Growth in pharmaceutical sales this year through Canadian hospitals and drugstores (excluding online sales to US customers) is forecast to have slowed to 6.0%-6.5%, in line with total global market growth for 2007 but down from the 8.4% average rise reported for Canada annually during 2002-6, according to new projections from IMS Health.

Canadian sales of generics are expected to have soared 20.1% this year, while those of innovative medicines have increased just 3.3%; moreover, this latter percentage falls to 1.6% if biotechnology products are excluded. IMS says this “unprecedented disparity” between the two sectors is primarily due to this year’s large number of patent expiries, and adds that this is unlikely to continue.

“Pharmaceutical products representing C$1.2 billion of sales in Canada faced patent expiries in 2007. This figure is four times larger than the patent expiries expected during the next two years,” said Ian Therriault, senior vice president, IMS Health Canada.

The growth of generics is also being boosted by cost-containment initiatives introduced by Canada’s provincial governments, led by Quebec and Ontario. These, the nation’s two largest drugs markets, have adopted legislation allowing the prices of innovative drugs to rise to levels just below the Consumer Price Index, once the province and manufacturers reach agreement. At the same time, generics’ prices have been rolled back around 21%, on average.

The Canadian Generic Pharmaceutical Association (CGPA) estimates that the nation could save C$700 million on the cost of prescription medicines in the first year alone if the use of generics increased to levels in the USA, where generic drugs are dispensed to fill 63% of all prescriptions.

However, research published by the Canadian free-market Fraser Institute think-tank this month and in late November claims that Canadians spend about the same percentage of their incomes on prescription drugs as Americans, because prices of brand-name drugs are lower in Canada than in the USA but Canadian generics prices are more than double those in the USA. In July, the Institute estimated that total potential savings lost from high generic prices in Canada due to government policies was C$2.5-C$6.6 billion for 2006 alone, while during 2003-6, the potential savings loss was C$20-C$26 billion.

Canadian government policies “shield retail pharmacies and generic drug manufacturers from competitive market forces that would naturally put downward pressure on generic drug prices", said Brett Skinner, the Fraser Institute’s director of health, pharmaceutical and insurance policy research. “Other research shows that Canadians who rely on the country’s public drug programmes don’t have the same degree of access to new medicines as do Americans,” he added.

Boost for biotechs
Meantime, IMS also reports that biotech drugs represent just 10% of total pharmaceutical sales in Canada but have accounted for some 24% of overall domestic market growth this year. This growth is being fueled by biological response modifiers and diabetes therapies, offsetting slower sales of oncology products and erythropoiesis-stimulating agents which have been the subject of safety warnings from Health Canada and the US Food and Drug Administration (FDA).

Another factor slowing 2007’s overall pharmaceutical market growth is the low number of New Molecular Entities (NMEs) and line extension launches in Canada; these continue to be affected by market-access delays and have accounted for under 0.3% of total drug store and hospital sales this year, says the firm. However, “with the value of patent expiries significantly lower in the next two years, it’s expected that the disparity in growth between the innovative and generic sectors will not be as significant as in 2007,” comments Mr Therriault.