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Argentina Pharmaceuticals and Healthcare Report Q4 2011
Business Monitor International, Aug 2011, Pages: 104
Business Monitor International's Argentina 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 Argentina's pharmaceuticals and healthcare industry.
BMI View:
Argentina's pharmaceutical market, driven by an ageing population and resurgent economic growth, has proven a lucrative stepping stone for pharmaceutical companies looking to penetrate Latin America. While Argentina's President Cristina Fernandez has made healthcare a key election issue, her political rhetoric has largely focused on strengthening the local pharmaceutical sector. BMI anticipate nationalist threats are likely to increase in the run-up to the 2011 elections, especially as the opposition now control congress. As it stands, government policies – heavily biased towards local companies, with the authorities keen to keep the national drugs bill low through price controls and state-run laboratories – do further damage to Argentina's already fragile reputation among international pharmaceutical firms.
Headline Expenditure Projections
- Pharmaceuticals: ARS29.17bn (US$7.46bn) in 2010 to ARS34.19bn (US$8.24bn) in 2011; +17.2% in local currency terms and +10.4% in US dollar terms. Forecast upwards from Q311 due to data overhaul and macroeconomic factors.
- Healthcare: ARS137.20bn (US$35.10bn) in 2010 to ARS157.85bn (US$38.04bn) in 2011; +15.1% in local currency terms and +8.4% in US dollar terms. Forecast up from Q311 due to macroeconomic factors.
- Medical devices: ARS2.74bn (US$698mn) in 2010 to ARS3.19bn (US$768mn) in 2011; +17.0% in local currency terms and +10% in US dollar terms. Forecast up from Q311 due to macroeconomic factors.
Business Environment Rating:
Argentina retains its fifth place rank in BMI’s Business Environment Ratings (BERs) for Q411, having moved to that spot from seventh at the end of 2010. However, its attractiveness on the Rewards side is considerably higher than on the Risk side, which is illustrative of the challenging intellectual property (IP) and pharmaceutical pricing and procurement environments. Nevertheless, the report expects Argentina to continue to be viewed with interest by multinational players, although it is unlikely to receive as much investment as its fast growing neighbour Brazil.
Key Trends & Developments
- In July 2011, the country's senate unanimously passed a bill to increase production at its state-run pharmaceutical companies. The law makes the provision of accessible and equitable healthcare a national interest and helps the country produce its own drugs, vaccines and medical supplies through 39 state-run manufacturers. The decision was billed as helping the country reduce its reliance on expensive medicine imports, coordinate public medicine production and ultimately meet rising public health demands in a way that is self-sufficient.
- The government has responded to a series of prescription drug scandals by clamping down on over-the-counter (OTC) pharmacy sales. A study by TNS Gallup found that around 60% of Argentines find it more convenient to purchase medicines at retailers other than pharmacies. However, the government is concerned about the increasing number of non-pharmacies illegally selling prescription medicines. In June 2010, Argentina's Drug, Food and Medical Technology Administration (Anmat) responded to the abuses by restricting the sale of OTC drugs.
BMI Economic View:
The Argentine economy has huge potential on account of its natural resource wealth and highly educated labour force. Over the long term, as the regional economy benefits from an expansion in Asian demand and the Brazilian growth story continues apace, Argentina is better positioned than most to benefit. However, the baseline forecasts see Argentine real GDP growth lagging the region, averaging just 3.6% over the 10-year forecast period, owing to continued government mismanagement of the economy. Indeed, in recent years, expansionary policies, have, in the report’s view, left the economy poised for a period of aneamic growth. Argentina's susceptibility to boom and bust cycles has been evident over the past two decades, with GDP per capita rising the most in the region from 2002 to 2008, but the least since 1993 owing to the 2001-2002 economic crisis and subsequent recession.
BMI Political View:
Argentina's President Cristina Fernández has selected incumbent Economy Minister Amado Boudou as her running partner for the forthcoming elections scheduled to be held in October. Fernandez selected Boudou after cutting ties with incumbent Vice President Julio Cobos in 2008 following his disapproval over a proposed rise in agricultural export taxes. Boudou advised the government on the takeover of private pension funds worth around US$24bn that helped boost expenditure in 2008 and managed the debt restructuring of approximately US$12.9bn in 2010.
While the crushing defeat of the Kirchners in the mid-term elections in June 2009 suggested that the current Argentine president's all-out expansionary and interventionist policies were wearing thin with the electorate, Fernández has bounced back strongly on the back of the nation's strong economic growth trajectory, and the report does not expect a new and more business-friendly government to enter the frame in 2012.
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