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What are general trends and opportunity areas in Latin America in general among small-to-mid size pharmaceutical companies?
Hello! Thanks for your question about the general trends and opportunity areas in Latin America in general among small-to-mid size pharmaceutical companies. The short version is that Latin America is presently a major market for the pharmaceutical industry, with generics and R&D playing emerging roles. However, we were unable to identify small to mid-size Latin American companies that would facilitate entry into that market. Below you will find a deep dive of my findings.
METHODOLOGY AND FINDINGS
We exhaustively researched this issue but were unable to identify small to medium-sized pharmaceutical firms in Latin America that present attractive growth opportunities. The research that we conducted in various trade journals, financial and industry websites repeatedly focused upon on large corporate pharmaceuticals that are moving into the region and that currently have a significant percentage of the market share. Nevertheless, while we were unable to locate companies within the parameters of the inquiry we did obtain information that should be of benefit to you.
OVERALL GROWTH POTENTIAL IN LATIN AMERICA
The pharmaceutical industry in Latin America is a robust $100 billion industry. From 2008 through 2012 the market grew at an annual average of 12 percent, after which it slowed somewhat to a current growth rate of 12 percent. The largest market is found in Brazil, which boasts an overall value of at least $26 billion (as of 2011) and a 10 percent growth rate. Brazil is followed by Mexico, which generates annual revenues of $12 billion. The top two countries are followed by Venezuela, Chile and Peru. It is noteworthy that Argentina has trade policies that are very protectionist and this has resulted in local companies accounting for 57 percent of the pharmaceutical revenue in that country.
MARKET GROWTH IN OTHER REGIONS
The Latin America market is one of the fastest growing pharmaceutical markets in the world. This growth has resulted from an aging population, an increase in chronic diseases, national healthcare systems that are better funded and an attractive environment that encourages clinical trials. Asia is the only other market that is presently matching the 12% growth rate in Latin America. Meanwhile, markets in North America, Europe and Japan have seen a modest 3% growth rate from 2008 through the present.
MARKET OPPORTUNITIES IN LATIN AMERICA
While the market continues to grow in Latin America the research suggests that opportunities vary widely, due, in part, to the fact that the region is made up of 22 different countries, many of which have very different trade policies.
The market for small to medium-sized companies does not look promising throughout Latin America. For example, some countries tend to welcome major multi-national companies. Brazil is becoming extremely attractive to large multinational companies, such as Merck and CVS. The Brazilian biologics market is also well in the hands of multinational companies. And Brazil's pharmaceutical trade association has now entered into agreements with Middle Eastern and North African countries to promote trade. Pharmacy chains and supermarkets now control 69% of the Mexican market. Walmart is showing signs of entering the Mexican market as well. In short, the market in Mexico is consolidating and is rapidly squeezing out the smaller companies. Argentina has recently signaled that it is open to allowing Indian companies to fully develop its drug market.
If small to medium-sized companies are to gain a competitive foothold in the Latin American pharmaceutical market it would seem that they would need to be companies that are local to the region. Some countries such as Venezuela pursue much more protectionist policies that discourage market penetration by the larger chains. Argentina is another country that is protectionist. Domestic companies hold a 57 percent market share of the pharmaceutical market in that country and over 70 percent of the pharmaceuticals sold in Argentina are "home-grown." But even so, Argentina, as mentioned above, is openly inviting Indian companies to enter its market. Chili has pursued the same protectionist policies that have kept multi-national companies away (though this is slowly changing). Peru is less protectionist, but national companies nevertheless tend to hold a majority share.
Small to medium-sized companies do seem to have one area in which they can compete (even in countries such as Brazil). That is in the production of generic drugs. The local manufacturers of generic drugs in Latin America were growing at a rate of 28 percent in 2015. But even here the market is beginning to see international conglomerates exercising their buying power in efforts to control the market. The top local companies in Latin America (though not small) are Ache Labs, Eurofarma, Roemmers and Neo Quimica. The market in Argentina is currently the best generic market in Latin America. That market is presently headed by larger companies such as Laboratorios Raffo, Driburg, Grupo Bago and Biosidus. However, there are other companies such as Amarin Technologies, S.A., Baliarda, S.A., Biogenesis Bago, S.A. (specializing in animal health), Gador, S.A. and Gerardo Ramon y Cia. S.A.I.C. that, while smaller in size than the larger firms, are nonetheless not small businesses as that term is typically used.
R&D is another major area that is growing in Latin America. The countries in the lead in R&D are Brazil, Bolivia, Colombia, Ecuador, Peru and Venezuela. These are countries that are, at present, open to companies of all sizes, including small pharmaceutical companies and generics. R&D is an industry that is not well developed in Latin America, which should present sound opportunities in the above-listed countries.
POSSIBLE CONTINUED RESEARCH
Part of the problem in researching this issue is that the market in Latin America varies widely. As indicated above, some countries, e.g. Brazil and Mexico, are quite open to multinational corporations, while others like Venezuela are more restrictive and have environments that are more conducive to domestic, smaller corporations. You might consider targeting specific countries or regions in order to acquire a better, site specific, overview of the marketplace. Likewise, targeting specific types of pharmaceuticals, e.g. generics or R&D, in specific countries could be helpful.
CONCLUSION
To wrap it up, after searching extensively through data on Latin American pharmaceutical companies we were unable to identify specific small to medium-sized pharmaceutical companies that would be responsive to your inquiry. However, we did learn that Latin American countries seem to be either very protectionist or open in their pharmaceutical policies and that two areas, generics and R&D are presently growing and should present growth opportunities for small and medium-sized companies.
Thanks for using Wonder! Please let us know if you'd like to continue research on any of the other topics outlined above!