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Latin America’s Pharmaceutical Market In 2015

With one of the fastest growing populations, an increasing elderly demographic and a growth in chronic diseases has made Latin America’s pharmaceutical market a hotbed of activity. Coupled with improvements in investment within the national healthcare systems of Latin America and an attractive clinical trial environment, pharmaceutical companies around the world are turning their attention and investments towards the region. Between 2010 and 2015, Latin America has seen an annual growth of 10 per cent in its pharmaceutical market with the world average growth during the same period, remaining at 4 per cent. Latin America is now one of the world’s fastest growing pharmaceutical markets in the world.

The Driving Forces Behind Latin America’s Pharmaceutical Market Growth

Latin America’s pharmaceutical growth is mainly being driven by the continued urbanization, the increased access to education and a growing representation of women working which is in turn increasing the average household income. The middle-class of Latin America has long been under the watchful eye of multinational organizations around the world due to a surge in the number of Latin Americans with a greater spending power. Between 2002 and 2009, Latin America’s middle-class grew by 60 million whereas by comparison, Asia’s middle-class grew by just 49 million. Pharmaceutical salesare being driven by this newly-established middle-class of Latin Americans who are getting older and wealthier by the day and increasingly visiting their pharmacy.

Consumption Patterns To Shape Latin America’s Pharmaceutical Market

By 2017, it is predicted that Brazil will become the fourth largest pharma market behind the United States, China and Japan. However, it will surprisingly not be the multinational pharmaceutical companies that see all the benefits from the region’s growth as the real winners will be Latin America’s generic drug makers and locally owned retailers. Consumer patterns in the region have shown an increased use of generic drugs which is a result of the national governments seeking to increase healthcare access at lower costs. These local generic drug producers are the driving force behind Latin America’s pharmaceutical market and are manufacturing branded as well as private labelled products for pharmacy chains. With a year on year growth in the number of local producers, generic drugs can be sold in Latin America’s domestic market at a price which can reach up to 70 per cent lower than their patented counterparts.

The Growth Of Latin America’s Pharmacy Chains And Supermarkets

As access to healthcare increases and Latin Americans enjoy the accessible prices of generic drugs, the pharmacy retail market is quickly evolving and expanding. A Mexican medical wholesaler, Nadro, indicated that pharmacy chains and supermarkets went from controlling 69 per cent of Mexico’s pharmaceutical sales in 2007 to 88 per cent in 2014. The number of independent owners has therefore decreased in Mexico with large organizations such as Wal-Mart beginning to tap into Mexico’s pharmacy market as well as local pharmacy chains being acquired by large organizations such as FEMSA. With fewer potential distributors for drug and over-the-counter manufacturers, the pharmaceutical retail segment will have a simplified sales process and an increased reliance on just a few major retailers. In the future this may lead to established product manufacturers encountering severe disruptions in their longstanding practices due to aggressive negotiations between retailers and their suppliers posing a potential risk to unsuspecting suppliers. Wholesale margins may also be squeezed as a result of a growth in the number of pharmacy chains which may lead to this segment reinventing itself as with their increased negotiation power, large retailers may seek to bypass this segment altogether.

A Bright Future For Medical Devices & Latin America

The growing middle-class of Latin America is causing a boom in the market of private clinics, private hospitals and private health insurance. As this happens, the market for medical devices and equipment is set to continue to mimic this growth presenting even more opportunities for manufacturers. With this in mind, Latin America has become a strong bet for pharmaceutical companies looking for future growth as the region’s economy continues to expand. While Mexico and Brazil accounted for almost 60 per cent of Latin America’s pharmaceutical sales in 2012 and will continue to dominate the marketplace, pharmaceutical companies looking for additional growth will begin to turn to countries such as Colombia, Chile and Peru all of which present strong, future growth prospects.

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