Canadian Life Sciences Overview
- The Canadian Pharmaceutical Industry Profile
- The Canadian Biotechnology Industry Profile
- Canadian Bio-Informatics Industry
- Canadian Genomics & Proteomics Industry
Canadian Pharmaceutical Industry Profile
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.
Innovation
A Research Infosource 2000 survey of Canada’s top corporate R&D spenders ranked the pharmaceutical/ biotechnology sector as second only to the information, communications and technology sector in terms of expenditures. The survey indicated that the sector also had the highest research intensity of any industry at a ratio of R&D to revenues of 17.7%.
Canadian Biotechnology Industry Profile
Canada’s biotechnology sector has expanded rapidly in the last decade, in terms of industry-wide revenues, the launch of new companies, and in the continuous diversification of its products. Canada continues to hold its position as one of the top five countries in this vital field. Canada’s high international standing in biotechnology is a reflection of its leading-edge research, a proven entrepreneurial approach that emphasizes clusters and partnerships, and an established financing and venture capital base for the industry.
The federal government’s strong leadership in the areas of economic and innovation policy has contributed significantly to Canada’s success in biotechnology, by stimulating the development of a critical mass of research infrastructure; large pools of post-graduate and post-doctoral researchers; world-class academic, public and private sector research investigators; entrepreneurs; and a renewed vision for biotechnology.
RESEARCH AND DEVELOPMENT
Canada’s steady growth is due largely to its strong base of scientific expertise and its continuous investment in research and development. The Canadian biotechnology industry demonstrated its commitment to R&D by undertaking an investment of CDN$1.5 billion in 2003, an increase of over 80% over expenditures of CDN$827 million in R&D in 1999. In 2004, Ernst & Young reported that public biotechnology firms have increased their R&D spending by 224% between 1998 and 2003.
Canada has established the fastest rate of growth in the number of workers devoted to R&D, in external patent application and in business expenditures on R&D among G7 countries. Canada’s growing R&D capacity in biopharmaceuticals is a natural evolution from a research base that has won an international reputation in fields such as genomics, proteomics, bio-informatics, stem cells, immuno-therapies, protein engineering and new drug delivery systems. Sixteen Canadian universities are affiliated with a network of more than 100 teaching hospitals and research institutes.
Canada’s biotechnology firms continue to diversify their products and processes and to work in more than one biotech sub-sector. As well, Canadian universities and research hospitals are conducting research with significant commercial potential. Currently there are over 500 products in the biopharmaceutical product pipeline from research through to market.
COMPANY GROWTH AND DISTRIBUTION
In 2003, the number of Canadian biotechnology companies grew to a total of 496, public firms making up 17%. According to E&Y, Canada continues to have the second highest number of biotechnology companies in the world demonstrating a supportive business climate and Canada’s commitment to growing this vital sector. In 2003, biotechnology company revenues were CDN$3.8 billion, a 96% increase over 1999 revenues.
CANADA’S INVESTMENT CLIMATE
According to a KPMG study, Canada’s R&D environment ranks first in terms of cost competitiveness for biomedical R&D compared to other industrialized nations including the U.S., Europe and Japan. Canada has established the fastest rate of growth in external patent applications and in industry investment in R&D among G7 countries.
The country has many other strengths. Overall, as a location for manufacturing, Canada has the lowest costs to establish and operate a manufacturing facility when compared to all other G-7 countries. Federal taxation offers a 20% non-refundable tax credit for public companies and a 35% refundable tax credit for private companies on current R&D expenditures, including capital expenditures on R&D and machinery and equipment. The Scientific Research & Experimental Development (SR&ED) program provides tax incentives to eligible companies that develop new or improved technologically advanced products or processes in Canada.
The overall skill level of Canada’s workforce ranks first among competing countries. Specialized organizations like Genome Canada, the Networks of Centres of Excellence and the National Institute for Nanotechnology, have been established to ensure focus, direct funding and to attract the world’s most qualified researchers in emerging fields.
FEDERAL GOVERNMENT’S COMMITMENT TO BIOTECHNOLOGY
The federal government’s leadership in the areas of economic and innovation policy has contributed significantly to Canada’s success in biotechnology, by stimulating the development of a critical mass of research infrastructure, large pools of post-graduate and post-doctoral research, world-class academic, public and private sector research investigators, entrepreneurs and a renewed vision for the sector. In 1999, Canada established Genome Canada, which is dedicated to enabling Canada to become a world leader in genomics and proteomics research. So far, CDN $600 million have been invested in Genome Canada, including $165 million in the federal budget of 2005. The Canada Foundation for Innovation (CFI) was established in 1997 as an independent corporation with the goal to strengthen the capability of Canadian institutions to carry out world-class research and technology development. In 2003 the Federal government increased the level of funding to CFI by CDN $500 million, increasing the total federal support for CFI to CDN $3.65 billion.
Canada has become a world leader in the biotechnology industry. That has been helped by a proven commitment from the Government of Canada, which has steadily increased its investment in the sector’s infrastructure, thereby ensuring Canadian industry will play a lasting and meaningful role both at home and abroad. The bottom line is that Canada offers a place of opportunity for biotechnology – somewhere that researchers, scientists and private industry can find the knowledge, the infrastructure and, most of all, the supportive attitude that fosters success.
CANADIAN MEDICAL DEVICE INDUSTRY
The medical device industry consists of firms that produce a wide range of products used for diagnosis and treatment of ailments, and which include the following: medical, surgical and dental equipment (including electromedical equipment and related software), furniture, supplies and consumables, orthopaedic appliances, prosthetics and diagnostic kits, reagents, and equipment. Firms that are active only in distribution are not included in this profile.
Size and Structure of the Industry
- In the period 2004-2005, the medical device manufacturing and development industry consisted of 1,101 facilities, comprising approximately 998 firms. (An additional 685 facilities, operated by 602 firms, solely engaged in distribution are not included in the following analysis.) Medical device manufacturing and development facilities were generally small in size as more than half (57%) had fewer than 25 employees and 37% had from 25-49 employees. Of the remaining facilities, only 45 (4%) were of medium size (50-150 employees), and less than 1% were large (greater than 150 employees).
- Approximately 90 percent of the medical device facilities were Canadian owned, unchanged from 2000. Foreign-owned facilities tended to be larger as 21% had 50 or more employees, compared to just 4% of domestically-owned facilities.
- Medical device-related employment in 2004-2005 rose to approximately 26,000, compared to employment of 22,000 in 2000, as reported by Statistics Canada.
- The industry was distributed across Canada, although concentrated in Ontario and Quebec where 42% and 32%, respectively, of all facilities were located. 22% of facilities were located the West and 4% in the Atlantic.
- Nation-wide average facility employment was small at 23 employees. Average facility employment was largest in Quebec (27) and Ontario (25) and below average in the West (16) and Atlantic Canada (11).
Industry Revenues Depend Significantly on Exports
- In 2003, Canadian firms generated approximately $4.0 billion from medical device sales in Canada and abroad, of which over half ($2.1 billion) were due to exports. With $3.8 billion in medical device imports, the size of the Canadian apparent medical device domestic market was just under $6.0 billion.
- Canada’s exports of medical devices increased at a solid compound annual growth rate (CAGR) of 10.5% from 2000-2005 as exports increased from $1.6 billion in 2000 to $2.4 billion in 2005. During the same period, import growth was also strong although lower at a CAGR of 6.5%. Despite the higher CAGR of exports compared to imports, the significantly higher level of imports resulted in the medical device trade deficit having increased slightly from $1.8 billion in 2000 to $1.9 billion in 2005.
- The United States remains overwhelmingly the primary market for Canadian medical device exports and the destination for 76% of all medical device exports in 2005. However, there is an increasing diversification of destination markets for Canadian medical devices as the export share destined for the United States has decreased in each of the last three years and is down sharply from 87% in 2002. In 2005, the other growing export markets for Canada were the United Kingdom, a destination for 4% of Canadian medical device exports, Germany (3%) and China (2%). Since 2000, the most rapidly expanding export markets, as measured by sales CAGR, were China (168%), Singapore (93%), South Africa (83%) and South Korea (79%).
- Since 2000, there has also been a shift in the source of Canada’s medical device imports. Although the United States still accounted for over half of all imports in 2005 at 54%, the share is down from 68% in 2000. During this period, both Germany (8%) and China (6%) have doubled their share of the Canadian market by way of sales CAGRs of 27% and 29%, respectively. Higher average growth rates were also posted by imports from Ireland (65%), Mexico (36%) and Australia (29%), although their shares of total imports remain at 3% or less.
Innovation
- The manufacturing of medical devices involves the application of diverse biomedical and engineering disciplines. The Canadian medical device industry benefits from the strengths of associated Canadian industries including biotechnology, advanced materials, microelectronics, telecommunications, and software and informatics.
- In addition, the industry is able to draw on world-class innovative research being conducted in Canadian universities, research institutes and hospitals. Nearly 10 percent of Canadian medical device firms are spin-offs of universities, other firms or laboratories. A number of medical device firms work in collaboration with other organizations (universities, hospitals, smaller or larger firms, government departments, etc.).
Canadian Bio-Informatics Industry
Bio-informatics is the use of computer software, programs, networks, and databases to organize, store, and analyse biological information. It is the field of science where biology, computer science, and information technology converge as a single discipline. Advances in genomics and proteomics produce a better understanding of biological systems and living organisms. Researchers require the advanced computer and statistical techniques made possible through bio-informatics in order to organize, store, and analyse the large amounts of biological data created through modern biotechnologies.
As biotechnology research continues to gain new ground, areas of bioinformatics will have to keep up to new and expanding demands.
According to Statistics Canada, sales of Canadian biotechnology products and services exceeded $1 billion Canadian in 1997. The health care field had the highest revenues, followed by the agriculture-food sector. These revenues are expected to grow over the next 5 years based on the strong focus on R&D. The Canadian biotechnology industry invested approximately $600 million in R&D in 1997, with almost 90% devoted to health care sector.
The Canadian Biotechnology ‘ 98, Success from Excellence report states that, in terms of geographical concentration, Quebec has the highest number of biotechnology firms, followed by Ontario and British Columbia. In terms of the number of research institutions and companies identified involving in bioinformatics, 39% are located in Ontario (Toronto, Ottawa, Hamilton and Kingston), 29% are in Quebec (Montreal and Laval) and approximately 9% each are in British Columbia (Vancouver), Alberta (Edmonton) and Nova Scotia (Halifax).
From the analysis of the surveys, firms involved in the bioinformatics research activities are usually involved in all areas of bioinformatics. As mentioned previously, these areas are: molecular sequence analysis and data mining, comparative genomics, functional genomics, and bioinformatics software development.
More specifically, research-involving bioinformatics in Canada is being used for:
- Protein folding, protein stability and macromolecular assembly – helps to solve the problem of inability to predict the three-dimensional fold or structure of a protein bioinfo.mshri.on.ca/hogue
- Structure-based drug design using three-dimensional structures of ligands and receptors to design and test new drug leads. A significant number of diseases are caused by imbalances in proteins. By knowing if the specific protein is absent, defective, or present in small amounts, this can lead to new and improved therapeutics, passive and active vaccines, diagnostic, industrial, environmental and agricultural products www.pence.ca
- Discovery of new antimicrobial agents to fight the growing number of common human pathogens that are resisting all of the current antimicrobial agents;
- Devising and implementing computational solutions for biological research to the development of applications to enable biotechnology companies to amplify the number and quality of their drug advancement opportunities;
- Understanding the complex biochemical circuitry that defines normal and disease process and investigating the domains of proteins, cell signaling and regulation of the cell cycle www.mshri.on.ca.
Survey results showed that most of the institutions and companies involved with bioinformatics develop their own software for their personal needs. However, five players have been identified who are involved in developing only bioinformatics software.
Three are from the industry sector. They are:
- ‘Biotools,’ Edmonton, Alta.
- Molecular Mining,’ Ottawa, Ont.
- Base4,’ Toronto, Ont.
In terms of strategic alliances and partnerships, 89% of those interviewed had an alliance of some capacity with universities and/or business. Further, 45% had established relationships with both universities and companies. Biotechnology companies that are in alliance are usually involved with companies in the U.S. As mentioned by one of the respondents, these alliances with the U.S. companies allow Canadian companies to have access to larger databases.
Canadian Genomics & Proteomics Industry
The genomics and proteomics sector is comprised of approximately 64 small but growing companies, whose work is roughly distributed in four categories: genomics-based development companies, toolmakers, bioinformatics software providers and information companies. Research has been the focal point of genomics efforts within the Government of Canada. In the last five years, strategic funding through Genome Canada has catapulted Canada into one of the best places in the world to do genomics and proteomics research.
Canada’s Support of the Genomics & Proteomics Sectors:
The Government of Canada has a number of intramural and extramural genomic initiatives that include proteomics. For example, $55 million over three years was allocated in 1999 and an additional $59.7 million over three years was allocated in each of 2002 and 2005 for genomics research at federal laboratories. Since 2000, $600 million has been directed to Genome Canada, which has raised to date over $400 million in matching funding. Between 2000 and 2005, Genome Canada funded 80 projects, and in August 2005, the results for Competition III were announced, with $346 million to be invested in 33 innovative, large-scale projects for a duration of three to four years.
In addition, the government indirectly supports research in genomics/proteomics by funding projects through CIHR and the Network of Centres of Excellence (NCE) Program. There are two NCEs which have proteomics components: The Stem Cell Network, established in 2000, which performs research in the area of genomics; and, Protein Engineering Network of Centres of Excellence (PENCE), which has a significant research thrust in proteomics.
Extracted from the Industry Canada - Life Sciences Branch Strategis Website
- Source of data unless otherwise specified: E&B Data collected in 2004 and 2005 and Canadian International Merchandise Trade Database. The latter presents data using the Harmonized System (HS), thereby allowing for detailed analysis on a product/country basis.
- Statistics Canada, Medical Device Industry Survey 2000.
- Based on the average of estimates by Rozinski ($3.7 billion) and E&B Data ($4.5 billion).
- Statistics Canada, Medical Device Industry Survey 2000.
Hot Links of Interest
- Industry Canada - Life Sciences Branch: www.strategis.gc.ca/lsb
- Invest in Canada: www.investincanada.gc.ca
- The Canadian Trade Commissioner Service: www.infoexport.gc.ca
- Innovation in Canada: www.innovation.gc.ca
- Medical Device Companies and Associations