Core demand for the industry’s products remains high and will only continued to increase in the next five years
New York, NY (PRWEB) October 21, 2014
Even as demand surged for the industry's products, revenue for the Generic Pharmaceutical Manufacturing industry in Canada has stumbled over the past five years. According to IBISWorld Industry Analyst Jocelyn Phillips, “Pricing pressure from provincial drug plan reforms limited industry gains even as sales volumes increased, while depressed export demand in the wake of the global recession and the subsequent relative appreciation of the Canadian dollar have driven total industry revenue down between 2009 and 2014.” Acquisition activity by some of the industry's largest globally operating players further limited industry expansion, while high research and development (R&D) costs kept average industry profitability gains only slight in recent years.
Nonetheless, core demand for the industry's products remains high and will only continue to increase in the next five years. The patent cliff of 2012 spurred industry revenue growth, as an estimated $35.1 billion in brand name sales came under the risk of competition from generics, with expirations expected to expose an additional $33.5 billion in brand-name sales to competition in 2015, according to IMS Health. An increasingly larger share of the brand-name drugs being threatened by these patent expirations are biological drugs, which are more complicated to produce but also carry potentially greater profit margins for industry manufacturers.
Market share concentration in the Generic Pharmaceutical Manufacturing industry in Canada is very high, with the four largest industry players generating a large majority of total industry revenue in 2014. Acquisition activity has increased market share concentration in recent years, particularly as Israeli-based generic pharmaceutical manufacturer Teva acquired two companies with significant market presence in Canada: Novopharm and Ratiopharm. “Regardless of this increased market share concentration, the Generic Pharmaceutical Manufacturing industry has expanded in recent years. The total number of industry enterprises has grown marginally since 2009 as growing demand for generics has provided niche producers with new opportunities, particularly in the burgeoning biosimilars market.],” says Phillips. IBISWorld expects this expansion to slow in the five years to 2019, while market share concentration will likely remain high due to the significant size and diverse product portfolios of the industry's largest players.
As Canadian generic pharmaceutical manufacturers scramble to be first to market with biosimilars, or generic version of these expiring biologic drugs, industry employment is expected to increase and wage costs will likely grow as companies hire more technically skilled R&D personnel. Exports are also expected to rebound in the coming years as demand in overseas markets continues to recover from the global financial crisis. The Canadian dollar will likely depreciate during this period as well, rendering Canadian-made pharmaceuticals more affordable overseas. As a result of these trends, IBISWorld expects industry revenue to grow over the next five years.
For more information, visit IBISWorld’s Generic Pharmaceutical Manufacturing in Canada industry report page.
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IBISWorld industry Report Key Topics
This industry develops prescription and over-the-counter drug products that are used to prevent or treat illnesses in humans or animals. Generic drugs are produced and distributed without patent protection and industry operators are not significantly engaged in the research and development of new drugs. The industry does not include manufacturers of nutritional supplements or cosmetic beauty products.
Key External Drivers
Industry Life Cycle
Products & Markets
Products & Services
Globalization & Trade
Market Share Concentration
Key Success Factors
Cost Structure Benchmarks
Barriers to Entry
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