Competition In The Phamaceutical Industry

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COMPETITION IN THE PHARMACEUTICAL INDUSTRY The pharmaceutical industry continues to grow rapidly in Canada and around the world. Ranking eighth in the world, Canada continues to produce both generic and branded drugs and accounts for 2% of the world market by sales (Aruvian, 2011). As competition increases and markets grow within the industry, Canada ranks fourth among its main competitors of China, the United States and Spain. In Canada, the pharmaceutical industry continues to be a leader in terms of product innovation and a high profit generator. Within the Canadian pharmaceutical industry it is composed of both brand-name drug companies and generic drug companies. Recent trends of the Canadian pharmaceutical industry are that it is becoming more involved in generic drugs than those that are branded. “The most important form of competition in the pharmaceutical industry is from generic firms which are able to enter when all valid patents on a drug have expired or been invented around” (Hollis, 2003). The pharmaceutical industry is knowledge based in that it requires mass sums to be spent on research and development. In Canada, pharmaceuticals account for the second source of health care costs. Pharmaceuticals are a high growth sector in Canada with domestic production valued at almost $12 billion in 2009 and growing 8.5 percent annually since 2000 (Canada's Pharmaceutical Sector, 2011). Generic pharmaceuticals are determined by Health Canada to be bio-equivalent to patented pharmaceuticals and their primary role is to serve as competition to brand-name drugs. The generic drug industry tends to be very complex and misunderstood. Generic drugs are tested in Canada and proven to have the same clinical effects of those branded products that are sold under patents. In Canada there are three types of payers for these prescription drugs: provincial

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