All seven Latin American markets covered in the IMS Market Prognosis Latin America 2004 report are expected to record steady revenue growth over the next five years. Aggregate sales in the seven markets are estimated to almost double to US$35 billion and post a CAGR (compound annual growth rate) of 13.3% between 2003 and 2008, expressed in US dollars at constant exchange rates as of January 2004.

The highest CAGRs are predicted for Venezuela (27%) and Mexico (13%), resulting from expected double-digit price rises in both countries during the prognosis period. On the contrary, Peru is estimated to post the lowest revenue growth rate (5%) during the five-year period.

Source: IMS Health

This is surprising for Venezuela, where the economy contracted by 13% in 2003, largely due to domestic, political and social upheaval. Given the low base, however, Venezuelan CAGR averaging 4.5% between 2003 and 2008 can hardly be said to constitute a true recovery. Economic growth has rebounded strongly in Argentina, driven mainly by domestic demand, which in turn was stimulated by expansionary fiscal and monetary policies, and gradual progress with structural reform will help boost GDP (gross domestic product) growth.

Exports will be the main driver for growth in most Latin American markets, in line with the expected revival in world trade. Chile in particular should benefit from bilateral trade agreements. In Peru, Mexico and Venezuela, GDP growth depends to a greater extent on domestic political stability than in the other four markets.

GDP per capita growth is expected in all seven countries, although disparities will remain widespread, with a large gap between the wealthier countries (Chile and Mexico) and the poorer countries (Colombia and Peru).

Source: IMS Health

Improving access to healthcare services through system reforms is at the heart of healthcare policy in all seven Latin American markets, but economic problems are a hindrance. In Colombia and Mexico in particular, any significant improvement to the healthcare system will depend on their governments pushing through tax reforms. In several countries, notably Venezuela, Peru and Mexico, political instability will hinder passage of legislation necessary to make changes to healthcare systems.

Several of the countries will step up efforts to expand access to medicines:

• Venezuela has established a list of price-controlled essential medicines
• Brazil plans to set up a network of pharmacies selling generics at subsidised prices, and is sourcing cheaper drugs from abroad and financing state-owned manufacturers with a view to obtaining cheaper products
• Peru is also looking to its local industry, with drugs from domestic companies to be favoured in a new procurement system
• in Colombia, plans for a fund for treatment of high-cost illnesses have been under discussion but have not so far come to fruition

Pharmaceutical spending is a key cost-containment target in all seven countries, with a variety of strategies being considered, notably encouragement of generics. Argentina, for example, has legislated for generic prescribing and pharmacy substitution. Favouring of locally-produced generics in institutional procurement strategies will also become more common. Some governments are increasing intervention in pharmaceutical pricing, notably Brazil and Venezuela.

Intellectual property
Compliance with the intellectual property provisions of the GATT TRIPS agreement will remain a highly contentious issue, particularly in Brazil, where compulsory licensing is now a reality in respect of antiretrovirals in cases of 'national emergency' or ‘public interest'.

Given their dependence on domestic industries for cheap copy products, most Latin American countries will aim for the minimum acceptable protection under the TRIPS agreement, which is likely to exclude second use patents and pipeline protection, allow for compulsory licensing, and keep data protection provisions to a minimum.

Multinationals will look to the Free Trade Area of the Americas (FTAA) agreement to help resolve some of their concerns about patent protection in the region. This is likely to be a highly contentious aspect of the FTAA negotiations, however, and they are likely to take some years to conclude.

Generics market
A true generic market is only just beginning to emerge in Latin America where, in the absence of patent protection, copy products (similares) and branded generics have dominated. The market share for ‘true’ generics has grown strongly in Brazil, where the first bioequivalent generics were approved in 2000, and growth has exceeded expectations even in the retail market.

In Mexico, where generic penetration has so far been very modest (less than 1% market share in value and volume), more than 100 companies are now involved in the manufacture and supply of ‘interchangeable’ generics to the government sector. These products are purchased on a preferential basis, with volume sales rising rapidly as a result. Further impetus for the Mexican generics market will come from new regulations imposing bioequivalence requirements on all new generics and the eventual requirement for copy products to demonstrate bioequivalence. IMS Health will continue to monitor developments in the Latin American generics market.

This article was written by Eleonora Sandullo, Project Manager for IMS Market Prognosis Latin America.

find out more

Relevant reports on this topic:
Global and regional sales information:

• Argentina
• Brazil
• Mexico

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