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Peru Pharmaceuticals and Healthcare Report Q3 2007
Business Monitor International, Nov 2007, Pages: 49
The Peru Pharmaceuticals and Healthcare Report provides independent forecasts and competitive intelligence on Perus pharmaceuticals and healthcare industry.
The author has revised its 2005 and 2006 total market size figures sharply upwards, based on new data on the Peruvian institutional market and exchange rate adjustments. Last year, the total Peruvian market reached an estimated size of US$618mn, representing 8% growth year-on-year compared to 2005. We present forecast sees a figure of US$663mn, with a five-year average growth rate of 5.4% between 2006 and 2011. The market is expected to reach a total value of US$803mn by the end of 2011.
The August earthquake on Peru’s Pacific Coast took more than 500 lives and cost millions of dollars in damages. But for the country’s president, Alan Garcia, the disaster was an opportunity to bring the country together after months of street protests over social conditions. The 2008 budget, published in August, pledges a 28% increase in overall investment, with social services seeing steep rises. Higher tax revenues and a booming economy should allow continuing record budget surpluses. All of this should help Garcia push forward increased coverage under the unified and strengthened Seguro Integral de Salud (SIS) health insurance system. The key will be ensuring the newly enrolled can actually access health services and get basic medicines. Otherwise, people will be back protesting on the streets.
Peru’s free-trade agreement (FTA) odyssey with the US continued, with US ratification stalling. The agreement faced a rebellion by US Republican Senators and vocal criticism from industry trade groupPhRMA over the watering down of intellectual property (IP) provisions in the treaty. These changes had been pushed through by Democrats, who control Congress, and backed by generic drug makers. With Republican senators promising to introduce a ‘mark-up’ of the latest text in late September, the FTA - ratified by Peru back in April 2006 - could still be some time in coming.
For several years now, the FTA has raised the question of the future of Peru’s domestic drug industry. With many dozens of small producers, there is little likelihood they will be able to adapt to inevitable if gradual improvements in IP protections and quality control, such as GMP requirements. Some consolidation is necessary and desirable if the local industry is to survive over the long-term and make the investments in GMP compliance - as several large producers, such as Farmaindustria have already done. When the government again raised the issue of abolishing the 20% ‘discount’ applied to bids by local manufacturers in official tenders in parliament in May, the industry replied by saying that thousands of jobs were being put at risk. Given Peru’s current strong economic position on the top of a commodities boom, an active industrial policy - such as the one pursued in Brazil by another centre-left president - could see state-backed funding to specific projects and consolidation. For the moment, Peru has sought to protect local drug makers by erecting visible and subtler barriers to trade - such as turning a blind eye to rule-breaking. A more sensible policy would seem to be investing to compete in the region and globally as lower quality products are increasingly shut out of more markets.
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