New data show that Canada losing the battle to attract new pharmaceutical R&D spending

Rx&D calls for new innovation strategy

The slide in R&D spending by Canadian pharma continues with 2004 expenditures by 84 reporting firms declining both in absolute dollars and research intensity. R&D spending as a percentage of revenue fell to 8.3% for all patentees and 8.5% for those belonging to Canada’s Research Based Pharmaceutical Companies (Rx&D), down from respective peaks of 11.5% and 12.9% that were attained in 1997. The data are contained in the latest annual report by the Patented Medicine Prices Review Board (PMPRB) which issues information on price trends for all medicines and tracks R&D spending by the pharmaceutical sector.

In 2004, R&D outlays totalled $1.17 billion, a full 2.0% lower than 2003, the straight second consecutive year of decline and the third annual decrease by Rx&D members after a 13-year stretch of impressive increases. The downturn in pharmaceutical R&D spending is setting off alarm bells in many quarters, including those involved in a new proposal to increase the R&D investment and economic returns of health care spending (see page 4).

“Very little attention is being paid to it but it’s an important issue,” says Dr Yves Morin, a former Liberal senator and key member of the proposed Canadian Health Industries Partnership (CHIP) committee. “The Chrétien government did so much for health research and here we are with the second largest number of biotech companies in the world. But 90% are university-based and they are unable to proceed with their research programs … For every drug developed outside of Canada, we lose $1 billion in research investment.”

RX&D SLAMS PMPRB AND FEDERAL POLICIES

Rx&D has responded to the latest PMPRB data by slamming the Board for exceeding its mandate. It blames the decline in R&D spending by its members on the federal government’s policies and regulatory practices and calls for a new innovation policy.

“(Government) should not delay a new innovation strategy. From an R&D perspective, better patent and data protection, significantly improved drug approval times, and better access for patients to new medicines, are globally competitive incentives that will attract increased R&D investment to Canada,” stated Rx&D president Russell Williams.

As for the PMPRB, Rx&D says that if it in successful in gaining the power to seek prior approval for drug price increases of patented medicines, it “could be interpreted by the international investment community as an unwarranted and unnecessary intervention that could negatively impact future R&D”.

In the breakdown of R&D type, there was some encouraging news. Spending on basic research increased to $221.7 million in 2004 or 19.7% of the total, up from $180 million in 2003 when it accounted for just 15.8% of the total. The reversal is good news after years of decline in basic R&D spending from a high of 27.2% of the total in 1990.

Spending on applied R&D was also up in 2004 — $658.3 million or 58.3% of the total, compared to $639 million or 55.2% in in 2003. Of the 2004 applied R&D total, 76.2% was spent on clinical trials, with $338.1 million on Phase III trials, $109.5 million on Phase II trials, and $54.3 million on Phase I trials. Applied R&D was rounded out by manufacturing process ($96.8 million), pre-clinical trials I ($42.0 million) and pre-clinical trials II ($17.6 million).

Of the funds spent in 2004 by R&D performing firms, $619.7 million or 55.1% was spent intramurally, down 1.9% from 2003. Universities and hospitals performed $148.2 million or 13.2% or the total, up 11.0% from the year before. Other companies performed $234.7 million or 20.9%, down 9.4% from 2003 and “others” performed $121.6 million or 10.9%, down 3.8% from 2003.

To obtain a copy of the PMPRB annual report, go to www.pmprb-cepmb.gc.ca.

R$