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Peru Pharmaceuticals and Healthcare Report Q1 2008
Business Monitor International, Feb 2008, Pages: 53
The Peru Pharmaceuticals and Healthcare Report provides independent forecasts and competitive intelligence on Perus pharmaceuticals and healthcare industry.
Peru’s pharmaceutical market remains small in relative terms - standing at an estimated US$666mn in 2007. Per capita drug expenditure is just US$23.1 due to a preference for cheap, non-equivalent branded generics called ‘similares’. The market is forecast to reach US$850mn by 2012, representing a CAGR of just 5%. We expect the generics market in particular to exhibit strong growth as the implementation of a free trade agreement (FTA) with the US leads to a tougher stance on similares that should push patients towards legitimate generics.
In December 2007, the Peru-US free trade agreement was finally signed by US President George Bush and Peruvian President Alan García following its ratification by the US Congress in the previous month. Although the wording of the intellectual property (IP) right provisions in the bill were watered-down under pressure from the Democrat-controlled US Congress, the agreement should still allow the vast majority of US exports duty-free access to Peru. Consequently, it is the US generics industry that has made the most positive noises concerning the bill. Overall trade between the two countries reached US$9bn in 2006.
For Q108, BMI has overhauled its Business Environment Ratings methodology. Under the new system, Peru is ranked last in the Americas regions on 39 points, just one point behind Venezuela. The small size of the drug market and unspectacular growth forecast serve to limit the potential returns. However, in terms of risk, the market is mid-ranking in the region due to an improving regulatory environment and stable political and economic environment.
The government’s 2008 budget, published in August, pledges a 28% increase in overall investment, with social services seeing steep rises. Higher tax revenues and a booming economy should allow continuing record budget surpluses. This should help García push forward increased coverage under the unified and strengthened Seguro Integral de Salud (SIS) health insurance system. The key will be ensuring those newly enrolled in the scheme can actually access health services and obtain basic medicine. Opposition parties are questioning the view that García handled the August 2007 earthquake and resulting health crisis admirably, citing HIV-infected blood transfusions and irregular health purchases that could see citizens returning to street protests.
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