Anchor Companies’ Vital Role in Global Life Sciences Innovation –

Anchor Companies' Vital Role in Global Life Sciences Innovation -

Canada is a global leader in research itself, being ranked in the top 10 countries for research output, and producing 3.8% of global research publications. However, Canada continues to fall behind in commercializing these discoveries. In 2018/19 the R&D pharmaceutical sector contributed 0.7% of Canada’s GDP; by comparison in the U.S., this sector’s output was almost 4% of U.S. GDP. adMare BioInnovations, a Canadian life science organization, this week released a new report demonstrating that Canada has all the ingredients for a globally competitive life sciences industry but is missing one key component – anchor companies . Although Canada boasts several biotechs that show potential to evolve into anchor companies, no Canadian firm meets all the criteria. adMare’s mission is to address this commercialization gap by building life science companies, training industry-ready talent, and creating ecosystems that nurture innovation and collaboration across academia and business. We had the pleasure to speak with their president and CEO, Gordon C. McCauley, about this report from their new think tank, the adMare Institute. Tell us about the first publication from the adMare Institute, what was the focus of the research and what did you learn? GM: The adMare Institute addresses current and emerging health and life sciences policy challenges faced by Canadians and their governments with impartial, balanced, and data-driven analysis. With this first white paper, the Institute examines Canadian life sciences ecosystems, and internationally renowned innovation clusters, to better understand the characteristics of successful life sciences hubs around the world. The literature demonstrates that the presence of anchor companies within a cluster creates important competitive advantages. An anchor firm is a dominant company with considerable market share, brand recognition, and sustained success. To maintain this position, firms invest heavily in R&D; they have a high capacity to develop, absorb and apply innovative knowledge. By engaging closely with regional innovators, while also deeply understanding global market needs, anchor firms enhance regional innovation. Our research suggests that this is pivotal to the emergence and maturation of globally competitive innovation clusters. By clarifying these defining characteristics, we observed that, even though we are close, there are currently no Canadian life sciences anchor companies. What are the constraints in Canada that limit our ability to commercialize research? GM: There is a long-recognized disconnect between Canada’s strong foundational research performance and ingenuity, and translation into companies that capture resulting economic benefits for Canada. Developing Canadian anchor firms will help to bridge this gap. To realize the full potential of Canada’s life sciences innovation and establish a self-sustaining industrial sector, Canada must develop as many potential anchor companies as possible. How have you seen anchor companies accelerate life science productivity in other jurisdictions? GM: There are many such examples. An anchor firm interacts systematically with other companies and organizations within a cluster and acts as a bridge, connecting its regional and global networks of partners, suppliers, customers, and stakeholders. Studies that explored the biotechnology sector’s emergence within the United States suggest that the presence of an anchor firm, with a dense web of local relationships, is a necessary condition for cluster formation. What’s missing in Canada’s large biotech firms that prevents them from being considered anchor companies? GM: To become an anchor firm, a company must have a deliberate and intentional mindset from early on, reach critical mass, and sustain a dominant market position through continual innovation. It begins with a corporate perspective that functioning as an anchor to strengthen regional innovation, including substantial investments to cultivate the regional ecosystem, is aligned with corporate goals. From this beginning, to become an anchor firm, a company must mature to establish an international presence and market position that enables the privileged business insights and global networks essential to provide an anchor function. Although there are several promising potential anchor companies in development, at this time none of Canada’s largest and most innovative biotech firms have all of these attributes. What are the advantages of innovation clusters for an industry? GM: A cluster is typically built around an anchor company and refers to a geographic concentration of interconnected companies and institutions in a particular industry or field. The co-location of specialized private and public organizations accelerates innovation and leads to “spillover” effects. These spillovers include talent attraction, talent mobilization, knowledge transfer from academia or research institute to private businesses, and capital attraction and formation, among other things. Clusters represent a robust organizational form that offers competitive advantages in efficiency, effectiveness, and flexibility. What can companies, the government, and other stakeholders in the sector do differently to nurture the growth of anchor companies? GM: A vibrant innovation ecosystem is necessary to drive the emergence of an anchor company. From outstanding basic research to an agile regulatory environment, all the links of the innovation chain must be strong, and work together, for an anchor company to emerge. Access to a large pool of specialized talent is crucial to meet the needs of a maturing anchor firm. Encouraging the participation of institutional investors in later stages is also necessary to favour the establishment of anchor companies. What will be the adMare Institute’s next paper? GM: adMare’s first white paper aims to create a collaborative space and encourage discussion among all life sciences stakeholders. These conversations will determine priorities for the industry, and bring to the fore new questions to be addressed by the Institute.