Canada Pharmaceuticals and Healthcare Report Q2 2012 Published : March 2012
No. of Pages : 95
Price:US$530
BMI View: With Canada’s economy set to weather the external storm, the outlook for the country’s pharmaceutical market looks relatively stable. Over the longer-term an ageing population in this already mature market should support spending. We also maintain it is highly unlikely the Canadian government will introduce punitive price controls like those witnessed across Europe. Instead, the country’s healthcare market will continue to place downward pressures on pharmaceutical prices as policies mandating generic substitution compress headline growth. Headline Expenditure Projections Pharmaceuticals: CAD26.28bn (US$26.57bn) in 2011 to CAD26.54bn (US$25.76bn) in 2012; +1.0% growth in local currency terms and -3.1% growth in US dollar terms. Forecast revised up due to analyst intervention. Healthcare: CAD181.48bn (US$183.48bn) in 2011 to CAD188.77bn (US$183.27bn) in 2012; +4.0% growth in local currency terms and -0.1% growth in US dollar terms. Forecast broadly unchanged. Medical Devices: CAD6.52bn (US$6.59bn) in 2011 to CAD6.79bn (US$6.59bn) in 2012; +4.1% growth in local currency terms and -0.1% growth in US dollar terms. Forecast revised down moderately due to analyst modification. Risk Reward: In BMI’s Risk/Reward Ratings for Q212, Canada remains in second place in the expanded regional matrix, trailing the US. However, Canada’s RRR score is down from Q112 following revisions to our growth projections in late November 2011. Key Trends & Developments In January 2012, drugmaker Valeant Pharmaceuticals withdrew its takeover bid for US branded ophthalmic company Ista Pharmaceuticals. Valeant said the US$7.50 a share cash offer was withdrawn due to due to lack of progress on the deal. Chairman and CEO J. Michael Pearson said the company was not keen to be involved in a lengthy evaluation process and the Ista management had not expressed any willingness to explore the bid by January 31. Ista plans to continue reviewing all possible strategic options for the company. It is in negotiations with several parties about a deal. In November 2011, the Canadian Medical Association Journal (CMAJ) called on the government to introduce new pharmaceutical intellectual property rights. The proposed changes would support and safeguard innovation in creation of new drugs. According to the author of the article, Paul Grootendorst from the pharmacy faculty at the University of Toronto, improvement in the legal and regulatory framework is required for market exclusivity of innovative drugs. The current regulations could be replaced with a standard assured fixed period for market exclusivity of up to 10 years. It was also suggested the Patented Medicines (Notice of Compliance) regulations could be abolished and the Patent Act could be used instead. BMI Economic View: The Canadian growth outlook remains relatively positive, though we expect a significant deceleration in activity in the first half of 2012 as the global economy cools. We maintain our overall view that private consumption is set to slow as business investment picks up as a driver of growth, but much will depend on the external picture and its impact on private sector confidence. BMI Political View: The 2015 Canadian federal election will see 30 seats added to the House of Commons under a reallocation plan passed by parliament in December 2011. On balance, the governing Conservative Party may well benefit electorally from the redistricting, as it includes several seats in its