Attendees at the Canadian Association of Chain Drug Stores’ Canadian Drugstore Conference, held here late last month, were cautioned to expect continued volatile markets for another year or two.

Canadian Association of Chain Drug Stores, Canadian Drugstore Conference, CACDS, chain drug stores, Canada, community pharmacy, pharmaceutical sales, prescription drugs, Mark Maciw, IMS Health, pharmacy sector, provincial drug reform, health expenditures, health care, drug expenditures, generic drug, generic drug utilization, Alasdair McKichan

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Inside This Issue - News

Outlook for Canadian pharmacies eyed

November 21st, 2011
by Alasdair McKichan

TORONTO – Attendees at the Canadian Association of Chain Drug Stores’ Canadian Drugstore Conference, held here late last month, were cautioned to expect continued volatile markets for another year or two.

After that, speakers at the event said, the market would likely become more predictable.
While no one promised that the high-growth years of the last decade would return, many saw community pharmacy experiencing more stability than other retail sectors.

Such issues as consumers’ use of technology, the environment, changes in the value equation and ethnic influences were frequent topics of discussion.

For the year ended in June 2011 Canada was the only one of the world’s 10 key markets that posted negative growth in pharmaceutical sales, Mark Maciw, group director of supplier management at IMS Health, told the CACDS audience.

While Maciw did not attribute the downturn in sales to the loss of patent protection of some major drugs and the pressures on drug pricing exerted by provincial governments, the general feeling in the industry is that both developments were major contributors to the result.

Despite a sales decline of 1.8%, Canada maintained its position as the world’s eighth-largest market for prescription drugs, Maciw said. Total North American growth, at 3.2%, was tepid on a worldwide scale, compared with the burgeoning markets of Asia, Africa and Australia, which grew at 12%, and Latin America, which expanded by 15.9%.

However, Maciw noted, North America still accounts for 41.3% of world consumption and, going forward, prescription use in Canada is expected to increase. Over the next decade and beyond, he said, usage among Canadians over the age of 55 will grow dramatically.

While this will have positive implications for pharmacy, it is likely to threaten governments’ health plans, Maciw noted. As a result, he said, provincial drug reform will continue with some provinces that had already reached an understanding with the pharmacy sector expecting to announce that they need to renegotiate those deals.

Prescription drugs account for 13.6% of the country’s total health expenditures, just under the 13.7% share claimed by physicians, Maciw noted.

In 2010 new drugs were positive contributors to growth; price, volume and mix were negative elements. Last year’s experience contrasts with that of the previous eight years, when the big contributors to total growth were volume and mix.

However, August 2011 sales showed a pattern that had not appeared for many months, with brand sales being a contributor to overall growth and generics being a detractor.
Through July, drugs with annual sales of $1.1 billion had lost their patent protection during the previous 12 months. That total is expected to reach $ 1.5 billion by year-end.

Next year, Maciw noted, an even larger number of key products, including Nexium, Diovan/HCT, Avapro, Atacand, Singulair, Avalide, Nasonex, Avandia, Reminyl ER, Taxatore, Strattera, and Zomig/R will all come off patent, representing some $2.3 billion in sales.

From 2013 to 2015 the value of drugs coming off patent will average $1 billion annually.
The health care and drug expenditure budgets of all the provinces for 2011 and 2012 mostly show growth in both these elements, but that growth is occurring at lower levels than in recent years.

During that time drug expenditures in Saskatchewan, Quebec, New Brunswick and Nova Scotia are expected to increase by 0.9%, 4.8%, 1.8% and 2.5%, ­respectively. The highest overall health care expenditures are expected in Newfoundland (8.7%) and British Columbia and Saskatchewan (6.2% apiece).

Nationally, health care is expected to increase 4.5%, and drug expenditures 1.9%, over the two years.

Maciw noted that the percentage of prescriptions being filled with generic drugs has been steadily increasing for the last seven years and is expected to continue to account for more sales going forward. In 2005 generics accounted for 43.9% of the market; by June of this year that share had grown to 58.8%.

Data shows that there are variations in generic drug utilization by province, with Manitoba and British Columbia having the highest usage at 64% and 62%, respectively, and Quebec (57%) and Nova Scotia (59%) showing the lowest generic penetration levels.

IMS data shows that between 2006 and 2010 several suppliers experienced significant sales growth in Canada.

Teva Pharmaceuticals Industries Ltd. led the way with a 17.3% increase over the four years, while Novartis Pharmaceuticals Corp.’s sales moved ahead 10.8%, AstraZeneca PLC’s volume increased 8.6%, Abbott Laboratories’ sales rose 8.4%, and Bristol-Myers Squibb Co.’s sales increased 7.4%.

The 10 fastest-growing brands in August 2011, the data showed, were: Crestor, Remicade, Lucentis, Humira, Januvia, Cipralex, Cymbalta, Lyrca, Pradax and Stelara.

The rate at which new brands have been introduced over the past five years has shown more consistency than the sales these brands deliver. In 2007, 20 new brands realized sales of $52.6 million. Last year 25 new brands resulted in sales of $27.2 million.

For the year through August 10 new brands have yielded sales of only $4.3 million.
In addition, the market share of new products has been declining. In the period from 2006 to 2008 their share ranged between 0.21% and 0.28%. Last year the share was 0.12%.