Canada's private sector pharmaceutical R&D hits lowest level in 20 years: PMPRB

The 2007 increase in R&D intensity by Canada's patent-holding pharmaceutical firms appears to have been a temporary blip. New data from the Patented Medicines and Prices Review Board (PMPRB) show a decline in 2008 ratio of R&D outlays to sales revenue slipping to 8.1%, the lowest level in 20 years. Patent-holding firms racked up $1.31 billion in R&D in 2008, a 1.1% decline from 2007 when expenditures totaled $1.33 billion.

Patent holders that are members of Canada's Research Based Pharmaceutical Companies (Rx&D) achieved a somewhat higher R&D-to-sales ratio of 8.9% but R&D spending still falls short of the 10% commitment the industry lobby group made when changes were made to the Patent Act in the late 1980s. It marks the sixth year running that Rx&D members missed the target, and the eighth year in which patent holders as a whole fell short.

Of the 82 patent holders captured in the PMPRB annual report, the R&D-to-sales ratios of 62 fell below 10%. Those firms accounted for 71% of the $16.3 billion in sales revenue for 2008. Rx&D members accounted for 35 of the reporting firms and had R&D expenditures of $1.2 billion or 89.4%.

Basic research classified as biological registered the biggest decline, dropping nearly 46% from $136.4 million in 2007 to $73.8 million in 2008. Basic research fell to its lowest level (except 2003) since 1988, accounting for just 15.9% of current R&D expenditures (current R&D outlays account for 96.5% of total expenditures and exclude capital equipment costs and allowable depreciation expenses).

Other qualifying R&D hit a near-record high of $337.9 million 26.9%, reflecting a long-term trend towards using Canadian facilities as a venue for Phase IV clinical trials and the rising cost of regulatory submissions.

In the largest category of applied R&D, Phase III clinical trials accounted for the largest single expenditure ($361.8 million), followed by Phase II ($125 million), Manufacturing Process ($90.5 million), Pre-Clinical II ($53.1 million), Phase I ($53.1 million), and Pre-Clinical I ($30.7 million).

PMPRB data show that Ontario is increasing its share of pharmaceutical R&D. In 2008, the province's share was 47.3% or $596.1 million of the national total, up from 44.6% and $567.8 million in 2007. In contrast, Quebec's share declined at Ontario's expense, decreasing from $44.1% or $561.7 million in 2007 to 42.2% or $532.5 million in 2008. Pharmaceutical R&D also declined in the western provinces from 9.7% or $124 million in 2007 to 8.8% or $11.2 million in 2008. The Atlantic provinces registered a modest 4% increase over the same period from $20.5 million to $21.3 million.

Rx&D continues to put the best possible face on the declining R&D performance of its members. In an August 13th statement, the group spoke only of its 10% R&D-to-sales commitment in terms of a 20-year average.

"Our member companies' total investment in R&D in Canada has averaged more than 10% of sales," stated the press release. "(In 2008) more than $140 million were invested directly in Canadian universities and hospitals."

Regardless of spin, it's increasingly evident that Canada is stalled in its attempt to attract more pharmaceutical R&D — a field dominated by US- and European-based transnationals. A comparison with other countries where medical research is conducted shows that Canada lags behind most nations. In 2006, Switzerland R&D-to-sales stands at 105%, followed by the UK (39.8%), Sweden (30.7%), Germany (22.1%) and France (16.4%). Of the countries listed in the PMPRB report, only Italy ranks below Canada at 6.8%.

Of the 2008 total, patent-holding companies performed $620.6 million of the total, followed by other companies ($282.5 million), others ($196.1 million), hospitals ($107.8 million) and universities ($54.4 million).

R$