Canada’s Pharmaceutical Industry and Prospects
The pharmaceutical industry, at both the global and Canadian levels, has experienced an unprecedented amount of challenges and changes over the past several years. Global market growth is trending down and the current pace is below the historical 5-year average. The slowing trend is noteworthy along with the stark contrast that makes up this overall growth: developed markets of Europe and North America are expanding at rates below 3% while emerging markets are posting double-digit growth. This contrast in growth has forced many global MNEs to focus their investment and efforts in the higher growth emerging countries, which in turn is making it more competitive for MNEs to increase or even maintain their investment in Canada.
Similar to this contrast in geographical performance are the large differences in the drivers of growth in therapeutic areas. Biologics continue to become increasingly dominant in market share and as an exceptional driver of market growth. The contrast to this innovation in biologics is patent expiry precipitating record levels of revenue losses for brand products and triggering the expansion of the generic sector, globally and in Canada.
As the era of the large primary care blockbuster drug draws to a close from the patent cliff, pharmaceutical companies are re-organizing and adopting strategies to reduce risk, and overcome external factors and their poor pipeline productivity. These strategies include adopting new business models built upon external networks and third party partnerships focused on medical research and development. This trend towards a business model that relies on outsourcing of many business functions, including manufacturing, is providing contract service providers (CSPs) in Canada with growth opportunities.
One of the biggest issue going forward is the ability of Canadian companies to successfully compete with other countries on many keys factors including cost, talent and market attractiveness; market attractiveness as defined by regulatory requirements, market access, IP legislation and pricing controls. The evolution and growing dominance of biologics along with MNEs’ desire to improve their pipeline productivity has meant that biopharma SMEs in Canada have an opportunity to flourish. However, adequate access to capital is expected to have a profound impact on how well biopharma SMEs thrive and compete in the years ahead.
While recent pharmaceutical industry trends in Canada have been challenged with poor market growth and pressures from global competition, there still remains a very viable industry which if aided by stronger industrial sector support can flourish and successfully compete in this new and much more globally competitive business environment. Canada also has an opportunity to be a global leader in certain new growth areas.