Peru Pharmaceuticals and Healthcare Report Q2 2009

In BMI's updated Business Environment Rankings (BER) for Q209, Peru remained second-bottom in the matrix assessing ten major markets in the Americas. A small market size and a deficient intellectual property (IP) environment - including the tolerance for non-bioequivalent similares and widespread counterfeiting - represent some of the major drawbacks to the involvement of foreign companies.

Nevertheless, Peru offers considerable longer-term benefits to foreign companies, not least due to its rising population numbers and solid GDP growth in recent years. A recently ratified trade agreement with the US is expected to be enforced in the course of 2009, thus leading to improvements in the intellectual property (IP) regime, but also to more intense competition to local players. In order to address such changes, local pharmaceutical manufacturers' association announced that it plans to invest US$15mn in manufacturing and research processes in the course of 2009.

However, downward pressure on prices - largely a factor of the strong competition in the chaindominated pharmacy retail sector and the government's continuing support for copy and generic medicines - is likely to lead to Peru's pharmaceutical market posting a modest compound annual growth rate (CAGR) of 6.04% in local currency terms through to 2013, though this envisages the strengthening of local currency. In 2013, the market value should reach PEN3.64bn (US$1.35bn) at consumer prices, rising from PEN2.72bn (US$0.885bn) in 2008.

In the meantime, Peru has been recording improvements in child and maternal health indicators, local press reported in February 2009 that the most recent edition of the UNICEF's The State of the World's Children noted that Peru has made considerable progress in reducing child and maternal deaths.

According to UNICEF, childhood under-five mortality fell by 74% in the period between 1990 and 2007, although maternal mortality is still among the highest in the region. Consequently, the Ministry of Health and UNICEF-Peru have teamed up to create a maternal health project, creating new maternal waiting houses 'Mamawasi' in order to address problems posed by geographic distance from health services. Peru currently has some 400 Mamawasi, mostly in the highland regions, all of which are operated by local health centres or hospitals.

Other positive developments include the January 2009 introduction of stricter phytotherapeutics regulations. As South America is rich in diverse flora, the successful harnessing of biological compounds can boost the local pharmaceutical industry. The new rules are expected to create a biodiversity list or framework, which will include all of the traditional medicines used by the native population, as well as provide legal protocols for pharmaceutical firms that may be interested in finding new drugs from biomatter.

Moreover, illustrating Peru's increasing attractiveness for foreign research companies, clinical research organisation (CRO) Parexel recently opened a base in Peru's capital, Lima.