Self-Imposed Barriers Hampering Canada’s Life Sciences Sector 

From: Rosalie Wyonch 

To: Research spending watchers 

Date: August 24, 2026 

Re: Self-Imposed Barriers Hampering Canada’s Life Sciences Sector 

The federal Pharmaceutical and Life Sciences Sector Task Force report recently delivered 39 recommendations to reposition the sector as a strategic, nation-building priority. It identified complex regulatory pathways, fragmented ethics approvals across sites, limited data infrastructure, and a lengthy reimbursement negotiation process as core challenges. In addition, various US policies threaten Canada’s industry through tariffs and the Most-Favoured-Nation (MFN) drug pricing policy. 

While there are certainly improvements to be made across the discovery-to-public-coverage pipeline, the Canadian life sciences industry punches above its weight in many categories. Pharmaceutical manufacturing GDP has expanded by roughly 35 percent since 2019 – well above the average growth across all Canadian industries. Canada’s pharmaceutical market is projected to grow at 4.32 percent annually from $46 billion in 2024 to more than $66 billion by 2033. 

With more clinical trials per capita than any other G7 country, the country has historically been a competitive destination for biopharmaceutical research investment. Canada's share of the global clinical trials market has declined from 6 percent in 2021 to roughly 4 percent today – an erosion equivalent to approximately $2.5 billion in foregone research spending and some 20,000 jobs. Among the top 10 destinations for industry-sponsored clinical trials, only China (17 percent), the United States (16 percent) and to a lesser extent, Australia (4 percent), have increased their share of the global total. As of 2026, Canada still ranks eighth but is losing ground.  

Any honest assessment of Canada's life sciences outlook must grapple with the risk posed by the United States’ proposed Most Favoured Nation (MFN) drug pricing policy. Unlike conventional external reference pricing – which uses an average of comparator country prices – MFN would tie US domestic prices to the single lowest price among comparators. Because the United States generates a disproportionate share of global pharmaceutical revenues, price reductions of the magnitude contemplated under MFN could have far-reaching consequences for global launch decisions and R&D investment levels, including in Canada. Already, nearly 50 drugs approved by Health Canada have had their launches delayed or cancelled in the Canadian market.  

Many provinces have made various changes to become more attractive as clinical trial and research destinations, or to improve market access for approved drugs through reimbursement policies. Regulators have moved from sequential to parallel processes to reduce timelines. In April 2026, the federal government committed $127 million in Strategic Response Funding to two major life sciences projects in Vancouver. The province's pharmaceutical manufacturing GDP has also grown by nearly 86 percent over the same period, growing BC’s share of Canada's national total from less than 5 percent to over 7 percent. 

The Atlantic Clinical Trials Network, a collaborative involving Nova Scotia Health, IWK Health, Vitalité, Horizon, Newfoundland and Labrador Health Services, and Health PEI, has positioned the region as a unified investment destination rather than four competing small markets. In October 2025, Ontario launched the Funding Accelerated for Specific Treatments program, which initiates public funding for select high-priority cancer drugs up to nine months earlier than the conventional reimbursement pathway, before price negotiations with manufacturers are complete. 

Pharmaceutical development and production have been historical strengths for Canada and recent growth has outpaced the economy (in part due to system improvements that governments have been implementing along the way). 

However, US pricing policy is likely to put significant pressure on pharmaceutical markets, particularly Canada’s access to new medicines. To maintain strong growth, governments should continue to address regulatory and administrative barriers and encourage inter-jurisdictional cooperation to streamline approval processes. Similarly, governments should develop strategic response plans to prioritize access to new medicines and prevent further delays to Canadian launches and patient access. 

Rosalie Wyonch is Associate Director of Research at the C.D. Howe Institute.  

To send a comment or leave feedback, email us at blog@cdhowe.org.  

The views expressed here are those of the author. The C.D. Howe Institute does not take corporate positions on policy matters.