Total drug spending in Canada is estimated to have reached $26.9 billion in 2007, according to a report by the Canadian Institute for Health Information (CIHI).
The report, Drug Expenditure in Canada, 1985 to 2007, says this represents an estimated annual growth rate of 7.2%, an increase of approximately $2 billion over previous. Spending on prescribed drugs continues to grow faster than spending on non-prescribed drugs and is estimated to have reached 84% of the total drug bill in 2007.
The annual growth rate for prescribed drug spending in 2007 (7.5%) is expected to be lower than it was between 1997 and 2006, when the average annual growth rate was 10.5%.
“With an aging population, increased use of drug therapies and new drugs entering the market, spending on drugs continues to rise at a higher rate than overall health spending and faster than inflation,” says Michael Hunt, manager of pharmaceutical programs at CIHI. “However, the growth seen in the late nineties and early millennial years has slowed somewhat.”
The Canadian Generic Pharmaceutical Association says the slowdown in the growth rate is due to the increased use of generic drugs. Generic drugs now fill 49% of all prescriptions in this country yet account for only 21% of the $19 billion Canadians spend annually on prescription medicines.
To see the CIHI report on the organization’s website, click here.
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Canadian Investors Look Elsewhere
Canadian investors continued to place funds abroad at a strong pace in 2006, with holdings of foreign securities at market value reaching $737.7 billion by the end of the year, according to Statistics Canada.
That’s a 34.7% jump from holdings of $547.7 billion at the end of 2005 and the highest annual growth of foreign portfolio assets since 1999—a period marked by strong increases in stock prices as a result of a boom in the high-tech sector.
The increases in 2006 reflected major advances in holdings of foreign debt instruments. This form of investment continued to increase as a percentage of total foreign holdings to reach more than 20% in 2006, compared to a 9% share at its lowest in 1999.
This stood in contrast to 1999 when the growth in foreign equities accounted for all of the increase in Canadian portfolio investment abroad.
“The unprecedented investment in foreign debt instruments observed since the elimination of the ceiling on foreign holdings of institutional investors by the federal government in 2005 was the main contributor to the growth in holdings of debt securities,” says StatsCan. “On the equity side, the vast majority of the increase was attributable to global equity price gains, and the revaluation effect on foreign currency denominated instruments from the depreciation of the Canadian dollar against the euro and the British pound.”
On a geographical basis, holdings of U.S. securities accounted for slightly more than half ($379.7 billion) of all Canadian holdings of foreign securities in 2006, down from a peak of 60% in 2002.
Portfolio investment in Europe gained a higher share of the total portfolio of Canadian investment abroad in 2006, led by increases in Western European countries, like the United Kingdom, France, Germany and Switzerland.
Still, gains were more widely distributed geographically as investors looked for opportunities in emerging markets. Canadian holdings of Chinese stocks more than doubled while holdings of Russian equities more than tripled on a market value basis in 2006.
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DC Plan Growth in U.S. Declines
The growth in the number of American defined contribution (DC) plans and the number of participants in those plans—which increased sharply in the 1990s—has slowed and even declined in recent years, according to a study by the Employee Benefit Research Institute.
The number of overall DC plans fell to 631,481 in 2005 after topping 686,878 five years earlier. The institute did not give a reason for why there was a decline. Still, that’s more than three times the number of DC plans in 1975 (207,748).
And the number of participants in such plans has fallen slightly to 52.2 million in 2004, down from 52.9 million in 2002. Compared to 1975, however, there were just 11.2 million active participants.
The assets held in these plans did not follow the same trend as did the number of plans and number of active participants from 1985 to 2004. The assets grew sharply, from US$427 billion in 1985 to $2.35 trillion in 1999, before falling (along with the stock market) until 2002, reaching $1.95 trillion. This level subsequently increased, reaching $2.6 trillion in 2005.
To see the report on EBRI’s website, click here.
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Rogerscasey Buying Perimeter Capital
Rogerscasey, a financial services and consulting firm based in Connecticut, has signed a deal to acquire Perimeter Capital Management Inc. Financial details of the agreement have not been released.
“We could not be happier,” says Bob Mitchell, president of Toronto-based Perimeter Capital. “Rogerscasey has long been considered a pre-eminent investment consulting and technology firm in the United States.”
Last year, Perimeter Capital tried setting up a marketplace for frozen third-party asset-backed commercial paper (ABCP) to be bought and sold.
The firm provides investment manager research and portfolio construction services to financial institutions across Canada. It will change its name to Rogerscasey Canada once the deal is complete, which is expected in the summer.