The ongoing focus on improving healthcare access combined with its growing pharmaceutical expenditure, resulting from rising disease burdens, will maintain Latin America's appeal as a destination for the global pharma industry, according to a study.
Since 2008, the region is by far the fastest growing pharmaceutical market in the world. By 2017, Brazil is poised to become the fourth largest pharma market, behind the US, China and Japan.
Growing regional focus on telemedicine, joint medicine procurement, and increased medical provision for rare conditions will further boost positive investor sentiment for Latin America over the coming decade. Mexico and Brazil will remain outperformers, particularly as Mexico's economy begins its strong recovery in 2015, the study points out.
Combined sales of prescription drugs and over-the-counter (OTC) medicines in Latin America are forecast to grow from US$ 84 billion in 2014 to US$ 172 billion in 2024, representing a 10-year compound annual growth rate (CAGR) of 7.4 per cent in US dollar terms.
With patents coming to an end and the decline in prescription drug sales, the pharmaceutical industry is facing big challenges in the US and Europe. However, these issues are making emerging markets such as Latin America sound more attractive. Moreover, the population growth and an increment in their health coverage plus the growing economic situation of the region will continue to fuel the growth.
While Brazil is the numero uno pharmaceutical market in the Latin America, Mexico is also rapidly growing, as well as Argentina, Chile, Colombia, Venezuela and Peru. Although due to their current political and economic situations Argentina and Venezuela might be lagging behind. This shows that the region as a whole is an attractive market for pharmaceutical companies.
Owing to economic development, Latin American countries are starting to change their disease patterns. The rapid economic growth brings an increase in prosperity, general health and longevity but it also brings an increase in diseases like diabetes and cardiovascular diseases. These changes in disease patterns open a new market for existing products.
Even though market growth is attractive in Latin America, there are big challenges for the pharmaceutical industry to overcome. One of the challenges is that each country is a world on its own and the companies need to adjust to the different regulations regarding sales, clinical research, market access and GMP amongst other. There has been some improvement in this area in the last couple of years with agreements between the health authorities in the countries that allow for certifications in one to be valid in another country. An example is the agreement between Argentina, Brazil, Colombia and Cuba that allow GMP certification in one of them to be valid in the others.
Since all the countries in Latin America also vary in size, healthcare infrastructure and affordability, the pharma companies need to tailor their strategies for approaching each country´s market. Tailored strategies will assure success if they are conscientiously planned.
Another challenge is the evolution of Latin American generics. Since medical prescriptions in the region have the generic name it is easy for pharmacists to recommend generic brands. In Argentina, by law, the prescription can only have the generic name so the patient has the option to buy generics. Due to price differences most people end up buying generics instead of original drugs. The problem with generics in Latin America is the lack of intellectual property protection and the fact that regulations are scarce so non original drugs are qualified as biosimilars and therefore bioequivalence are not requested tests. This is becoming less common but it still happens.
Multinational companies have bought or partnered with local pharmacies and have given generic drugs appropriate quality control and bioequivalence tests. Localization through partnerships with local companies can be a solution for many of the challenges in the region so it should be thoroughly explored by companies wanting to make the most of these emerging markets.
Pharmaceutical companies also experience trouble with local industry protection on behalf of the government. Companies need to have their eyes opened and try to work out partnerships with local companies so they are not left out. They need to watch their prices because some of them become extremely high because of the amount of intermediates in the supply chain. In Colombia, for example, drug prices are regulated and since December 2013 these regulations are finally affecting pharmacies. This helps protect the consumer and also the pharmaceutical companies because intermediates can't manage their prices as they please, resulting in highly elevated prices for original medications.
Urbanization, greater access to education and a larger proportion of women in the workforce are helping to bolster income levels throughout Latin America, thus driving the expansion of pharmaceutical sales as people begin to spend more on healthcare beyond basic necessities.
Consumption patterns will continue to lean towards an increased use of generics throughout the region, a trend driven by governments seeking to broaden healthcare access at reduced costs. Local producers of generic drugs are becoming the driving force of the pharmaceutical market, manufacturing branded products as well as private labels for pharmacy chains. Local producers are growing at a staggering 28 per cent per year enabling generics to be sold in domestic markets 70 per cent more economically than their patented counterparts.
In the course of two decades, Latin American generics have evolved from a nuisance to the international laboratories into the dominant force in most medication categories. The most accommodating market in the region is Argentina. Patents were only first legally recognized starting in 2000, so as a result, many international drugs marketed there carry no patent protection.
Non-original drugs are classified as biosimilars (not generics) and thus do not require proof of bioequivalence. Furthermore, data exclusivity, the most important step of protecting original formulas in developed markets, is not even recognized in Argentina. Argentina’s lax intellectual property protection has enabled the generic industry to thrive. Companies like Laboratorios Raffo, Driburg, Grupo Bago and Biosidus are some of the largest private sector employers in Argentina and the pride of Kirchner administrations, under whose favorable regulatory regime they have expanded.
Former Brazilian health minister, Jose Serra famously stood up to the international pharmaceutical industry in the 1990s by criticizing the lengthy patent protections of expensive HIV drugs. After winning their showdown with global pharma, Brazil began opening the regulatory door to more generics. Though considered more respectful of intellectual property rights than Argentina, Brazil nonetheless supports one of the world’s largest generic industries. EMS, Brazil’s largest drug laboratory, began producing generics in 2000, and today employs over 5,000 Brazilians and exports generics to 40 plus countries. Even Mexico, bound by the rigors of Nafta, has developed an impressive homegrown generics industry.
Generics can be as much as 70 per cent cheaper than original drugs. Since medical prescriptions in Latin American countries must only list the medical name and not the brand name, pharmacists tend to recommend generics. In spite of their affordability, generics are mindful to incorporate a healthy margin for pharmacy retailers into their pricing structure.
The accessible prices of generics has helped unleash consumer demand for pharmaceuticals. Rising incomes and an aging population further bolsters medication volumes. The pharmacy retail sector is quickly evolving to meet demand.
In the meanwhile according to a study by Frost & Sullivan , the high incidence of a number of infectious diseases in Latin America, plus the unavailability of adequate treatments for them, spell opportunities for pharmaceutical companies across the region to develop new and improved diagnosis and treatment methods.
In particular, Latin America has high rates of HIV, Chagas disease, dengue and influenza H1N1, according to the study. It also reports that Chagas ranks the highest in terms of relative prevalence, and that the 50 per cent efficacy rate of current treatments means that this is a market to be tapped and developed.HIV has the second-highest incidence rate in the region, followed by dengue and influenza H1N1.
According to a healthcare industry analyst at Frost & Sullivan, as a result of intense competition in the market, pharmaceutical companies in Latin America are currently offering numerous generic drugs for the treatment of HIV at reduced prices. However, while these drugs assure a longer and better life for patients, they do not cure their disease, and this leaves considerable room for more effective therapies, she adds.