While Mexico and Brazil are the best markets having a huge potential for the Indian companies to tap. there are also other countries which are looking at India for quality medicines at affordable prices. Though the markets in Latin American Countries are relatively new when compared to the US or European markets, the potential is very high for Indian players to tap,according to Dr P V Appaji, director-general, Pharmexcil.
According to Peeyush Jain, Deputy MD, Venus Remedies Ltd , Brazil is the largest pharmaceutical market. Economic recovery continues in the country, although pharmacy sales are growing moderately. Mexico is the second leading market, whilst Venezuela and Argentina are the third and fourth leading markets of Latin American countries. Local producers are strengthening their manufacturing capabilities in order to maximise their export markets, particularly in other neighbouring Latin American countries, he said.
With $12 billion market potential the Mexican pharmaceutical sector is the fastest-growing sector of the Mexican industry and the 10th largest in the world, said Appaji.
The next five years are projected to show tremendous growth in the market. Mexico has signed the largest number of FTAs (Free Trade Agreements) in the world with 33 countries.
While there is a gradual increase in the exports of bulk drugs to Mexico, Indian formulations exports have also seen a gradual increase to Guatemala, Panama and Costa Rica, said Appaji .
During the year 2008-09, Indian bulk drugs export to Mexico was $80 million and it had increased to $88 million in 2009-10 and $92 million in the year 2010-11. But the countries have seen decreasing trend in the export of formulations from $30 million in the year 2008-09 to $17.38 million in the year 2010-11. In herbals, there is a steady growth of Indian exports from $2.4 to $2.65 from 2008-09 to 2011.
The export statistics for Guatemala are also on the rise. The total exports for bulk drugs, formulations and herbals have increased from $9.79 to $12.9 from 2008-09 to 2011.
Among the major pharmaceutical markets in the world, Brazil is one of the fastest growing and one of the top emerging markets globally. The pharmaceutical market in Brazil, the second largest among the seven pharmerging markets , is expected to grow by seven to 10 per cent annually between 2008 and 2013, according to IMS Health.
According to IMS estimates the total sales in Brazil could grow from $19 billion in 2008 to over $27 billion in 2013, making the country the eighth largest market in the world and the second largest among the seven pharmerging nations, after China.
The Brazilian market has 191 +million consumers with a per capita income of roughly US$ 8000, while per capita consumption of medicines is still relatively low. Compared to other emerging markets, Brazil also boasts an effective patent protection regime, consistent with TRIPS rules, and a relatively low incidence of falsified drugs.
With total revenues exceeding US$ 26 billion per year, Brazil is an emerging pharmaceutical market: Demand for pharmaceutical products grows approximately 10 per cent per year. Thanks to better income distribution and social programs, more and more of Brazil’s 191 million people are getting access to health services and medicines
Since the introduction of the new Patent Law in 1997, many foreign pharmaceutical companies have entered the Brazilian market. However, due to the lack of government support in the country, MNCs have mostly partnered with local players for the expansion of their services.
The major growth drivers of the Brazilian market are its huge population and investment friendly environment. It is already the largest pharma market in Latin America (accounting for more than a third of regional pharma sales), and ranks seventh globally due to a fast-growing and increasingly wealthy middle class, favourable demographics ,high out-of-pocket or private funding,developing regulatory and patent systems, high healthcare spend and a stable political environment.
Generics have achieved higher growth in the market due to legal and regulatory support. The generics accounted for 20.6 per cent of the market share in 2011 and are expected to grow in future. Both private and public sectors are playing a role in the healthcare infrastructure of the country. The availability of reasonably priced raw materials and good access to the patient pool, well-equipped facilities, high-quality staff and infrastructure are the major attractions for foreign players.
The Brazilian pharmaceutical market grew at a CAGR of nine per cent between 2004 and 2010. The economic growth of the country was above the world average and inflation was low compared to Argentina and Paraguay. In accordance with the Brazilian Ministry of Health, the private healthcare sector contributes approximately two per cent of Brazil's GDP.
According to a report from Cutting Edge Information , Brazil is on the verge of emerging into a world power, perhaps even surpassing the other BRIC countries (Russia, India, and China).
With a rapid economic growth, huge population of 200 million, increase in healthcare spendings and a booming generic drug sector, the Brazilian pharma market has in the last decade changed radically.
The pharmaceutical industry holds great potential for investment in Brazil. The country is being tipped as being one of the top seven countries in the world that has tremendous potential for growth in the pharmaceutical sector and is regarded as being the emerging market for investment.
In terms of the revenue generated, the Brazilian pharmaceutical industry is the 10th largest market in the world and is the second largest market in South America. The pharmaceutical industry is huge, and is responsible for providing employment for about 47,000 people in Brazil.
The Brazilian pharmaceutical industry is one of the main industries that are the central point of the Brazilian government’s industrial policy. The government of Brazil, with a view to give a boost to the industry, has formulated a special financing program. The government aims to increase the local production of medicines, facilitate development of Research and Development centres and encourage mergers and alliances with foreign investors.
The main motto of the Brazil government is to bring down the negative balance of trade of pharmaceuticals, improve the standards of drug quality in the country and enhance production of medicines. The government of Brazil has very ambitious plans of creating an environment in the country to attract investment of about $5 billion dollars. Thus, there is great opportunity for investors to invest in the sector and gain valuable returns on their investments.
In the past, the pharmaceutical manufacturing companies in Brazil lacked proper production technique. Also, the government imposed heavy taxes on medicines. As a result, not many local investors were keen to invest in the sector. However, the situation today has changed drastically. The government now has reduced the prices of drugs and this has created a dynamic investment environment in the country.
The Brazilian government today actively encourages new investors in the sector by providing them the option of preferential purchase in public tenders. The government also offers special financial investment conditions, which are beneficial for the investors.
The situation in Brazil is similar to much of the rest of Latin America where physician-driven, branded generics, including similares, have dominated the market. Similars were largely introduced before patent regimes were enforced or bioequivalence standards were introduced, and are sold under a brand name rather than an international non-proprietary name. As a result, these branded, copy drugs became entrenched in the market, especially in Mexico where it’s common for patients to purchase drugs without a prescription, in which case pharmacists may advise on substitution. Also, because generic quality has been uncertain in the past, brand has played an important role in generic choice, and led to further brand competition. Government policies aim to change these market forces.
In the meanwhile Mexico represents the second largest pharma market in Latin America – worth $11.4 billion in 2010, which ranks fourteenth globally according to Deutsche Bank. At the same time a Russell Reynolds Associates report ranks Mexico as the tenth largest global market for healthcare products.
It is largely a self-pay market with government spending limited primarily to a short list of formularies for the poorest of the population. The pharmaceutical market has grown to its present value from about $7 billion in 2004 despite a severe economic recession in recent years. IMS predicts the market will continue to grow at a compound rate of six per cent per year over to reach around $13 billion in 2014. While noting the reluctance of government plans to include any new therapeutic advances on formularies, a recent Deutsche Bank market research report cites several companies that are optimistic about Mexico, including Sanofi, which recently rolled out its successful Brazilian generics brand Medley there.
Overall Indian pharmaceutical companies have great potential to tap the markets in LAC and other South American countries. Especially countries like Mexico, Guatemala, Panama and
Costa Rica have opened their markets to the Indian pharma players. In the southern parts, countries like Brazil, Venezuela, Colombia, and Ecuador are also providing vast markets for the Indian pharmaceutical products opined Appaji
Moreover there is a positive change in the mindset of Latin American businessmen and political leaders who have started realising India’s importance as an emerging economic power. There is immense business opportunity for Indian pharma companies in this region, said Appaji.
Latin America continues to be a region of promising opportunities for commercial pharmaceutical organisations. The region represents a growing consumer base for the drug industry as by 2020 the regional population may be as high as 687 million. The value of the pharmaceutical markets in Latin America is at $50 billion, growing at the CAGR of approximately 15-20 per cent, said Peeyush Jain.