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 pharmaceutical companies, generic drug firms, biopharmaceutical small and medium sized enterprises (biopharmaceutical SMEs), and contract service providers (CSP).

Size and structure of the industry

  • Pharmaceutical sales in Canada have a 2.0% share of the global market, making Canada the 10th largest world market. Since 2011, compound annual growth has remained positive at 2.8% (IMS Pharmafocus 2021).
  • 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% of Canadian sales and 34% of prescriptions. Generics account for the rest (IMS Pharmafocus 2020).
  • In early 2016, the manufacturing portion of the sector employed 28,500 people and over the last 5 years, employment has fallen by 6.7% (Statistics Canada, CANSIM table 281-0023).
  • The industry is clustered mainly in the metropolitan areas of Toronto, Montreal and Vancouver.
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 average.
200528,673
200630,032
200728,914
200828,700
200928,138
201027,209
201126,710
201226,979
201326,983
201425,934
201527,302
201628,494

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Canadian drug sales

  • According to the 2015 PMPRB Annual ReportFootnote 1, from 2001 to 2015, total pharmaceutical sales (including non-patented over the counter medicines) in Canada have doubled to $24.6 billion, with 87.5% sold to retail drug stores and 12.5% sold to hospitals. Governments account for 42% of drug expenditures and private payers account for the remaining 58% (private coverage and individuals).
  • Annual domestic pharmaceutical manufacturing production is valued at $9.8 billion in 2016 with a compound annual growth rate of 1.0% since 2008 (Statistics Canada, CANSIM Table 304-0014).
Canadian Manufacturer's Sales of Patented and Non-Patented Drugs from 2004 to 2015 (Sales in $ billions)
Year Patented Non-Patented Total
Source: 2015 PMPRB Annual Report
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
201112.89.021.8
201212.88.821.6
201313.38.621.9
201413.79.323.0
201515.29.424.6

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R&D activities

  • Total business expenditures on R&D by Canadian pharmaceutical companies have fallen below $1 billion since 2011. From 2001 to 2015, industry R&D spending fell by 20%Footnote 2 (2015 PMPRB Annual Report).
  • However, the industry's changing business model means that more R&D is being conducted externally and through partnerships. This includes investments in SMEs, venture funds and work with Canada's growing CSP sector. A survey by Rx&DFootnote 3 (now Innovative Medicines Canada) and KPMG highlights many of these new investments, indicating additional R&DFootnote 4 expenditures of $317 million in 2013.
  • According to Research InfosourceFootnote 5, the pharmaceutical industry is second after the Information Technology (IT) sector in R&D intensity. Twenty-two pharmaceutical and biotechnology companies are listed in the Top 100 Corporate R&D Spenders 2015 in Canada.
  • R&D costs per drug averaged US$1.4 billion over 12-13 years (Tufts Center for the Study of Drug Development). Full costing (including amortization of research failures and opportunity cost of capital) raised 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 the original drug.
Total Canadian Pharmaceutical Business R&DFootnote 1 Expenditure (2004 - 2015)
Year Expenditure (in $ billions)
Source: 2015 PMPRB Annual Report
20041.17
20051.23
20061.21
20071.33
20081.31
20091.27
20101.18
20110.99
20120.94
20130.80
20140.79
20150.87
2015 Distribution of Canadian Business R&D Expenditures By Region
Region R&D Distribution (%)
Source: 2015 PMPRB Annual Report
Ontario 52.3
Quebec 28.7
West 17.2
Maritimes 1.8

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International trade

  • From 2001 to 2016, pharmaceutical exports and imports between Canada and the rest of the world increased by 77% and 30% respectively.
  • More than half of Canadian production is exported (primarily to the United States) and a significant portion (67.0%) of the Canadian market is supplied by foreign imports (68% of imports from the U.S. and 40% from the EU).
Total Canadian Pharmaceutical Trade (2004-2016) in $ billions
Year Domestic Exports Imports Trade Deficit
Source: Statistics Canada
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
20147.815.47.6
20159.816.87.0
201610.117.37.2

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Leading companies

  • In 2016, the top ten pharmaceutical companies accounted for half of total Canadian pharmaceutical sales including both prescription and non-prescription medicines (IMS Pharmafocus 2021).
Leading Pharmaceutical Companies in Canada in 2016
Rank Leading Companies Total Sales
($ billions)
Market Share (%)
Source: IMS Pharmafocus 2021
1 Johnson & Johnson 2.93 11.4
2 Novartis 1.24 4.8
3 Teva/Cobalt/Actavis 1.19 4.6
4 Apotex 1.19 4.6
5 Merck 1.14 4.4
6 Pfizer/Hospira 1.06 4.1
7 AstraZeneca 0.93 3.6
8 Roche 0.88 3.4
9 Gilead 0.88 3.4
10 AbbVie 0.86 3.4

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Leading products

  • The top ten pharmaceutical products sold in Canada account for 16% of 2015 industry sales. Leading therapeutic categories including medicines for arthritis, depression, liver health and asthma therapies (IMS Pharmafocus 2020)
2015 Leading Pharmaceutical Products in Canada
Rank Leading Products Therapeutic Subclass Total Sales ($ millions) 2015 Growth (%) Company
Source: IMS Pharmafocus 2020
1 Remicade Anti-arthritic 911.8 14.4 Merck
2 HarvoniFootnote 6 Liver health 615.1 >N/A Gilead
3 Humira Anti-arthritic 581.5 15.5 AbbVie
4 Lucentis Vision loss 469.3 -2.7 Novartis
5 Enbrel Anti-arthritic 347.3 1.9 Amgen
6 Cymbalta Depression 268.0 12.0 Lilly
7 Rituxan Autoimmune 237.1 1.2 Roche
8 Coversyl Blood pressure 210.7 10.8 Servier
9 Symbicort Bronchodilators 200.6 7.3 AstraZeneca
10 Spiriva Brochodilators 192.6 -4.7 Boehringer

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Health expenditures on drugs

According to the Canadian Institute for Health Information's National Health Expenditure ReportFootnote 7:

  • More than 60% of total health expenditures were directed to hospitals, physicians and drugs.
  • Pharmaceuticals are the second largest component of health care expenditures, representing 16% of total expenditures.
  • Although spending on pharmaceutical continued to grow, the pace has slowed in recent years across provinces and territories.
Canada's Health Expenditure (2005 to 2016)
Expenditure ($ billions)
Year Total Health Expenditures On Drugs Share of Total (%)
Source: Canadian Institute of Health Information (CIHI); f=forecasted
2005 140.2 23.2 16.6%
2006 150.6 25.1 16.7%
2007 160.1 26.4 16.5%
2008 172.0 27.9 16.2%
2009 182.0 29.5 16.2%
2010 193.2 32.4 16.8%
2011 199.2 33.0 16.6%
2012 205.4 33.3 16.2%
2013 209.3 33.4 16.0%
2014 215.8 34.8 16.0%
2015f 222.1
2016f 228.1

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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 8.
Average Ratio of Median International Price to Canadian Price in Patented Drug Products (2004-2015)
Year Ratio
Source: 2015 PMPRB Annual Report
20041.16
20051.14
20061.07
20071.03
2008 1.03
2009 1.04
20101.06
20111.05
20121.07
20131.06
20141.13
20151.18

For More Information Contact:

Manufacturing and Life Science Branch
Innovation, Science and Economic Development
235 Queen Street
Ottawa ON, K1A 0H5
Telephone: 613-954-3077
Fax: 613-952-4209
Website: Canadian life science industries

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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 Patented Medicine Prices Review Board

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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 A brief history of the definition of SR&ED

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Footnote 3

The survey was published by the association of Canada’s Research-Based Pharmaceutical Companies (Rx&D), now Innovative Medicines Canada, and can be viewed at Innovative Medicines Canada (PDF version)

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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

Research Infosource publishes a list of the top 100 corporate R&D spenders in Canada annually. The most recent version can be viewed here: Canada's Top 100 Corporate R&D Spenders List

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Footnote 6

Harvoni was launched in October 2014.

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Footnote 7

This annual report published by CIHI tracks and reports health care spending across Canada. To learn more visit Canadian Institute for Health Information

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Footnote 8

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 8 referrer

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