Pharmaceuticals Chile report 2011

ChilePharma reportApril 2011

SPONSORED SUPPLEMENT

APRIL 2011 FOCUS REPORTS S2

Country Report

Considered to be Latin America’s economic powerhouse, Chile is typically a solitary country that is forgotten, or remembered, because it is the most politically and economically stable in the region and therefore produces minimal headlines for the world—unless they involve tragic seis-mic events or heroic mining rescues. This loosely-populated nation of almost 17 million is

ranked as the 30th most competitive country in the world (ahead of Brazil and Mexico), holds an A+ credit rating, a AA grade for investments and is the only Latin American nation accepted as a member of the OECD. With health indicators such as life expectancy and infant mortality rates that rival those of most developed nations, surely this country’s healthcare and pharmaceutical sectors must also be thriving. Indeed Chile’s pharmaceutical industry, estimated at US$1.5 billion in 2010 and expected to reach US$2 billion by 2015, is lucrative but has not always been the most popular among Big Pharma. For decades the country has been notorious for pro-ducing the cheapest similar and generic drugs in Latin America, some of them marketed in violation of patents and without proper bioequivalence studies. With other serious issues such as the concentration of distribution channels into three main pharmacy chains that control 93% of pharmaceutical sales and the domi-nance of a “lowest price wins” public healthcare system, representing 80% of the population, the country’s pharmaceutical sector quickly became uninviting for in-novators. This was up until 2006 when then President Bachelet saw the great need to overhaul the healthcare system of her country and began a series of reform policies that marked the beginning of the sector’s revitalization. While efforts are still ongoing, the push for a modern and effi-cient healthcare system is in full force today and the country is now poised to offer fresh and attractive opportunities within its own borders and beyond, for local and foreign companies alike.

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Chilean Pharma:More spotlights on pharmaceutical markets worldwide at

exploring beyond copper

This sponsored supplement was produced by Focus Reports.

Project Director: Béatrice ColletEditorial Coordinator: Leonardo BarqueroContributor: Mariuca Georgescu

For exclusive interviews and more info, please log onto or write to [email protected]



Country Report

Considered to be Latin America’s economic powerhouse, Chile is typically a solitary country that is forgotten, or remembered, because it is the most politically and economically stable in the region and therefore produces minimal headlines for the world—unless they involve tragic seis-mic events or heroic mining rescues. This loosely-populated nation of almost 17 million is

ranked as the 30th most competitive country in the world (ahead of Brazil and Mexico), holds an A+ credit rating, a AA grade for investments and is the only Latin American nation accepted as a member of the OECD. With health indicators such as life expectancy and infant mortality rates that rival those of most developed nations, surely this country’s healthcare and pharmaceutical sectors must also be thriving. Indeed Chile’s pharmaceutical industry, estimated at US$1.5 billion in 2010 and expected to reach US$2 billion by 2015, is lucrative but has not always been the most popular among Big Pharma. For decades the country has been notorious for pro-ducing the cheapest similar and generic drugs in Latin America, some of them marketed in violation of patents and without proper bioequivalence studies. With other serious issues such as the concentration of distribution channels into three main pharmacy chains that control 93% of pharmaceutical sales and the domi-nance of a “lowest price wins” public healthcare system, representing 80% of the population, the country’s pharmaceutical sector quickly became uninviting for in-novators. This was up until 2006 when then President Bachelet saw the great need to overhaul the healthcare system of her country and began a series of reform policies that marked the beginning of the sector’s revitalization. While efforts are still ongoing, the push for a modern and effi-cient healthcare system is in full force today and the country is now poised to offer fresh and attractive opportunities within its own borders and beyond, for local and foreign companies alike.

Phot

o Cr

edit

/ Di

ego

Carc

amo

Silva

Chilean Pharma:More spotlights on pharmaceutical markets worldwide at

exploring beyond copper

This sponsored supplement was produced by Focus Reports.

Project Director: Béatrice ColletEditorial Coordinator: Leonardo BarqueroContributor: Mariuca Georgescu

For exclusive interviews and more info, please log onto or write to [email protected]

Country ReportSPONSORED SUPPLEMENT

S3 FOCUS REPORTS APRIL 2011



Country Report

Sanitizing the healthcare SyStemPharmaceutical demand in Chile is fo-cused on 80 diseases that are covered by the Regime of Explicit Health Guarantees (GES-AUGE) healthcare program enact-ed in 2005, which ensures government-funded coverage for patients regardless of age, class, and ability to pay. While this universal health plan covers four-fifths of the population, under Chile’s dual healthcare system the remaining 20% is entitled to pick their coverage from a number of private insurance

companies known as ISAPRES. Jorge Rodriguez, CEO and general manager of Deloitte Chile, explains that “the pri-vate healthcare system began operating in 1981 and since then it has been per-fecting itself to offer the highest quality services. Governmental authorities have witnessed this transformation and today are aiming to improve their provision of healthcare so that it is on par with those offered by the best private providers in the country.” As a key partner to the healthcare sector, Rodriguez aims “to as-sist the government in their objective of

providing better healthcare to a greater number of people in Chile” by providing consulting and advisory services to the government’s reform initiatives.

Leading today’s healthcare reform is Minister of Health, Jaime Mañalich, who is determined to iron out the inef-ficiencies of the healthcare system to re-flect the rest of the country’s economic and political achievements. “A major is-sue for our healthcare system is related to the structure and quality of health institutions, including hospitals and reg-

ulatory entities,” he asserts. Two main entities on the Ministry’s radar are the Public Health Institute (ISP), the regula-tory agency for the pharmaceutical in-dustry, and the National Supply Center (CENABAST) that is the public purchas-ing entity and distributor for all public hospitals and clinics—the pharmaceuti-cal industry’s de facto biggest purchas-er. A recent audit of CENABAST con-ducted by advisory firm PWC, brought to light the severe inadequacies of the institution and the desperate need for a professionalization of its activities. Min-

ister Mañalich explains that “the under-lying problem is that CENABAST does not have the adequate facilities and ca-pacity to handle the logistics required to supply the system appropriately. We are therefore proposing to delegate this re-sponsibility to the private sector by hav-ing pharmaceutical laboratories deliver directly to hospitals and clinics.” Initia-tives such as this will save the govern-ment millions of dollars in health expen-ditures that will allow for the coverage of higher quality treatments under the GES plan, therefore narrowing the gap between private and public healthcare options. Other proposals in the pipe-line include the liberalization of OTC products that today are, paradoxically, kept behind the counters and sold only in pharmacies, as well as the creation of a National Pharmaceutical Agency (ANAMED) that will be solely charged with the registration and regulation of pharmaceutical products—a task that today is overseen by the overwhelmed

LEFT: Maria Teresa Valenzuela, Director of the Publich Health Institute (ISP); RIGHT: Maximiliano Santa Cruz, National Director of the National Institute of Industrial Property

and underbudgeted ISP. The director of the ISP, Maria Teresa Valenzuela, echoes the need for drastic change and stresses that “the key area for this new administration is the search for quality in all possible aspects—from adminis-trative management up to the most de-tailed analysis of technical processes”. For Valenzuela this also means improv-

ing protocols and approval of clini-cal trials, as well as enhancing the b ioequ iva lence capabilities of the institution by “supporting the accreditation of three new centers of bioequivalence

in the country in partnership with three major academic institutions”.

As regards the old tales of Chilean imitators violating patents, the National Institute of Industrial Property (INAPI) has been at the forefront in setting the record straight. Chile is one of the coun-tries in the world that has signed on to the most free trade agreements, includ-ing one with the United States and an Association Agreement with the Euro-pean Union. Maximiliano Santa Cruz, national director of INAPI, admits that Chile “committed to several obligations in these treaties, many of them impact-ing directly on the pharmaceutical sec-tor, such as extending the protection of

Jose Manuel Cousiño, Executive Vice President of CIF

patents in case of delays which we are already running in INAPI and ISP.” Part of his institution’s efforts to optimize patent regulation includes a direct part-nership with the national police’s “IP brigade” in charge of IP enforcement and national customs agencies. With such proposals already rolling, Santa Cruz is bold enough to proclaim that “INAPI is going to be the best IP agency in Latin America in the future.”

FreSh new Field. let’S play ball! As a direct consequence of healthcare optimization, international innovators are seeing greater opportunities to grow their operations in the Chilean market. Jose Manuel Cousiño, executive vice president of the Chamber of the Phar-maceutical Industry in Chile (CIF), rep-resenting the international innovators in Chile, explains that the country “has the advantage that it is an econo-my truly based on the notion of free trade and compe-tition.” Now that the playing field has been leveled for the MNCs, due to better regulation by the authorities and greater access to in-novative products within the public sys-tem, the possibilities for major growth are within grasp. As a strategic consult-

ing partner to the Chilean pharmaceu-tical sector, Rodrigo Castillo, business manager for IMS Health in Chile, pro-vides a more in-depth analysis when ex-plaining that innovators “suffered more in Chile up until 10 to 15 years ago, when there was no patent protection and the competition [there] was very strong. At this point in time, Chile has managed to learn how to compete and are in a better position.” Furthermore, “multi-nationals are now consolidating and im-proving their market share and have fu-ture plans of getting their products into the GES program, which would highly benefit them,” says Castillo. This re-newed momentum is also evident in the sharp increase of clinical trials that are being conducted in the country by them with the aim that innovation is valued for its worth in the local market. “Chile

has great research centers and uni-versities and a very good scien-tific community, which makes it at-tractive for these kinds of studies,” concludes Cous-

iño. The country has also updated is clinical research

legislation to accelerate the work of eth-ics committees and the approval times for trials and is now the fourth-largest market for clinical trials in the region.

“A major issue for our healthcare system is related to the structure and quality of health institutions, including hospitals and regulatory entities.”

— jaime mañalich, minister of health

LEFT: Monica Zerpa, General Manager of Pfizer; RIGHT: Rene Delsin, General Manager of Roche

Country ReportSPONSORED SUPPLEMENT




Country Report

Sanitizing the healthcare SyStemPharmaceutical demand in Chile is fo-cused on 80 diseases that are covered by the Regime of Explicit Health Guarantees (GES-AUGE) healthcare program enact-ed in 2005, which ensures government-funded coverage for patients regardless of age, class, and ability to pay. While this universal health plan covers four-fifths of the population, under Chile’s dual healthcare system the remaining 20% is entitled to pick their coverage from a number of private insurance

companies known as ISAPRES. Jorge Rodriguez, CEO and general manager of Deloitte Chile, explains that “the pri-vate healthcare system began operating in 1981 and since then it has been per-fecting itself to offer the highest quality services. Governmental authorities have witnessed this transformation and today are aiming to improve their provision of healthcare so that it is on par with those offered by the best private providers in the country.” As a key partner to the healthcare sector, Rodriguez aims “to as-sist the government in their objective of

providing better healthcare to a greater number of people in Chile” by providing consulting and advisory services to the government’s reform initiatives.

Leading today’s healthcare reform is Minister of Health, Jaime Mañalich, who is determined to iron out the inef-ficiencies of the healthcare system to re-flect the rest of the country’s economic and political achievements. “A major is-sue for our healthcare system is related to the structure and quality of health institutions, including hospitals and reg-

ulatory entities,” he asserts. Two main entities on the Ministry’s radar are the Public Health Institute (ISP), the regula-tory agency for the pharmaceutical in-dustry, and the National Supply Center (CENABAST) that is the public purchas-ing entity and distributor for all public hospitals and clinics—the pharmaceuti-cal industry’s de facto biggest purchas-er. A recent audit of CENABAST con-ducted by advisory firm PWC, brought to light the severe inadequacies of the institution and the desperate need for a professionalization of its activities. Min-

ister Mañalich explains that “the under-lying problem is that CENABAST does not have the adequate facilities and ca-pacity to handle the logistics required to supply the system appropriately. We are therefore proposing to delegate this re-sponsibility to the private sector by hav-ing pharmaceutical laboratories deliver directly to hospitals and clinics.” Initia-tives such as this will save the govern-ment millions of dollars in health expen-ditures that will allow for the coverage of higher quality treatments under the GES plan, therefore narrowing the gap between private and public healthcare options. Other proposals in the pipe-line include the liberalization of OTC products that today are, paradoxically, kept behind the counters and sold only in pharmacies, as well as the creation of a National Pharmaceutical Agency (ANAMED) that will be solely charged with the registration and regulation of pharmaceutical products—a task that today is overseen by the overwhelmed

LEFT: Maria Teresa Valenzuela, Director of the Publich Health Institute (ISP); RIGHT: Maximiliano Santa Cruz, National Director of the National Institute of Industrial Property

and underbudgeted ISP. The director of the ISP, Maria Teresa Valenzuela, echoes the need for drastic change and stresses that “the key area for this new administration is the search for quality in all possible aspects—from adminis-trative management up to the most de-tailed analysis of technical processes”. For Valenzuela this also means improv-

ing protocols and approval of clini-cal trials, as well as enhancing the b ioequ iva lence capabilities of the institution by “supporting the accreditation of three new centers of bioequivalence

in the country in partnership with three major academic institutions”.

As regards the old tales of Chilean imitators violating patents, the National Institute of Industrial Property (INAPI) has been at the forefront in setting the record straight. Chile is one of the coun-tries in the world that has signed on to the most free trade agreements, includ-ing one with the United States and an Association Agreement with the Euro-pean Union. Maximiliano Santa Cruz, national director of INAPI, admits that Chile “committed to several obligations in these treaties, many of them impact-ing directly on the pharmaceutical sec-tor, such as extending the protection of

Jose Manuel Cousiño, Executive Vice President of CIF

patents in case of delays which we are already running in INAPI and ISP.” Part of his institution’s efforts to optimize patent regulation includes a direct part-nership with the national police’s “IP brigade” in charge of IP enforcement and national customs agencies. With such proposals already rolling, Santa Cruz is bold enough to proclaim that “INAPI is going to be the best IP agency in Latin America in the future.”

FreSh new Field. let’S play ball! As a direct consequence of healthcare optimization, international innovators are seeing greater opportunities to grow their operations in the Chilean market. Jose Manuel Cousiño, executive vice president of the Chamber of the Phar-maceutical Industry in Chile (CIF), rep-resenting the international innovators in Chile, explains that the country “has the advantage that it is an econo-my truly based on the notion of free trade and compe-tition.” Now that the playing field has been leveled for the MNCs, due to better regulation by the authorities and greater access to in-novative products within the public sys-tem, the possibilities for major growth are within grasp. As a strategic consult-

ing partner to the Chilean pharmaceu-tical sector, Rodrigo Castillo, business manager for IMS Health in Chile, pro-vides a more in-depth analysis when ex-plaining that innovators “suffered more in Chile up until 10 to 15 years ago, when there was no patent protection and the competition [there] was very strong. At this point in time, Chile has managed to learn how to compete and are in a better position.” Furthermore, “multi-nationals are now consolidating and im-proving their market share and have fu-ture plans of getting their products into the GES program, which would highly benefit them,” says Castillo. This re-newed momentum is also evident in the sharp increase of clinical trials that are being conducted in the country by them with the aim that innovation is valued for its worth in the local market. “Chile

has great research centers and uni-versities and a very good scien-tific community, which makes it at-tractive for these kinds of studies,” concludes Cous-

iño. The country has also updated is clinical research

legislation to accelerate the work of eth-ics committees and the approval times for trials and is now the fourth-largest market for clinical trials in the region.

“A major issue for our healthcare system is related to the structure and quality of health institutions, including hospitals and regulatory entities.”

— jaime mañalich, minister of health

LEFT: Monica Zerpa, General Manager of Pfizer; RIGHT: Rene Delsin, General Manager of Roche



Country Report

iLogisticaWith the reform of CENABAST requir-ing the outsourcing of all its distribu-tion activities, logistics providers are stepping up to meet the demand of pharmaceutical laboratories. Just out-side of Santiago, iLogistica has built a brand new 8,000m2 storage ware-house with the latest technol-ogy for the most efficient distribution of pharmaceutical products. Hav-ing reconstructed almost from scratch after the earthquake in February of 2010, the company has refurbished

itself to become the strategic partner for the industry. General manager, Raul Zamorano, explains his compa-ny’s comparative advantage to serve the pharmaceutical industry: “being an entirely independent company that is not linked to any pharmaceutical laboratory, we can ensure the utmost confidentiality of our clients’ data and product information. We also have no alliance with any of the players in the industry and this allows us to act freely always looking to serve our clients in the most efficient and effec-tive way possible. In this sense we are positioned to become a trustworthy partner for any international company that wishes to distribute their products in Chile and who might have reserva-tions about the safety of their com-

pany’s data.” The company has gone as far as developing a custom-made software platform that allows the greatest adaptability to the demands of its customers. “In order to provide the best traceability for our clients we have developed our own software platform that allows full customiza-tion to each one of our clients’ needs”, explains Zamorano.

I Logistica Santiago warehouse

Raul Zamorano, General Manager, iLogistica



Country Report

iLogisticaWith the reform of CENABAST requir-ing the outsourcing of all its distribu-tion activities, logistics providers are stepping up to meet the demand of pharmaceutical laboratories. Just out-side of Santiago, iLogistica has built a brand new 8,000m2 storage ware-house with the latest technol-ogy for the most efficient distribution of pharmaceutical products. Hav-ing reconstructed almost from scratch after the earthquake in February of 2010, the company has refurbished

itself to become the strategic partner for the industry. General manager, Raul Zamorano, explains his compa-ny’s comparative advantage to serve the pharmaceutical industry: “being an entirely independent company that is not linked to any pharmaceutical laboratory, we can ensure the utmost confidentiality of our clients’ data and product information. We also have no alliance with any of the players in the industry and this allows us to act freely always looking to serve our clients in the most efficient and effec-tive way possible. In this sense we are positioned to become a trustworthy partner for any international company that wishes to distribute their products in Chile and who might have reserva-tions about the safety of their com-

pany’s data.” The company has gone as far as developing a custom-made software platform that allows the greatest adaptability to the demands of its customers. “In order to provide the best traceability for our clients we have developed our own software platform that allows full customiza-tion to each one of our clients’ needs”, explains Zamorano.

I Logistica Santiago warehouse

Raul Zamorano, General Manager, iLogistica





Country Report Country Report

Leading the innovator revolution in Chile is none other than megalith Pfizer, who today is following close on the heels of the national pharma com-panies coming in as the No. 1 MNC in the country. Undoubtedly the company has benefited from its recent acquisition of Wyeth, not only in the expansion of its product portfolio and sales force, but also because Pfizer Chile general man-ager, Monica Zerpa, was the former general manager of Wyeth in Chile. Ever the optimist, and one of the very few top women executives in the industry, Zer-pa believes that Pfizer has “many oppor-tunities here, thanks to the solid regula-tory framework for the pharmaceutical market and to the country’s economic and political stability.” She is of the opinion that MNCs brought upon their own past failures in the Chilean market because they chose to focus on the chal-lenges of the industry. “I think multi-national pharmaceutical companies in Chile have remained very static in their approach and we must become more flexible regarding the prices, services, and access to products that we offer. We need to learn how to become more agile and responsive to this dynamic market, and that’s what I aim to bring to the company,” she says.

This agility is exemplified by Zerpa’s decision to “create a sales structure with representatives specially trained to support our institutional clients, such as hospitals,

patient programs, and CENABAST. The Chilean government has been modern-izing the public healthcare system over the years, and we must ensure that our services take these reforms into account so that patients have wider access to our products. I am confident that this will also make our prod-ucts and services more competitive—vis-à-vis low-cost generics.” Beyond their sales strategies, Pfizer has seized the advantages of Chile’s updated regulatory environment and rich scientific community for clinical research and has already completed 49 of its trials in the country. Even more impressive is Sanofi-Aventis’ dedicated clinical research center in Santiago that in 2009 invested US$6.3 million into its operations.

Indeed Mauricio Rosas, managing director of Merck’s pharmaceutical di-vision, also believes that the current environment is promising for innova-tors. “Even though we are facing tough competition from generics and private labels, we are still top-of-mind for our clients. Our sales force is exceptional because it has managed to build strong relationships with the practitioners,” he says. Their sales prowess is so impres-

sive that they have been asked by BMS, AstraZeneca, and Novartis to com-mercialize some of their products in the Chilean market. “If we include the BMS products that we distribute, then Chile is actually the country with the highest market share for Merck in Latin Amer-ica. Moreover, Chile represents 5% of the Latin American operations in terms of sales for the group, which is a very good figure taking into consideration that the Chilean pharmaceutical market in general is only 3% of Latin Ameri-can sales,” details Rosas. Riding on the company’s local excellence, he foresees that “in the next few years the market is expected to grow at 6% and we plan to maintain our growth rate at the actual level of 12%.” With such figures it is evi-dent that global innovators have learned the ways of the Chilean market and are taking advantage of the opportunities being created by the optimized health-care sector. MSD general manager Hen-rik Secher expresses this best by saying: “I wouldn’t say that we have completely resolved these issues in Chile, but we have been dealing with them for a lot more time here and this means that we have greater chances to fight back and to leverage our position.”

public healthcare goeS premiumThe country’s impressive economic suc-cess over the last decade, together with the ongoing modernization of Chilean

healthcare, is creating a greater demand for innovative treat-ments. Chile’s increasing wealth is reflected by Santiago’s shiny glass skyline and luxury megamalls, but also in the quality of healthcare and medical treatments being demand-ed by the population, including those covered by the public healthcare system. Furthermore, as a true free-market econo-my, the liberalization of the industry to include private health-care providers and insurance companies is allowing patients to pick and choose their medical treatment options, causing first-class products and niche segments to become solid driv-ers of the industry. This trend is illustrated in the marked dif-ference of a ranking of the top 10 pharma companies in the country in terms of units sold versus one measured in terms of value. The first only includes two innovator companies, namely Merck and Bayer in the eighth and 10th positions, respectively, whereas the second lists Pfizer as the fifth-most-important company, immediately followed by MSD, Bayer, Merck, and GSK in descending order. Such figures are also in-dicative of the increasing consumption of innovative products by the public system, including premium and niche products. As a whole the country is slowly moving to improve the qual-ity of treatments available to the population.

As the leader of the Chilean biotech offering, Roche is the prime example of a company benefitting from upgrades in the public healthcare system. General manager Rene Delsin com-ments on the successful implementation of pilot programs to introduce new products into the public sector: “With these programs, such as one for our HIV products, we were able to gain access to the public system serving 80% of the popula-tion.” The company already dedicates 50% of its portfolio to oncology products, most of which fall under the public healthcare plan, and is currently growing above the market driven by their biotech offering. Delsin describes the com-

pany’s strategy as one that is migrating from primary care to high-tech drugs. Lilly has been taking a comparable approach to the Chilean market by targeting therapeutic areas that are currently not addressed by the public system. Cesar Buendia,

Katia Trusich, General Manager of Genzyme






Leading the innovator revolution in Chile is none other than megalith Pfizer, who today is following close on the heels of the national pharma com-panies coming in as the No. 1 MNC in the country. Undoubtedly the company has benefited from its recent acquisition of Wyeth, not only in the expansion of its product portfolio and sales force, but also because Pfizer Chile general man-ager, Monica Zerpa, was the former general manager of Wyeth in Chile. Ever the optimist, and one of the very few top women executives in the industry, Zer-pa believes that Pfizer has “many oppor-tunities here, thanks to the solid regula-tory framework for the pharmaceutical market and to the country’s economic and political stability.” She is of the opinion that MNCs brought upon their own past failures in the Chilean market because they chose to focus on the chal-lenges of the industry. “I think multi-national pharmaceutical companies in Chile have remained very static in their approach and we must become more flexible regarding the prices, services, and access to products that we offer. We need to learn how to become more agile and responsive to this dynamic market, and that’s what I aim to bring to the company,” she says.

This agility is exemplified by Zerpa’s decision to “create a sales structure with representatives specially trained to support our institutional clients, such as hospitals,

patient programs, and CENABAST. The Chilean government has been modern-izing the public healthcare system over the years, and we must ensure that our services take these reforms into account so that patients have wider access to our products. I am confident that this will also make our prod-ucts and services more competitive—vis-à-vis low-cost generics.” Beyond their sales strategies, Pfizer has seized the advantages of Chile’s updated regulatory environment and rich scientific community for clinical research and has already completed 49 of its trials in the country. Even more impressive is Sanofi-Aventis’ dedicated clinical research center in Santiago that in 2009 invested US$6.3 million into its operations.

Indeed Mauricio Rosas, managing director of Merck’s pharmaceutical di-vision, also believes that the current environment is promising for innova-tors. “Even though we are facing tough competition from generics and private labels, we are still top-of-mind for our clients. Our sales force is exceptional because it has managed to build strong relationships with the practitioners,” he says. Their sales prowess is so impres-

sive that they have been asked by BMS, AstraZeneca, and Novartis to com-mercialize some of their products in the Chilean market. “If we include the BMS products that we distribute, then Chile is actually the country with the highest market share for Merck in Latin Amer-ica. Moreover, Chile represents 5% of the Latin American operations in terms of sales for the group, which is a very good figure taking into consideration that the Chilean pharmaceutical market in general is only 3% of Latin Ameri-can sales,” details Rosas. Riding on the company’s local excellence, he foresees that “in the next few years the market is expected to grow at 6% and we plan to maintain our growth rate at the actual level of 12%.” With such figures it is evi-dent that global innovators have learned the ways of the Chilean market and are taking advantage of the opportunities being created by the optimized health-care sector. MSD general manager Hen-rik Secher expresses this best by saying: “I wouldn’t say that we have completely resolved these issues in Chile, but we have been dealing with them for a lot more time here and this means that we have greater chances to fight back and to leverage our position.”

public healthcare goeS premiumThe country’s impressive economic suc-cess over the last decade, together with the ongoing modernization of Chilean

healthcare, is creating a greater demand for innovative treat-ments. Chile’s increasing wealth is reflected by Santiago’s shiny glass skyline and luxury megamalls, but also in the quality of healthcare and medical treatments being demand-ed by the population, including those covered by the public healthcare system. Furthermore, as a true free-market econo-my, the liberalization of the industry to include private health-care providers and insurance companies is allowing patients to pick and choose their medical treatment options, causing first-class products and niche segments to become solid driv-ers of the industry. This trend is illustrated in the marked dif-ference of a ranking of the top 10 pharma companies in the country in terms of units sold versus one measured in terms of value. The first only includes two innovator companies, namely Merck and Bayer in the eighth and 10th positions, respectively, whereas the second lists Pfizer as the fifth-most-important company, immediately followed by MSD, Bayer, Merck, and GSK in descending order. Such figures are also in-dicative of the increasing consumption of innovative products by the public system, including premium and niche products. As a whole the country is slowly moving to improve the qual-ity of treatments available to the population.

As the leader of the Chilean biotech offering, Roche is the prime example of a company benefitting from upgrades in the public healthcare system. General manager Rene Delsin com-ments on the successful implementation of pilot programs to introduce new products into the public sector: “With these programs, such as one for our HIV products, we were able to gain access to the public system serving 80% of the popula-tion.” The company already dedicates 50% of its portfolio to oncology products, most of which fall under the public healthcare plan, and is currently growing above the market driven by their biotech offering. Delsin describes the com-

pany’s strategy as one that is migrating from primary care to high-tech drugs. Lilly has been taking a comparable approach to the Chilean market by targeting therapeutic areas that are currently not addressed by the public system. Cesar Buendia,

Katia Trusich, General Manager of Genzyme






Espacio Riesco

Sergio Gutierrez, Espacio Riesco General Manager

general manager for Chile, Peru, Ecua-dor, and Bolivia, explains that “given Chile’s highly competitive environment, I would say the main challenge is indeed to continue providing new innovative treatments to address unmet medical needs, which is our main objective, in a way that is timely and cost-effective”. The company is leveraging their posi-tion in the market by specializing in neurological diseases, erectile dysfunc-tion, and diabetes that are all covered under the AUGE-GES plan. Buendia further states that “as long as there are patients that can benefit from innova-tive products then we as a company will strive to provide them.”

Another unusual success story has been that of Hospira in Chile, which until very recently functioned as the headquarters for the Southern Cone region. Even though the company has not introduced new pharmaceuticals beyond its initial eight products since it began its operation, it have managed to double its sales in the last five years en-tirely based on its high-tech medical de-vices. Aldo Arata Muñoz, general man-ager of Hospira Chile, explains, “This year my plan is to open up the market to our infusion security software and to expand our sales in this segment by convincing the hospitals that this is a very important issue for them. It won’t be an easy endeavor, but it is definitely our big chance for growth, and I would like Hospira to be the first company working on this issue in Chile to dif-ferentiate our medical devices in this way.” The company is betting that its software offering will be valued by the public hospitals enough to drive its sales beyond its past performance.

Similarly, Baxter has been expand-ing its business in Chile by focusing on its end-stage kidney disease and hemo-philia products. As a matter of fact, the company is one of the few MNCs that still has production facilities in Chile and has been putting them to good use at the local level. General manager Christian Quiroga elaborates that, “To-

day, we also export products to other Baxter facilities in Ecuador and Central America, but that only represents about 10% of our total production. The rest is entirely for the local market.” The Ar-gentine manager has been exploring to further diversify its portfolio in the pub-lic system as a means to drive growth. “In Chile, bioscience products, which include therapies for hemophilia, are awarded on a tender basis, and represent one of our greatest growth opportuni-ties,” concludes Quiroga.

As premium and niche segments are increasingly recognized, new product offerings have been constantly sprout-ing throughout the country, bringing the most innovative treatments into the market. Genzyme only established itself in the country in 2008, but nev-ertheless has managed to introduce 15 of its products for rare diseases mostly through the use of educational initia-tives. “We have done a lot of work on

medical education, which is the main challenge for rare diseases, because you need to make sure that doctors are fully trained to correctly diagnose patients and have an impact in the development of the disease” says general manager, Katia Trusich. Her strategy for the company is based on the need to “cre-ate access to medicines and support the development of new policies that are more open and have higher standards of care for its patients. If we manage to make these changes, then our growth and revenue will follow naturally.” The educational approach has also been es-sential for companies like Novo Nord-isk, who aim to transmit the vast advan-tages of their modern insulin products to Chilean doctors. They certainly have done a fair job so far considering that they have more than 55% of the market share for insulin products and are the official providers for the state.

The buzz of renewed pharmaceutical and healthcare sectors has extended beyond the direct activities of pharma companies and been spilt over to the service provid-ers who are quickly adapting themselves to cater to the new and improved industry. A notable example of adaptation to the needs of pharma companies is that of the largest event space in the country, Espacio Riesco. Sergio Gutierrez, general manager of Espacio Riesco, describes that “we built this space in order to address the need for large con-gresses and conferences in the country and we began our operations by organizing the International Gynecology Congress at which we received more than 7,000 delegates.

We are now counting with 180,000 square meters in total, out of which approximately 40,000 square meters are covered, which makes us the biggest multipurpose venue in the country. In this regard, we now have the capacity to accommodate 8,500 people for a sit-down dinner and not only for fairs and conferences.” The conference center has its own in-house services for options such as catering and decoration, and is increasingly host to a number of pharmaceutical events. Gutierrez offers his vision for the future of Espacio Riesco by asserting that “we want to consolidate ourselves as the leader in the market of fairs, conferences, congresses and big corporate events.”






Espacio Riesco

Sergio Gutierrez, Espacio Riesco General Manager

general manager for Chile, Peru, Ecua-dor, and Bolivia, explains that “given Chile’s highly competitive environment, I would say the main challenge is indeed to continue providing new innovative treatments to address unmet medical needs, which is our main objective, in a way that is timely and cost-effective”. The company is leveraging their posi-tion in the market by specializing in neurological diseases, erectile dysfunc-tion, and diabetes that are all covered under the AUGE-GES plan. Buendia further states that “as long as there are patients that can benefit from innova-tive products then we as a company will strive to provide them.”

Another unusual success story has been that of Hospira in Chile, which until very recently functioned as the headquarters for the Southern Cone region. Even though the company has not introduced new pharmaceuticals beyond its initial eight products since it began its operation, it have managed to double its sales in the last five years en-tirely based on its high-tech medical de-vices. Aldo Arata Muñoz, general man-ager of Hospira Chile, explains, “This year my plan is to open up the market to our infusion security software and to expand our sales in this segment by convincing the hospitals that this is a very important issue for them. It won’t be an easy endeavor, but it is definitely our big chance for growth, and I would like Hospira to be the first company working on this issue in Chile to dif-ferentiate our medical devices in this way.” The company is betting that its software offering will be valued by the public hospitals enough to drive its sales beyond its past performance.

Similarly, Baxter has been expand-ing its business in Chile by focusing on its end-stage kidney disease and hemo-philia products. As a matter of fact, the company is one of the few MNCs that still has production facilities in Chile and has been putting them to good use at the local level. General manager Christian Quiroga elaborates that, “To-

day, we also export products to other Baxter facilities in Ecuador and Central America, but that only represents about 10% of our total production. The rest is entirely for the local market.” The Ar-gentine manager has been exploring to further diversify its portfolio in the pub-lic system as a means to drive growth. “In Chile, bioscience products, which include therapies for hemophilia, are awarded on a tender basis, and represent one of our greatest growth opportuni-ties,” concludes Quiroga.

As premium and niche segments are increasingly recognized, new product offerings have been constantly sprout-ing throughout the country, bringing the most innovative treatments into the market. Genzyme only established itself in the country in 2008, but nev-ertheless has managed to introduce 15 of its products for rare diseases mostly through the use of educational initia-tives. “We have done a lot of work on

medical education, which is the main challenge for rare diseases, because you need to make sure that doctors are fully trained to correctly diagnose patients and have an impact in the development of the disease” says general manager, Katia Trusich. Her strategy for the company is based on the need to “cre-ate access to medicines and support the development of new policies that are more open and have higher standards of care for its patients. If we manage to make these changes, then our growth and revenue will follow naturally.” The educational approach has also been es-sential for companies like Novo Nord-isk, who aim to transmit the vast advan-tages of their modern insulin products to Chilean doctors. They certainly have done a fair job so far considering that they have more than 55% of the market share for insulin products and are the official providers for the state.

The buzz of renewed pharmaceutical and healthcare sectors has extended beyond the direct activities of pharma companies and been spilt over to the service provid-ers who are quickly adapting themselves to cater to the new and improved industry. A notable example of adaptation to the needs of pharma companies is that of the largest event space in the country, Espacio Riesco. Sergio Gutierrez, general manager of Espacio Riesco, describes that “we built this space in order to address the need for large con-gresses and conferences in the country and we began our operations by organizing the International Gynecology Congress at which we received more than 7,000 delegates.

We are now counting with 180,000 square meters in total, out of which approximately 40,000 square meters are covered, which makes us the biggest multipurpose venue in the country. In this regard, we now have the capacity to accommodate 8,500 people for a sit-down dinner and not only for fairs and conferences.” The conference center has its own in-house services for options such as catering and decoration, and is increasingly host to a number of pharmaceutical events. Gutierrez offers his vision for the future of Espacio Riesco by asserting that “we want to consolidate ourselves as the leader in the market of fairs, conferences, congresses and big corporate events.”






Small dog, big biteToday it is evident that changes in the healthcare system have not only affected Big Pharma but also the local industry

that has had to adapt, shape up, and keep the pressure on the competition. This has helped develop entirely new strategies and sce-narios, including inter-national mergers and acquisitions that today have made “national” industry a difficult term to define. This is the new face of Chil-ean pharma.

When global phar-ma shut down local production plants back in the ’80s and ’90s, contract manufactur-ing became essential

to placate national demand for phar-maceuticals. As a direct answer to this need, Farmindustria bought the former Schering-Plough manufacturing plant in

1998 to later become the largest contract manufacturing in the country. Today Farmindustria is responsible for 40% of all contract manufacturing in the coun-try and has created its own laboratory known as Laboratorio Volta. Roberto

Roizman, CEO of Laboratorio Volta and Farmin-dustria, describes that “the com-pany began as a very small opera-tion 12 years ago, but that was the perfect moment to enter the mar-ket because at that time the majority

of the global pharmaceutical companies were shutting down their manufactur-ing facilities in the country. In paral-lel there were the local companies that were growing very quickly and did not have the capacity to produce all of their products.” Farmindustria has remained at the cutting-edge of the industry by investing 50% of its profit on new tech-nology and equipment every year. Fur-thermore, they have maintained flexibil-ity as a key element of their operations and Roizman describes the company as one “that is willing and able to adapt to the specific needs of our clients. If one of our customers comes to us with a proposal illustrating a new produc-tion process with higher quality control standards, then we will do our best to implement the changes and to achieve the highest levels that are required by the international industry.”

Beyond this the company recently de-veloped a “partnership with Eurofarma in Brazil that is a very reputable company with an extensive international network already in place … and in this way Volta can increase its role in the region”, ex-plains Roizman. The company also is pushing its limits to experiment with in-novation and has gone as far as to exploit the country’s natural resources to devel-op a supplemental treatment for cancer

Andres Rudolphy Fontaine, General Manager of Andromaco

derived entirely from a national berry known as Maqui.

Another notable example of evolu-tion within the lo-cal Chilean industry is that of the No. 2 company, Androma-co, that, despite its two manufacturing sites, is concentrat-ing its efforts entirely on the commer-cialization of its products. It goes as far as claiming that even if its production fa-cilities were to shut down, it would still maintain their current market position entirely based on its sales and marketing expertise. The company is now focus-ing on penetrating smaller markets in the region, such as Bolivia and Central

America, and even plans to acquire a company closer to those loca-tions. Argentine Laboratorio Bago, has also decided to use its Chilean operation for a similar purpose by exporting the majority of its pro-duction to the Andean markets.

In a similar fashion, ITF-La-bomed CEO Francisco Medone Crovetto tells his company’s story of building an international net-work of partners: “Chile’s market

size and high competition made me re-alize that as a non-innovative company the best way for me to grow was through licensing agreements. I then proceeded to look for licensing partners abroad to bring new products into the market, and today 50% of our products are licensed and the other 50% are our own branded generics.” After many years of partner-

ship with the Italian group Italfarma-co, Labomed was acquired in 2009 to form the current ITF-Labomed, which

served as an entry point into the Latin American mar-ket for the Italian mother company. Now that they are part of a European ph a r m a c e u t i c a l group, “We have aspirations to have a manufacturing

plant that is certified by EMEA,” con-cludes Crovetto.

national pharma remixedDespite the optimism in the air, the country is still considered to be the most competitive pharma market in the West-

Hernan Pfeifer Frenz, General Manager of Laboratorio Chile

Farmindustria plant

Francisco Medone Crovetto, CEO of ITF-Labomed






Small dog, big biteToday it is evident that changes in the healthcare system have not only affected Big Pharma but also the local industry

that has had to adapt, shape up, and keep the pressure on the competition. This has helped develop entirely new strategies and sce-narios, including inter-national mergers and acquisitions that today have made “national” industry a difficult term to define. This is the new face of Chil-ean pharma.

When global phar-ma shut down local production plants back in the ’80s and ’90s, contract manufactur-ing became essential

to placate national demand for phar-maceuticals. As a direct answer to this need, Farmindustria bought the former Schering-Plough manufacturing plant in

1998 to later become the largest contract manufacturing in the country. Today Farmindustria is responsible for 40% of all contract manufacturing in the coun-try and has created its own laboratory known as Laboratorio Volta. Roberto

Roizman, CEO of Laboratorio Volta and Farmin-dustria, describes that “the com-pany began as a very small opera-tion 12 years ago, but that was the perfect moment to enter the mar-ket because at that time the majority

of the global pharmaceutical companies were shutting down their manufactur-ing facilities in the country. In paral-lel there were the local companies that were growing very quickly and did not have the capacity to produce all of their products.” Farmindustria has remained at the cutting-edge of the industry by investing 50% of its profit on new tech-nology and equipment every year. Fur-thermore, they have maintained flexibil-ity as a key element of their operations and Roizman describes the company as one “that is willing and able to adapt to the specific needs of our clients. If one of our customers comes to us with a proposal illustrating a new produc-tion process with higher quality control standards, then we will do our best to implement the changes and to achieve the highest levels that are required by the international industry.”

Beyond this the company recently de-veloped a “partnership with Eurofarma in Brazil that is a very reputable company with an extensive international network already in place … and in this way Volta can increase its role in the region”, ex-plains Roizman. The company also is pushing its limits to experiment with in-novation and has gone as far as to exploit the country’s natural resources to devel-op a supplemental treatment for cancer

Andres Rudolphy Fontaine, General Manager of Andromaco

derived entirely from a national berry known as Maqui.

Another notable example of evolu-tion within the lo-cal Chilean industry is that of the No. 2 company, Androma-co, that, despite its two manufacturing sites, is concentrat-ing its efforts entirely on the commer-cialization of its products. It goes as far as claiming that even if its production fa-cilities were to shut down, it would still maintain their current market position entirely based on its sales and marketing expertise. The company is now focus-ing on penetrating smaller markets in the region, such as Bolivia and Central

America, and even plans to acquire a company closer to those loca-tions. Argentine Laboratorio Bago, has also decided to use its Chilean operation for a similar purpose by exporting the majority of its pro-duction to the Andean markets.

In a similar fashion, ITF-La-bomed CEO Francisco Medone Crovetto tells his company’s story of building an international net-work of partners: “Chile’s market

size and high competition made me re-alize that as a non-innovative company the best way for me to grow was through licensing agreements. I then proceeded to look for licensing partners abroad to bring new products into the market, and today 50% of our products are licensed and the other 50% are our own branded generics.” After many years of partner-

ship with the Italian group Italfarma-co, Labomed was acquired in 2009 to form the current ITF-Labomed, which

served as an entry point into the Latin American mar-ket for the Italian mother company. Now that they are part of a European ph a r m a c e u t i c a l group, “We have aspirations to have a manufacturing

plant that is certified by EMEA,” con-cludes Crovetto.

national pharma remixedDespite the optimism in the air, the country is still considered to be the most competitive pharma market in the West-

Hernan Pfeifer Frenz, General Manager of Laboratorio Chile

Farmindustria plant

Francisco Medone Crovetto, CEO of ITF-Labomed



Country Report

ern hemisphere. Such notoriety is still partly due to a preference for similars and generics by the public healthcare system, with original drugs only repre-senting 19.2% of the market. Another major factor is also the robust manufac-turing capacity that Chile has developed over the decades despite the small size of the market. Most exemplary of this is the national manufacturing giant, Laboratorio Chile, “which today is the market leader in both branded and pure generics, and No. 2 in exports and the OTC market,” explains general manag-er Hernan Pfeifer Frenz. The company is the producer of one out of every four pharmaceuticals consumed in the coun-try, and exports 20% of its production to 14 countries. The company’s success was so glaringly obvious that the com-pany was acquired by IVAX in 2001

as part of a strategic expansion into the Latin American market, and conse-quently by Teva in 2006 who acquired IVAX’s global operations. All the same, Laboratorio Chile still retains its mono-lithic brand name as part of the coun-try’s pride and joy.

Other notable national companies

are Laboratorios Saval and Instituto Sanitas, both operating state-of-the-art production facilities certified under GMP standards and offering extensive product portfolios that cover the thera-peutic gamut—from oncology to central nervous system (CNS) disorders, from cardiology to infectious diseases. These triumphs of Chilean pharma today are reverberating in the region like never before, with Laboratorio Recalcine ac-quiring several Argentine laboratories in the past few years and, even more impressively, a UK allergy-oriented vac-cine producer in 2009. Some regional players have decided to become a part of the action in Chile, as was the case with Argentina’s pharmaceutical cham-pion Roemmers, who entered the mar-ket through its local subsidiary named Pharma Investi and ranked in the top 10. Pharma Investi general manager Fernando del Puerto points out that the company “increased its sales fivefold in the last seven years … moved up in the ranking and improved its position most-ly through organic growth.”

The Industrial Association of Phar-maceutical Laboratories (ASILFA) that was created to defend the interests of the generic and local manufacturers is work-ing hard to erase the blemished past of patent violations and to shape a com-pliant and high-quality national indus-try. In line with governmental reforms, Maria Angelica Sanchez, executive vice president of ASILFA, explains that its current agenda is focused on raising production standards and increasing the role of innovation as part of the Chil-ean industry. The first step to achieve this is by ensuring that national health authorities are efficient and up-to-date with global regulatory norms. “The new presidential administration has already begun to address some of our concerns by tackling these problems in small com-mittees that deal with specific topics. These discussions will also include other companies that are not part of our as-sociation,” she explains.

Top 20 Ranking Prescription Drug Sales in Units

(% Mkt Share)

1. Laboratorio Chile 6.2

2. Laboratorio Saval 5.2

3. Andromaco 4.7

4. Recalcine 4.3

5. Laboratorio Bago 3.8

6. Medipharm 3.1

7. Instituto Sanitas 2.8

8. Merck 2.8

9. Pharma Investi 2.5

10. Bayer 2.4

11. Pfizer 1.7

12. MSD 1.6

13. Tecnofarma 1.3

14. Laboratorio Pasteur 1.1

15. Roche 1.1

16. Laboratorio Prater 0.9

17. Nestle 0.9

18. GSK 0.9

19. Novartis 0.8

20. ITF-Labomed 0.7

LEFT: Maria Angelica Sanchez, Executive Vice President of ASILFA; RIGHT: Fernando del Puerto, General Manager of Pharma Investi

email: [email protected]

Pharmaceuticals Chile report 2011

Documents

solitary country

competitive country

latin american nation

pharmaceutical sectors

countrys healthcare

pharmaceutical sales

populated nation

public healthcare system