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Canada Pharmaceuticals and Healthcare Report Q1 2010
Business Monitor International, Dec 2009, Pages: 79
Canada Pharmaceuticals and Healthcare Report provides industry professionals and strategists, corporate analysts, pharmaceutical associations, government departments and regulatory bodies with independent forecasts and competitive intelligence on Canada's pharmaceuticals and healthcare industry.
Canada’s pharmaceuticals market should grow relatively slowly over the forecast period. Its value in 2008 was CAD22.9bn (US$22bn) and the authors expect this to rise to CAD30bn (US$23.4bn) by the end of 2014, representing a compound average growth rate (CAGR) of 4.41% in Canadian dollar terms. In the longer term, the report forecasts that the Canadian drug sector will reach a value of CAD35.1bn (US$26.9bn) in 2019, representing a CAGR of 3.18% in local currency terms.
However, Canada’s economy has emerged from the global economic downturn relatively unscathed. This report forecasts the economy will actually grow by 2.5% in 2009, in an environment where most industrialised nations will post a significant contraction. Indeed, recent results from Shoppers Drug Mart (Shoppers) – Canada’s largest pharmacy chain – suggest that some strength is returning to the prescription drug market. In Q309, Shoppers’ revenues increased by 7.9% to CAD3.01bn (US$2.97bn), driven predominately by a 9.7% increase in prescription drug sales to CAD1.48bn (US$1.41bn). Prescription drugs account for 49.1% of the company’s total sales. The authors forecast that in 2009, prescription drug sales in Canada will grow by 4.3% in local currency terms. However, the authors believe that prescription drugs sales could be impacted by plans to implement a mandatory price cut for generic products in Ontario – Canada’s most populous province – following similar plans implemented in Alberta.
In November 2009, Alberta revealed a new generic drug pricing scheme which will be implemented as part of the second phase of the national pharmaceutical strategy to reduce consumer costs. The province currently has some of the highest generic drug prices in the country. The authors believe the reduction should increase access to healthcare and invite further interest from generic drugmakers looking to expand their presence in Canada. According to the Edmonton Sun, over CAD50mn (US$48mn) will be saved through new measures such as bulk contracts with generic pharmaceutical manufacturers, which in turn should lower wholesale costs. The prices of generic medicines (including existing generics) will be reduced from 75% of the bioequivalent patented drug prices to 45%. Implementation is expected in April 2010. Changing the prices of off-patent drugs already available in the Canadian market is particularly significant, as these are usually set at the point of approval and have been criticised for being misaligned with purchasing power over time.
Meanwhile, Canada has moved back up to second place in the Business Environment Ratings for the Americas region, due to a recovering economy and forecasts of solid growth in the pharmaceuticals sector over the next five years.
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