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Peru Pharmaceuticals and Healthcare Report Q1 2009
Business Monitor International, Jan 2009, Pages: 65
Peru Pharmaceuticals and Healthcare Report provides independent forecasts and competitive intelligence on Peru's pharmaceuticals and healthcare industry.
In the Business Environment Rankings (BER) for Q109, Peru has slipped from second-last to last position in the Americas matrix, thus remaining one of the least attractive pharmaceutical markets in the region. Its key drawbacks include a small market size, modest per capita spending (with a high out-of pocket share of total pharmaceutical expenditure) and a deficient intellectual property (IP) environment, which has resulted in a notable counterfeit medicines market. Nevertheless, Peru offers considerable longer-term benefits to foreign companies, not least because its population is expected to top 30mn by the end of 2010. The recently ratified Free Trade Agreement (FTA) with the US – which is due to come into force in the course of 2009 - is viewed as a positive development, as Peruvian businesses will be gaining access to the largest market in the world.
However, domestic competitiveness is expected to suffer, as a consequence of lower import duties and the entry of higher quality products to the market from abroad. Additionally, whilst the robust performance of the Peruvian economy in 2008 was testament to impressive private sector investment and attractive lending conditions, we expect fixed investment levels in particular to suffer from tighter credit and falling commodity prices in 2009. The risks to our medium-term outlook are skewed to the downside, forecasting real GDP growth of 4.3% in 2009, and average growth of just 4.2% over the next five years. This will have a negative bearing on healthcare and pharmaceutical budgets, given that the official figures indicate that up to 80% of drug purchases (by volume) are achieved in the public sector.
In fact, the public healthcare provision has been in a considerable state of disarray in recent months, with a nation-wide strike by some 20,000 doctors. Led by the Peruvian Medical Federation (FMP), the doctors protested against the failure of the previous Health Minister to implement a 15-point agreement signed at the start of 2008, which included bonuses for doctors working in inaccessible areas, pay increase for doctors that would equal that to rises within the EsSalud health insurance sector, and the establishment of a unified health system. The doctors returned to work in October 2008, after a two-week truce was reached, with a permanent solution likely to be hammered out in the coming months and enacted into law.
Meanwhile, drug prices - as reported by official agencies - have been flat in recent months, which is largely explained by the strong competition in the chain-dominated pharmacy retail sector and the government’s continuing support for copy and generic medicines. However, according to an October 2008 issue of Noticias Financieras, the General Manager of AstraZeneca stated that the prices of pharmaceuticals would fall by 3% before the end of the year, again due to competition in the market and the launch of new branded generics. This would represent a major contrast to the increases of between 2.7 and 8.9% in the 2005-2007 period, though patients are unlikely to reap benefits as a result of an increase in the consumer price index (CPI).
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