The Pharmacuetical Market In Latam In 2020

The Pharmaceutical Market
in Latin America in 2020
NextLevel Pharma:
Pharmaceutical Market & Patient Access in
Latin America
February 7, 2011
James A. Cercone
President
Sanigest Internacional

w w w . s a n i g e s t . c o m

© Sanigest 2005 Original Página 1

Today‟s Discussion

• Latin America pharmaceutical market
size and characteristics

• Factors affecting pharmaceutical
supply and demand

• Market access models: Limitations
and Potential for growth


As of 2009, the
pharmaceutical market in
Latin America was worth over
40 billion USD and is expected
to increase to 63 billion USD
by 2012

Source: Business Wire 2011


Where are we now? Market size in 2009 (USD)

Colombia
2.24bil. Venezuela
Mexico 3.5bil.
13.0bil.

Central America
(excluding Mexico) Brazil
Peru 16.9bil.
accounted for over
1.25bil.
2 bil. USD

Other Latin
American Argentina
Chile 3.37bil.
countries
1.04bil.
accounted for
nearly 1 bil.
Source: BMI country reports Q4 2010

Market Share, 2009

LA market is highly consolidated. Five countries = 90% of market size.

Market size (bil. USD) Cumulative % of market
18 100%

Cumulative % of market
16 90%
Market size (bil. USD)

14 80%
12 70%
60%
10
50%
8
40%
6 30%
4 20%
2 10%
0 0%

Source: World Bank and BMI country reports Q4 2010

Market Share by Country, 2009

2% Argentina
5% 8% Brazil
Mexico
8%
2% Colombia
3% Peru
Chile
Venezuela
5%
Other
38% Central America

Brazil, Mexico and
Venezuela account
29% for the largest
proportions of the
Latin American
pharmaceutical
Source: World Bank and BMI country reports Q4 2010 market

Expected market size (bil. USD), 2009 - 2019
Market size should more than double in the next ten years…In high scenario,
market would reach US$90 billion in 2019.

40
30

Billions
Billions

35
25
30
20
25
15 20
2009 2009
10 15
2014 2014
10
5 2019 2019
5
0
0

Source: World Bank, BMI country reports Q4 2010 and Sanigest Projections

Per capita drug expenditure vs. income level
GDP, 2009
Rising incomes per capita will contribute to faster growth…

Drug
expenditure is
expected to
increase as
income level
increases

Per capita drug expenditure, 2009-2019 (USD)
$250
Argentina
Drug expenditure per capita (USD)

Brazil
$200 Mexico
Colombia
Venezuela
$150
Chile
Peru

$100

$50
Increasing per capita
drug expenditure
through 2019 – notably:
$0 Brazil ($228),
2009 2014 2019 •Mexico ($211)
•Argentina ($210)

On average, per capita drug
expenditure is expected to
increase from $77 pp in 2009
to $129 pp in 2019


Pharmaceutical Market by Sub-Sector
• By value, represents
largest pharmaceutical
Patented sub-sector
• Decreasing market
share forecasted
through 2019

• Marked increase in
market share forecasted
Generic through 2019
• Subject to price ceilings
in most of Latin America

• Growing sub-sector
• Opportunities depend
on ‘’switching
OTC procedures’’
• Generally under free
pricing

Pharmaceutical market size (USD) by sub-
sector, in billions, 2009
16
OTC Generic Patented
14

12
Market size (bil. USD)

10

8

6

4

2

0
Brazil Mexico Argentina Venezuela Colombia Chile Peru

Example: Composition of Mexico‟s pharmaceutical
market by drug type and product origin
Type Percentage of market Unit price
Value Volume Non-patented =
100
Patented 20.4 4.4 5.5
innovative (from
one source)
Non-patented 79.6 95.6 1.0
(from multiple
sources)
• Non-branded 11.4 34.4 0.4
generics*
• Branded 17.9 19.6 1.1
generics
• Branded** 50.3 41.7 1.5
*This includes medicines known as ‘interchangeable generics’
**This includes innovated non-patented products, non-patentable products and copy products which were introduced in
the market prior to the original product’s patent expiring.
Source: IMS Health 2009

Today‟s Discussion

• Pharmaceutical market size: Where
are we now?

• Factors affecting pharmaceutical
supply and demand

• Market access models: Limitations
and Potential for growth


Undermining the pharmaceutical market…

One survey showed that
An estimated 7-22% of
50% of Latin Americans
drugs on the market in
use under-the-counter
Latin America are
(UTC) drugs on a regular
counterfeit
basis


Distribution Channels
• Public health insurance vs. pharmacies
– Patented medicines not always stocked by public sector
pharmacies
– Consolidation of pharmacy chains: Retail sector controlled by
few main pharmacies – vulnerable to collusion

• Penetration of private pharmacies into new markets
– Increasingly rapidly (11% increase in 2009 in Argentina alone)
– Dominated by high price branded medicines
– Introduction of private pharmacies could spur pricing wars
– Possible shift to private pharmacy dispensing for public systems
could drive sales.

• Possibility of regional purchasing for Central America would
create regional purchasing pool putting pressures on margins.

Factors affecting pharmaceutical supply and demand

Final determination of market size depends on
interaction of demand and supply with the health
system

Demand

Supply

Health
System


Factors affecting pharmaceutical supply and demand

Market access strategies and estimates of demand
should be based on realistic assessment of interaction
of health systems factors for each product…
Financing

Access
Market Regulation
Access

Staff


Trend: Data Driven Approach

Market access strategies
should look carefully at
population segmentation,
insurance coverage and
expansion of access and
technology.


Looking Ahead

Three factors affecting pharmaceutical demand:

1 Epidemiological and demographic
shifts

2 Global economic climate
3 Expanding national health insurance

Age standardized DALYs (per 100,000 pop.) by
cause
Countries are moving from a high communicable
disease burden to a high chronic disease burden

Chronic disease care will require
long-term and/or high tech
pharmaceutical solutions

High Income Country
Disease Profile


Demographic Shift: increased overall demand and demand
for specialized care (geriatric, chronic disease, etc.)
Population over 40 will increase from177,881,896 in 2009 to 293,140,656 in 2030
Population Boom Demographic Aging
Population 2025 % increase (2010-2025) 0-14 15-64 65+
250 25
100
Millions

90
200 20 80
Total population

70

% increase
150 15 60
50
40
100 10
30
20
50 5
10
0
0 0
Colombia
Chile
Peru
Argentina
Brazil

Venezuela
Mexico

Source: Population Reference Bureau, CIA World Fact book, US Census Bureau

Demographic Shift
Population 2010 Population 2030
100+ 100+
95-99 Female 95-99
90-94 90-94
Male Female
85-89 85-89
80-84 80-84 Male
75-79 75-79
70-74 70-74
65-69 65-69
60-64 60-64
55-59 55-59
50-54 50-54
45-49
45-49
40-44
40-44
35-39
35-39
30-34
30-34
25-29
25-29
20-24
20-24
15-19
15-19
10-14
10-14
5-9
5-9
0-4
0-4
40 20 0 20 40
40 20 0 20 40
Millions
Millions

Over 70 age group has most drug users, so as
Source: US Census Bureau Int’l Database
and Norwegian Institute of Public Health
countries age, drug consumption is expected to
increase

Looking Ahead


shifts


Global Economic Climate

• Increased cost for energy and importing raw
goods for production
Inflation • Rising consumer prices lowers demand

• Cost-pressure on government spending
• High unemployment depresses consumer
Spending spending

• Weakening Latin American currencies vs.
USD
Currency • Affect of shifting exchange rates on imports


Looking Ahead


shifts


As a general trend, Latin American governments are investing more in
healthcare

Healthcare expenditure (USD) as a % of GDP, 2005-2019
12
Argentina
Healthcare expenditure as % of GDP

10 Colombia
Mexico
Peru
8
Venezuela
Brazil
6 Chile
Other
4

Increased healthcare
2 spending in:
Colombia
•Mexico
0
•Peru
2009 2014 2019
•Brazil

Market Trends
Colombia is
expecting
Mexico is universal and Venezuela is
implementing unified health negotiating
universal coverage by drug price
health 2014 increases
coverage

Peru is
increasing per
These 7 capita drug
Argentina is
expenditure
countries planning to
represent a increase
pharma
market of 468 Chile is
access
increasing
million people insurance
and GDP of 2.7 coverage

trillion USD
Source: Business Wire and BMI country reports Q4 2010

Health insurance coverage

100%
Mexico and Costa
90% Rica have the highest 0.2% 2.8%
19.6%

80%
levels of public
coverage (87%) 17.6%

70%
2.0%
Population coverage

60%
7.9% 42.0%
50%
1.8%
86.8% 87.0%
40% 80.4%

10.0% 30.0% 67.1% 68.3%
30%
51.2%
45.0%
20% 5.0%
3.3% 34.4%
28.1%
10% 4.0% 18.0% 18.3%
15.1%
7.7%
0%
Uruguay

Chile
Honduras

Argentina
Guatemala
Nicaragua

Peru

Venezuela

Brazil
Mexico
Colombia
El Salvador

Costa Rica
Public Private


Effects of Health Insurance Coverage on
Pharmaceutical Markets
• Expanding health insurance coverage
– Increased drug consumption as more people
are covered and reduces ‘co-pay’

• Potential for group purchasing of branded
drugs – expands access but pressure on unit
prices

• Pharmacoeconomics as an influence on
pharmaceutical supply
– Using Health Technology Assessment (HTA)
to evaluate cost-effectiveness of treatment
options

Looking Ahead

Three factors affecting pharmaceutical supply:

1. Pricing and reimbursement

2. Global economic climate

3. Technology: mHealth


Pricing and Reimbursement

2011 emphasis on procurement and un-regulated private pricing should
shift to more regulated P&R schemes with reference pricing, discounting
and more aggressive pharmacist distribution.

Increasing interest in LA to use HTA, or pharmacoeconomics for
formulary and pricing decisions.
Price Prior
Discounts
Freezes authorization

Pharmacist
substitution Positive &
P&R measures in Latin America
Negative
OTC
Substitution
Reference Patient co- Rebate &
Pricing pay taxes


Pricing and Reimbursement

Large
Increase Private
Increase in formal Insurance Market
labor market 
social insurance
Growth of Middle • Private insurance
Class greater pressure
• Increase access to reimbursement
Market social insurance control, more
Size • Middle-of-Pyramid reduces OOP and interest in branded
driving shifts purchasing to differentiate.
consumption
• Increased access
to private
pharmacy
Small
Low High
Pressure on P&R


What‟s on the horizon for pharmaceutical
pricing?
• Expanding use of “procurement auctions” to
obtain value for money in social security
purchases: example Mexico IMSS and Chile
• Increasing use of reference pricing for public
and private sectors
• Tightening of private distribution of
prescription drugs
• Increasing consolidation of public coverage
of the population  reduction in out-of-
pocket private spending.
• Introduction of Pay-For-Performance scheme
for expanding use of innovators

Looking Ahead





Trend: Mhealth

Mhealth has the potential to be
a disruptive technology for
pharma industry…

…Early innovators may
capture market share


mHealth Pharmaceuticals

Incidence of mhealth on pharma industry

Controlling
Counterfeit

Chronic
Compliance
care

Supply
Payments
Chain

Adherence
Source: Healthcare on Mobiles 2010

mHealth: Adherence and Chronic Care
Offers unique opportunity for communication with
patient

Improved patient adherence
• Studies show improved TB, HIV drug adherence
• Improved adherence to glucose control and weight loss
programs

Evidence suggests
Improved patient outcomes that successful
trials and pilot
• Link patient biomarkers to dosing programs could be
• Improved glucose control easily adapted to
• Better/faster diagnostic testing the Latin American
context


Evidence for mHealth
Study Impact

Mobile Phone-Based Remote Patient Monitoring System  Average 24-h BP fell by 11 /5 (+/- 13/7 SD) mmHg a difference of
for Management of Hypertension in Diabetic Patients 35% from baseline
(Logan et al. 2007)  Overall, BP improved significantly

“Comparison of an SMS text messaging and phone  Subjects who received a text message reminder were 60% more
reminder to like than controls to attend their health appointment
improve attendance at a health promotion center:
A randomized controlled trial “ (Chen et al. 2008)

“A randomized control trial of Sweet Talk, a text  Patients with Sweet Talk and intensive therapy had a decrease of
messaging system to support young people with 9.2% (+/- 2.2%) in their blood glucose. Other groups had no
diabetes” (Franklin et al. 2006) significant change
 No impact on knowledge score

“A randomized trial of a proactive cellular telephone  Those receiving the mobile intervention were 3.6 times as likely to
intervention for smokers living with HIV/AIDS “ quit smoking at 3 months than controls
(Vidrine et al. 2006)

“Using internet and mobile technology to deliver an  The intervention group lost significantly more body fat and had
automated physical activity program: randomized significantly more physical activity than the control group
controlled trial” (Hurling et al. 2007 )

SIMpill  Treatment success 94% with SIMpill (compared to 71% nationally
with standard DOTS)


More cost-benefit
research is needed to
guide development of
scalable business
models for pharma in
mhealth

Future Forces


Conclusions
• Epidemiological and demographic shifts will increase overall
demand for pharmaceuticals

• Increased government investment in healthcare and
expenditure on pharmaceuticals through 2019

• Trends like mHealth could increase pharmaceutical sales
through:
– Increased patient compliance and preference for branded drugs
tied to mHealth technology

• Likely shift to reference pricing

• Increased insurance coverage
- Pharmacoeconomics influence on drug supply
- Potential for group purchasing


Thank you for your Attention
Contact Information

James A. Cercone
jcercone@sanigest.com


Works Cited
1. Argentina Pharmaceuticals & Healthcare Report Q4 2010. Business Monitor International. 10 Jul. 2010.
2. Brazil Pharmaceuticals & Healthcare Report Q4 2010. Business Monitor International. Sept. 2010.
3. Chile Pharmaceuticals & Healthcare Report Q4 2010. Business Monitor International. Sept. 2010.
4. CIA World Factbook. Available online at http://www.cia.gov. Accessed 23 Jan. 2011.
5. Colombia Pharmaceuticals & Healthcare Report Q4 2010. Business Monitor International. Aug. 2010.
6. „Drug Consumption in Norway – A Fact Sheet.‟‟ Norwegian Institute of Public Health. 5 Jul. 2010.
7. Global Infobase. WHO. Available online at http:///Infobase.who.int. Accessed 21 Jan. 2011.
8. Image of Latin America available online at http://www.worldatlas.com. Accessed 24 Jan. 2011.
9. „Kaiser Permanente Teams With mobileStorm for SMS Reminders, Sees 30% Cost Savings.‟ Mobile Marketing
Watch. 30 Dec. 2009. Available online at http:///www.mobilemarketingwatch.com. Accessed 30 Jan 2011.
10. Mexico Pharmaceuticals & Healthcare Report Q4 2010. Business Monitor International. Jul. 2010.
11. Peru Pharmaceuticals & Healthcare Report Q4 2010. Business Monitor International. Sept. 2010.
12. “Population mid-2025 (projected).‟‟ Population Reference Bureau. PRB 2010 World Population Data Sheet.
13. „The Pharmaceutical Markets in Latin America USD41 Billion – and Growing Fast.‟‟ Business Wire. 18 Jan. 2011.
14. „The World Bank, Pharmaceutical Policies and Health Reforms in Latin America.‟ International Journal of Health
Services. Vol. 35, No. 4, 2005: 691-717.
15. US Census Bureau International Database. Available online at http://www.census.gov/ipc/www/idb. Accessed 31
Jan 2011.
16. Venezuela Pharmaceuticals & Healthcare Report Q4 2010. Business Monitor International. Sept. 2010.


The Pharmacuetical Market In Latam In 2020

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