Statement - Report on R&D investments - Urgent call to strengthen Canada's competitive edge

OTTAWA, June 21, 2012 /CNW/ - The following is a statement by Russell Williams, President of Canada's Research-Based Pharmaceutical Companies (Rx&D), in response to the release of the Patented Medicine Prices Review Board's (PMPRB) 2011 Annual Report.

"The PMPRB report released today demonstrates the urgent need to improve Canada's competitiveness so that the Canadian innovative pharmaceutical sector can become a leader in life sciences research and investment. Rx&D member companies continue to represent the lion's share of pharmaceutical R&D in Canada at a little over 90% of all patentee R&D reported to the PMPRB in 2011, part of a long-term commitment that has resulted in investments of, on average 9.75 percent of sales per year over the past 24 years (based on SR&ED eligible R&D only).

"That said the 2011 report points to the trend of declining R&D investment, one that we want to work with governments across Canada to reverse. Quite simply, we do not have the tools to compete internationally and the mechanisms created 25-years ago need to be updated. Our key competitors and trading partners have upgraded and improved their policies to aggressively pursue R&D investments. Our goal is to see investment in Canada grow again. Rx&D members continue to invest at a higher rate than the rest of the industry.

"We are actively pursuing ways to help Canada regain its competitive edge and today's report can only be interpreted as a compelling call to action for all involved.

A quarter-century later, the world has changed
"In 1987, Rx&D members committed to invest ten percent of annual sales revenues in Canadian R&D by 1996, "assuming that the international and national regulatory environments for the pharmaceutical industry will not undergo substantial change".

"Rx&D members met that commitment, but twenty-five years later, both international and domestic environments have become increasingly challenging. Today, multiple layers of federal and provincial regulatory process, intellectual property protection which is not globally competitive, along with limited access to medicines in Canada are real concerns. International competition for research dollars is extremely fierce and it has become more and more difficult for Canadian CEOs to win global investments for Canada.

"At the same time, the model for life sciences research and innovation in the twenty-first century has changed. Canada's research-based pharmaceutical companies are investing in new, more collaborative initiatives, including research partnerships with Canadian universities, hospitals, centres of excellence, early stage biopharmaceutical companies and health charities. While these often multi-million dollar initiatives clearly support research and development in Canada, they do not qualify under the criteria used by PMPRB to measure R&D investment, a 25-year old methodology first developed to track tax credits.

"Last year, Rx&D commissioned a report by KPMG, using updated criteria agreed to by Industry Canada, PMPRB and CIHR. KPMG found that when reviewed using the updated criteria, Rx&D members had invested 28 percent above and beyond what was captured by the PMPRB's 2010 annual report. A similar review of our 2011 investments is underway.

"We believe that the regulations should be changed in order to document all R&D in Canada.

Strengthening Canada's competitive-edge
"Globalization presents both challenges and opportunities, especially for a high-value business activity such as life sciences R&D, for which countries around the world are competing aggressively. It is a critical contributor to both the health and wealth of our nation, and it hinges on having the right policy in place to create a stronger, more attractive investment environment in Canada.

"The Government of Canada's ambitious trade agenda provides an opportunity to do just that - by strengthening safeguards for intellectual property and shoring up Canada's position as a leading contender for life sciences investment. Similarly, provincial and territorial governments have opportunities to better leverage the value that new medicines offer to help achieve health system sustainability.

"I cannot overstate the urgency of the situation. The PMPRB annual report released today shows that the status quo is not an option for the future of the Canadian life sciences sector. If we want to grow and maintain a key pillar of Canada's knowledge-based economy, if we want to support a healthier and more prosperous Canada, we must do so with a clear understanding of the global context and our competition.

"Over $100 billion dollars is invested by our global member companies in R&D every year. We currently attract roughly one percent to Canada. Let's commit our collective energy, and policies, to growing our share of this investment. History tells us that it is good for Canada and good for Canadians.

About Rx&D
Rx&D is the association of leading research-based pharmaceutical companies dedicated to improving the health of Canadians through the discovery and development of new medicines and vaccines. Our community represents 50 member companies and invests more than $1 billion in research and development each year to fuel Canada's knowledge-based economy. Guided by our Code of Ethical Practices, our membership is committed to working in partnership with governments, healthcare professionals and stakeholders in a highly ethical manner.

Christine Choury
Media Relations
Telephone: [phone]
E-mail: [email protected]

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