you will. What came to mind is that SaskTel actually signed a contract with a small firm in my riding in Manitoba that was an up-and-comer. So I congratulate you for that. Obviously, it's not everywhere in the world that you're seeing people having to go to IBM, and that's a big challenge, and we can talk about that later. I'm not going to name the company, but it was at a critical time in their career. You signed a contract with them and got them up and running.
I wonder, Mr. Florizone, if you could just comment on that. How come we're only hearing about these third-party successes as kind of an afterthought? I think it is absolutely one of the most important things we've heard here today.
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For the second example, I want to turn to the health sector. It deals with so many...certainly from my city and very close to me. It's the Edmonton Protocol. It involves a researcher named Ray Rajotte, whom some of you may know.
Ray was a graduate of a polytechnic school. He was an X-ray technician, and he then went on to get other degrees at the University of Alberta. He started his research in an old abandoned washroom on the bottom floor of the University of Alberta, and 30 years later he's on the front page of The New York Times. President Clinton is talking about the Edmonton Protocol. By taking islets from a pancreas and transferring them into a patient, you can get that person off of insulin shots.
I had someone actually come up to me and say that my uncle improved their life, and that was a real moment for me. But if I'd said to Ray in 1977, “Ray, you're going to be famous for the Edmonton Protocol on taking islets out of a pancreas”, he would have said that I was nuts, that there was no way he was going there.
It shows the challenge we face as policymakers and parliamentarians. How would you identify a Ray Rajotte in 1977? It's easy in 2005 for us to all stand up and say what a wonderful thing this is, let's fund it. And that's what we did. The federal government stepped in at the end and started funding it, saying “Isn't this wonderful.” But how do you identify that? You are talking about funding basic research over a 30-year period. Maybe that would have ended up producing nothing, but it did end up making a difference in a lot of people's lives.
Mr. McCulloch, I was struck when you talked about big science projects requiring both. One of the reasons it was successful was that Ray had an engineering technical background that allowed him to make different products to actually freeze the islets and then transplant them.
That's a key question for me. How do you recognize that there's a genesis there that could turn into something, allow it to turn into something, but not fund 20 white elephants? It's a real challenge, and I think that's where a lot of our questions are going.
I don't know if anyone wants to address that issue.
Mr. McCulloch, do you want to address that?