With the 2025 federal budget on the horizon, Canada’s role in the global life sciences ecosystem is being tested from all sides. Advocates are demanding bold investments in biotech, pharmacare, and digital health—despite fiscal restraint and shifting federal priorities. Canada is also gaining new recognition for its regulatory leadership, even as warnings mount about the fragility of global pharmaceutical systems. The question now is whether Canada can match its growing international profile with the urgency and coordination needed to deliver lasting reform.
Canada’s Life Sciences Investment Strategy Faces Budget and Trade Pressure
Ahead of the 2025 federal budget, leading life sciences organizations are calling on the federal government to strengthen its investment strategy. Life Sciences Ontario (LSO) provided strategic recommendations in a submission for the pre-budget consultation ahead of the 2025 federal budget. LSO argued for enhancing the Biomanufacturing and Life Sciences Strategy, focusing on emerging opportunities like cell and gene therapies, artificial intelligence, and health data.
LSO suggested embedding a value-based approach in government procurement policies to better support innovative local health technologies, noting that current strategies often miss long-term savings and improved health outcomes because of their short-term cost containment focus. The organization also recommended a whole-of-government approach to align various governmental efforts in the life sciences sector, which currently operates in silos, hindering strategic decision-making.
BIOTECanada echoed the call for action. BIOTECanada released its 2025 federal budget submission, urging the federal government to take swift action to strengthen Canada’s life sciences sector, warning that global competition for biotech leadership is accelerating. The group called for expanded venture capital programs, increased non-dilutive funding, enhanced SR&ED tax incentives, regulatory modernization, and improved vaccine access.
Meanwhile, Canada’s regulatory weaknesses are under increased scrutiny. In a Macdonald Laurier article, former Ontario Medical Association president Dr. Shawn Whatley explained that U.S. tariffs and Trump’s Most Favoured Nation (MFN) pricing policy present an opportunity for Canada’s life sector to remove regulatory barriers and promote innovation.
Even before Trump’s tariff threat, the sector contributed less than 1% to global pharmaceutical research and development spending and is plagued by stringent regulations on drug and medical technology development. Dr. Whatley called for structural reforms, simple regulatory processes, a national competitiveness strategy, and incentives for innovation.
Public Health Spending at Risk as Digital Health Gains Ground
As reported by The Hill Times, the upcoming federal budget is expected to balance cost-cutting with new investments, while facing pressure to maintain commitments to pharmacare, expand mental health services, and fund diabetes treatments. Business leaders and former ministers warned that increased defence spending and program cuts could undermine these priorities, leaving uncertainty about future funding for public health and social programs.
Meanwhile, Noah Schulz, provincial director of the Manitoba Health Coalition, warned that the federal pharmacare plan, once promised protection by Prime Minister Mark Carney, is now at risk as his government shifts priorities amid economic pressures from U.S. trade policies.
In parallel, digital health innovation is gaining traction at the provincial level. In an opinion piece published in The Hill Times, Canada Health Infoway President and CEO Michael Green urged the federal and provincial governments to conduct more initiatives to integrate digital health solutions in public healthcare systems, such as data sharing platforms, artificial intelligence (AI) tools, and electronic health record (EHR) systems. According to Green, public-private partnerships must prioritize equitable access, privacy and security, and improving health outcomes for Canadians.
According to a report by CBC, Santé Québec is working on expanding the use of artificial intelligence (AI) tools to ease administrative burden in healthcare, including AI scribes like Plume IA. The app, which records and transcribes conversations between doctors and patients, received official certification in Quebec and is now being used by 10% of doctors in the province. After the recording, Plume IA writes a structured medical note, and Dr. Felix Lê-Phat-Hô claims that it saves him nearly three hours of paperwork on a daily basis. Plume IA co-founder Dr. James Tu, however, highlights the need to address issues such as cybersecurity, ethics, and accountability.
Two health institutions have also announced the adoption of Oracle Health’s electronic health record (EHR) system, including Cambridge Memorial Hospital and Sunnybrook Health Sciences Centre. Cambridge will integrate into the Waterloo Regional Health Network’s system, while Sunnybrook will begin using the technology in 2027.
Canada Gains Global Standing Amid Warnings on Pharmaceutical Oversight
Canada’s regulatory authority received a boost last week as Health Canada was named a WHO-Listed Authority (WLA), joining 38 other global regulators including Japan and the United Kingdom. The designation affirms Canada’s compliance with the highest standards for medical product oversight and is expected to increase international trust in Canadian pharmaceuticals, especially in low- and middle-income countries seeking faster access to safe, quality-assured medicines.
Yet a joint report from the World Health Organization (WHO) and the United Nations Office on Drugs and Crime (UNODC) revealed major weaknesses in the global pharmaceutical supply chain that have led to fatal medicine contaminations with toxic chemicals such as diethylene glycol and ethylene glycol, particularly affecting children.
The report analyzed eight case studies from 1996 to 2024, uncovering systemic failures driven by economic pressures, weak regulatory oversight, poor procurement practices, and low adverse event reporting.
It issued recommendations for regulators, manufacturers, and enforcement agencies to strengthen oversight, improve testing, and enhance global information sharing to prevent future incidents.
As Canada prepares to finalize its 2025 federal budget, the path forward will require more than policy tweaks—it demands coordinated, cross-sector action. With mounting pressure to deliver on health innovation, regulatory reform, and global leadership, the decisions made in the coming weeks will shape not just budgets but the future of Canada’s place in the global life sciences landscape.
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