The Canadian province of Quebec, located in our northern neighbor's central region and home to approximately 7.3 million people, has long been known for its European charm and popularity as a year-round tourist destination for Americans. In recent years, however, Quebec has also begun to carve out a new identify for itself as an emerging powerhouse in knowledge-based industries.

Several factors have combined to propel Quebec to the head of the class in the research and development field. For one thing, the province is home to several highly respected universities that are widely regarded as being world leaders in their fields.

The best known of these is McGill University, which is located in Montreal, the largest city in Quebec. Other schools that offer world-class scientific expertise include the University of Montreal, which lies across town from McGill, and Laval University, which is situated in the provincial capital of Quebec City.

In addition, Quebec is also home to a number of privately-operated research organizations that have done exciting work in their fields. Two leading examples of such institutions would be the Centre de recherchÇ industrielle du Quebec (CRIQ), which is located in Montreal, and the Institut national d'optique (INO) in Quebec City.

Other key advantages have also helped to spur the growth in R&D activity in Quebec. The provincial government is clearly sold on the notion that Quebec's future lies in science and technology, and over the past decade it has doubled its own spending on R&D from Cad. $236 million in 1992 to $470 million today.

In addition, Quebec offers some of the most generous fiscal and tax incentives for R&D that can be found in the industrialized world. For example, R&D enterprises operating in Quebec are eligible for fully refundable tax credits of 20 percent on salaries and subcontracting, 40 percent on the costs of R&D contracts undertaken by qualifying research centers, and 40 percent on project expenses for pre-competitive research. In addition, foreign researchers who relocate to Quebec are eligible for a five-year holiday on provincial personal income tax.

Companies that are active in knowledge-based industries can often benefit from a variety of different grant programs, and from a business and financial community that is eager to help them succeed. Access to capital is readily available from many different sources, and in the past twenty years, Quebec has witnessed the emergence of a whole new class of entrepreneurs and business executives who are well-educated, dynamic, eager to do business in global markets, and quite prepared to take risks.

Top-notch Talent

Perhaps the most important factor that has contributed to the phenomenal blossoming of Quebec's R&D industry has been the ready availability of top-notch scientific and engineering talent. Each year the province's universities turn out an ample supply of highly qualified graduates, many of whom find employment in research-oriented capacities.

Companies that are active in R&D in the province also have discovered that Quebec offers an environment in which it is easy to not only attract but also retain good people. During the tech boom of the late 1990s it was not unheard of for many Silicon Valley companies to experience annual employee turnover rates in excess of 30 percent. In Quebec, by contrast, turnover rates of scientific and engineering personnel seldom exceed 5 percent.

Certain fields have emerged as being the key industrial pillars that are driving Quebec's spirited charge into the New Economy. In Montreal, for example, the hot fields include aerospace, pharmaceuticals, multimedia, and biotechnology. Further north in Quebec City the biggest success stories are coming out of the optics and photonics sector, but other fields like life sciences are also rapidly emerging.

Laval is a Leader in Nutraceuticals

One of the most distinguished research institutions in the province is Laval University.

The oldest institution of higher learning in Quebec, Laval traces its roots back to 1663 and is named after a famous Bishop who presided over Quebec during a period when it was a colony of France. Today, Laval University has nearly 30,000 students on campus and an annual research budget of Cad. $160 million.

Laval is well known for its excellence in many fields of science, but the university has acquired a particularly impressive track record in several rapidly growing fields. One of these is functional foods and nutraceuticals, the science of creating nutritionally enhanced foods that help to promote better human health. Laval has established a special institute in this field, INAF, which operates under the direction of Paul Paquin, a professor of agricultural science, and this summer opened a brand new facility on campus that incorporates state-of-the-art food processing technologies.

INAF's research is multidisciplinary in nature and focuses on the commercial as well as the scientific issues associated with the nutraceuticals industry. Much of the institute's fundamental research revolves around identifying bioactive molecules from animal, plant, dairy, and marine sources, and developing new techniques to assess their nutritional value and enhance the levels of these molecules in common food products.

In addition, INAF's researchers are also involved in conducting economic and consumer studies intended to help support the growth of the nutraceuticals industry.

Focusing on Photonics and Optics

Another area in which Laval can lay claim to world-class achievements is optics and photonics, the science of using light to measure, calculate, and transform. The university began to conduct research in this field during the mid-1960s, and today Laval's Centre for Optics, Photonics, and Lasers (COPL) is widely considered to be the best research institution of its kind in Canada, and one of the best in the world.

COPL brings together academics drawn from two of Laval's strongest departments, Physics and Electrical and Computer Engineering. The research itself focuses on a number of key scientific issues, including transmission, wavelength division multiplexing, image processing, laser miniaturization, optical information processing, and ultrashort and intense optical pulses. COPL's expertise in its field was formally recognized by the Canadian government in 1998, when Laval was selected to become the lead player in a national network of Centers of Excellence in optics and photonics.

Quebec City's stature as a global leader in the photonics field is further strengthened by the presence of another research powerhouse, the Institut national d'optique (INO). Founded in 1988, INO is a privately-operated research facility located in the Metro Quebec High Tech Park in the city's northeast corner. Under the leadership of Dr. Jean-Guy Paquet, the former head of nearby Laval University, INO currently employs some 185 scientists and researchers, and is rapidly adding to its talent pool.

The institute's research activities are grouped into four broadly defined areas of specialization: photonic materials and processes, photonics and guided-wave optics, laser systems technologies, and digital and optical systems. INO's scientific activities are overseen by a power-packed research advisory board that includes representatives of such global high-tech powerhouses as JDS Uniphase, Nortel Networks, and Bell Canada.

Montreal Universities Spur Innovation

A two-hour drive south of Quebec City brings you to Montreal, the largest city in the province and home to approximately four million inhabitants.

In recent years, Montreal's economy has been driven by the rapid growth of knowledge-based industries in the region. Jacques Girard, president and CEO of Montreal International, believes that the city, which his organization is mandated to promote, is rapidly emerging as the "grey matter" capital of Canada, and as a result, Montreal's future prospects are now looking a lot brighter than they have in some time.

Girard says that Montreal has several advantages going for it, which make the city an excellent location for R&D activity. One is the fact that the city has four universities within close proximity to the downtown core, two of which are blessed with top-notch medical schools. He notes that at present there are approximately 250 active research centers within the Montreal region, some located on university campuses and others operated by private sector organizations.

Biotech and biopharmaceuticals are two particularly strong sectors in Montreal, and today the region receives about 40 percent of the research funds that are disbursed in these fields by various Canadian granting agencies.

One of the most active and successful research institutions in the city is the University of Montreal, the largest French-language university in the province. With more than 60 different academic departments and over 50,000 people on campus, the university spends a whopping $200 million each year on research, and is closely allied with the Quebec business community.

An example is the Centre for Transportation Research, which brings together multidisciplinary research teams from a variety of academic departments to conduct research on a variety of issues relating to transportation. Established in 1971, the Centre conducts both theoretical and highly applied research, and much of its work focuses on using sophisticated quantitative tools to conduct complex modeling and simulation exercises.

A key focus of the Centre's work involves developing new technologies that can be used in a variety of practical contexts. Examples of these would include MADITUC, a planning system now being used by urban transport commissions in major Canadian cities like Montreal, Toronto, and Winnipeg; SIMNAV, a computer modeling system which is used by Transport Canada to track maritime traffic; and HASTUS, a mass transit scheduling system which has now been adopted by over 135 organizations in 19 different countries.

McGill Spin-offs Have Bright Future

The other major presence on the Montreal R&D scene is McGill University, the largest English-language university in Quebec. Founded in 1821 and named after James McGill, a wealthy Montreal merchant of the time, McGill today boasts 22 faculties and schools and several affiliated teaching hospitals, and on campus you'll find students drawn from over 150 countries.

McGill is particularly well known for its highly esteemed medical school, and also enjoys an international reputation for excellence in a number of other scientific disciplines. During the past decade the university has also moved aggressively to strengthen its links to industry by establishing an Office of Technology Transfer (OTT). With a staff of nine officers, each of whom is responsible for a specific industry sector, the OTT is actively involved in areas such as intellectual property management, negotiation of material transfer agreements and industry-sponsored research contracts, and establishment of external partnerships.

For example, research that's been done in the area of life sciences has already led to the establishment of a number of interesting spin-off companies. One good example is Gemin X Biotechnologies, a start-up company that is rapidly emerging as a powerful force in the battle against cancer.

Gemin X Biotechnologies was the brainchild of Professors Philip Branton and Gordon Shore, two longtime colleagues in McGill's Department of Biotechnology. Working together in the mid-1990s, the two scientists hit upon the idea of defeating cancer by using small molecule drugs and viral death proteins to induce apoptosis, the phenomenon of programmed cell death.

In late 1996, after raising money from the Canadian Medical Discoveries Fund, Branton and Shore filed their first patents. Gemin X was formally incorporated in September of the following year, and in early 1998, the company's management team was beefed up with the addition of Dan Giampuzzi, a veteran executive with previous successes in biotechnology and pharmaceuticals to his credit. Results from initial research have been highly encouraging, and with US $12.6 million in hand from a second round of financing, Gemin X is now exploring potential opportunities to forge a strategic partnership with a large pharmaceutical firm.

Oriented Towards the Future

When all things are considered, it is clear that Quebec's remarkable success in transforming its economy and orienting it towards the opportunities of the future has been due in large part to the impressive R&D capabilities that are present in many regions of the province. As Quebec continues to build upon the powerful momentum that has already been established, observers can expect to see more and more international success stories originating from this "Northern Tiger" of science and technology.

Mike Kennedy is President of Kennedy Management Services, a consulting company with operations in Toronto and Montreal.

A specialist in Canadian and Quebec business affairs, he can be reached at

(416) 385-3942, or at mkennedy@idirect.com.