Peter Zandstra, Canada Research Chair in stem cell engineering at the University of British Columbia and head of its school of biomedical engineering, said Canada should seize the moment by actively recruiting star academics from the U.S.KEVIN VAN PAASSEN/The Globe and Mail
Canada has long relied on a stable alliance with the United States to help ensure its prosperity. In the face of unpredictability to the south, this series examines barriers within and economic opportunities beyond.
As a plastic surgeon, professor and entrepreneur, Karen Cross describes her Toronto-based startup, Mimosa Diagnostics Inc., as “proudly Canadian.”
But when it came time to bring her made-in-Canada mobile imaging devices to market, she knew success lay in focusing her efforts on the United States.
“You don’t realize this as a doctor-founder” at first, she said, “that, wait, Canada is not going to buy what you have, so you have to commercialize south of the border.”
More than 80 per cent of sales of Mimosa’s devices, which help track and identify the extent of skin wounds, are in the U.S. – but that may be about to change.
For years, Canada’s life sciences sector has seen the U.S. as its first – and typically primary – market, with more people and money and a health care system dominated by private players. It’s not just that it’s easier to sell into the world’s biggest economy, though; it’s also harder than it should be to sell in Canada.
But now, the trade war kicked off by President Donald Trump is threatening to make the U.S. market more challenging for Canadian health sciences companies. Meanwhile, researchers in the U.S., Canada and elsewhere who have relied on the U.S. National Institutes of Health (NIH) for tens of billions of dollars annually are worried about the future after grants were stalled this year by the Trump administration.
While that may sound calamitous to Canada’s life sciences industry, many in the sector believe the turmoil is also creating opportunities on this side of the border. Just as politicians are now addressing long-standing interprovincial trade barriers, health sciences leaders here say this is the moment for Canadians to tackle some perennial barriers to domestic procurement and perhaps attract top research talent from the U.S.
Longer term, it could help boost the sector’s anemic contribution to Canada’s economy: Life sciences account for less than 1 per cent of Canada’s gross domestic product and 0.27 per cent of the S&P/TSX Composite Index.
“Some of the greatest opportunities are created in a crisis,” said Brett Belchetz, a physician and co-founder of Toronto-based virtual-care provider Maple Corp. “This is an opportunity to rectify past mistakes. And one of those past policies is that we haven’t built homegrown strength and capability. We have not supported Canadian industry to go out and be world beaters.”
With sales in the U.S. threatened, many Canadian companies are hoping to spur procurement reform at health care organizations, including hospitals and provincial governments. “The procurement pathways here are very convoluted,” Dr. Cross said. “Each hospital will have a different structure, a different pathway. I call it the spaghetti factory.”
One hurdle is getting public health plans to cover the cost of new products. Armen Bakirtzian, chief executive officer of Kitchener-based Intellijoint Surgical Inc., said it took years for the company’s surgical tools to be purchased by a hospital in Ontario and that was through foundational support. They are still working on getting reimbursement in Ontario, and even then would have to start the process from scratch in other provinces.
“Without a way to get publicly funded, it’s nearly impossible for hospitals to adopt new technologies, especially since they’re already dealing with tight budgets and growing demands for services,” he said.
Dr. Cross said that while it’s easier to get to payers in the U.S. and explain the value proposition of products to them, “in Canada, it’s much harder to get to the payer and it’s more convoluted. Someone needs to pay for it, and they need a budget for it, and there’s no budget and no budget to buy Canadian.” In Canada, the default option is for buyers to wait until products are adopted elsewhere before ordering them, which disadvantages startups.
In addition to starting over the sales effort in each province, legal fees associated with negotiating contracts are higher in Canada than in the U.S., and individual contract volumes there are much greater, Dr. Cross said. “In a lot of cases, we’re spending more money to get a contract through here than in the U.S., and the value of the deal is much larger there.”
Governments have tried to tackle these issues before. In 2019, Ottawa established the CAN Health Network, a national non-profit that works with buyers such as hospitals to help innovative companies grow and get their products market-ready.
Dante Morra, the chair of CAN Health, said there is an economic-development rationale to promoting “Buy Canadian” policies in life sciences, given that 12 per cent of Canada’s GDP is spent on health care – about 40 per cent of every tax dollar. “If you think about where all the tax money is, the big industry and the big opportunity is health care,” he said.
Another opportunity many in the sector point to is trying to attract some of the U.S.-based researchers whose work is imperilled by the Trump administration’s cuts to research funding.
One researcher looking north is James Voss, an HIV researcher at the Scripps Research Institute in La Jolla, Calif., who grew up in the Toronto area.
Dr. Voss said he is currently working without a salary as he waits for more than US$20-million in NIH grants for his office to be unfrozen. He has inquired about opportunities at Canadian universities but so far hasn’t found many.
“The research dollars [in Canada] are far lower than the research dollars in the U.S. per capita,” he said. “At first I thought: Okay, there’s 10 times less people in Canada, is there 10 times less research dollars? Well, it’s way less than that. That explains why it is very competitive to get a position in Canada.”
Peter Zandstra, Canada Research Chair in stem-cell engineering at the University of British Columbia and head of its school of biomedical engineering, said Canada should seize the moment by actively recruiting star academics from the U.S. He points to the fact that Canada’s leadership in artificial intelligence didn’t happen by chance, but because the public-private-funded Canadian Institute for Advanced Research actively recruited three leading academics in the field who didn’t want to live and work in America: Geoff Hinton, Yoshua Bengio and Rich Sutton. That effort took money, forethought and determination – and could be replicated in health sciences, Dr. Zandstra said. And he’s seen a spike in inquiries from U.S. researchers in recent weeks who are open to making such a move.
“This really requires leadership,” he said. Launching a brain-gain effort “represents a once-in-a-generation opportunity for Canadian science and also our health security. If we could have a way to create a home for that science and those people, it would be fantastic.”
Editor’s note: (March 21, 2025): A previous version of this article incorrectly said Intellijoint Surgical Inc.'s products are covered by the Ontario provincial health plan. The company is still working to obtain approval.