The Canadian Pharmaceutical Industry

April 2002
Innovation Profile

The Industry

• The pharmaceutical industry comprises brand-name, research-dependent companies, which are largely foreign-owned multinationals, as well as Canadian-owned bio-pharmaceutical firms, and Canadian and foreign-owned generic manufacturers. The sector employs a large, highly skilled and highly paid work force.



• Canada provides patent protection for innovation products such as brand-name pharmaceuticals for 20 years, although a drug is often on the market for less than 10 years. Once the product is no longer protected by patents, generic firms can proceed to develop and market their versions of the brand-name product.



• Approximately 20,000 people are employed by the brand-name sector, 7,000 by bio-pharmaceutical firms, and over 4,500 by the generic drug manufacturers.



• The total pharmaceutical market in Canada is approaching $10 billion in sales, about 1.8% of the total world market.



• The brand-name companies in Canada account for less than 2% of all sales and employment in the manufacturing sector of the Canadian economy but are responsible for more than 10% of total research and development (R&D;) expenditures.



• The pharmaceutical industry is one of the most R&D-intensive; sectors in Canada. In 2000, Canada's brand-name pharmaceutical industry spent almost $1 billion on R&D.; About 20% of this was on basic research conducted in company research facilities as well as across Canada in universities, hospitals and laboratories, and about 65% went to clinical research.



• The generic manufacturers have an R&D; to sales ratio of over 20% and spend about $300 million annually on R&D; in Canada. However, most R&D; was focussed on the development work necessary to obtain product approvals.



• Total prescription drug expenditures in 2001 were $10.3 billion.