Colombia Pharmaceuticals and Healthcare Report Q2 2009

In BMI's updated Business Environment Ranking table for the Americas, Colombia's score has remained the same, again ranking the country fifth out of the 10 major markets in the region. While the rising population numbers and a steady forecast market growth represent considerable draws for foreign companies, the persistent problems regarding its intellectual property (IP) environment - as well as the higher attractiveness of other larger and better regulated Latin American markets - will continue to hamper foreign direct investment (FDI) over the coming years.

Colombia's drug market compound annual growth rate (CAGR) in local currency terms is forecast at a solid 11.56%, similar to the US dollar CAGR, which is expected at 12.04%. In theory, the future ratification of the penned Free Trade Agreement (FTA) by the US should provide a legal basis to continue to improve enforcement to meet its treaty obligations, although continued delays to the ratification of the deal are breeding uncertainty.

On a positive note, there has been an increase in the presence of non-profit organisations addressing Colombia's healthcare needs, to the tune of US$81mn in 2005. In light of mounting evidence of the country's exposure to the global economic downturn, BMI's Country Risk team believes Colombia will be unable to escape a recession in 2009. The GDP growth forecast has been revised downwards, from 2.9% and 4.5% in 2009 and 2010, respectively, to 2.1% and 3.9%. This will further reduce the government's focus on improving the country's healthcare systems, leading to more non-profit institutions entering the country. In fact, given that price rises in private healthcare are the second-largest component of top-line inflation figures, alternative funding sources will be crucial for ensuring adequate access to healthcare and ensuring that certain social groups (such as indigenous and female population) are not further disadvantaged.

Colombian private health insurance firms have recently been criticised for failing to provide care for HIV/AIDS patients. The United Nations Program on AIDS (UNAIDS) has expressed serious concerns over the absence of a transparent national strategy that has left private health insurers with little or no incentives to provide relevant treatments for affected patients. Nevertheless, according to the latest report by UNAIDS on the global HIV/AIDS epidemic, Latin America is performing better in terms of scaling up access to antiretroviral (ARV) drugs compared with rates of coverage in other low- and middle-income countries. However, a perception that the price of treatment in Latin America is high compared with other regions is leading to mounting pressure on Latin America's leaders to talk tough on perceived overpricing of ARVs. A number of non-governmental organisations (NGOs) have already petitioned the Colombian government to issue a compulsory licence for one ARV, following failed requests that its manufacturer voluntarily lowers the drug's price.