Canadian Pharmaceutical Industry Profile (2014)

Canada's Pharmaceutical Sector

The pharmaceutical sector is one of the most innovative industries in Canada. It is composed of companies developing and manufacturing innovative medicines and generic pharmaceuticals, as well as over the counter drug products. The sector is made up of a number of sub-sectors that service different market segments, these include brand-name pharmaceuticals companies, generic drug firms, biopharmaceutical small and medium sized enterprises (biopharmaceutical SMEs), and contract service providers (CSPs).

Size and Structure of the Industry

  • Pharmaceutical sales in Canada have a 2.5 percent share of the global market, making Canada the 9th largest world market. Since 2009, compound annual growth has slowed to 0.4 percent (IMS Health Pharmafocus 2018).
  • Companies undertake research and development (R&D) to develop new or improved patented therapies, while others develop bio-equivalent copies of innovative drugs once patents expire. An emerging field of biologics and subsequent entry biologics (SEBs) is also taking shape.
  • Brand-name products account for 77 percent of Canadian sales and 34 percent of prescriptions. Generics account for the rest.
  • In 2014, the manufacturing portion of the sector employed 26,300 people and over the last 5 years employment has fallen by 6.3 percent.
  • The industry is clustered mainly in the metropolitan areas of Vancouver, Montreal and Toronto.
Table 1: Yearly Employment in Manufacturing Portion of Pharmaceutical Sector
Year Employment
Source: Statistics Canada, Monthly Labour Force Survey, CANSIM table 281-0023, Yearly employment is 12 month trailing average from July 2014.
200527,923
200629,935
200729,379
200828,635
200928,563
201028,059
201126,288
201226,974
201327,022
201426,301

Canadian Drug Sales

  • From 2001 to 2013, total pharmaceutical sales (including non-patented over the counter medicines) in Canada have almost doubled to $22 billion, with 89 percent sold to retail drug stores and 11 percent sold to hospitals. Governments account for 42 percent of drug expenditures and private payers the remaining 58 percent (private coverage and individuals).
  • Annual domestic pharmaceutical manufacturing production is valued at $7.7 billion as of August 2014 with a declining compound annual growth rate of 2.5 percent since 2008 (Statistics Canada CANSIM table 304-0014).
  • Cross-border internet pharmacy sales between Canada and the U.S. grew rapidly from 2000 to 2003, but have since steadily declined to $105 million or 2 percent of total exports in 2013.
Table 2: Canadian Manufacturer's Sales of Patented and Non-Patented Drugs from 2004 to 2013 (Sales in $ billions)
Year Patented Non-Patented Total
Source: 2013 PMPRB Annual ReportFootnote 1
200411.04.215.2
200511.54.816.3
200611.95.717.6
200712.37.219.5
200812.67.820.4
200912.98.921.8
201012.49.722.1
201112.98.721.6
201212.88.821.6
201313.68.422.0

R&D Activities

  • Total business expenditures on R&DFootnote 2 by Canadian pharmaceutical companies has fallen below $1 billion since 2011. From 2001 to 2013, industry R&D spending has fallen by 29 percent.
  • However, the industry's changing business model means more R&DFootnote 2 is being conducted externally and through partnerships. This includes investments in SMEs, venture funds and work with Canada's growing CSP sector. A recent survey by Rx&DFootnote 3 and KPMG highlights many of these new investments, indicating additional R&DFootnote 4 expenditures of $247M in 2013.
  • The pharmaceutical industry is second after the Information Technology (IT) sector in R&D intensity. Twenty pharmaceutical and biotechnology companies are listed in Research Infosource's Top 100 Corporate R&D Spenders 2014 in Canada.
  • R&D costs per drug averaged US$605 million over 12-13 years (Tufts Center for the Study of Drug Development). Full costing (including amortization of research failures and opportunity cost of capital) raises average costs significantly. A generic drug may take 2 to 3 years and requires $3 to $10 million of R&D to develop and prove equivalency with original drug.
Table 3: Total Canadian Pharmaceutique Business R&DFootnote 1 Expenditures (2004 to 2013)
Year Expenditure (in $ billions)
Source: 2013 PMPRB Annual Report
20041.17
20051.23
20061.21
20071.33
20081.31
20091.27
20101.18
20110.99
20120.89
20130.75
Table 4: 2013 Distribution of Canadian  Business R&D Expenditures By Region
Region R&D Distribution (%)
Source: 2013 PMPRB Annual Report
Ontario 44.1
Quebec 40.0
West 13.1
Maritimes 2.8

International Trade

  • From 2001 to 2013, pharmaceutical exports and imports between Canada and the rest of the world increased by 155 percent and 96 percent respectively.
  • More than half of Canadian production is exported (primarily to the United States) and a significant portion (62.3%) of the Canadian market is supplied by foreign imports (33 percent of imports from the U.S. and 43 percent from EU).
Table 5: Total Canadian Pharmaceutical Trade (2004 to 2013) (in $ billions)
Year Domestic Exports Imports Trade Deficit
Source: Statistics Canada, Industry Canada Trade data online
20043.79.65.5
20053.910.05.7
20065.111.45.9
20076.512.35.5
20086.512.75.9
20097.214.57.0
20105.713.37.2
20114.913.57.7
20125.213.58.0
20135.613.78.1

Leading Companies

  • In 2013 the top ten pharmaceutical companies accounted for half of total Canadian pharmaceutical sales including both prescription and non-prescription medicines. (IMS Health Pharmafocus 2018)
Table 6: Leading Pharmaceutical Companies in Canada in 2013
Rank Leading Companies Total Sales
($ billions)
Market Share (%)
Source: IMS Health Pharmafocus 2018
1 Johnson & Johnson 2.13 9.6
2 Pfizer 1.45 6.5
3 Apotex 1.19 5.4
4 Merck 1.17 5.3
5 Novartis 1.13 5.1
6 Teva 0.97 4.4
7 GlaxoSmithKline 0.91 4.1
8 Roche 0.80 3.6
9 Pharmascience 0.77 3.5
10 AstraZeneca 0.77 3.4

Leading Products

  • The top ten pharmaceutical products sold in Canada account for 14 percent of 2013 industry sales. Leading therapeutic categories including medicines for arthritis, depression, cholesterol reduction and Asthma therapies.
Table 7: 2013 Leading Pharmaceutical Products in Canada
Rank Leading Products Therapeutic Subclass Total Sales ($ millions) 2012 Growth (%) Company
Source: IMS Health Pharmafocus 2018
1 Remicade Anti-arthritic 694.9 23.1 Schering
2 Humira Anti-arthritic 434.9 18.2 AbbVie
3 Lucentis Vision loss 402.2 40.4 Novartis
4 Enbrel Anti-arthritic 332.9 5.4 Amgen
5 Cipralex Antidepressant 250.0 16.1 Lundbeck
6 Rituxan Autoimmune 217.6 8.7 Roche
7 Cymbalta Depression 204.7 19.2 Lilly
8 Advair Asthma Therapy 204.5 0.2 Abbott
9 Spiriva Brochodilators 204.3 6.3 Boehringer
10 Ezetrol Cholesterol reduction 185.0 6.4 Merck

Health Expenditures on Drugs

According to the Canadian Institute for Health Information's National health expenditure reportFootnote 5:

  • About 60 percent of total health expenditure in 2014 will be directed to hospitals, physicians and drugs.
  • Pharmaceuticals are the second largest component of health care expenditures representing 16 percent of total expenditures.
  • Growth in drug spending has slowed in recent years and is being outpaced by spending on hospitals and physicians.
Table 8: Canada's Health Expenditure (2005 to 2014)
Expenditure ($ billions)
Year Total Health Expenditures On Drugs Share of Total (%)
Source: Canadian Institute of Health Information (CIHI); f=forecasted
2005 140.3 23.2 16.5
2006 150.8 25.1 16.6
2007 160.3 26.4 16.5
2008 172.1 27.9 16.2
2009 182.1 29.5 16.3
2010 193.3 32.4 16.8
2011 199.4 33.0 16.5
2012 205.4 33.3 16.2
2013f 210.4 33.7 16.1
2014f 214.9 33.9 15.8

Canadian Drug Prices

  • Since 1998, when the PMPRB began collecting data on drug prices, the price of pharmaceuticals has been increasing at a slower rate than consumer inflation.
  • Canadian pharmaceutical prices have been on average lower than foreign countriesFootnote 6.
Table 9 : Average Ratio of Median International Price to Canadian Price in Patented Drug Products (2004 to 2013)
Year Ratio
Source: 2013 PMPRB Annual Report
2004 1.16
2005 1.14
2006 1.07
2007 1.03
2008 1.03
2009 1.04
2010 1.06
2011 1.05
2012 1.07
2013 1.06

Footnotes

Footnote 1

The Patented Medicines Prices Review Board (PMPRB) protects and informs Canadians by ensuring that the prices of patented medicines sold in Canada are not excessive and by reporting on pharmaceutical trends. To learn more visit http://pmprb-cepmb.gc.ca/

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Footnote 2

R&D refers to Scientific Research and Experimental Development (SR&ED) expenditures outlined in Income Tax Regulation. For more information please visit http://www.cra-arc.gc.ca/txcrdt/sred-rsde/clmng/brfhstrydfntnsrd-eng.html

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Footnote 3

The survey is published annually by the association of Canada's Research-Based Pharmaceutical Companies (Rx&D) and can be viewed at http://www.canadapharma.org/en/home

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Footnote 4

The additional R&D measured is not considered eligible for SR&ED as per the Income Tax Regulation.

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Footnote 5

This annual report published by CIHI tracks and reports health care spending across Canada. To learn more visit http://www.cihi.ca

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Footnote 6

The PMPRB conducts an international price comparison of all patented drugs sold in Canada using seven foreign countries: France, Germany, Italy, Sweden, Switzerland, the United Kingdom and the United States.

Return to footnote 6 referrer

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