Skip navigation

News from The Globe and Mail

Generic drugs fuel prescription growth

Account for 3.7% rise in retail pharmacy sales; name-brand medications slip


For the first time this decade, generic drugs accounted for all of the growth in prescriptions dispensed by Canadian pharmacies last year while brand-name medicines declined marginally, according to a survey.

Data collection agency IMS Health Canada said retail prescriptions rose 3.7 per cent last year, the slowest growth since 1995.

It attributed the slowdown to, among other things, nine brand-name drugs that faced generic competition for the first time in 2005, including Pfizer Inc.'s antibiotic Zithromax and GlaxoSmithKline PLC's antidepressant Wellbutrin.

"The good news is that increased use of generic drugs is helping to curb Canadians' prescription drug costs," said Jim Keon, president of the Canadian Generic Pharmaceutical Association (CGPA). "The bad news is that loopholes in drug patent laws continue to force governments, employers and consumers in Canada to pay for higher-priced brand-name drugs for longer than they should."

The impact of generic competition can be dramatic.

Glaxo's Canadian sales of Paxil, for example, were $222-million in 2002. In 2004, the first full year of generic competition, total sales of the antidepressant had fallen to $154-million, with generics accounting for 58 per cent of prescriptions and 54 per cent of sales, according to IMS data obtained from industry sources. Paxil sales in 2005 totalled $115-million, with generics controlling 88 per cent of prescriptions and 85 per cent of sales.

A similar fate could await Pfizer's Zithromax, which had sales of $55-million in Canada last year. Generics competitors arrived in November, grabbing sales of $1.3-million in the last two months of the year, IMS said.

Pharmacist Alex Wong said customers at his Meadowvale Pharmacy outside of Toronto do not object to generic substitution, which is required under Ontario's drug insurance regulations. "We tell customers that this is an interchangeable product at a reduced price. I think in 25 years, I've had only three people object."

IMS also said total spending on pharmaceuticals by pharmacies and hospitals reached $16.6-billion last year, an increase of 7.3 per cent, the lowest level of growth since 1996.

In 2005, IMS said generic medicines accounted for 43 per cent of all prescriptions but only 13.8 per cent of total drug spending. Mr. Keon's association estimates that if the use of lower-priced generics matched the 53-per-cent market share in the United States, it would save Canada's health care system up to $500-million in the first year alone.

Ian Therriault, a senior industry expert for IMS, said the pharmaceutical market in Canada is expected to grow at a compound annual rate of 5 to 8 per cent over the next five years, with generic competition and government cost-cutting continuing to hurt brand-name manufacturers.

However, several promising new drugs are expected in 2006, including diabetes therapy Exubera, hypertension drug Caduet and Cymbalta for depression.

"We also expect growth will be fuelled by oncology medications coming from the biotech sector, such as Avastin," Mr. Therriault added.

© The Globe and Mail

Search the News
Search using one or more of the following options:
    Symbol  Lookup
* Can only be used when searching The Globe and Mail and the newswires. Search Tips

Only GlobeinvestorGOLD combines the strength of powerful investing tools with the insight of The Globe and Mail.

Discover a wealth of investment information and and exclusive features.

Free E-Mail Newsletters

  • Morning news headlines
  • Morning business headlines
  • Financial highlights
  • Tech alert
  • Leisure

Sign-up for our free newsletters

Back to top