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Peru Pharmaceuticals and Healthcare Report Q4 2011
Business Monitor International, Sep 2011, Pages: 86
BMI View: From a number of viewpoints, Peru offers considerable rewards to pharmaceutical and healthcare industry players, not least due to its fast-developing economy. However, per capita spending and incomes are low, which is not conducive to sales of higher-price medicines, especially in an environment lacking formal price controls and a stricter separation of prescription and non-prescription medicines in the retail channels. In the short to medium term, we expect more emphasis on costcontainment, which is likely to result in the introduction of downward pressures on pharmaceutical prices.
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 unchanged from Q311.
- Healthcare: PEN18.42bn (US$6.57bn) in 2010 to PEN19.39bn (US$7.60bn) in 2011; +5.3% in local currency terms and +15.8% in US dollar terms. Forecast slightly down from Q311 due to the use of new historical data.
- 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 unchanged from Q311. Business Environment Rating: Peru’s composite score for the quarter has remained unchanged from Q311. The country remains placed 10th out of the 17 countries surveyed within our Business Environment Rating (BER) matrix for the Americas region, with its Risk profile slightly more promising than its Rewards score. Globally, Peru ranks 65th out of the new total of 85 markets surveyed within our pharmaceuticals universe.
Key Trends & Developments
- In June 2011, the Andean Drug Price Observatory was launched, with a view to collating medicine prices from six countries – Bolivia, Chile, Colombia, Ecuador, Peru and Venezuela. Peru's Minister of Health, who is leading the initiative, explained that the online database will provide a better assessment of the region's pharmaceutical market and enable governments to evaluate their procurement strategies. However, while there is little doubt the initiative will provide member countries with the information needed to make better purchasing decisions, BMI is sceptical that the programme's low-cost, volume-driven procurement ambitions will materialise in a healthcare market as fragmented as Latin America's.
- In a bid to improve and rationalise healthcare finances, Peru's new Health Minister announced a national audit of government hospitals, looking for administrative irregularities and misappropriated funds. We also note that the new Health Minister has also announced plans to make healthcare access a priority for his administration, which is to be achieved through an increased access to generic medicines.
BMI Economic View: Despite the currently positive economic picture, we see risks to our outlook in the event that global risk aversion persists and hurts our growth forecast for Peru. As an export-driven economy, Peru is particularly vulnerable to a global slowdown or China landing hard. In that case, the new president could be driven to pursue more expensive social policies in order to protect Peru's poorest social segments, which would lead to friction with private enterprise, including companies in the pharmaceutical industry, although this is not our core view.
BMI Political View: We maintain our view that markets have overreacted to President Ollanta Humala's election and, despite global risk aversion, we see a short term rally in Peruvian equities. Furthermore, our view that Humala is going to pursue a moderate economic policy is supported by his appointment of centrist and market-friendly figures as chief of cabinet and minister of economy and finance. As a result, we believe policy continuity is largely assured in Peru, which should provide for a solid basis for the continuation of the government’s efforts to improve the nation’s health and access to services.
Business Monitor International's 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.
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