Discover how Canadian government funding enabled Dr. Frederick Banting's insulin breakthrough in 1921, transforming diabetes from a death sentence into a manageable condition and creating immeasurable returns on a modest public investment.
In the sweltering summer of 1921, a young Canadian surgeon named Frederick Banting was working feverishly in a cramped laboratory at the University of Toronto. With barely enough money to buy supplies and only a medical student named Charles Best as his assistant, Banting was racing against time to prove a theory that could save millions of lives. What he didn't know was that the modest government support enabling his research would yield one of the highest returns on investment in medical history.
Today, insulin saves approximately 7.4 million lives annually worldwide. But the story of how this life-saving treatment came to be—and the crucial role of Canadian government funding in its discovery—offers powerful lessons for modern innovators and policymakers about the transformative potential of public investment in research.
Before 1921, a diagnosis of Type 1 diabetes was essentially a death sentence. Children diagnosed with the condition rarely lived more than a year or two, slowly wasting away despite desperate attempts at treatment through starvation diets that only prolonged the inevitable. Parents watched helplessly as their children grew weaker by the day, knowing that medical science had no answers.
Dr. Frederick Banting, a 29-year-old orthopedic surgeon struggling to establish his practice in London, Ontario, had an idea that challenged conventional medical thinking. After reading an article about the pancreas late one October night in 1920, Banting hypothesized that if he could isolate the pancreatic secretions before the organ's digestive enzymes destroyed them, he might be able to treat diabetes.
The problem? Banting had no laboratory, no funding, and no research experience. Private investors weren't interested in funding what seemed like a long-shot medical experiment from an unknown doctor. This is where government-backed infrastructure made all the difference.
Banting approached Professor John Macleod at the University of Toronto—a publicly funded institution that received substantial government support for medical research. Initially skeptical, Macleod eventually agreed to provide Banting with laboratory space, basic equipment, and a student assistant for the summer of 1921. This decision was only possible because the university had government funding specifically allocated for exploratory medical research.
The initial "investment" was remarkably modest by today's standards:
In 1921, the alternatives to government funding were virtually non-existent for unproven medical research. Here's why public investment was crucial:
Risk Tolerance: Private investors and pharmaceutical companies of the era were unwilling to fund speculative research with no guaranteed return. The mortality rate for diabetic patients was 100%, but the market for any potential treatment was considered too small and the science too uncertain for commercial investment.
Infrastructure Access: The government-funded University of Toronto provided not just money, but access to laboratories, libraries, and—critically—connections to other researchers. When Banting and Best struggled to purify their extract, the university brought in biochemist James Collip, whose expertise proved essential to creating a usable treatment.
Public Mission Alignment: Unlike private investors who would have demanded exclusive rights and maximum profits, government funding came with the expectation of public benefit. This alignment proved crucial to insulin's story.
Long-term Commitment: Government funding allowed for sustained research even when early results were mixed. The first patient injection in January 1922 caused an allergic reaction and only modest blood sugar reduction. Private funding might have been withdrawn, but public support continued, allowing the team to refine their process.
By January 23, 1922, the team had refined their extraction process. They injected their improved pancreatic extract into 14-year-old Leonard Thompson, who was near death at Toronto General Hospital. Within 24 hours, Thompson's blood sugar levels normalized, and his symptoms began to reverse. The boy who had been given days to live would go on to live another 13 years—dying eventually from pneumonia, not diabetes.
Word of the miracle spread quickly. The team published their findings, and suddenly diabetic children who had been sent home to die were returning to the hospital for treatment. One of the most poignant stories involves Elizabeth Hughes, daughter of U.S. Secretary of State Charles Evans Hughes. Weighing just 45 pounds at age 14, Elizabeth received insulin treatment from Banting and gained 50 pounds within months, eventually living to age 73.
Here's where the government investment story becomes even more compelling. Rather than selling the insulin patent to the highest bidder, Banting, Best, and Collip sold it to the University of Toronto for one dollar each—$3 total. The university then gave pharmaceutical companies royalty-free licenses to produce insulin, with the agreement that it would be sold at reasonable prices.
The Ontario government and federal government continued to support insulin development through:
By 1923, insulin was being produced in sufficient quantities to treat diabetic patients across Canada and internationally. The Connaught Laboratories, with continued government support, became one of the world's leading insulin producers while keeping prices affordable.
Calculating the return on investment for insulin requires looking beyond simple financial metrics:
Direct Financial Returns:
Indirect Returns:
Human Returns (Incalculable):
The insulin story offers crucial insights for contemporary government funding programs like IRAP, SR&ED tax credits, and SDTC grants:
Today, Canada's biotechnology sector—built on the foundation of discoveries like insulin—employs over 140,000 people and generates billions in annual revenue. Companies like AbCellera, which received early IRAP funding and went on to develop COVID-19 antibody treatments, follow in insulin's footsteps, showing that government investment in biomedical research continues to yield extraordinary returns.
The story of insulin reminds us that when government funding supports visionary researchers tackling seemingly impossible problems, the returns can be measured not just in dollars, but in lives saved, industries created, and hope restored. For modern entrepreneurs and researchers working on today's "impossible" problems—from climate change to cancer—insulin's story offers both inspiration and a roadmap: with public support at critical moments, world-changing innovations become possible.
As Banting himself reflected years later: "Insulin belongs to the world, not to me." This philosophy, enabled by government funding that prioritized public good over private profit, transformed diabetes from a death sentence into a manageable condition and established Canada as a permanent leader in medical innovation. The roughly $15,000 in government support didn't just save lives—it created an entirely new paradigm for how public investment can catalyze discoveries that benefit all humanity.
