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Ex-Liberal MP Frank Baylis scores windfall as Boston Scientific buys his heart device business for US$1.75-billion

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photo of Frank Baylis, Executive Chairman of the Board, Baylis Medical and Kris Shah, President, Baylis Medical (Frank is on the left and Kris on the right). Handout

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Frank Baylis is the son of a Barbadian immigrant who won a landmark discrimination case in Quebec in the 1960s. He has also made movies, and served as a member of Parliament.

Now, he’s one of Canada’s wealthiest people, because the company he helped build for 30-plus years, Baylis Medical Company Inc., has agreed to sell its cardiovascular medical devices business to Boston Scientific Corp. for US$1.75-billion.

Boston Scientific is picking up a fast-growing, profitable business, with expected 2022 revenues of US$200-million and 850 employees.

Mr. Baylis, the company’s executive chairman, and Kris Shah, its president, co-own the debt-free enterprise, which has never raised outside equity. It’s the third time their Montreal-based business has sold a division to a major U.S. company, making them arguably Canada’s most successful medical device entrepreneurs.

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But the pair, aged 58 and 60 respectively, aren’t finished just yet. They plan to put the proceeds to work building another medical devices business, Baylis Medical Technologies, focused on radiology and neurosurgery.

“I’m excited to see the cardiology business we’ve worked so hard to develop in Canada over many years evolve and grow through this agreement with Boston Scientific to improve the lives of even more patients around the world,” Mr. Baylis said in a statement. He added that he is looking forward to working on the new company.

Baylis Medical was founded by Mr. Baylis’s mother, Gloria Baylis, in 1986, as an importer and distributor of medical devices. It was a second career for Ms. Baylis, who had emigrated from Barbados to Montreal in the early 1950s and worked as a nurse.

She made headlines after she was turned down for a nursing job in 1964 at Montreal’s Queen Elizabeth Hotel, then owned by Hilton of Canada Ltd. After being told the position was taken, she discovered the job was unfilled, and complained under a new Quebec law that made racial discrimination by employers illegal. She won her case, but the hotel appealed for years. She later found work as a nurse – including a stint for Dr. Henry Morgentaler – and relocated to Toronto before founding her company.

Her son Frank and Mr. Shah joined the business in 1989. The two men had met during a co-op placement during their first year in electrical engineering at the University of Waterloo. Both were sons of immigrant nurses – Mr. Shah’s Indian-born father worked in the profession – and both had ambitions to be self-employed. “We looked for opportunities, businesses we could start, technologies we could incubate,” Mr. Shah said.

They ended up working for Baylis. For a decade, they also ran a consulting company that helped innovative businesses apply for tax credits.

By 2001, they were ready to push Baylis into creating and selling its own devices. They set up research and development facilities in Mississauga, collaborated with local hospitals and built specialized instruments that helped identify and alleviate spinal pain using radiofrequency technology.

They sold that division to their US distributor, Kimberly-Clark Corp., for between US$30-million and US$50-million in 2009. In 2016 they sold another device program, for treating cancers in the spine, to Medtronic PLC for a similar amount. (Ms. Baylis retired in 2004 and died in 2017.)

Meanwhile, they focused on making products for use in cardiovascular procedures. Those included a five-milimetre-thick, one metre-long plastic pipeline used to deliver therapies to the heart. It is inserted in the groin and guided through the body to carefully puncture the muscular organ using radiofrequency energy.

As the cardiovascular business grew, Mr. Baylis followed his heart in other directions. He co-wrote screenplays and produced two films, in which he also acted. The long-time Liberal fundraiser even left his company to run for the party in the 2015 federal election. He won the Pierrefonds-Dollard riding in Quebec.

He returned to the business in 2019, but his political connections came up in a negative light after a Baylis-owned company won a subcontract to make ventilators during the pandemic. Mr. Baylis testified to MPs last December that he didn’t use his political relationships to secure any contracts.

Mr. Shah said the pair decided to sell the cardiovascular business, whose sales are concentrated in the U.S. and Japan, after looking for a partner to help it expand to the rest of the world. They were not interested in taking on an equity investor after being bootstrapped for so long. “We were quite happy with how things were going.”

Mr. Shah described their move into radiology and neurosurgery as “the next step to evolve into the next version of ourselves.”

“We enjoy medical technology, we get a lot of personal energy and pride from that,” he said.

The business will have a running start, he added, because of their considerable resources and managerial capacity, as well as their facilities, engineering expertise and the 120 employees they will retain after the deal.

“Hopefully we can grow faster than even our cardiovascular business,” Mr. Shah said.

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Consumer debt tops $2.36 trillion in third quarter, up 7.3 per cent from last year

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Equifax Canada says an increase in borrowers helped push total consumer debt to $2.36 trillion in the third quarter for a 7.3 per cent rise from last year, even as mortgage volumes decline.

It says average non-mortgage debt rose to $21,183 for the highest level since the second quarter of 2020, with early signs of strain starting to show in auto loans and credit cards.

Overall non-mortgage debt came in at $599.9 billion for a 5.3 per cent climb from last year, and up 1.9 per cent from the third quarter of 2019, as the number of borrowers rose by 3.1 per cent.

Rebecca Oakes, Equifax Canada’s head of advanced analytics, says the rising debt stems from a combination of growth from immigration, pent-up spending, as well as increased borrowing as consumers feel the strain of higher living costs.

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Credit card spending in the quarter was up 17.3 per cent from last year to an all-time high for the time period.

Average spending put on credit cards was almost $2,447, a 21.8 per cent jump from the third quarter of 2019.

There’s been an increase in credit card spending and new cards issued across all consumer segments, including the sub-prime segments, said Oakes in a statement.

She said there are some signs that borrowers are starting to have trouble covering the bills, with average payment rates for those who carry a balance down from a year ago, she said.

“Consumers have been making strong payments, but we are starting to see a shift in payment behaviour especially for credit card revolvers — those who carry a balance on their card and don’t pay it off in full each month.”

Delinquencies on auto loans have also started to trend up, especially those opened since late 2021, she said.

The overall rate of more than 90 day delinquencies for non-mortgage debt was 0.93 per cent, up from 0.87 last year, though insolvencies are still well below pre-pandemic levels.

New mortgage volume dropped 22.7 per cent in the quarter compared with last year and by 14.9 per cent compared with the third quarter of 2019. First-time home buyers are paying over $500 more for almost the same loan amounts as first-time buyers last year.

Overall insolvency rates are up from a year ago but from a relatively low starting point, and there are some areas of concern including a rise in consumer proposals by seniors, said Oakes.

“The true impact of interest rate hikes could be visible by the end of 2023.”

 This report by The Canadian Press was first published Dec. 6, 2022.

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Trudeau, Ford mark opening of Canada’s first full-scale electric vehicle plant

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The Canadian Press


Published Monday, December 5, 2022 5:06AM EST


Last Updated Monday, December 5, 2022 1:17PM EST

Prime Minister Justin Trudeau and Ontario Premier Doug Ford are celebrating the opening today of Canada’s first full-scale electric vehicle manufacturing plant.

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Trudeau says electric delivery vans have started rolling off the line today at the General Motors CAMI production plant in Ingersoll, Ont., which has been retooled to build the company’s BrightDrop all-electric vehicle brand.

The prime minister was joined by Ford and the province’s Economic Development Minister Vic Fedeli to mark the milestone.

The provincial and federal governments each invested $259 million toward GM’s $2-billion plan to transform its Ingersoll plant and overhaul its Oshawa, Ont., plant to make it EV-ready.

The federal government says the Ingersoll plant is expected to manufacture 50,000 electric vehicles by 2025.

Canada intends to bar the sale of new internal-combustion engines in passenger vehicles by 2035.

This report by The Canadian Press was first published Dec. 5, 2022.

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Food prices in Canada: Families to pay $1,065 more in 2023

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HALIFAX –

Canadians won’t escape food inflation any time soon.

Food prices in Canada will continue to escalate in the new year, with grocery costs forecast to rise up to seven per cent in 2023, new research predicts.

For a family of four, the total annual grocery bill is expected to be $16,288 — $1,065 more than it was this year, the 13th edition of Canada’s Food Price Report released Monday said.

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A single woman in her 40s — the average age in Canada — will pay about $3,740 for groceries next year while a single man the same age would pay $4,168, according to the report and Statistics Canada.

Food inflation is set to remain stubbornly high in the first half of 2023 before it starts to ease, said Sylvain Charlebois, lead author of the report and Dalhousie University professor of food distribution and policy.

“When you look at the current food inflation cycle we’re in right now, we’re probably in the seventh-inning stretch,” he said in an interview. “The first part of 2023 will remain challenging … but we’re starting to see the end of this.”

Multiple factors could influence food prices next year, including climate change, geopolitical conflicts, rising energy costs and the lingering effects of COVID-19, the report said.

Currency fluctuations could also play a role in food prices. A weaker Canadian dollar could make importing goods like lettuce more expensive, for example.

Earlier this year the loonie was worth more than 80 cents US, but it then dropped to a low of 72.17 cents US in October amid a strengthening U.S. dollar. It has hovered near the 74 cent mark in recent weeks, ending Friday at 74.25 cents US.

“The produce section is going to be the wild card,” Charlebois said. “Currency is one of the key things that could throw things off early in the winter and that’s why produce is the highest category.”

Vegetables could see the biggest price spikes, with estimates pegging cost increases will rise as high as eight per cent, the report said.

In addition to currency risks, much of the produce sold in Canada comes from the United States, which has been struggling with extremely dry conditions.

“The western U.S., particularly California, has seen strong El Nino weather patterns and droughts and bacterial contaminations, and that’s impacted our fruit and vegetable suppliers and prices,” said Simon Somogyi, campus lead at the University of Guelph and professor at the Gordon S. Lang School of Business and Economics.

“The drought is making the production of lettuce more expensive,” he said. “It’s reducing the crop size but it’s also causing bacterial contamination, which is lessening the supply in the marketplace.”

Prices in other key food categories like meat, dairy and bakery are predicted to soar up to seven per cent, the researchers found.

The Canadian Dairy Commission has approved a farm gate milk price increase of about 2.2 per cent, or just under two cents per litre, for Feb. 1, 2023.

“The increase for February is reasonable but it comes after the unprecedented increases in 2022, which are continuing to work their way through the supply chain,” Charlebois said of the two price hikes of nearly 11 per cent combined in 2022.

Meanwhile, seafood is expected to increase up to six per cent, while fruit could increase up to five per cent, the report said.

Restaurant costs are expected to increase four to six per cent, less than supermarket prices, the report said.

Rising prices will push food security and affordability even further out of reach of Canadians a year after food bank use reached a record high, the report said.

The increasing reliance on food banks is expected to continue, with 20 per cent of Canadians reporting they will likely turn to community organizations in 2023 for help feeding their families, a survey included in the report found.

Use of weekly flyers, coupons, bulk buying and food rescuing apps also ticked up this year and is expected to continue growing in 2023, the report said.

“We’re in the era now of the smart shopper,” said Somogyi, also the Arrell Chair in the Business of Food.

“For certain generations, it’s the first time that they’ve had to make a list, not impulse buy, read the weekly flyers, use coupons, buy in volume and freeze what they don’t use.”

Last year’s report predicted food prices would increase five to seven per cent in 2022 — the biggest jump ever predicted by the annual food price report.

Food costs actually far exceeded that forecast. Grocery prices were up 11 per cent in October compared with a year before while overall food costs were up 10.1 per cent, according to Statistics Canada.

“We were called alarmists,” Charlebois said of the prediction that food prices could rise seven per cent in 2022. Critics called the report an “exaggeration,” he said.

“You’re always one crisis away from throwing everything out the window,” Charlebois said. “We didn’t predict the war in Ukraine, and that really affected markets.”

This report by The Canadian Press was first published Dec. 5, 2022.

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