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Venezuela Pharmaceuticals & Healthcare Q4 2006Published by: Business Monitor International Published: Jan. 1, 2007 - 64 Pages Table of Contents
AbstractVenezuela presents a challenging market for multinational R&D-based drugmakers. The continued existence of price controls on a list of 1,300 'essential' medicines, coupled with very lax enforcement of patent rights, represent clear threats to innovator companies present on the market. However, value growth in local currency terms in recent years has been strong, and the market is expected to reach a value of US$2.33bn by 2010. Although the local currency continues to depreciate against the US dollar, BMI believes that a significant expansion of the healthcare system could lay the foundations for an expansion of the pharmaceutical market. Under an oil-for-expertise sharing agreement with Cuba, the treatment of low-income citizens has increased significantly, with an estimated 13,000 Cuban doctors now operating in the country. In late 2005, funding for the government's flagship Barrio Adentro scheme was earmarked at US$2.5bn, although there remains the risk that the bulk of medicines used under the programme will be low-cost generics sourced from Asia or Cuba. Additionally, the Venezuelan government is channelling resources into the retail and wholesale markets, in an effort to translate windfall oil revenues into a real boost in public access to medicines. Despite this belated commitment to investing greater resources in public health, there are downside risks for foreign firms active in Venezuela. While multinationals have reported a series of major health ministry tenders, and a consequent improvement in opportunities on the local market, the government's focus on cost containment is likely to limit significant revenue growth. Accordingly, BMI believes that organic market growth represents the best hope for expansion, with the over-the-counter sector identified by leading players including Pfizer as a key growth area. Nevertheless, given the country's erratic economic performance, stable market development cannot be assured in the forecast period. In terms of the breakdown of the market, the prescription sector is likely to see a slight decline in its share of total sales, as the value of over-the-counter and under-the-counter transactions boosts the overall OTC sector's market share to 30% by the end of the forecast period, equal to US$691mn. At the same time, the 'generic' sector - comprising both legitimate and illegitimate copies - is set to boost market share to more than 28% of sales, or some US$659mn by 2010. However, due to lax market rules on bioequivalence, quality and intellectual property, illegitimate copy products are likely to remain competitive. Venezuela's weak position and operational risks are reflected in the country's score within our Business Environment Ranking for Latin America. Accounting for factors including the relatively underdeveloped local manufacturing industry and the market's considerable size, Venezuela is placed equal fifth in our ranking - above only Colombia, Peru and Argentina. |
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