During the apex of COVID-19, respiratory viruses, and flu season, Alexandre Clarizio went to the pharmacy to pick up antibiotics for his wife and daughter. He encountered something many Canadians have run into over the past few years: a shortage.
“I was flabbergasted,” Clarizio said in an interview with BetaKit. “Why do we have shortages and back orders in Canada?”
“I was flabbergasted. Why do we have shortages and back orders in Canada?”
Clarizio was completing a master’s degree in industrial operations at Polytechnique Montréal—and this seemed like a supply-chain problem he could solve. After calling pharmaceutical companies to understand the scale of the shortage issues, he reached Delpharm’s Boucherville, Que. plant, which told him they’d support a research project to help streamline production.
That research has since become the venture-backed startup Kaster Technologies, and Delpharm has become a client. The company announced on Monday that it has closed a $1.6-million CAD pre-seed equity round led by Graphite Ventures, with participation from Hidden Layers Capital and angel investor Louis-Martin Rousseau, Clarizio’s Polytechnique director.
Clarizio said he connected with his investors through the Montréal edition of the Creative Destruction Lab accelerator program. Though he claimed Kaster was approached by multiple American VCs, the founder and CEO said the company still has lots to work on in Canada and would explore that option when it comes time to expand to the US.
Kaster’s software platform considers a manufacturer’s production cycle, including equipment, constraints, and stock, and produces optimized production plans. The startup claims its product can increase production capacity by 20 percent, without new equipment.
Clarizio said generic drug makers that supply to many Canadian hospitals are struggling to keep up with high demand and high prices. “Their prices for everything else—their own suppliers, the ingredients—keep increasing,” he said. “So we help alleviate that margin stress.”
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The Canadian government created a task force to address drug shortages in 2022, in the wake of shortages that ranged from fever-reducers for children to antibiotics for tuberculosis. Health Canada has since introduced a plan to bolster the supply of needed pharmaceuticals when shortages are caused by manufacturing issues and spikes in demand. The plan includes maintaining a list of drugs vulnerable to shortages, requiring safety shortage stocks for certain drugs, and introducing new reporting requirements from manufacturers.
The company uses AI in its software and internally, in a “guided, intentional” way, Clarizio said. In a regulated industry like pharmaceuticals, he said that Kaster must be cautious about what kind of data it puts into the large-language models it uses.
Kaster plans to use the funding to refine the company’s software as it gears up to sell to new drug makers, as well as add a few more employees to its full-time team of six. The startup also signed a “strategic commercial partnership” with Québec supply chain company Optel to help bring Kaster’s product to market.
Feature image courtesy Kaster Technologies.