The Pharmacuetical Market In Latam In 2020

© Sanigest 2005 Página 1Original

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

The Pharmaceutical Market

in Latin America in 2020

James A. Cercone

President

Sanigest Internacional

NextLevel Pharma:

Pharmaceutical Market & Patient Access in

Latin America

February 7, 2011


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)

Mexico

13.0bil.

Colombia

2.24bil. Venezuela

3.5bil.

Brazil

16.9bil.

Argentina

3.37bil.Chile

1.04bil.

Peru

1.25bil.

Central America

(excluding Mexico)

accounted for over

2 bil. USD

Other Latin

American

countries

accounted for

nearly 1 bil.

Source: BMI country reports Q4 2010


Market Share, 2009

Source: World Bank and BMI country reports Q4 2010

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

0

2

4

6

8

10

12

14

16

18

Cu

mu

lati

ve

% o

f m

ark

et

Mark

et

siz

e (

bil.

US

D)

Market size (bil. USD) Cumulative % of market

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


Market Share by Country, 2009

8%

38%

29%

5%

3%

2%8%

2%5%

Argentina

Brazil

Mexico

Colombia

Peru

Chile

Venezuela

Other

Central America

Brazil, Mexico and

Venezuela account

for the largest

proportions of the

Latin American

pharmaceutical

marketSource: World Bank and BMI country reports Q4 2010


Expected market size (bil. USD), 2009 - 2019

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

Market size should more than double in the next ten years…In high scenario,

market would reach US$90 billion in 2019.

0

5

10

15

20

25

30

Bil

lio

ns

2009

2014

2019

0

5

10

15

20

25

30

35

40

Bil

lio

ns

2009

2014

2019


Per capita drug expenditure vs. income level

GDP, 2009


Drug

expenditure is

expected to

increase as

income level

increases

Rising incomes per capita will contribute to faster growth…


Per capita drug expenditure, 2009-2019 (USD)


$0

$50

$100

$150

$200

$250

2009 2014 2019

Dru

g e

xp

en

dit

ure

per

cap

ita (

US

D)

Argentina

Brazil

Mexico

Colombia

Venezuela

Chile

Peru

Increasing per capita

drug expenditure

through 2019 – notably:

Brazil ($228),

•Mexico ($211)

•Argentina ($210)



On average, per capita drug

expenditure is expected to

increase from $77 pp in 2009

to $129 pp in 2019


Patented

• By value, represents largest pharmaceutical sub-sector

• Decreasing market share forecasted through 2019

Generic

• Marked increase in market share forecasted through 2019

• Subject to price ceilings in most of Latin America

OTC

• Growing sub-sector

• Opportunities depend on ‘’switching procedures’’

• Generally under free pricing

Pharmaceutical Market by Sub-Sector


Pharmaceutical market size (USD) by sub-

sector, in billions, 2009

0

2

4

6

8

10

12

14

16

Brazil Mexico Argentina Venezuela Colombia Chile Peru

Ma

rket

siz

e (

bil

. U

SD

)

OTC Generic Patented



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

innovative (from

one source)

20.4 4.4 5.5

Non-patented

(from multiple

sources)

79.6 95.6 1.0

• Non-branded

generics*

11.4 34.4 0.4

• Branded

generics

17.9 19.6 1.1

• 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…

An estimated 7-22% of drugs on the market in

Latin America are counterfeit

One survey showed that 50% of Latin Americans use under-the-counter

(UTC) drugs on a regular 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

Health System

Supply

Demand

Final determination of market size depends on

interaction of demand and supply with the health

system


Factors affecting pharmaceutical supply and demand

Market Access

Financing

Regulation

Staff

Access

Market access strategies and estimates of demand

should be based on realistic assessment of interaction

of health systems factors for each product…


Market access strategies

should look carefully at

population segmentation,

insurance coverage and

expansion of access and

technology.

Trend: Data Driven Approach


Looking Ahead

1 Epidemiological and demographic

shifts

2 Global economic climate

3 Expanding national health insurance

Three factors affecting pharmaceutical demand:


Age standardized DALYs (per 100,000 pop.) by

cause

High Income Country

Disease Profile

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


Demographic Shift: increased overall demand and demand

for specialized care (geriatric, chronic disease, etc.)

Demographic AgingPopulation Boom

0

10

20

30

40

50

60

70

80

90

100

0-14 15-64 65+

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

0

5

10

15

20

25

0

50

100

150

200

250

Bra

zil

Mexic

o

Arg

entina

Chile

Peru

Colo

mbia

Venezuela

% in

cre

ase

To

tal

po

pu

lati

on

Mil

lio

ns

Population 2025 % increase (2010-2025)

Population over 40 will increase from177,881,896 in 2009 to 293,140,656 in 2030


Demographic Shift

Population 2010 Population 2030

Source: US Census Bureau Int’l Database

and Norwegian Institute of Public Health

40 20 0 20 40

0-4

5-9

10-14

15-19

20-24

25-29

30-34

35-39

40-44

45-49

50-54

55-59

60-64

65-69

70-74

75-79

80-84

85-89

90-94

95-99

100+

Millions

Female

Male

40 20 0 20 40

0-4

5-9

10-14

15-19

20-24

25-29

30-34

35-39

40-44

45-49

50-54

55-59

60-64

65-69

70-74

75-79

80-84

85-89

90-94

95-99

100+

Millions

Female

Male

Over 70 age group has most drug users, so as

countries age, drug consumption is expected to

increase


Looking Ahead


shifts





Global Economic Climate

Inflation

• Increased cost for energy and importing raw goods for production

• Rising consumer prices lowers demand

Spending

• Cost-pressure on government spending

• High unemployment depresses consumer spending

Currency

• Weakening Latin American currencies vs. USD

• Affect of shifting exchange rates on imports


Looking Ahead


shifts





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

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

healthcare


0

2

4

6

8

10

12

2009 2014 2019

Healt

hcare

exp

en

dit

ure

as %

of

GD

P Argentina

Colombia

Mexico

Peru

Venezuela

Brazil

Chile

Other

Increased healthcare

spending in:

Colombia

•Mexico

•Peru

•Brazil


Market Trends

Mexico is

implementing

universal

health

coverage

Colombia is

expecting

universal and

unified health

coverage by

2014

Venezuela is

negotiating

drug price

increases

Argentina is

planning to

increase

pharma

accessChile is

increasing

insurance

coverage

Peru is

increasing per

capita drug

expenditureThese 7

countries

represent a

market of 468

million people

and GDP of 2.7

trillion USD

Source: Business Wire and BMI country reports Q4 2010


Health insurance coverage

Mexico and Costa

Rica have the highest

levels of public

coverage (87%)

7.7%

15.1% 18.0%

28.1%

45.0%

18.3%

51.2%

67.1%

34.4%

68.3%

86.8% 87.0%80.4%

4.0%

3.3%

5.0%

10.0%

1.8%

30.0%

7.9%

2.0%

42.0%

17.6%

0.2%2.8%

19.6%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Nic

arag

ua

El S

alvad

or

Hon

du

ras

Per

u

Uru

gu

ay

Gu

atem

ala

Arg

enti

na

Colo

mbia

Ven

ezu

ela

Ch

ile

Cost

a R

ica

Mex

ico

Bra

zil

Popula

tion

cover

age

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

1. Pricing and reimbursement

2. Global economic climate

3. Technology: mHealth

Three factors affecting pharmaceutical supply:


Pricing and Reimbursement

P&R measures in Latin America

Price

FreezesDiscounts

Prior

authorization

Pharmacist

substitution Positive &

Negative

Reference

Pricing

Patient co-

pay

Rebate &

taxes

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.

OTC

Substitution


Pricing and Reimbursement

• Middle-of-Pyramid

driving

consumption

• Increased access

to private

pharmacy

• Increase access to

social insurance

reduces OOP and

shifts purchasing

• Private insurance

greater pressure

reimbursement

control, more

interest in branded

to differentiate.

Growth of Middle

Class

Increase in formal

labor market

social insurance

Increase Private

Insurance Market

Pressure on P&R

Market

Size

Large

Small

Low High


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





Mhealth has the potential to be

a disruptive technology for

pharma industry…

…Early innovators may

capture market share

Trend: Mhealth


mHealth Pharmaceuticals

Controlling Counterfeit

Compliance

Payments

Adherence

Supply Chain

Chronic care

Source: Healthcare on Mobiles 2010

Incidence of mhealth on pharma industry


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

Improved patient outcomes

• Link patient biomarkers to dosing

• Improved glucose control

• Better/faster diagnostic testing

Evidence suggests

that successful

trials and pilot

programs could be

easily adapted to

the Latin American

context


Evidence for mHealth

Study Impact

Mobile Phone-Based Remote Patient Monitoring System for Management of Hypertension in Diabetic Patients (Logan et al. 2007)

Average 24-h BP fell by 11 /5 (+/- 13/7 SD) mmHg a difference of 35% from baseline

Overall, BP improved significantly

“Comparison of an SMS text messaging and phone reminder toimprove attendance at a health promotion center:A randomized controlled trial “ (Chen et al. 2008)

Subjects who received a text message reminder were 60% more like than controls to attend their health appointment

“A randomized control trial of Sweet Talk, a text messaging system to support young people with diabetes” (Franklin et al. 2006)

Patients with Sweet Talk and intensive therapy had a decrease of 9.2% (+/- 2.2%) in their blood glucose. Other groups had no significant change

No impact on knowledge score

“A randomized trial of a proactive cellular telephoneintervention for smokers living with HIV/AIDS “ (Vidrine et al. 2006)

Those receiving the mobile intervention were 3.6 times as likely to quit smoking at 3 months than controls

“Using internet and mobile technology to deliver an automated physical activity program: randomized controlled trial” (Hurling et al. 2007 )

The intervention group lost significantly more body fat and had significantly more physical activity than the control group

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

[email protected]


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.

http://www.cia.gov/

http://Infobase.who.int

http://www.worldatlas.com/

http://www.mobilemarketingwatch.com

http://www.census.gov/ipc/www/idb

The Pharmacuetical Market In Latam In 2020

Documents

Transcript of The Pharmacuetical Market In Latam In 2020