Canada: Pharmacapsules @ Gowlings: May 28, 2009

Last Updated: June 2 2009

Edited by Jennifer Wilkie & Chantal Saunders

  • Biotechnology Clusters: Their Importance and Keys to Success
  • Latest Report Shows Biotech Companies Facing Serious Financial Crunch
  • Biotechnology Industry Organization (BIO) Comments on the Impact of the Economy
  • Genome Quebec Appoints New President and CEO
  • Private Members' Bills Seek Amendments to Patent Act and Food and Drugs Act
  • Recent Cases

Biotechnology Clusters: Their Importance and Keys to Success
By: Michael Herman

The development of clusters as a key factor for the success of knowledge-based industries is not a new concept. A recent report ("Report") from Canada's Science Technology and Innovation Council affirms that the drivers of innovation success include a private sector focussed on science, technology and innovation strategies, education and research institutions and researchers and workers.

The Report stresses that innovation performance comes from not only how well these performers do individually, but how well they collaborate with each other. By supporting collaborations, clusters provide competitive advantages. Physical proximity facilitates linkages and reduces the cost of innovation through shared resources and information. Successful clusters also attract a large pool of highly qualified or specialized people and become centres of specialized investment capital.

The growth of clusters, while primarily a result of market forces, can be assisted by public policies, such as those that provide a knowledge infrastructure and encourage collaboration between research institutions, government and the private sector and those that enhance cooperation between different levels of government.

It is definitely not simple to build successful and thriving clusters. The right intentions and rhetoric are not sufficient. A recent article in Genetic Engineering and Biotechnology News on emerging technology clusters recognizes that while there are many great research institutions throughout the world, many proposed clusters do not reach critical mass. The article suggests that it is the business aspects of growing a biotech cluster that are most difficult. Ernst & Young's global biotech leader states that "the secret sauce for biotech success is experienced venture capital, experienced management and a serial entrepreneurial culture."

The article reviews briefly many emerging global biotech clusters. Toronto and Vancouver are included, but, surprisingly, Montreal is not. [It is suggested that the author take another look at Montreal as a biotech cluster.] The article illustrates how competitive many of the world's regions have become in trying to attract biotech through building strong, sustainable clusters.

The article provides ample evidence that for Canada to maintain its position as a leader in the biotechnology sector, governments at all levels, the private sector, the investment community and the research community must have a strategic focus, align their interests and work collaboratively to build the strongest and most attractive regional clusters across the country.

For more information, please see:
Gail Dutton, "Emerging Biotechnology Clusters", Genetic Engineering & Biotechnology News, May 1, 2009 (Vol. 29, No. 9) at The Science, Technology and Innovation Council Report "State of the Nation 2008: Canada's Science, Technology and Innovation System" is available online at

Latest Report Shows Biotech Companies Facing Serious Financial Crunch
By: Scott Robertson

According to the latest report released by Ernst and Young ("E and Y report"), 44 per cent of publicly listed biotech companies reported having less than a year's worth of operational funding. This is an increase of 25 per cent from the previous year.

As a result of the current financial crises biotech companies are finding it more difficult to secure investments from financial institutions. This lack of funding puts several smaller biotech companies at an immediate risk of going out of business.

With a lack of investment to rely on, there is potential for some of the smaller firms to be acquired by larger pharmaceutical firms. However, not all of these smaller companies will be able to survive the economic downturn.

The E and Y report was not all gloomy for the industry as revenues of publicly traded biotech firms grew by 12 per cent to 89.7 billion in 2008 and for the first time ever, it was reported that the industry in the U.S. reached aggregate profitability.

For more information, please see:

Biotechnology Industry Organization (BIO) Comments on the Impact of the Economy
By: Natalie de Paulsen

James Greenwood, President and Chief Executive of BIO (Biotechnology Industry Organization) spoke to the Boston Globe this month about the impact of the economy on the biotechnology industry. Mr. Greenwood points out that as most BIO companies do not have products for sale yet their revenue comes from investment and as this has decreased, it is a very difficult time for them. Mr. Greenwood predicts, however, that most biotech companies will survive the recession. He also comments on Mr. Obama's healthcare reform plan stating that "There are opportunities there. Universal access is a good thing. We support it. We want our products available to anyone. As long as innovation is part of the agenda and not just cost-cutting, we think it can be win-win."

For more information, please see: biotech_group_confident_despite_economy/

Genome Quebec Appoints New President and CEO
By: Melissa Binns

Genome Quebec, a private non-profit agency committed to supporting Quebec researchers conduct genomics and proteomics research, has appointed a new executive. Jean-Marc Proulx recently took over as Genome Quebec's President and CEO replacing Paul L'Archevêque who has held the appointment for the last eight years. Proulx's appointment follows his service as Chairman of the agency's Board and he brings 25 years experience in information technology as a software engineer.

This appointed coincides with a new direction for Genomic Quebec, focusing more closely on human health and clinical applications and shifting away from areas such as agriculture and forestry. Genome Quebec is financed jointed by the public and private sectors, its role is to distribute grants to mostly university scientists. Genome Quebec has an annual budget of approximately $75 million, coming from the Federal, Provincial and private sectors. To date, Genome Quebec has assisted financing of more than $500 million in research in genomics. However, one of the first challenges Proulx will face is dealing with an expected $100 million cut in funding for Genome Canada, the agency that oversees federal granting.

For more information, please see: Transition+from+genomics+natural+Proulx/1567318/story.html

Private Members' Bills Seek Amendments to Patent Act and Food and Drugs Act
By: Jennifer Wilkie

A review of certain current private member's bills before Parliament reveal that important changes are being sought to both patent and food and drug legislation. We will report further if these bills progress.

Bill C-275, which had a first reading on January 29, 2009, seeks to reduce the extent of patent protection for medicines by amendment of section 55.2(4) of the Patent Act and by repeal of the Patented Medicines (Notice of Compliance) Regulations.

Bill C-370 was first read on April 27, 2009. This bill seeks to amend the Food and Drug legislation to require identification of and labelling of genetically modified foods.

Finally, most recently, Bill C-393/S-232 had a first reading May 25, 2009. This Bill seeks to amend the Patent Act and the Food and Drugs Act pertaining to the Jean Chretien Pledge to Africa legislation. In particular the Bill summary indicates that it seeks to make it easier to manufacture and export pharmaceutical products to developing and least developed countries.

For more information, please see:
For Bill C-275,

For Bill C-370,

For Bill C-393,

Recent Cases
By: Beverley Moore

Novopharm Limited v. Eli Lilly Canada Inc; appeal of a motion to dismiss pursuant to s.6(5)(a) of the NOC Regulations ; 2009 FCA 138; olanzapine; May 4, 2009

The Court of Appeal dismissed the appeal of the generic company from a decision of the motions judge refusing to dismiss the proceeding as a whole.

Lilly had brought a proceeding pursuant to the NOC Regulations on the basis of a patent listed on the Patent Register. Novopharm had challenged the listing of that patent and the 2008 amendments to the NOC Regulations on the basis that the amending regulations were ultra vires the powers of the Governor in Council.

In the underlying decision, the motions judge found he did not have the jurisdiction to grant the declaratory relief sought by Novopharm and alternatively, would not have exercised his jurisdiction not to grant it if he did have jurisdiction. We summarize that decision here.

The Court of Appeal upheld the decision of the motions judge, citing a Supreme Court decision, which held that interlocutory declaratory relief is not available in a NOC proceeding as NOC proceedings are summary in nature and generally intended to produce rulings binding only on the parties to the litigation. Furthermore, declarations generally cannot be sought by way of motion. An application for judicial review is the proper procedure to challenge the validity of a regulation made by the Governor in Council.

The full text of the decision can be found at:

The full text of the decision below can be found at:

Lundbeck v. ratiopharm and Cobalt; appeal of a motion to strike ; 2009 FCA 134; memantine; April 29, 2009

The Court of Appeal upheld the decision of the applications judge who struck the applications for judicial review.

In the Court below, Lundbeck had brought proceedings seeking to judicially review the decision of the Minister of Health to accept and review the generic Abbreviated New Drug Submission on the basis that its product was entitled to protection under the Data Protection Regulations, thereby preventing the Minister of Health from accepting the submission during the term of data protection. The judicial review was dismissed December 16, 2008. This decision was summarized here.

The Court of Appeal wholly agreed with the Trial Division's reasons and dismissed the appeal. Lundbeck's appications were found to be bereft of any chance of success.

The full text of the decision can be found at:

The full text of the trial decision can be found at:

Bayer v. Canada; appeal of a listing decision; 2009 FCA 133; estradiol; April 28, 2009

The Court of Appeal dismissed Bayer's appeal, thus affirming the refusal to list the patent on the Patent Register.

The question before the Court was whether the patent at issue claimed a dosage form of the drug. The applications judge had concluded that the patent describes a delivery system rather than a dosage form. We summarized that decision here.

The Court of Appeal upheld the applications judge's reasoning that the patent at issue contained a form of protective packaging and thus was not eligible for listing on the Patent Register.

The full text of the decision can be found at:

The full text of the trial decision can be found at:

Pharmacommunications Holdings v. Avencia International; appeal of a trade-mark decision; 2009 FCA 144; May 5, 2009

The Court of Appeal upheld a trial judge's decision dismissing an application in a suit regarding statutory passing-off. The application below was dismissed because Pharmacommunications had not adduced any evidence of actual or potential damage. The Court of Appeal upheld this decision on the basis that, although the statute does not require actual or potential damages, the Court of Appeal and the Supreme Court have previously held elsewhere that the statute is a codification of common-law passing-off and actual or potential damages are required.

Thus, as there is no evidence of actual or potential damages, the claim for statutory passing-off cannot succeed and the appeal must be dismissed.

The full text of the decision can be found at:

Apotex v. Canada (Minister of Health); judicial review of a decision not to issue a NOC; 2009 FC 452; aspirin; May 5, 2009

Apotex brought a judicial review of the Minister's refusal to issue a NOC regarding its version of aspirin. The Court dismissed the application.

Apotex was issued a Notice of Non-Compliance ("NON") during the review process on the basis of some data deficiencies in one of its studies. In response to this NON, Apotex argued that the problems did not lie with its product but rather with the reference product that it was using. The Minister did not agree with Apotex' arguments and determined that Apotex' ANDS was withdrawn without prejudice to its right to re-file. Apotex asked for a reconsideration, asserting that its product was safe and that a failure to prove bioequivalence was not fatal to the application. The Minister upheld his original decision.

The Court found that the Food and Drugs Act requires proof of safety and efficacy to the Minister's satisfaction on a reasonable basis. In order to assist with this satisfaction, the Minister has issued guidelines regarding bioequivalence, which do allow of exceptions where justified. The Court further held that the Minister had clearly stated his concerns with Apotex' explanation of the bioequivalence issue and that Apotex was given every opportunity to submit new or better evidence and submissions but rather chose to merely reiterate the same arguments.

The Court also held that it is not unreasonable for the Minister to demand compliance with the guidelines in the absence of a clear indication that an alternative approach is justified.

The Minister had included lengthy and detailed reasons about his concerns. In particular, the Minister did not accept Apotex' bare statement that the deficiencies in the bioequivalence data was the result of a defect in the reference drug. Apotex had not submitted sufficient evidence to satisfy him that this was indeed the problem. As in the end there was a difference of opinion between the Minister and Apotex, it was not the Court's role to resolve that difference. It is sufficient that the Minister's opinion or lack of satisfaction was rationally based and adequately explained.

The full text of the decision can be found at:

Eli Lilly v. Canada (Minister of Health); listing decision; 2009 FC 474; olanzapine; May 8, 2009

Eli Lilly had submitted patent lists seeking to add the newly issued patent at issue to the Patent Register with respect to several supplemental new drug submissions. Those requests were initially refused by the Minister. However, upon the provision of additional information, the patent was added to the Patent Register.

Lilly then asked for the patent to be considered listed as of its submission date, instead of as of the date the Minister eventually determined the patent to be eligible for listing. The Minister refused and that decision was the subject of this judicial review.

The Court upheld the decision of the Minister. The Court found that when considered as a whole, the NOC Regulations indicate that a second person does not have to address any patent that has not yet been added to the Register. Further, a clear distinction is drawn between submitting a patent list to the Minister and the determination of its eligibility for listing. Thus, the Court held that the intent of the NOC Regulations must be that the listing of the patent on the Patent Register is done contemporaneously with the Minister's determination of the patent's eligibility for listing rather than at the time of the filing of a patent list. The fact that a generic manufacturer can obtain a procedural advantage from the delay between the filing of the patent list and the Minister's eligibility determination does not deprive the innovator of its substantive patent rights.

The full text of the decision can be found at:

Johnson & Johnson v. Boston Scientific; motion to strike portions of the memorandum of fact and law; 2009 FCA 155; May 14, 2009

Johnson & Johnson (J&J) had sued Boston Scientific (Boston) for patent infringement. At trial, the Court dismissed the action for infringement with regard to both patents and found one patent invalid. J&J appealed the dismissal of the infringement action with respect to the patent that was upheld in terms of validity. Boston did not cross-appeal the dismissal of the claim for the declaration of invalidity of that patent.

When Boston filed its responding memorandum of fact and law on the appeal, it included argument asserting the invalidity of the patent. J&J challenged those paragraphs on the basis that Boston had not appealed the finding that the patent was valid.

The Court found that it was open to Boston to argue that the patent was invalid without seeking a declaration to that effect. Thus, the portions of the memorandum of fact and law that related to invalidity of the patent were allowed to stay. The Court did permit J&J to file a reply memorandum so that the Court had a complete picture of the legal argument.

The full text of the decision can be found at:

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