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Pharmaceutical Industry in Canada

Several of my clients are in the Pharmaceutical Industry. I find their business fascinating. I am aware that the complexity of this industry creates confusion among industry observers. This article will help explain some of the important trends, and the key role market influencers are having on the future of drug sales in Canada.

Did you know?

  • The value of the global Pharmaceutical market topped $1 trillion in 2014.

  • Canada is considered the 8th largest market in the world

  • Emerging markets like China and Brazil are now experiencing 16-17% growth.

  • Developed markets in Europe and North America are now expanding at rates below 3%

  • The ‘Patent Cliff’ has had the biggest impact on the decline.

  • The impacts of the ‘Patent Cliff’ have largely been realized in company valuations and sales.

  • Payer provinces and insurers continue to reduce prices they are willing to pay for drugs.

  • Increasing pricing pressure is forcing Multi National Enterprise pharmaceutical companies to rethink their product pipeline costs and business models.

So what does all this mean?

There is an increasing demand for outsourced Contract Service Providers (CSP) to manage pipeline sales, R&D, administration and manufacturing. The efficiency of these outsourcers is seen as an important part of the go-to-market-strategy often deployed by the large drug companies. With profit margins shrinking from 11% in 2006 to 7% in 201O , and trending for further downward pressure, CSPs are looking better each year.

Emerging markets are getting the lion’s share of attention from the big drug companies. R&D spending continues to grow as companies look to attract their fair share of growth in these markets. This R&D spending trend does not bode well for developed markets like Canada. However, there are advantages in managing product pipelines in Canada where a fully integrated network is already established and proven.

Overall, the Pharmaceutical Industry is changing rapidly to profitability realities. Scalability through mergers, acquisitions and partnerships has been occurring at a rapid pace. Expect change to continue as the Canadian Healthcare System adapts to meet the demands of our aging population.

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