Canadian organizations must act now to respond to competition from emerging markets, chronic lack of funding, increased industry convergence and tightening regulations.

TORONTO - A Deloitte report released May 6, 2008 provides a blueprint for the Canadian life sciences industry to follow in order to foster future growth and success. Faced with shifting demographics, decreasing margins, evolving regulations and rising R&D costs, the report outlines how organizations must not only optimize the development processes, but also re-examine their underlying operational strategies.

Titled "Diagnosis: Transformation. Strategies for growth in Canada's life sciences organizations" the report identifies five primary challenges faced by Canadian organizations today - lack of financial liquidity, penetrating global markets, competition from emerging markets, industryconvergence, and tightening reimbursement regulations - and provides strategic recommendations to help companies compete effectively.

"By embracing the strategies set forth in this report, organizations enhance not only their bottom line and position in the marketplace, but also their ability to identify and develop treatments for chronic medical conditions faced around the world," said Marcelo Morales, Deloitte's national life sciences leader. "In doing so, organizations not only strengthen their own performance and competitiveness, they also contribute to the advancement of science and the people it serves."

Today, more than ever, Canadian life sciences organizations must fully consider how to properly leverage the economics of global business to their advantage. For example, while Canada's R&D incentives are generous by global standards, many organizations do not take full advantage of them - meaning that money which could easily be re-invested in R&D and commercialization isn't made available.

1) Lack of financial liquidity - Venture capital funding in the Canadian life sciences industry grew from $346 million in 2005 to $473 million in 2007. Despite this 37% growth, overall domestic investment in life sciences has decreased due to higher, shorter-term returns in other sectors. This, in turn, forces many Canadian life sciences organizations to seek out alternative methods and geographic locations for their funding needs.

2) Penetrating global markets - Competition for a smaller pool of investment capital within Canada's venture capital community provides a golden opportunity for organizations to seek new international partnerships. Done right, they will help companies bolster R&D activity, expand into emerging markets, open up new marketing channels and build relationships with governments.

3) Competition from emerging markets - As competition from emerging markets, such as India and China, improves research and manufacturing capabilities, outsourcing will likely take place beyond Canada's borders. In order to compete, Canadian organizations must find innovative ways to reduce their own costs and to differentiate themselves from low-cost competitors.

4) Industry convergence - In light of increasing cost pressures, growing consumer demands and global competition, life sciences organizations have sought to differentiate themselves through the convergence of drugs, devices and diagnostics - that is, creating all-in-one solutions that holistically monitor health, prescribe and deliver medication. For Canadian organizations, success in this area means developing appropriate plans and identifying optimal partners.

5) Tightening reimbursement regulations - Canadian federal and provincial governments face increased demands to do more with less in health care. This, in turn, requires companies to design their R&D recovery strategies around a demonstration of the value of their products and services against spiraling health care costs.