Pharmaceutical industry profile

Canada's pharmaceutical sector

The pharmaceutical sector is one of the most innovative industries in Canada. It is composed of companies developing and manufacturing innovative medicines and generic pharmaceuticals, as well as over–the-counter drug products. The sector is made up of a number of sub-sectors that service different market segments. These include brand-name pharmaceuticals, generic pharmaceuticals, biopharmaceutical small and medium sized enterprises (biopharmaceutical SMEs), contract research organizations (CROs), and contract manufacturing organizations (CMOs).

Size and structure of the industry

• The Canadian pharmaceutical market ranks 6th largest globally (FitchSolutions, "Canada Pharmaceuticals Report Q3 2025"), with a 2.1 percent share of the global market (IQVIA Pharmafocus 2028). Since 2018, compound annual growth has remained positive at 7.5 percent.
• Companies undertake research and development (R&D) to develop new or improved patented therapies, while others develop bio-equivalent copies of innovative drugs once patents expire. Emerging fields of biopharmaceuticals include gene and cell therapies, and nanomedicines.
• Brand-name products account for 80.5 percent of Canadian sales by value and 23.4 percent of prescriptions by quantity. Generics account for 19.5 percent of market sales by value and 7 6.6 percent of the market share by prescriptions (IQVIA Pharmafocus 2028).
• In 2024 , the manufacturing portion of the sector employed an average of approximately 3 5,000 people and over the last 5 years, employment has grown by approximately 15.1 percent (Statistics Canada; Table 14-10-0201-01).
• The industry is clustered mainly in the metropolitan areas of Toronto, Montreal and Vancouver.

Canadian drug sales

According to the 2023 PMPRB Annual Report Footnote1, patented medicines represented 47.3 percent of all medicine sales in Canada, totaling $19.9 billion in 2023. In recent years, sales of non-patented brand and generic medicines have grown more rapidly than those of patented medicines.

Sales of medicine are handled via different channels with 5 8.1 percent being sold through consolidated distributers, 3 2.5 percent sold through self-distributing pharmacy chains, and 9.4 percent being sold directly to pharmacies (IQVIA Pharmafocus 2028).

R&D activities

• Total business expenditures on R&D by Canadian pharmaceutical companies selling patented medicines were reported to be $1,069.3 million and have increased by 17 percent from 2022 to 2023 (2023 PMPRB Annual Report).
• New medicines and drug candidates are increasingly being developed externally via partnerships with academia, small and medium sized enterprises (SMEs), government and research centres as well as contract research organizations (CROs).
• Drug research and development is increasingly done via external partners, as over the past decade, 60 percent of innovator small molecules and 82 percent of innovator biologics have their roots outside of big pharmaceutical companies (source: Accenture). As a result, the innovation activities of large pharmaceutical firms have diversified, and Canadian CROs perform an increasingly important share of R&D.
• According to Research Infosource Footnote3, thirty- two pharmaceutical and biotechnology companies were listed among Canada's Top 100 Corporate R&D Spenders in 2023.
• R&D costs per drug averaged US $1.4 billion over 12–13 years (Tufts Center for the Study of Drug Development). Full costing (including amortization of research failures and opportunity cost of capital) raised average costs significantly. A generic drug may take 2 to 3 years and requires $3 to $10 million of R&D to develop and prove equivalency with the original drug.

International trade

• From 2019 to 2024, pharmaceutical exports between Canada and the rest of the world increased by 38 percent, while imports increased by 35 percent.
• The United States is Canada's main trading partner, accounting for 76.8 percent of exports and 31 percent of imports in 2024. Another 50.5 percent of imports originate from the European Union.

Leading companies

• As of December 2023, the top ten Canadian pharmaceutical corporations accounted for approximately 48.1 percent of the total Canadian market share, totaling $20.71 billion in purchases (IQVIA Pharmafocus 2028).

Leading products

• The top ten pharmaceutical products sold in Canada account for 72 percent of 2023 industry sales for the top 20 brands. Leading therapeutic categories include medicines for cancer, diabetes, and autoimmune diseases such as arthritis (IQVIA Pharmafocus 2028)

Health expenditures on drugs

According to the Canadian Institute for Health Information's National Health Expenditure Report (2024) Footnote4:

• In 2024, 52.8 percent of total health expenditures were directed to hospitals (25.8 percent), physicians (13.3 percent) and drugs (13.7 percent).