Think Canada Think Medical Device Industry Think Investment March 2001

2 A snapshot of Canada's dynamic Medical Device Industry 18,000 Employees Production estimated at $3B One National & Six Regional Associations 800 Manufacturers $1.57B in Exports in 2000

3 Cardiovascular (e.g. heart valves, electronic cardiography) Radiation therapy and therapy-planning software Medical imaging (e.g. 3-D imaging, ultrasound scanners) In vitro diagnostics (e.g. cancer, hepatitis) Dental implants and materials Assistive devices/home care, mobility aids Canada's Medical Device Industry has a number of recognized strengths

4 The presence of large multinationals and growing Canadian firms demonstrates the breadth of the Canadian Medical Device Industry

5 Companies in Canada's Medical Device Industry are supported by a number of national and regional associations National ­ Medical Devices Canada Regional ­ Association québécoise des fabricants de l’industrie médicale ­ Association of Ontario Medical Manufacturers ­ Health Care Products Association of Manitoba ­ Calgary Association for Medical Products ­ Metro-Edmonton Health Industry Association ­ B.C. Medical Device Industry Association

6 The strength of associated Canadian industries advances the competitive position of Medical Device companies in Canada Software and Informatics Medical Devices Microelectronics Biotechnology Advanced Materials Telecommunications

7 Canada offers lower R&D costs Canada's R&D tax treatment is very generous — immediate and full write-off for all expenditures in R&D capital equipment, and appreciable tax credits. Because of this, firms can significantly reduce R&D costs through direct investment or sub- contracting in Canada. Provincial tax credits augment federal credits and are unique for each jurisdiction. Relative Competitiveness of R&D Tax System Canada 0.70 Korea U.S. France U.-K. Japan Mexico Italy Germany Australia Sweden The B-index represents a ratio of the after-tax cost of a $1 expenditure on R&D divided by 1 less the corporate tax rate. A lower B-index indicates a more competitive R&D tax system Source: Conference Board of Canada, June

8 … lower manufacturing costs Comparison of Total Annual Costs for a Model Medical Device Manufacturing Facility (Index: US=100) As a location for medical device manufacturing, Canada has the lowest overall annual costs (all annual operating costs and taxes) when compared to all other G-7 countries and Austria. Source: KPMG The Competitive Alternatives, 1999

9 … and access to capital Canada’s world-class financial services industry provides a competitive advantage to life sciences companies through ready access to capital. Canadian financial institutions provide focused account management and products and services specifically designed for the health care and life sciences industries. Canada’s venture capital industry continues to generate active and growing funds investing in life sciences, for example, Canadian Medical Discoveries Fund, MDS Capital Corporation and SOFINOV. Investments in the Life Sciences sector totalled $1.8 billion in 1997, a 64% increase over 1996.

10 Canada's regulatory process increasingly emphasizes harmonization and reciprocity Medical device products manufactured in Canada specifically for export do not require Canadian regulatory approval. Risk-based regulation in keeping with international trends. Signature of Mutual Recognition Agreements (MRAs) with the EU, Switzerland, Iceland, Liechtenstein and Norway for conformity assessment of regulated products.

11 Canada provides an entry to NAFTA, the largest Medical Device market in the world Global Consumption of Medical Devices Through NAFTA, Canada’s market is the huge North American market of almost 400 million consumers. At US$58 billion, North America represents 45% of the US$130 billion global medical device market. Source: Health Industry Manufacturers Association, The 1997 Global Medical Technology Update

12 The Canadian Institutes for Health Research support basic, applied and clinical research ­ Research training and development support for up to 10,000 highly-skilled people each year ­ Research partnerships with industry and other organizations ­ Linkage of MNEs to excellent Canadian science through the Life Science Research Investments Initiative Networks of Centres of Excellence provide industry access to Canada’s leading researchers. Health-related Networks include: ­ The Canadian Bacterial Diseases Network ­ The Canadian Genetic Diseases Network ­ The Protein Engineering Network of Centres of Excellence ­ The Health Evidence Application and Linkage Network (HEALNET) ­ Canadian Arthritis Network ­ Canadian Stroke Network ­ Canadian Network for Vaccines & Immunotherapeutics of Cancer & Chronic Viral Diseases ­ Stem Cell Genomics and Therapeutics Network Canada offers Federally - funded research support programs

13 National Research Council ­ Innovation and collaboration through key research institutes:  Institute for Biological Sciences, Ottawa  Biotechnology Research Institute, Montreal  Institute for Biodiagnostics, Winnipeg  Steacie Institute for Molecular Sciences, Ottawa  Industrial Materials Institute, Boucherville, Quebec  Integrated Manufacturing Technologies Institute, London ­ Support to SME innovation through Industrial Research Assistance Program (IRAP) Natural Sciences and Engineering Research Council ­ Supports basic university research and project research through partnerships Federally-funded research support programs (continued)

14 In recent budgets, the federal government has shown its commitment to research and innovation Establishment of Canadian Institutes for Health Research: $477 million in Canada Foundation for Innovation: $3.15 billion over 13 years Networks of Centres of Excellence: $77 million in Genome Canada: $300 million for establishment of 5 genome science centres across Canada Canada Research Chairs: $900 million over 5 years for the establishment of 2000 Canada Research Chairs by The Government of Canada is committed to doubling its investment in research and development by 2010 and making Canada one of the five most research-intensive nations in the world.

15 Canada's growing medical device industry creates an increasing number of innovative business opportunities. The industry is supported by strong associated Canadian industries such as biotechnology and telecommunications. Canada maintains and continues to invest in a world class research infrastructure, creating a strong knowledge base which has contributed to international recognition in a number of segments of the medical device industry. Canada’s excellent social and economic environment, combined with its advantageous trading arrangements, make it an ideal site for medical device manufacturing. Why Invest in Canadian Medical Devices?

16 Key websites for further information on federally-supported innovation Canadian Institutes of Health Research - National Research Council - Networks of Centres of Excellence - Natural Sciences and Engineering Research Council - Canada Foundation for Innovation - Technology Partnerships Canada - Scientific Research & Experimental Development Tax Credits - Canadian Biotechnology Strategy Federal Budget -

17 For more information: Contact: Linda Leinan Life Sciences Branch Tel: (613) Fax: (613)