Tech sector has matured and will navigate market adjustments better than before: Croxon
TORONTO -- Chris Albinson is frustrated. The chief executive at Waterloo, Ont. innovation hub Communitech has spent much of the pandemic hearing about hospitals worried about dwindling inventories of COVID-19 tests, while companies less than 80 kilometres away have the ability to make more.
"When we can't get those things together, that drives me nuts," Albinson said. "We should be able to solve these problems."
However, the situation is not a surprise for Albinson. He and others have spent decades watching Canadian health tech companies be neglected on home soil.
They say these companies often have to take their innovations across the U.S. border before the Canadian market even bats an eye.
Those that take their chances at home say breaking into the market in a meaningful way is tough because procurement processes vary wildly across provinces, hospitals, long-term care homes and other medical facilities.
The processes can also be hard to navigate. In 2016, the Council of Academic Hospitals of Ontario found 76 per cent of its 23 members identified policies, directives and procurement rules as "major barriers" to innovation adoption within their organization.
Many product buyers won't even accept bids from companies that are younger than 10 years old, shutting out startups with cutting edge solutions no one else is looking to solve, Albinson said.
"Canada is the only place that doesn't buy its own stuff and that's been true for 40 years," he said.
"Our founders have been taught for 40 years don't sell in Canada, it's a waste of time."
That sentiment is reflected in funding. PricewaterhouseCoopers and CB Insights' MoneyTree report found venture capital invested in Canadian digital health startups fell to US$135 million in 2019, from US$182 million in 2018 and only a slight uptick from US$133 million in 2017.
Even when funding is not an issue, Dr. Kumanan Wilson said challenges are still plentiful for health tech companies.
The Ottawa Hospital researcher started CANImmunize, an app that helps Canadians track vaccinations, in 2011, after a mother in a park mentioned it would be easier to record immunizations on a phone instead of paper slips.
Getting Nova Scotia to use it took Wilson and then-engineering student Cameron Bell about three years of relationship building.
"Government procurement cycles can take a while and that kills a lot of small businesses," Wilson said.
"The big businesses can afford to wait out those procurement cycles because they have got tons of cash, while the small businesses are just waiting and all their hopes are on this procurement and then it doesn't happen."
Wilson thinks it would have been harder for CANImmunize to entice Nova Scotia and later, the Yukon and Prince Edward Island, if Ottawa health care organization Bruyere didn't take a chance on the app with a pilot.
But he's still experienced instances where organizations pitched CANImmunize opted for foreign alternatives.
"We were small, and I think there's a worry that if you procure us and we fail, what the heck are you doing? Are you crazy?" he said.
"It's just aneasier way sometimes to go with these big companies, but I think, in many of the instances, these bigger companies that were procured never did anything in the immunization space before."
To reduce these situations, Communitech teamed up late last year with the Coordinated Accessible National Health Network, a federally funded program aimed at supporting domestic health solutions.
Hospitals and other health care organizations approach the team with needs, which can range from a scheduling system for nurses to bioengineered tissue for corneal implants.
The team either matches them with a Canadian company that already has a solution or Communitech approaches businesses making similar tech and starts a submission process to find the health care organization a partner to work with.
Despite being cash-strapped and in crisis, it's not hard to get buy-in from health care organizations right now, said Dr. Dante Morra, chair of CanHealth's governance team.
"We solve their real problems, and we do it quickly," said Morra, also president of THP Solutions at Trillium Health Partners, a hospital group in the Greater Toronto Area.
"The first projects we usually do are projects that save money, so the chief financial officers love them."
The real challenge, he said, is making sure this pipeline sticks and expands even further to areas like agriculture and manufacturing, which face similar barriers.
"We can win and we've shown we can do it," Morra said. "We've just got to buy our own stuff and scale our own companies."