Pharmaceutical Industry Profile


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 8th largest world market. A 2.2 percent compound annual growth over the period 2009–2013 makes Canada the 7th fastest growing market globally. (IMS Health Pharmafocus 2017)
  • 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 76 percent of Canadian sales and 37 percent of prescriptions. Generics account for the rest.
  • In 2013, the manufacturing portion of the sector employed 27,000 people and over the last 10 years employment has increased by 1.6 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 2013.
200123,468
200224,318
200326,515
200427,610
200527,923
200630,083
200729,935
200828,634
200928,557
201028,041
201126,259
201226,923
201326,945
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Canadian Drug Sales

  • From 2001 to 2013, total pharmaceutical sales in Canada have almost doubled to $21.6 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).
  • Domestic pharmaceutical manufacturing production has been on a decline in Canada, valued at $7.7 billion in 2011, with average annual growth falling by 1.7 percent since 2004 (Statistics Canada CANSIM Table 301-0006).
  • Cross-border internet pharmacy sales between Canada and the U.S. grew rapidly from 2000 to 2003, but have since steadily declined to $103 million or 2 percent of total exports in 2011.
Table 2: Manufacturer's Sales of Patented and Non-Patented Drugs (2001 to 2012) (in $ billions)
Year Patented Non-Patented Total
Source: 2012 PMPRB Annual report
20017.64.111.7
20028.94.313.2
200310.23.814.0
200411.04.215.2
200511.54.816.3
200611.95.717.6
200712.37.219.5
200812.67.820.4
200912.9 8.921.8
201012.49.722.1
2011 12.9 8.721.6
2012 12.8 8.821.6
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R&D Activities

  • Total business expenditures on R&DFootnote 1 by Canadian pharmaceutical companies has fallen below $1 billion since 2011. From 2001 to 2012, industry R&D spending has fallen by 15.6 percent.
  • However, the industries 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&D and KPMG highlights many of these new investments, indicating additional R&DFootnote 2 expenditures of $221M in 2012.
  • The pharmaceutical industry is second after the Information Technology (IT) sector in R&D intensity. Twenty-two pharmaceutical and biotechnology companies are listed in Research Infosource's Top 100 Corporate R&D Spenders 2013 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 R&D Expenditures (2001 to 2012)
Year Expenditures (in $ billions)
Source: 2012 PMPRB Annual Report
20011.06
20021.20
20031.19
20041.17
20051.23
20061.21
20071.33
20081.31
20091.27
20101.18
20110.99
20120.89
Table 4: 2012 Distribution of Canadian  Business R&D Expenditures By Region
Region R&D Distribution (%)
Source: 2012 PMPRB Annual Report
Ontario 42.6%
Quebec 43.0%
West 13.9%
Maritimes 2.5%
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International Trade

  • From 2001 to 2012, pharmaceutical exports and imports between Canada and the rest of the world have increased by 136 percent and 93 percent respectively.
  • More than half of Canadian production is exported (primarily to the United States) and a significant portion of the Canadian market is supplied by foreign imports (34 percent of imports from the U.S. and 44 percent from EU).
Table 5: Total Canadian Pharmaceutical Trade (2001 to 2012) (in $ billions)
Year Domestic Exports Imports Trade Deficit
Source: Statistics Canada & US Census Bureau, Global Trade Atlas
20012.27.04.7
20022.48.15.5
20033.29.05.6
20043.79.65.5
20053.910.05.7
20065.110.45.7
20076.512.35.5
20086.512.75.9
20097.214.57.0
20105.713.37.2
20114.913.57.7
20125.213.58.0
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Leading Companies

  • In 2012 the top ten pharmaceutical companies accounted for 53.3 percent of total Canadian pharmaceutical sales including both prescription and non-prescription medicines. (IMS Health Pharmafocus 2017)
Table 6: Leading Pharmaceutical Companies in Canada in 2012
Rank Leading Companies Total Sales
($ billions)
Market Share (%)
Source: IMS Health Pharmafocus 2017
1 Johnson & Johnson 1.89 8.6
2 Pfizer 1.60 7.2
3 Apotex 1.27 5.7
4 AstraZeneca 1.22 5.5
5 Merck 1.11 5.0
6 Teva 1.03 4.7
7 Novartis 0.99 4.5
8 Abbott 0.95 4.3
9 GlaxoSmithKline 0.95 4.3
10 Pharmascience 0.77 3.5
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Leading Products

  • The top ten pharmaceutical products sold in Canada account for 14 percent of 2012 industry sales. Leading therapeutic categories are neuro-therapies, cardiovascular, and gastrointestinal.
Table 7: 2012 Leading Pharmaceutical Products in Canada
Rank Leading Products Therapeutic Subclass Total Sales ($ millions) 2012 Growth (%) Company
Source: IMS Pharmafocus 2017
1 Remicade Anti-arthritic 564.4 2.6 Schering
2 Crestor Cholesterol Reducer 411.6 1.9 AstraZeneca
3 Humira Anti-arthritic 373.5 1.7 Nycomed
4 Enbrel Anti-arthritic 315.8 1.4 Amgen
5 Lucentis Vision loss 286.4 1.4 Novartis
6 Lyrica Seizure Disorders 235.8 1.1 Pfizer
7 Cipralex Antidepressant 215.2 1.0 Purdue
8 Nexium Stomach acid control 210.1 1.0 Astrazeneca
9 Advair Asthma Therapy 203.9 0.9 Abbott
10 Rituxan Autoimmune 200.0 0.9 Roche
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Health Expenditures on Drugs

  • Pharmaceuticals are an important component of health care, representing 16 percent of total Canadian health expenditures. They are an increasingly important tool in healthcare and have become the second largest component of health care expenditures.
  • Since 1992, the prices of pharmaceuticals have been increasing at a slower rate than inflation (Patented Medicine Price Index, Consumer Price Index).
  • Since 1992, Canadian pharmaceutical prices have been on average lower than foreign countries.Footnote 3
Table 8: Average Ratio of Median International Price to Canadian Price in Patented Drug Products (2001-2012)
Year Ratio
Source: 2012 PMPRB Annual report
2001 1.11
2002 1.08
2003 1.12
2004 1.16
2005 1.14
2006 1.07
2007 1.03
2008 1.03
2009 0.04
2010 1.06
2011 1.05
2012 1.07

For More Information Contact:

Manufacturing and Life Science Branch
Industry Canada
235 Queen Street
Ottawa ON, K1A 0H5
Telephone: 343-291-2182
Fax: 613-952-4209
Website: http://www.ic.gc.ca/eic/site/lsg-pdsv.nsf/eng/home

Footnotes

Footnote 1

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 2

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

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Footnote 3

The PMPRB conducts an international price comparison using seven foreign countries: France, Germany, Italy, Sweden, Switzerland, the United Kingdom and the United States.

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