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The Outlook for Pharmaceuticals in Latin America to 2013
Espicom Business Intelligence Ltd, Sep 2009
The pharmaceutical markets in Latin America are worth US$50 billion - and growing fast!
The eight Latin American markets covered by Espicom Business Intelligence represent a market of 474 million people with a GDP of US$3.4 trillion in 2008. The region is better prepared to face global instability than in the past but economic growth is expected to slow down in 2009 and 2010, after a recent period of remarkable growth. Access to medicines in the public sector has increased, particularly among the least well-off population, with initiatives such as Remediar in Argentina, PAC Saúde in Brazil, Auge in Chile, Seguro Popular in Mexico and Barrio Adentro in Venezuela. Governments are using their bargaining power to negotiate - and centralise - drug purchases in an effort to contain costs. At a regional level, MERCOSUR members have decided to establish a drug price database to compare and monitor drug prices. Overall, public drug expenditure in the region will continue to rise, as there is a considerable level of unfulfilled demand.
Private pharmacy sales are surging, as countries such as Brazil, Mexico and Venezuela have higher disposable incomes in a climate of macroeconomic stability. Innovative drug prices have risen, but governments have started to control them, either directly or indirectly. Contrary to what has happened in developed markets, generics consumption in Latin America is low, with the exception of Brazil. Local protectionism, very low prices and high production capabilities have helped the country to develop a sizeable bioequivalent generics market which has proved tough for foreign generics producers. In Mexico, Calderon’s government has started a renewal process for drug registrations, and it is expected that there will only be patented and bioequivalent generics by 2010. For the time being, however, Mexico remains on the 2008 USTR Watch List. The region is also facing a growing incidence of drug counterfeting, but initiatives are in place to control it.
Attractive opportunities remain in Latin America. The eight pharmaceutical markets covered by Espicom Business Intelligence will represent a value of US$80 billion at retail prices in 2013. With nearly twice the population of Mexico and a GDP of US$1.4 trillion, Brazil is the largest market. Economic stability and the depreciation of the US dollar are helping to bring private pharmacy sales to record figures in the country. Mexico is the second leading drug market, whilst Argentina and Venezuela each represent about a quarter and a third of the Brazilian and Mexican drug markets. Local producers are strengthening their manufacturing capabilities in order to maximise their export markets, particularly in other neighbouring Latin American countries. Combined domestic production represents about half of the regional market. Imports are valued at over US$10 billion but low exports contribute to a deficit in the pharmaceutical balance of trade of US$7 billion.
These reports analyse the issues
That is why Espicom Business Intelligence has published these new management reports: The Outlook for Pharmaceuticals in Latin America to 2013. Each report provides an individual and highly-detailed analysis of each market, looking at the key regulatory, political, economic and corporate developments in the wider context of market structure, service and access. The reports are available individually or as a discounted collection, and prices include 4 completely updated reports sent quarterly plus a comprehensive annual review.
Executive Summary
8 Major Markets Covered!
Argentina
Brazil
Chile
Colombia
Cuba
Mexico
Peru
Venezuela
FOR EVERY MARKET,
SENT QUARTERLY
MARKET OUTLOOK
Current market size
Unique 5-Year market projections to 2013
Market outlook
Comment & rating, covering 8 key areas such as use of generic drugs, intellectual property, pricing and the health systems
Market structure
Statistical data on imports and exports
Market developments, covering recent and impending developments with respect to key issues such as regulation, health facilities, funding and
government policy
Key national data projections
FOR EVERY MARKET,
SENT ANNUALLY
BACKGROUND DATA
Population data, including growth trends and age structure
Demographic indicators detailing principal causes of death and morbidity
HEALTHCARE SYSTEM
Organisation & administration
Health expenditure
- Expenditure by source of funding and type
Hospital services
- Hospital data such as beds by type, region, specialty, patient admissions and surgical procedures
Outpatient care
Medical personnel
- Data on healthcare professionals covering such areas as doctors by specialty, nursing staff and dentists
ACCESSING THE PHARMA MARKET
Regulatory environment
Distribution and trade fair information
Domestic production
Company information
CONTACT DETAILS
For healthcare organisations and trade associations
ARGENTINA
The Argentinian pharmaceutical market plummeted in 2002, but has since recovered. Pharmaceutical production, distribution and the market are dominated by the local pharmaceutical manufacturers. In comparison with other Latin American markets, local pharmaceutical production is still very high. Local producers are increasing their export capabilities, with Argentina being the third leading Latin American exporter of pharmaceuticals. Foreign producers of branded pharmaceuticals are recovering from the peso’s devaluation. Small copycat producers, which have traditionally served the public sector, are shaking up the industry. The government is using price negotiations as a short-term cost-containment but drug producers aim to negotiate price rises of up to 10% in 2008.
BRAZIL
The local currency has appreciated, increasing the pharmaceutical market in dollar values. Despite cost-containment measures, there is considerable potential for growth. The local industry will continue to maximise its opportunities in the generic sector. The public sector is small in comparison to the pharmacy sector, but is growing, representing between 15.0% and 20.0% by value. About one fifth of this is spent on antiretrovirals. Brazil issued its first compulsory licence for Merck Sharp & Dohme’s Stocrin (efavirenz) in May 2007. Since then, the international pharmaceutical industry has been more cautious with investments in Brazil, with a tendency to shift production and clinical studies development to Mexico and Argentina. The implementation of the PAC Saúde programme in February 2008 is expected to strengthen the Unified Health System (SUS).
CHILE
Protectionism towards the domestic industry characterises the Chilean pharmaceutical market, which ranks sixth in the region. Domestic producers are the leaders in the private pharmacy sector, controlled by three pharmacy chains. The domestic industry relies on raw material imports, whilst exports are restricted to Andean markets due to a lack of quality standards. The industry is slowly meeting GMP practices, with a new deadline in 2008. Domestic manufacturing is expected to shift from copycat products to branded products under licence from multinationals; bioequivalence tests are being performed for selected active ingredients. Most of the international drug companies are importers in Chile. TRIPS-related patent enforcements and the new health reform will increase pharmaceutical spending in the long term.
COLOMBIA
The Colombian pharmaceutical market is the fifth largest in the region. The healthcare reform programme has been instrumental in boosting consumption of pharmaceutical products, but growth has been largely in volume terms. The majority of the market is supplied by the relatively well-developed domestic industry; most of the subsidiaries of international drug producers have closed their manufacturing facilities. The largest indigenous manufacturers are engaged in the production of generic copycats. The deficit in the balance of pharmaceutical trade has increased since the introduction of intellectual property rights in the mid 1990s. In April 2008, an argument between the US White House and Congress stopped the trade agreement with Colombia being fast-tracked and perhaps delayed it indefinitely; this is a setback for Uribe’s government.
CUBA
The seventy-five-year-old Raul Castro became President of Cuba in February 2008, after his brother Fidel declined to serve another term in office. The US announced that, although there is potential for change, and despite the new leader, the trade embargo will remain until Cuba becomes a democracy. Cuba has a relatively strong domestic pharmaceutical and biotechnological industry, which supplies both domestic and export markets; Cuba has close health ties with Venezuela. In December 2007 the director of QUIMEFA confirmed that there will be millions of dollars of investments to improve and increase pharmaceutical production, and the plans include seven new plants which will benefit from the latest technology. Domestic GMP-compliant production concentrates on generic pharmaceuticals to treat HIV/AIDS, circulatory diseases & cancer and vaccines; selected pharmaceuticals meet bioequivalence standards.
MEXICO
Mexico is the second leading Latin American market, behind Brazil. International and domestic producers compete in the internal market, and continue to increase exports towards the USA and Latin America. In recent years, drug prices have risen, particularly in the private pharmacy sector. Monopolistic practices exercised by leading research-based producers and distributors are being targeted by Calderon’s government. The public sector is using its bargaining power to bring prices down and, in fact, launched a commission to centralise drug purchases in April 2008. A renewal process for drug registrations started in February 2008; the Mexican market will only have patented and bioequivalent generic medicines in the market by 2010. Under a new decree published in January 2008, Article 168 of the General Health Law has not been modified; the Secretary of Economy wanted to incorporate the elimination of plant requirements to import drugs.
PERU
The Peruvian pharmaceutical market is the seventh largest in the region. Historically, growth in pharmaceutical expenditure has been positive but unstable. There are preferential custom duties and product registration towards Latin American countries. Due to a lack of local infrastructure and quality standards, exports are comparatively insignificant. Imports of original drugs are almost exclusively consumed by the private pharmacy sector, whilst locally produced branded and unbranded generics are consumed by the private pharmacy and public sectors. The public sector is making efforts to co-ordinate central drug purchases. The approval of the USA - Peru Trade Promotion Agreement (PTPA) in December 2007 will result in further intellectual property compliance by the pharmaceutical industry.
VENEZUELA
Recent economic performance has boosted out-of-pocket drug expenditure. The Barrio Adentro Mission, which is the basis of the new national healthcare system, has also increased drug spending, particularly in the public sector. In spite of price controls on around one third of the private pharmacy sector and restricted access to foreign exchange, the pharmaceutical market continues to grow and ranks fourth in the region. Future market expansion will depend on economic performance, the implementation of the Barrio Adentro Mission, exchange controls and import levels. The USTR maintains Venezuela on the Priority Watch List in 2008. Data exclusivity and linkage problems remain. Following its move to join MERCOSUR, Venezuela withdrew from the Andean Community in April 2006, raising questions about the country’s ability to perform its international IP obligations. USTR notes that Venezuela has not issued a patent for a foreign drug since 2003.
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