Colombia Pharmaceuticals and Healthcare Report Q1 2007

During the first few months of 2007, the dominant talking point has been the free trade agreement (FTA) with the US, whose format was finalised in November 2006 and whose ratification by both the Colombian and US congresses is believed to be imminent. For the research-based pharmaceuticals industry, the key benefit of the FTA would be more stringent patent protection, although the trade association AFIDRO is at pains to point out that the FTA merely includes measures that guarantee the correct and efficient application of norms that have existed in Colombia since 2002. AFIDRO also stresses that contrary to some of the scare stories generated by the generics industry, the FTA would not lead to fewer generics, given that the tighter patent protection will not be retroactive to include medicines that have already been approved. Another significant development was the approval in January 2007 of Law 1122, which aims to improve social security healthcare provision. In doing so, the law has provided for the creation of the CRES (Commission of Health Regulation), which will operate under the auspices of the Ministry of Social Protection and will replace the CNSSS. The role of the CRES will include overseeing the mandatory contribution schemes (i.e. the POS) and updating at least once a year the list of essential medicines and generics that form part of the benefit plans.

Meanwhile, in terms of future prospects, the structure of the market is unlikely to change in the short term, with the prescription sector accounting for 83% of market value and worth US$3.31bn at year-end 2011. In terms of overall sales, the market is expected to approach US$3.89bn by year-end 2010. In 2006, Colombia's overall pharmaceuticals market increased by 19% in dollar terms to reach US$1.97bn, while growth in local currency was a slightly more modest 16%. The market can be split down into a prescription market worth US$1.67bn (up 19%) and an OTC market worth US$310mn (up 22%). Meanwhile, the share taken by generics (not including similares) was fairly stable at around 39%. BMI may revise Colombia's position in our regional Business Environment Ranking later in 2007, pending further developments in healthcare sector legislation. However, the country's current low ranking - in equal fifth place with Venezuela - illustrates the high level of risk to the local operations of R&Dbased foreign companies in Colombia.