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Peru Pharmaceuticals and Healthcare Report Q3 2011
Business Monitor International, June 2011, Pages: 92
The Peru 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 Peru's pharmaceuticals and healthcare industry.
Analysts View: Peru is an attractive emerging pharmaceutical market. However, even though we expect the country to outperform its peers economically, the government seems committed to cost-containment in healthcare and pharmaceuticals. Such measures are seen as necessary to ensure adequate access to medicines through the relatively well-subsidised public sector, given that the government is largely responsible for the procurement of patented products in this area.
Headline Expenditure Projections:
- Pharmaceuticals: PEN3.07bn (US$1.09bn) in 2010 to PEN3.22bn (US$1.26bn) in 2011; +5% in local currency terms and +15.5% in US dollar terms. Forecast up slightly from Q211 due to macroeconomic factors.
- Healthcare: PEN20.03bn (US$7.14bn) in 2010 to PEN21.42bn (US$8.40bn) in 2011; +6.9% in local currency terms and +17.6% in US dollar terms. Forecast slightly down from Q211 due to constraints on government contribution to healthcare spending.
- Medical devices: PEN833mn (US$297mn) in 2010 to PEN908mn (US$356mn) in 2011; +9.0% in local currency terms and +19.9% in US dollar terms. Forecast slightly down from Q211 due to constraints on government contribution to healthcare spending.
Business Environment Rating: Peru dropped one place to tenth in our latest regional Business Environment Rating (BER) matrix for the Americas. Its composite score worsened by 6.5% in relation to the previous quarter. Peru’s rewards profile is now seen as more problematic, primarily due to modest per-capita spending on drugs, but its risks score is actually not far off the regional average. Globally, Peru ranks 64th out of the total of 83 markets surveyed within our pharmaceuticals universe.
Key Trends & Developments:
Pharmaceutical imports in Peru are likely to increase by 12.5% year-on-year (y-o-y) to US$372.6mn in 2011, reported LivinginPeru.com, citing Peru-based consulting and market research firm Maximixe. The rise in imports can be attributed to improvements in the population's purchase of health insurance. During 2010, as much as 90% of the country's imports included medicine for therapeutic or prophylactic purposes.
Economic View:
Collapsing demand for Peruvian assets has also hit the currency hard, with the local tender losing over 2.4% against the US dollar since the middle of March 2011. This will make imported raw materials for the pharmaceutical industry more expensive, thus impacting the bottom line figures of domestic players and their future investment capacities. In the meantime, until we have a clearer picture of the outcome of Peru's presidential elections, we are leaving our core interest rate and inflation (which is largely domestic-led) forecasts unchanged.
Political View:
Opinion polls in Peru ahead of the final round of the presidential vote on June 10 2011 indicate that nationalist Ollanta Humala is pulling ahead of Keiko Fujimori. However, with almost a month to go until the ballot and Humala apparently pursuing a more moderate policy platform, we still believe the outcome remains incredibly hard to call. Generally speaking, the possibility of a Humala victory – perceived as being bad for markets and private enterprise due to his anti-investor rhetoric, despite stopping short of nationalisation – continues to weigh on Peruvian assets, including the attractiveness of its pharmaceutical industry to foreign investors. Still, in a further attempt to allay the fears of investors, Humala has made numerous public statements reiterating his commitment to free-trade, foreign investment and private property rights, although signs are unclear if this rhetoric represents a genuine policy shift.
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