Latin American Market for Generic Drugs

Rapid growth, high unmet clinical needs and increasing regulation are changing the face of Latin American pharmaceuticals. What are the opportunities and challenges for companies and investors wanting to develop or enter this growing market? This major strategic study compares 7 key markets.

Key Areas Addressed:

• 5-Year market forecast to 2010
• Analysis of trends
• Intellectual property protection
• GMP/bioequivalence progress
• Health provision and plans
• Domestic production and review of leading companies

Answering important questions about the future of generic drugs in Latin America

What effect is the move to better GMP and bioequivalence having on the market now, and what impact might it have on domestic companies in the future?

Patents and intellectual property have risen to the top of the industry's agenda, but is there political will to enforce compliance?

What role are ambitious Indian generic manufacturers taking in the region and what is their on going impact likely to be?

In 2005, the generic sector in Latin America was valued at US$1.7 billion, which represented a 26.9% increase over the 2004 figure of US$1.3 billion. Regional generic expenditure per capita stood at US$3.8. Venezuela had the highest expenditure per capita at US$8.0, followed by Argentina at US$5.8.

Throughout the region, pharmaceutical patenting remains a relatively new concept - and an on-going issue. Many countries have local industries geared to producing branded versions of drugs still under patent in their country of origin. These copycats tend to be priced cheaper than branded originals, and this diminishes 'pure' generic penetration.

The traditional proliferation of non-bioequivalent, branded generic or copycat products is slowly being replaced by the steady introduction of bioequivalent generics in Latin America. In an effort to increase local demand, raise awareness and increase export opportunities, bioequivalence standards are slowly being implemented.

Argentina

The generic sector was valued at US$180 million in 2004, compared to US$121 million in 2003. Around 78.2% of generic sales take place in the hospital sector. Pharmacy penetration is very low; generic pharmacy sales stood at US$26.4 million in 2003, equal to 1.4% of the total. The international industry argues that most of the 'generics' available in Argentina are copy products rather than true generics because they do not have to demonstrate bioequivalence with the originator products.

Brazil

The National Medicines Agency (ANVISA) has increased the number of generic registrations and presentations in recent years. By July 2005, 58.5% of generic registrations and 22.2% of total presentations had been marketed. Generics are outperforming the overall pharmacy sector and the pharmaceutical market as a whole. Between January and October 2005, generics increased their pharmacy market share by 1.5% in value. Sales in the first nine months of 2005 reached US$486.5 million, which represented a 52% increase over the same period in 2004.

Chile

Due to low prices, generic penetration is very high in volume terms, compared to Chile's neighbours. In 2004, there were 76.2 million generics units sold, equal to 39.6% of the pharmacy sector. The average price of a generic medicine stood at US$0.9 in 2004, compared to US$4.4 for a branded generic and US$7.6 for an original drug. TRIPS-related patent enforcement and the new health reform will increase pharmaceutical spending in the long term. Domestic manufacturing is expected to shift from copycats to originals and generics under licence from multinationals, a trend that could see many smaller manufacturers merge or be acquired by larger groups.

Colombia

Prescription medicines accounted for 80% of the pharmacy sector in 2003, equal to US$712 million at manufacturers' prices. Bioequivalent generics accounted for 12.6% of the POM sector, or 10.1% of the pharmacy sector in 2003, equal to US$90 million. The healthcare reform programme has been instrumental in boosting consumption of pharmaceuticals; growth has been largely in volume terms, since the drugs eligible for reimbursement are primarily cheap generics.

Mexico

Mexico has a small generic sector in comparison to its pharmaceutical market size. Local producers are SMEs but only a few are equipped to demonstrate bioequivalence. But this has to change, as new rules were enforced in 2005. Bioequivalent generics are expected to penetrate the market of similar drugs and explore new markets. There is a new wave of generic producers looking for business opportunities in Mexico.

Peru

The Peruvian generic sector is expected to increase by 6% annually in the next five years, reaching US$179 million by 2010. Pharmacy sales of generics represented 21% of the total in 2005, equal to US$28 million. They are expected to increase by 7% annually in the next five years, reaching US$39 million by 2010. According to Espicom estimates, the generic sector represented 19.6% of the pharmaceutical market as a whole in 2005. Pharmacy sales of generics represented 4.1% of the pharmaceutical market as a whole or 7.2% of the overall pharmacy sector in 2005, which is a relatively high percentage.

Venezuela

Generics (branded & unbranded) are between 20% and 70% cheaper than original drugs. Price continues to be their distinctive advantage. Price competition between generic producers, however, has put the average price of generics at US$2.3 in 2005, compared to US$3.3 in 2001. As a result, growth in generic sales fell to 10.7% in 2005, reaching US$221 million. Currently, there are 1,934 generic presentations in the Venezuelan pharmaceutical market, which represent 20.7% of the total. The generic sector comprises around 87 companies, but four leading producers concentrate around 75% of the sector by volume.