Securing Canada’s Future in Life Sciences: A Strategic Imperative Amid Global Competition
As evidenced by recent events, Canada stands at a critical inflection point. Generations of North American economic integration are being tested, and traditional sectors are under the direct challenge of sustainability. Amid this turbulence, one sector stands out for its resilience and transformative potential: life sciences.
The Canadian life sciences sector in recent years has secured more than $30 billion in investment—evidence of both confidence and capacity. Additionally, the sector has outperformed other innovative technology based economic drivers, with record levels of return on investment performance. Homegrown companies are securing major international partnerships, expanding manufacturing operations, and commercializing breakthrough innovations. Canadian life science expertise is being sought after globally—for its research excellence, skilled talent, and biomanufacturing capabilities.
Global competition for healthcare innovation is accelerating at an unprecedented pace, reshaping how countries approach economic and defense sovereignty, health security, and strategic investment. In this context, Canada must act with urgency to reinforce and capitalize on the strong foundation already built within its life sciences sector.
In this climate, life sciences have emerged as one of Canada’s most valuable strategic assets. Landmark federal initiatives—including the Biomanufacturing and Life Sciences Strategy (BMLSS), the Strategic Innovation Fund (SIF), the renewed Venture Capital Catalyst Initiative (VCCI), and the creation of Health Emergency Response Canada (HERC)—have attracted historic levels of investment. These programs have helped Canadian life sciences companies take a leading role in global health innovation and economic growth.
But this momentum is faltering. Other leading economies have doubled down on biotech, recognizing it not just as a health asset but as a critical pillar of economic power. Countries across the OECD are increasing R&D investments, fast-tracking regulatory reforms, and competing aggressively for talent, companies, and capital. The UK and Europe in particular, are moving swiftly to secure global leadership in biotechnology with recent releases of life science strategies aimed at addressing regulatory efficiencies, taxation and investment initiatives designed to outcompete other key markets. Canada must meet this moment with equal ambition.
The window of opportunity is narrow.
Today’s geopolitical instability and escalating trade tensions are creating unprecedented competition for the very technologies and healthcare solutions Canada is positioned to deliver.
Canada’s opportunity lies in translating world-class research into commercialized products and globally adopted healthcare solutions. Achieving this requires a policy and regulatory environment that keeps pace with innovation, attracts sustained investment, adopts new solutions for care, and signals to global partners Canada is serious about competing—and winning—in the knowledge economy.
The current geopolitical landscape, including the ongoing threat of U.S. tariffs, underscores the fragility of global supply chains and the urgency of shoring up domestic strength. Tariffs on health-related goods would directly disrupt Canadian innovation and patient care, affecting everything from advanced therapies and diagnostics to critical components in the manufacturing process. Medicines, vaccines, devices, and their supply chains must be protected from countermeasures. Canada must also assert clearly that health products should not be targets of international trade disputes.
This is more than a moment of risk—it is a moment of opportunity. Bold, immediate action can build long-term economic and health security for Canada. This is not only about protecting what we’ve achieved. It’s about capitalizing on it—locking in Canada’s long-term economic sovereignty in research and development while strengthening our ability to deliver healthcare solutions for Canadians and global markets alike.
The next decade will be defined by advancements in biotechnology, including the integration of artificial intelligence to transform drug discovery, diagnostics, gene editing, and personalized medicine.
The federal government must:
- Address the long-standing gaps in access to capital to grow life sciences;
- Modernize and align regulatory systems to ensure timely product access and build clinical trial capacity;
- Protect healthcare supply chains from trade disruption;
- Secure and invest in public health initiatives to protect Canadians
- Create clear policy signals that attract global investment and incentivize domestic growth.
Biotechnology is now a defining force in the global economy. As it continues to grow its potential converging with other technologies including artificial intelligence and engineering, the increasing value of its applications is simply unprecedented. The opportunity for Canada is equally unprecedented if we want to capture the new economy.
BIOTECanada offers the following recommendations for immediate budget implementation:
I. Increased Availability of Investment Capital
In today’s economic climate and financial challenges facing life science companies, new investment and government support are urgently required to drive innovation forward and maintain Canada’s hard-fought aspirations of becoming a leading life science jurisdiction in the world. Health and economic sovereignty initiatives must continue to be mobilized with attraction of institutional and pension funds that are timely to build life sciences capacity in Canada and to benefit from the potential of historical healthy returns on investment. The global competition for investment will go to where it is best rewarded. To capitalize on biotech’s generational moment, now is not the time to slow down but instead accelerate access to capital for life sciences companies.
Recommendations:
Growing Access to Venture Capital
The government should invest $350M to grow the Life Sciences Venture Capital Catalyst Initiative (LS-VCCI), a life sciences venture fund beyond what was previously committed. With investment match from private sector, a significant foundational investment would bring the total investment envelope to be created and deployed over 5 a year horizon (at least $200 million per year). Attracting institutional and pension funds would further leverage these government funds.
Non-dilutive Investment Capital
Non-dilutive capital is important for the early stage of company creation and growth. A non-dilutive funding measure would jump start Canadian innovation at an early stage and provide it with a stronger possibility of scaling and staying in Canada because it is funding without giving up any equity or ownership of the business. With the creation of the Health Emergency Response Canada (HERC) to drive innovation in the sector, there is an opportunity to further bolster advancing leading-edge technologies and support the growth of life sciences in Canada. The rapid additional deployment of non-dilutive funding directly to private Canadian companies is required to address future needs and aspirations of Canada leadership in life sciences. The Government of Canada should implement additional non-dilutive funding for private companies without delay or risk the contraction of the industry contrary to its health and economic sovereignty goals. Non-dilutive funding should:
- Meeting federal research and development needs of health and economic security
- Increase private-sector commercialization of innovation derived from federal research and development funding
- Stimulate technological innovation
- Foster technology transfer through cooperative R&D between industry and research institutions
Recommendation:
Canada should commit additional budget to HERC and build an additional significant non-dilutive investment pool utilizing existing deployment mechanisms (e.g. IRAP) to capitalize on and support the scaling up of the companies emerging from the biotech ecosystem with a minimum spend each year.
II. Competitive Tax Environment
Boosting Scientific Research and Experimental Development
The scientific research and experimental development (SR&ED) tax incentives remain an important cornerstone for the sector’s performance. No reductions of SR&ED should be implemented. Rather the industry welcomes expanding the eligibility, and increasing the limits (caps) for SR&ED.
Recommendation:
BIOTECanada strongly urges the government to take immediate steps to expediate initiatives to enhance the SR&ED credit. These budget measures complement federal and provincial life sciences strategies and the company growth those policy commitments are driving.
III. Establish Canadian Regulatory Leadership
An effective regulatory environment ensures safety while encouraging the introduction, acceleration, and adoption of biotech innovation while capitalizing on the private and public investments being made. A high performing world class regulatory system that is predictable, efficient, consistent and transparent, avoiding barriers to business investment is key to cementing Canadian’s access to biotechnology innovation.
A competitive regulatory system will accelerate the growth of Canadian companies and facilitate the attraction of innovation to Canada for Canadian patients. Canada’s ambition to be a world leading regulator is at risk without the Government’s resourcing of capacity, particularly as new game-changing technologies are developed and deployed such as mRNA, cell and gene therapies, gene editing, radiopharmaceuticals and artificial intelligence.
Health Canada currently has ongoing operational challenges and increasingly not meeting current performance targets. The goal should be to address the volume of work as a global regulatory leader as well as tackle the added complexity from globalization, technological advancement and more sophisticated data and systems such as artificial intelligence (AI). Predictability and timeliness in regulatory program performance is vital to meeting the needs of Canadians and health innovation and maintaining a world class regulatory authority.
Recommendation:
Health Canada must be additionally resourced to deliver services on time and expedite the execution on modernizing regulations to remain internationally competitive, meet performance standards, and follow through on Canada’s ambition to create a regulatory environment that is “Best in Class” to attract global biotech companies as investors/partners in the ecosystem and as providers of next generation of therapeutics for Canadians.
IV. Improve access to vaccines for Canadians
Vaccines are proven to be effective and affordable, but Canada has fallen behind in protecting its citizens from vaccine preventable diseases. With the explosive resurgence of measles in recent months, a vaccine-preventable disease, Canadians have been reminded about the complexity and rapid development of public health risks faced by Canada in a global context. Vaccines can and do play a critical role in addressing many public health challenges and demonstrate a significant return of investment in health on every immunization dollar spent in Canada.
Recommendation:
The federal government must plan for a recurring annual budget starting in 2026 to support Canadians’ access to innovative, effective, safe and cost-effective vaccines.
Submission: July 2025