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Canada commits to R&D

Posted on: 04 Feb 04


By 2010 Canada aims to become one of the top 5 countries in the world in terms of industrial R&D performance. Its pharmaceutical and biotech sectors, which are already key contributors to the economy, look set to prosper.
With the US accounting for the majority of the world’s pharmaceutical and biotech industry research, there has been a tendency to overlook events occurring in neighbouring Canada. Nevertheless, Canada has a strong commitment to improving its industrial R&D position in the world, which in turn, will have a positive impact on both the pharmaceutical and biotech sectors.

Canada aims to improve its industrial R&D performance

Although Canada has been successful in attracting investment for its R&D industries, the country has further ambitions to become a global centre for R&D – which includes biopharmaceutical R&D. In 1989, 17% of funding for business R&D in Canada came from foreign investment, but by 1999 this had risen to 27% (1). Despite such encouraging progress, Canada continues to analyse its R&D performance relative to other industrialised countries in order to make additional improvements.

Currently, Canada is 15th in the world for industrial R&D performance, however, the Canadian  government has set itself the target of 2010 to transform Canada into the one of the top 5 countries. In terms of R&D intensity and commitment, the pharmaceutical industry has been identified as one of the key areas within major countries for contributing to overall industrial R&D.

A key contributor

The Canadian pharmaceutical industry is a major contributor to the economy and is a considerable source of employment. In 2000, Canadian pharmaceutical manufacturers employed 20,000 people and spent CDN$1 billion on R&D (2). Importantly, about 65% of pharmaceutical R&D spend was devoted to clinical research (2). The significant proportion of R&D expenditure allocated to clinical development in Canada is a trend that is apparent across all industrialised countries.

In 2000 a Canadian survey of the top spenders on R&D ranked the combined pharmaceutical/biotechnology sector as second only to the information technology (IT) and communications sector in relation to expenditure (2). The survey also revealed that the R&D to revenues ratio in the pharmaceutical/biotechnology sector was the highest for any Canadian industry, with a ratio of 17.7% (2). As a direct result of this R&D commitment, Canada accounted for 10% of the global new medicines discovered in 2001 (2).

Improved focus on pharmaceutical R&D

Around the world, countries that represent the largest pharmaceutical markets have shown a tendancy to attract major companies involved in R&D. This is due to the strong relationship between R&D investment in a region and product acceptance. If the product is to be successful in a major market, it is important to gain the confidence of the medical fraternity, and therefore, many companies choose to involve them during the drug development process.

As Canada only represents 1.8% of the global pharmaceutical market, it cannot rely on these market factors alone to create an environment that attracts inward R&D investment from major companies (2). Consequently, successive governments and regional agencies have worked hard to convince global companies that Canada has the right infrastructure and conditions to promote innovation and encourage new drug development. Thanks to this approach, pharmaceutical R&D in Canada has increased by 700% over the last ten years, which is faster than any other industrialised country (3).

Despite, these improvements, in 2003, the industry association Canada’s Research-Based Pharmaceutical Companies (Rx&D) expressed some concern over a report from the Patented Medicine Prices Review Board (PMPRB), which revealed that, as a percentage of sales, pharmaceutical R&D investment had dipped slightly between 2001 and 2002 (4). They called for renewed efforts from the federal government to improve the environment for pharmaceutical R&D in Canada.

Hopefully, with continued efforts to boost the industry, such as schemes offering tax benefits to companies involved in R&D activities, Canada will be able to achieve its goal of becoming a global centre for R&D.


  1. Lonmo C. and Anderson F. (2003). A Comparison of International R&D Performance: An Analysis of Countries that have Significantly Increased their GERD/GDP Ratios During the Period 1989-1999. Science and Innovation Surveys Section. Statistics Canada.
  2.  The Canadian Pharmaceutical Industry: Innovation Profile. April 2003. Innovation in Canada.
  3. Bachand A (2003). R&D and Pharmaceuticals. Rx&D Contact – Summer 2003. Canada’s Research-Based Pharmaceutical Companies (Rx&D).
  4. A year in Review (2003). Canada’s Research-Based Pharmaceutical Companies (Rx&D). 31 December.

Dr Faiz Kermani and Dr Rebecca Gittins

Last updated on: 27/08/2010 11:40:18

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