By Cole Bunn, Senior Research Analyst, LSN
As we look forward to 2017, there is certainly a lot of speculation regarding how the biotech sector will fare in the wake of a lackluster 2016 for public market performance, M&A transactions and venture funding for life science/healthcare companies, not to mention the intense pricing pressure drug makers are now facing. All things considered, most biotech folk are optimistic on what the new year will hold for the life science startups and the healthcare sector as a whole.
One geography that may be uniquely positioned to take advantage of these potential tailwinds is Canada, with its rapidly developing life science hubs. As we gear up for the second RESI conference at the MaRS Discovery District in Toronto on April 4, 2017, we wanted to take a closer look at what’s going on in the Canadian life science scene.
Taking a sample of Canada data from the LSN Company Platform, we can assess the most popular sectors for life science startups in Canada’s top three most populous cities.
Medtech was the most represented sector. There are a couple of different possible reasons for this: 1) medical technology is a fairly broad term and there tends to be some overlap with digital health given that underlying a lot of medical devices, primarily the newer ones, is a software component; 2) generally speaking, the amount of capital required from inception to commercialization for a medical device tends to be considerably less than for a biopharmaceutical product due to fewer and smaller clinical trials, and given that there are less venture and corporate dollars available for Canadian startups as compared to the U.S., entrepreneurs pursue less capital-intensive opportunities.
Taking a look at the LSN investor platform, the below data shows the percentage of investors in the U.S. and the rest of the world (excluding Canada) that have stated they are actively looking for technology in Canada.
One thing we hear over and over from early-stage investors, particularly those based in the US East Coast or Silicon Valley, is that Canadian startups are attractive due to their reasonable valuations, as compared to valuations in traditional life science hubs such as Boston and San Francisco. Some U.S.-based investors are going as far as setting up offices in Canadian cities to take advantage of this fact. In addition, well-established VCs in the U.S. hubs see just about every deal out there, and are increasingly looking for innovation in less saturated areas. About half of the U.S. investors and investors in the rest of the world that are tracked by the LSN research team are looking to invest in Canadian startups.
As for the Canadian investors, about half of them are putting money to work only in their own country.
We’re excited to bring the RESI conference back to Toronto for a second time and get a firsthand look at the innovation that is happening in this rapidly developing life science hub, as well as expose the technologies to a diverse group investors and strategic partners.