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CETA threatens the generic pharmaceutical industry in Canada

Trade agreement would cause loss of jobs and $1 billion per year in exports.

TORONTO, ON, October 11, 2011: Canada could face a loss of jobs and investment in its R&D intensive and fast-growing generic pharmaceutical industry if the European Union's pharmaceutical intellectual property proposals in the current Canada-EU trade negotiations are adopted, according to a new report released today. The report by Montreal-based E&B Data was commissioned by the Canadian Generic Pharmaceutical Association (CGPA).

The report notes that the global demand for generic pharmaceuticals is growing at a rate of 10 percent each year, and the global market is expected to grow to $358 billion by 2016. Canada is currently well positioned to benefit from the global growth of this industry through existing generic pharmaceutical R&D and manufacturing facility investments by several global and Canadian-based companies.

  "The EU proposed changes to Canada's intellectual property regime for pharmaceuticals which would extend periods of market exclusivity for brand-name drugs by an average of 3.5 years and add an estimated $2.8 billion annually to Canada's prescription drug bill."

Canada's generic pharmaceutical industry has a strong industrial base centred in the Montreal, Toronto and Winnipeg regions, and employs more than 11,000 Canadians in highly skilled R&D and manufacturing positions. In addition to producing most of the generic drugs sold in the domestic market, generic products manufactured in Canadian facilities are exported to more than 115 countries around the globe. The value of these low-cost exported products exceeds more than $1 billion annually.

The EU has tabled several proposed changes to Canada's intellectual property regime for pharmaceuticals in the current negotiations for a Comprehensive Economic and Trade Agreement (CETA), which would extend periods of market exclusivity for brand-name drugs by an average of 3.5 years and add an estimated $2.8 billion annually to Canada's prescription drug bill. These increased costs would be paid by private and public sector payers, consumers and taxpayers.

According to today's report, if the EU's proposals are adopted, generic pharmaceutical companies in Canada could lose their ability to seek timely access to new export markets, and opportunities in foreign markets would be captured earlier by manufacturers in countries that do not have the comparable barriers to trade that the EU proposals would create.

1. Short- to medium-term impact

•Canadian generic pharmaceutical companies would lose export markets and manufacturing mandates for new generic molecules. As a result, some R&D projects already under way would be abandoned.

•There would also be less R&D on new molecules in the future as securing future project financing would be more difficult. Production of older molecules will likely continue, but dependence on existing products will diminish the revenues of Canadian companies.

•Reduced upgrades of existing manufacturing and R&D centres could be expected. The lower revenues, later market entry and reduced ability to compete for global mandates will also provide less incentive for generic companies in Canada to challenge weak and frivolous patents.

2. Long-term impact

•If the EU pharmaceutical intellectual property proposals are adopted, the generic pharmaceutical industry would face a highly uncertain presence in Canada.

•Generic pharmaceutical companies could be expected to divert production and R&D mandates to industrial facilities in other countries that present a more attractive investment climate.

•Shutdowns and relocations are possible, resulting in job losses in the generic pharmaceutical industry and its suppliers. Ultimately, only commercial activities (import and distribution) would likely remain.

Links and sources
  New report: Adoption of EU's pharmaceutical proposals would mean Canada loses out on fast-growing generic industry investments

Posted: October 24, 2011

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