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Chile Pharmaceuticals and Healthcare Report Q1 2009
Business Monitor International, Feb 2009, Pages: 67
Chile Pharmaceuticals and Healthcare Report provides independent forecasts and competitive intelligence on Chile's pharmaceuticals and healthcare industry.
In the Q109 Business Environment Rankings for the 10 markets of the Americas, Chile is ranked seventh overall, rising one place since last quarter and above the much larger market of Argentina. In the next five years, we expect that the country’s pharmaceutical market will experience a compound annual growth rate (CAGR) of 9.7% in US dollar terms (or 5.1% in local currency terms, as the peso appreciates against the US dollar), reaching CLP883bn (US$1.9bn) at consumer prices in 2013.
The main drivers of this trend will be economic growth (despite an expected blip in 2009), higher government spending, expansion of universal insurance and epidemiological concerns, as well as the expected introduction of tougher bioequivalence standards. The strengthening of the Chilean peso against the US dollar has contributed to growth numbers, with further appreciation expected from 2010, following a 2008 and 2009 depreciation. Future value growth will depend in part on the continued implementation of the 2007 Industrial Property Law and expected amendments during 2008, as well as the speed at which Chile aligns its regulations with its international obligations. Should new patent legislation be gradually tightened along the lines of the terms originally envisaged in the US Free Trade Agreement (FTA), expenditure will rise considerably, local manufacturing costs will increase and market exclusivity will be better secured for original products. Much depends, however, on the government’s success in balancing its healthcare reforms and the need to restrain cost growth with the desire to placate its international trading partners.
Nevertheless, there are drawbacks to investing in the Chilean pharmaceutical market. These include the fact that government provision and reimbursement of medicines has long been minimal, despite the relative expansion witnessed in recent years. Private sector retail drug prices remain low, primarily owing to intense competition, in contrast with other markets in the region, such as Argentina or Brazil. This is the case despite the fact that the three main retailers - Farmacias Ahumada (FASA), Salcobrand and Cruz Verde - are being investigated over alleged price collusion. Additionally, we are forecasting a sharp slowdown in economic growth in Chile in 2009 to 1.8% (down from a previously forecast 4%), as the rising cost of credit restricts activity for consumers as well as small- and medium-sized businesses.
The Chilean regulatory climate will continue to pose problems for research-based companies in particular. Nevertheless, in a positive development, in October 2008, Chile's University of Valparaiso began a project to update the country's long outdated pharmacopoeia, a document that sets pharmaceutical standards in terms of identification of drug samples and preparations of compound medicines. The project, expected to cost around CLP1bn (US$1.6mn), is planned to come into effect in 2010. The rollout is likely to considerably boost Chile’s business environment, based on improved bioequivalence standards. Eventually, Chile hopes to produce every category of the new pharmacopoeia domestically.
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