Boston, MA -- (SBWIRE) -- 05/03/2013 -- Innovative drugmakers have experienced increasing government cost containment pressure and generic competition in Canada. Local authority has also switched to more direct incentive to encourage R&D investment from pharmaceutical industry. We expect the country's relatively high generic drug price will fall further which will ultimately benefit consumers.

Headline Expenditure Projections

- Pharmaceuticals: CAD25.6bn (US$25.6bn) in 2012 to CAD25.8bn (US$25.5bn) in 2013; -0.4% growth in local currency terms and 0.5% growth in US dollar terms. Forecast downward from Q113 on account of lower than expected new industry data.
- Healthcare: CAD196.9bn (US$197.0bn) in 2012 to CAD203.9bn (US$206.0bn) in 2013; +3.6% growth in local currency terms and +4.6% growth in US dollar terms. Forecast slightly up from Q113 due to new industry data.

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Risk/Reward Rating: In BMI's RRRs for Q213, Canada remains in second place in the expanded regional matrix, trailing behind the US. This is also the case for all other countries in BMI's proprietary system that ranks pharmaceutical markets according to attractiveness to multinational drugmakers. A minor reweighting of one of the RRR components is being implemented to improve the tool, and the adjusted scores for all markets will be published in the Q313 updates of the Pharmaceuticals & Healthcare reports.

Key Trends And Developments

- In January 2013, Canada's provinces made a coordinated effort to lower prices on six of the most widely prescribed generic drugs. The government's aim to reduce high spending on generic drugs for health programs in the country, both public and private. From April 2013, pharmacies will be requested to price generics at no more than 18% of the price of the brand-name equivalent. The six drugs account for 20% of public spending on generic drugs in Canada, and comprises: atorvastatin, the generic version of Pfizer's cholesterol-lowering Lipitor; ramipril, a generic version of Altace, Sanofi's blood pressure medicine; venlafaxine, the generic version of antidepressant Effexor from Pfizer; amlodipine, a cardiac drug developed by Pfizer; and omeprazole and rabeprazole, both used to treat ulcers and acid reflux, originally developed by AstraZeneca and Eisairespectively.
- In December 2012, Quebec abolished its rule, introduced in 1994, authorising the reimbursement of lower-cost generic drugs in the province's public prescription drug insurance plan only after the originator drug has been on the market for 15 years. The announcement was part of Quebec's 2013 budget, which also includes a new incentive for the biopharmaceutical sector: the government will increase refundable tax credit for research and development (R&D) salaries from 17.5% to 27.5% on all spending incurred from November 21 2012 to January 1 2018.

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