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w w w . s a n i g e s t . c o m
The Pharmaceutical Market
in Latin America in 2020
James A. Cercone
President
Sanigest Internacional
NextLevel Pharma:
Pharmaceutical Market & Patient Access in
Latin America
February 7, 2011
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Today‟s Discussion
• Latin America pharmaceutical market
size and characteristics
• Factors affecting pharmaceutical
supply and demand
• Market access models: Limitations
and Potential for growth
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As of 2009, the
pharmaceutical market in
Latin America was worth over
40 billion USD and is expected
to increase to 63 billion USD
by 2012
Source: Business Wire 2011
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Where are we now? Market size in 2009 (USD)
Mexico
13.0bil.
Colombia
2.24bil. Venezuela
3.5bil.
Brazil
16.9bil.
Argentina
3.37bil.Chile
1.04bil.
Peru
1.25bil.
Central America
(excluding Mexico)
accounted for over
2 bil. USD
Other Latin
American
countries
accounted for
nearly 1 bil.
Source: BMI country reports Q4 2010
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Market Share, 2009
Source: World Bank and BMI country reports Q4 2010
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
0
2
4
6
8
10
12
14
16
18
Cu
mu
lati
ve
% o
f m
ark
et
Mark
et
siz
e (
bil.
US
D)
Market size (bil. USD) Cumulative % of market
LA market is highly consolidated. Five countries = 90% of market size.
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Market Share by Country, 2009
8%
38%
29%
5%
3%
2%8%
2%5%
Argentina
Brazil
Mexico
Colombia
Peru
Chile
Venezuela
Other
Central America
Brazil, Mexico and
Venezuela account
for the largest
proportions of the
Latin American
pharmaceutical
marketSource: World Bank and BMI country reports Q4 2010
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Expected market size (bil. USD), 2009 - 2019
Source: World Bank, BMI country reports Q4 2010 and Sanigest Projections
Market size should more than double in the next ten years…In high scenario,
market would reach US$90 billion in 2019.
0
5
10
15
20
25
30
Bil
lio
ns
2009
2014
2019
0
5
10
15
20
25
30
35
40
Bil
lio
ns
2009
2014
2019
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Per capita drug expenditure vs. income level
GDP, 2009
Source: BMI country reports Q4 2010
Drug
expenditure is
expected to
increase as
income level
increases
Rising incomes per capita will contribute to faster growth…
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Per capita drug expenditure, 2009-2019 (USD)
Source: BMI country reports Q4 2010
$0
$50
$100
$150
$200
$250
2009 2014 2019
Dru
g e
xp
en
dit
ure
per
cap
ita (
US
D)
Argentina
Brazil
Mexico
Colombia
Venezuela
Chile
Peru
Increasing per capita
drug expenditure
through 2019 – notably:
Brazil ($228),
•Mexico ($211)
•Argentina ($210)
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Source: BMI country reports Q4 2010
On average, per capita drug
expenditure is expected to
increase from $77 pp in 2009
to $129 pp in 2019
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Patented
• By value, represents largest pharmaceutical sub-sector
• Decreasing market share forecasted through 2019
Generic
• Marked increase in market share forecasted through 2019
• Subject to price ceilings in most of Latin America
OTC
• Growing sub-sector
• Opportunities depend on ‘’switching procedures’’
• Generally under free pricing
Pharmaceutical Market by Sub-Sector
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Pharmaceutical market size (USD) by sub-
sector, in billions, 2009
0
2
4
6
8
10
12
14
16
Brazil Mexico Argentina Venezuela Colombia Chile Peru
Ma
rket
siz
e (
bil
. U
SD
)
OTC Generic Patented
Source: BMI country reports Q4 2010
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Example: Composition of Mexico‟s pharmaceutical
market by drug type and product origin
Type Percentage of market Unit price
Value Volume Non-patented =
100
Patented
innovative (from
one source)
20.4 4.4 5.5
Non-patented
(from multiple
sources)
79.6 95.6 1.0
• Non-branded
generics*
11.4 34.4 0.4
• Branded
generics
17.9 19.6 1.1
• Branded** 50.3 41.7 1.5
*This includes medicines known as ‘interchangeable generics’
**This includes innovated non-patented products, non-patentable products and copy products which were introduced in
the market prior to the original product’s patent expiring.
Source: IMS Health 2009
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Today‟s Discussion
• Pharmaceutical market size: Where
are we now?
• Factors affecting pharmaceutical
supply and demand
• Market access models: Limitations
and Potential for growth
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Undermining the pharmaceutical market…
An estimated 7-22% of drugs on the market in
Latin America are counterfeit
One survey showed that 50% of Latin Americans use under-the-counter
(UTC) drugs on a regular basis
Source: BMI country reports Q4 2010
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Distribution Channels
• Public health insurance vs. pharmacies
– Patented medicines not always stocked by public sector
pharmacies
– Consolidation of pharmacy chains: Retail sector controlled by
few main pharmacies – vulnerable to collusion
• Penetration of private pharmacies into new markets
– Increasingly rapidly (11% increase in 2009 in Argentina alone)
– Dominated by high price branded medicines
– Introduction of private pharmacies could spur pricing wars
– Possible shift to private pharmacy dispensing for public systems
could drive sales.
• Possibility of regional purchasing for Central America would
create regional purchasing pool putting pressures on margins.
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Factors affecting pharmaceutical supply and demand
Health System
Supply
Demand
Final determination of market size depends on
interaction of demand and supply with the health
system
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Factors affecting pharmaceutical supply and demand
Market Access
Financing
Regulation
Staff
Access
Market access strategies and estimates of demand
should be based on realistic assessment of interaction
of health systems factors for each product…
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Market access strategies
should look carefully at
population segmentation,
insurance coverage and
expansion of access and
technology.
Trend: Data Driven Approach
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Looking Ahead
1 Epidemiological and demographic
shifts
2 Global economic climate
3 Expanding national health insurance
Three factors affecting pharmaceutical demand:
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Age standardized DALYs (per 100,000 pop.) by
cause
High Income Country
Disease Profile
Countries are moving from a high communicable
disease burden to a high chronic disease burden
Chronic disease care will require
long-term and/or high tech
pharmaceutical solutions
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Demographic Shift: increased overall demand and demand
for specialized care (geriatric, chronic disease, etc.)
Demographic AgingPopulation Boom
0
10
20
30
40
50
60
70
80
90
100
0-14 15-64 65+
Source: Population Reference Bureau, CIA World Fact book, US Census Bureau
0
5
10
15
20
25
0
50
100
150
200
250
Bra
zil
Mexic
o
Arg
entina
Chile
Peru
Colo
mbia
Venezuela
% in
cre
ase
To
tal
po
pu
lati
on
Mil
lio
ns
Population 2025 % increase (2010-2025)
Population over 40 will increase from177,881,896 in 2009 to 293,140,656 in 2030
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Demographic Shift
Population 2010 Population 2030
Source: US Census Bureau Int’l Database
and Norwegian Institute of Public Health
40 20 0 20 40
0-4
5-9
10-14
15-19
20-24
25-29
30-34
35-39
40-44
45-49
50-54
55-59
60-64
65-69
70-74
75-79
80-84
85-89
90-94
95-99
100+
Millions
Female
Male
40 20 0 20 40
0-4
5-9
10-14
15-19
20-24
25-29
30-34
35-39
40-44
45-49
50-54
55-59
60-64
65-69
70-74
75-79
80-84
85-89
90-94
95-99
100+
Millions
Female
Male
Over 70 age group has most drug users, so as
countries age, drug consumption is expected to
increase
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Looking Ahead
1 Epidemiological and demographic
shifts
2 Global economic climate
3 Expanding national health insurance
Three factors affecting pharmaceutical demand:
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Global Economic Climate
Inflation
• Increased cost for energy and importing raw goods for production
• Rising consumer prices lowers demand
Spending
• Cost-pressure on government spending
• High unemployment depresses consumer spending
Currency
• Weakening Latin American currencies vs. USD
• Affect of shifting exchange rates on imports
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Looking Ahead
1 Epidemiological and demographic
shifts
2 Global economic climate
3 Expanding national health insurance
Three factors affecting pharmaceutical demand:
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Healthcare expenditure (USD) as a % of GDP, 2005-2019
As a general trend, Latin American governments are investing more in
healthcare
Source: BMI country reports Q4 2010
0
2
4
6
8
10
12
2009 2014 2019
Healt
hcare
exp
en
dit
ure
as %
of
GD
P Argentina
Colombia
Mexico
Peru
Venezuela
Brazil
Chile
Other
Increased healthcare
spending in:
Colombia
•Mexico
•Peru
•Brazil
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Market Trends
Mexico is
implementing
universal
health
coverage
Colombia is
expecting
universal and
unified health
coverage by
2014
Venezuela is
negotiating
drug price
increases
Argentina is
planning to
increase
pharma
accessChile is
increasing
insurance
coverage
Peru is
increasing per
capita drug
expenditureThese 7
countries
represent a
market of 468
million people
and GDP of 2.7
trillion USD
Source: Business Wire and BMI country reports Q4 2010
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Health insurance coverage
Mexico and Costa
Rica have the highest
levels of public
coverage (87%)
7.7%
15.1% 18.0%
28.1%
45.0%
18.3%
51.2%
67.1%
34.4%
68.3%
86.8% 87.0%80.4%
4.0%
3.3%
5.0%
10.0%
1.8%
30.0%
7.9%
2.0%
42.0%
17.6%
0.2%2.8%
19.6%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Nic
arag
ua
El S
alvad
or
Hon
du
ras
Per
u
Uru
gu
ay
Gu
atem
ala
Arg
enti
na
Colo
mbia
Ven
ezu
ela
Ch
ile
Cost
a R
ica
Mex
ico
Bra
zil
Popula
tion
cover
age
Public Private
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Effects of Health Insurance Coverage on
Pharmaceutical Markets
• Expanding health insurance coverage
– Increased drug consumption as more people
are covered and reduces ‘co-pay’
• Potential for group purchasing of branded
drugs – expands access but pressure on unit
prices
• Pharmacoeconomics as an influence on
pharmaceutical supply
– Using Health Technology Assessment (HTA)
to evaluate cost-effectiveness of treatment
options
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Looking Ahead
1. Pricing and reimbursement
2. Global economic climate
3. Technology: mHealth
Three factors affecting pharmaceutical supply:
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Pricing and Reimbursement
P&R measures in Latin America
Price
FreezesDiscounts
Prior
authorization
Pharmacist
substitution Positive &
Negative
Reference
Pricing
Patient co-
pay
Rebate &
taxes
2011 emphasis on procurement and un-regulated private pricing should
shift to more regulated P&R schemes with reference pricing, discounting
and more aggressive pharmacist distribution.
Increasing interest in LA to use HTA, or pharmacoeconomics for
formulary and pricing decisions.
OTC
Substitution
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Pricing and Reimbursement
• Middle-of-Pyramid
driving
consumption
• Increased access
to private
pharmacy
• Increase access to
social insurance
reduces OOP and
shifts purchasing
• Private insurance
greater pressure
reimbursement
control, more
interest in branded
to differentiate.
Growth of Middle
Class
Increase in formal
labor market
social insurance
Increase Private
Insurance Market
Pressure on P&R
Market
Size
Large
Small
Low High
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What‟s on the horizon for pharmaceutical
pricing?
• Expanding use of “procurement auctions” to
obtain value for money in social security
purchases: example Mexico IMSS and Chile
• Increasing use of reference pricing for public
and private sectors
• Tightening of private distribution of
prescription drugs
• Increasing consolidation of public coverage
of the population reduction in out-of-
pocket private spending.
• Introduction of Pay-For-Performance scheme
for expanding use of innovators
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Looking Ahead
1. Pricing and reimbursement
3. Technology: mHealth
Three factors affecting pharmaceutical supply:
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Looking Ahead
1. Pricing and reimbursement
3. Technology: mHealth
Three factors affecting pharmaceutical supply:
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Mhealth has the potential to be
a disruptive technology for
pharma industry…
…Early innovators may
capture market share
Trend: Mhealth
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mHealth Pharmaceuticals
Controlling Counterfeit
Compliance
Payments
Adherence
Supply Chain
Chronic care
Source: Healthcare on Mobiles 2010
Incidence of mhealth on pharma industry
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mHealth: Adherence and Chronic Care
Offers unique opportunity for communication with
patient
Improved patient adherence
• Studies show improved TB, HIV drug adherence
• Improved adherence to glucose control and weight loss
programs
Improved patient outcomes
• Link patient biomarkers to dosing
• Improved glucose control
• Better/faster diagnostic testing
Evidence suggests
that successful
trials and pilot
programs could be
easily adapted to
the Latin American
context
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Evidence for mHealth
Study Impact
Mobile Phone-Based Remote Patient Monitoring System for Management of Hypertension in Diabetic Patients (Logan et al. 2007)
Average 24-h BP fell by 11 /5 (+/- 13/7 SD) mmHg a difference of 35% from baseline
Overall, BP improved significantly
“Comparison of an SMS text messaging and phone reminder toimprove attendance at a health promotion center:A randomized controlled trial “ (Chen et al. 2008)
Subjects who received a text message reminder were 60% more like than controls to attend their health appointment
“A randomized control trial of Sweet Talk, a text messaging system to support young people with diabetes” (Franklin et al. 2006)
Patients with Sweet Talk and intensive therapy had a decrease of 9.2% (+/- 2.2%) in their blood glucose. Other groups had no significant change
No impact on knowledge score
“A randomized trial of a proactive cellular telephoneintervention for smokers living with HIV/AIDS “ (Vidrine et al. 2006)
Those receiving the mobile intervention were 3.6 times as likely to quit smoking at 3 months than controls
“Using internet and mobile technology to deliver an automated physical activity program: randomized controlled trial” (Hurling et al. 2007 )
The intervention group lost significantly more body fat and had significantly more physical activity than the control group
SIMpill Treatment success 94% with SIMpill (compared to 71% nationally
with standard DOTS)
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More cost-benefit
research is needed to
guide development of
scalable business
models for pharma in
mhealth
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Future Forces
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Conclusions
• Epidemiological and demographic shifts will increase overall
demand for pharmaceuticals
• Increased government investment in healthcare and
expenditure on pharmaceuticals through 2019
• Trends like mHealth could increase pharmaceutical sales
through:
– Increased patient compliance and preference for branded drugs
tied to mHealth technology
• Likely shift to reference pricing
• Increased insurance coverage
- Pharmacoeconomics influence on drug supply
- Potential for group purchasing
© Sanigest 2005 Página 44Original
Thank you for your Attention
Contact Information
James A. Cercone
© Sanigest 2005 Página 45Original
Works Cited
1. Argentina Pharmaceuticals & Healthcare Report Q4 2010. Business Monitor International. 10 Jul. 2010.
2. Brazil Pharmaceuticals & Healthcare Report Q4 2010. Business Monitor International. Sept. 2010.
3. Chile Pharmaceuticals & Healthcare Report Q4 2010. Business Monitor International. Sept. 2010.
4. CIA World Factbook. Available online at http://www.cia.gov. Accessed 23 Jan. 2011.
5. Colombia Pharmaceuticals & Healthcare Report Q4 2010. Business Monitor International. Aug. 2010.
6. „Drug Consumption in Norway – A Fact Sheet.‟‟ Norwegian Institute of Public Health. 5 Jul. 2010.
7. Global Infobase. WHO. Available online at http:///Infobase.who.int. Accessed 21 Jan. 2011.
8. Image of Latin America available online at http://www.worldatlas.com. Accessed 24 Jan. 2011.
9. „Kaiser Permanente Teams With mobileStorm for SMS Reminders, Sees 30% Cost Savings.‟ Mobile Marketing
Watch. 30 Dec. 2009. Available online at http:///www.mobilemarketingwatch.com. Accessed 30 Jan 2011.
10. Mexico Pharmaceuticals & Healthcare Report Q4 2010. Business Monitor International. Jul. 2010.
11. Peru Pharmaceuticals & Healthcare Report Q4 2010. Business Monitor International. Sept. 2010.
12. “Population mid-2025 (projected).‟‟ Population Reference Bureau. PRB 2010 World Population Data Sheet.
13. „The Pharmaceutical Markets in Latin America USD41 Billion – and Growing Fast.‟‟ Business Wire. 18 Jan. 2011.
14. „The World Bank, Pharmaceutical Policies and Health Reforms in Latin America.‟ International Journal of Health
Services. Vol. 35, No. 4, 2005: 691-717.
15. US Census Bureau International Database. Available online at http://www.census.gov/ipc/www/idb. Accessed 31
Jan 2011.
16. Venezuela Pharmaceuticals & Healthcare Report Q4 2010. Business Monitor International. Sept. 2010.