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Colombia Pharmaceuticals and Healthcare Report Q4 2009
Business Monitor International, Sep 2009, Pages: 76
The Colombia Pharmaceuticals and Healthcare Report provides industry professionals and strategists, corporate analysts, pharmaceutical associations, government departments and regulatory bodies with independent forecasts and competitive intelligence on Colombia's pharmaceuticals and healthcare industry.
The author calculates that pharmaceutical sales in Colombia reached COP4,466bn (US$2.27bn) in 2008. This represents impressive growth of 11.4% in local currency terms between 2007 and 2008 (compared with a -3.2% decline in the drug market between 2006 and 2007).
However, our forecast for 2009 is more conservative and we calculate that the drug market will see growth of 7.0%, reaching a value of COP4,778bn (US$2.24bn) in 2009. By 2013, we forecast the Colombian pharmaceutical market will be worth COP6,494bn (US$4.56bn), increasing at a compound annual growth rate (CAGR) of 7.8%. The author notes that as a result of the weakening Colombian peso, drug market expenditure in US dollar terms will experience a decline in 2009, to US$2.24bn, before rising to US$2.98bn in 2010 and to US$4.56bn by 2013 – a 15% CAGR.
In the Business Environment Ratings table for the Americas, Colombia scores 52.8, maintaining its ranking of sixth place among the 10 major markets in the Americas. On the positive side, the country’s population expected to reach almost 50mn in number by the end of the decade, combined with rising per-capita expenditure are important draws.
However, the persistent shortcomings of the intellectual property (IP) and pricing and reimbursement regime continue to hamper the more direct involvement of foreign companies.
In August 2009, with the aim of boosting health tourism in Colombia and becoming a recognised leader in the sector, the country’s authorities launched a business plan to support its development. The author cautions that, despite Colombia’s seemingly favourable indicators, public sector health spending as a percentage of total health expenditure is forecast to decline. Growth in the number of hospitals and doctors hasremained stagnant and the country has serious epidemiological issues. Therefore, we believe that medical tourism in Colombia may not represent a sensible choice for most patients.
In July 2009, Venezuelan President Hugo Chávez froze diplomatic relations with Colombia and threatened to find a substitute for Colombian imports, arguing that they are not essential. This could significantly affect the Colombian pharmaceutical industry, particularly after Samán’s recently stated goal to halt all pharmaceutical imports in a bid to promote local production. In 2008, almost 30% of all Colombian pharmaceutical exports went to Venezuela, the loss of which would be bad news for the sector in Colombia. Yet we are also highly sceptical about Venezuela’s ability to establish domestic production, as not only is it heavily reliant on imports, but Chávez’s socialist policies have made many industry majors wary of doing business in Venezuela. Without external research and funding, it appears highly unlikely that Venezuela can attract the level of investment required to start up a domestic pharmaceutical industry, and we therefore sincerely doubt the long-term success of such a strategy. As a result we have maintained our forecast for Colombia’s pharmaceutical exports.
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