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Chile Pharmaceuticals and Healthcare Report Q3 2011
Business Monitor International, June 2011, Pages: 89
Business Monitor International's Chile 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 Chile's pharmaceuticals and healthcare industry.
BMI View: Blessed with some of the world's largest reserves of natural resources, many of Latin America's major economies have long been reliant on commodity exports both to support domestic consumption and balance external accounts. The growing discrepancy between the value of commodity exports and production volumes is leaving many South American economies, and particularly Chile and its neighbour Peru, increasingly exposed to corrections in commodity prices. However, BMI believes the government will increase investment in the long term as it attempts to decrease bias towards extractive industries. It will also aim to develop the domestic manufacturing sector to ensure the region's long-term economic development.
Headline Expenditure Projections
- Pharmaceuticals: CLP1,455bn (US$2.86bn) in 2010 to CLP1,544bn (US$3.36bn) in 2011; +6.1% in local currency terms and +17.5% in US dollar terms. Forecast up moderately from Q211 due to macroeconomic factors.
- Healthcare: CLP7,779bn (US$15.27bn) in 2010 to CLP8,416bn (US$18.29bn) in 2011; +8.2% in local currency terms and +19.8% in US dollar terms. Forecast down slightly from Q211 due to macroeconomic factors.
- Medical devices: CLP346.22bn (US$680mn) in 2010 to CLP375.04bn (US$815mn) in 2011; +8.3% in local currency terms and +20% in US dollar terms. Forecast up marginally from Q211 due to analyst modification.
Business Environment Rating: In Q311, BMI’s average Business Environment Rating (BER) for the 17 Americas markets surveyed has increased from 48.8 to 49.0. Chile’s composite pharmaceutical rating has increased from 50.9 to 55.2. In this quarter, the country continues to occupy eighth position in the Americas matrix. However, on a global basis, Chile has moved up three places to occupy 43rd place in BMI’s global pharmaceutical rankings, and can now be found below Saudi Arabia and above Hungary. As a region, the Americas ranks second only behind Western Europe in terms of attractiveness to multinational pharmaceutical manufacturers.
Key Trends & Developments
- The Chilean parliament is due to examine legislation aimed at establishing a national medicines agency. The new Agencia Nacional de Medicamentos (Anamed), will take over responsibility for pharmaceutical regulation from the existing national Institute of Public Health, and will be responsible for enforcing bioequivalence requirements. The measures are considered a positive development for pharmaceutical manufacturers, particularly for multinationals.
- A study conducted by the World Health Organization (WHO) has found that more Chileans die each year from alcohol-related cirrhosis of the liver than from motoring accidents. The average alcohol consumption of Chileans over the age of 15 is 37% higher than the world average, which currently stands at 6.1 litres per year. Chile’s rate of alcohol consumption is currently the seventh highest among the 22 countries of the North, Central, and South American regions.
- Chile’s Ministry of Health announced that it would take control of a large share of the coordination and management of all organ donations made across the country. As of January 2011, over 1,800 Chileans were in need of organ transplantation and 15-20% were under 15 years of age.
- Chile’s Farmacias Cruz Verde pharmacy chain announced that it had purchased a 50% stake in Costa Rica’s Cefa Corporation, which is the largest distributor of pharmaceutical products in Central America. The agreement will help finance Cefa’s expansion into Central America and the Caribbean.
BMI Economic View: Chile’s fiscal situation will remain very healthy as the withdrawal of stimulus spending is complemented by increasing revenues on the back of higher tax receipts and robust copper exports. This in turn gives the government sufficient ammunition to mitigate the potential inflationary impact of higher imported food and fuel costs through the use of subsidies or price caps, lowering the economic and social risks associated with rising prices.
BMI Political View: Over the next 12 months we expect President Sebastián Piñera’s administration to place renewed focus on the numerous economic reforms contained in his policy platform, which centres on bolstering the private sector and boosting foreign investment. The reforms will be central to Chile's long-term growth trajectory, and as such the higher likelihood of their introduction in 2011 shores up our positive near-term outlook for the economy. Policies most likely to be pursued are, in our view, trade agreements and integration with key Asian economies, reforming the rigid Chilean labour market, and tax breaks designed to encourage foreign investment.
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