BMI's Executive Summary

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The Canadian drug market remains robust and is considered by BMI to be one of the best environments in the world for a drugmaker to operate in. In 2006, the pharmaceutical market reached a value of US$18.6bn, and, going forward, BMI expects sales to be powered by generics. Over the next five years BMI forecasts a compound annual growth rate (CAGR) of 7.68% bringing the total value of the generics sector to US$5.5bn. This compares to an overall market CAGR of 5.07%.

However, as discussed in detail in BMI's Q108 Canada Pharmaceuticals & Healthcare Report, generic sales are being buoyed by high prices, despite the presence of a salubrious and competitive manufacturing industry. The primary problem appears to be the failure of pharmacies to pass on discounts offered by drugmakers to the end-payer. A study by the Patented Medicines Price Review Board (PMRB) in June 2006 concluded that retail prices for generic drugs were higher in Canada than in 10 out of 11 comparable markets. However the failure of pharmacies to address the situation, means that the authorities will probably be forced to. Both Ontario and Quebec have recently lowered the maximum price ceiling for generics drugs, in order to combat perceived price gouging.

Meanwhile, it has been a busy quarter in terms of company activity. Probably the biggest event was the US$900mn acquisition of Canadian biotech Aspreva by Swiss pharmaceutical producer and wholesaler Galenica. The purchase is one of the largest ever in the Canadian pharmaceutical sector and should provide a ringing endorsement for Canada's biotech industry, often criticised as a difficult environment to work in. Rather than developing novel drugs, Aspreva concentrates on finding new indications for existing drugs, often in neglected or rare disease areas.

In BMI's new methodology for Business Environment Rankings - which gives stronger emphasis to the regulatory environment, and also factors in country-specific economic and political indicators – Canada ranks in second position, in the Americas region and third globally. This is primarily because of excellent Country Risk Indicators, including low corruption and a stable political environment, solid growth in the pharmaceutical market, and a generous government reimbursement system.

Contents

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Executive Summary

Canada Pharmaceuticals & Healthcare Industry SWOT

Canada Political SWOT

Canada Economic SWOT

Chapter 1 - Pharmaceutical Business Environment Ratings

Table: Pharmaceutical Business Environment Rankings

Limits To Potential Returns

Risks To Realisation Of Returns

Chapter 2 - Canada - Market Summary

Chapter 3 - Regulatory Regime

Intellectual Property Developments

Pricing And Reimbursement Issues

Ontario Breaks The Mould

Chapter 4 - Industry Developments

Product Approvals And Launches

Pharmaceutical Re-import Policy

Company Activity

National Pharmaceuticals Strategy

Generics Sector

Table: Foreign-To-Canadian Price Ratios, 2005

Research And Development Sector

Pharmacy Sector

Chapter 5 - Industry Forecast Scenario

Overall Market Forecast

Table: Canada: Drug Market Indicators

Key Growth Factors - Industry

Table: Canadian Health Expenditure Indicators

Key Growth Factors - Macroeconomic

Table: Canada - Economic Activity

OTC Market Forecast

Table: Canadian OTC Drugs Market Forecast Indicators (US$mn unless otherwise stated)

Generics Market Forecast

Table: Canadian Generics Market Indicators

Patented Market Forecast

Table: Canadian Patented Market Indicators

Export/Import Forecasts

Table: Sectoral Trade Indicators (US$mn)

Other Healthcare Data Forecasts

Table: Canadian Socio-demographic Indicators

Chapter 6 - Competitive Landscape

Table: Canada's Leading Generics Firms, 2006

Chapter 7 - Company Profiles

Leading Multinational Manufacturers

Pfizer

Merck & Co

GlaxoSmithKline

Sanofi-Aventis

Novartis

Indigenous Manufacturers

Apotex

Chapter 8 - BMI Forecast Modelling

How We Generate Our Industry Forecasts

Pharmaceutical Industry

Pharmaceutical Business Environment Ratings Methodology

Ratings Overview

Table: Pharmaceutical Business Environment Indicators

Weighting

Table: Weighting Of Components

Sources

Competitive Landscape for Americas Pharmaceuticals and Healthcare: Sample of Companies Ranked

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Cross-border analysis of regulatory systems comparing the patenting environment, summarising regional pricing and reimbursement factors and monitoring the growth of the Pharmaceuticals sector across the region. Company SWOTs cover leading multinational and national drug companies operating in each market.

Network of American Pharmaceuticals & Healthcare Sources

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BMI's American Pharmaceuticals & Healthcare Reports are based on an extensive network of multilateral organisations, government departments, pharmaceuticals industry associations, chambers of commerce and company reports. Information sources include: