To remain competitive globally it is imperative for companies to continue to innovate and grow. For the Canadian life sciences industry, the Globe and Mail reported in April of 20151 that the biotech sector is “ready and eager” for growth but without adequate financing, it will go nowhere. Canada does offer a multitude of government grants and incentives to promote innovation and growth for Canadian businesses.
The federal government as well as all provincial governments offer support in the form of non-repayable grants, favourable loans, and tax credits, with Ontario and Québec having the largest number of programs available. While the other provinces have fewer program offerings, new programs are announced on a monthly basis in an effort to support their regional priorities and compete with the other provinces.
Regardless of the geographic region in the country, government incentive programs are available to companies operating in various industries, including life sciences. The programs available can be broadly grouped into four categories relating to the initiatives they support:
1. Business and Market Expansion
2. Innovation Development
3. People Development
4. Environmental Sustainability
Programs in the Business and Market Expansion category generally support projects that include facility expansions, new product line expansions and expansion to new markets. For Ontario businesses, projects that involve expanding innovation capacity, improving productivity, performance and competitiveness and are proposed be in excess of $10 million in expenditures could be eligible for up to a 20 per cent non-repayable grant contribution. For similar projects that are expected to be less than $10 million, they could be eligible for a 15 per cent non-repayable grant to a maximum of $1.5million if project costs exceed $500,000.
Program offerings in the Innovation Development category generally support all industries, including life science-based projects that require significant R&D investment for new product and technology development; acquisition of new equipment and technology to improve productivity; as well as industry/university collaboration initiatives.
Canada’s longstanding flagship Scientific Research & Experimental Development (SR&ED) program provides up to a 35 per cent federal credit for SR&ED eligible labour, materials and subcontractor expenditures. In addition to SR&ED, federal programs such as the National Research Council’s (NRC) Industry Research Assistance Program (IRAP) provide R&D project-based non-repayable funding up to $500,000 per project.
The Ontario Centres of Excellence (OCE) AdvancingHealth2 program is designed to bolster innovation in Ontario’s public healthcare sector by matching healthcare needs with innovative products and services through partnerships between public healthcare organizations, companies and academic institutions. The aim of the program is to advance healthcare innovation directed to improved health outcomes, enhanced patient experience and efficient use of resources through investments in collaborative demonstration projects that show clear potential for scaling-up to the system-level and establish a strong case for adoption. Up to $250,000 is available from OCE per demonstration project and applicants can also access two academic vouchers per demonstration project (valued at $50,000) each to support academic researchers and students to work on the demonstration project and/or to assist with adoption.
In many provinces, both federal and provincial assistance is available to help Canadian companies hire and retain staff, improve their effectiveness and train their employees in areas such as advanced technologies or operational processes. Specific programs support initiatives towards hiring of recent university/college graduates; training programs for upskilling staff; training on new technology or equipment installations; and supporting the temporary hiring of co-ops students and interns. Companies looking to hire recent university graduates from science, technology, engineering, and math disciplines can access funding to subsidize 50 per cent of the first year salary for a new hire.
Support for climate change initiatives and technology development projects has also increased in recent years. Grants are available for projects aimed at greenhouse gas reductions, energy conservation, and water conservation and usage reduction. These programs can improve the ROI for a company’s sustainability strategies, including renewable energy investments, energy efficiency improvements, recycling initiatives, advanced manufacturing and green building construction.
Over the past five years, there has been a focused effort by the federal and provincial governments to deliver grants and incentives to Canadian businesses through direct funding mechanisms (i.e., non-repayable cash contributions and favourable loan programs) over indirect funding mechanisms such as tax credits. While these programs have defined eligibility criteria, the majority are discretionary and limited to budget availability. The discretionary nature of the majority of direct funding programs introduces a high level of uncertainty to companies who would otherwise be eligible. In addition, businesses are required to submit their application and receive funding approval before commencing the project. This requires companies to plan ahead and develop a funding strategy to be successful.
Regardless of whether programs are statutory or discretionary, with proper planning and advice, there is significant opportunity for Canadian life science businesses to receive government funding for their upcoming projects.
1. Reguly, Eric, “Why is Canada’s life sciences sector flatlining?,” The Globe and Mail, 23 Apr 2015. http://www.theglobeandmail.com/report-on-business/rob-magazine/why-is-canadas-life-sciences-sector-flatlining /article24030375/