Executive Summary

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Argentina's pharmaceutical market surged in Q107, according to data released by the country's INDEC official statistics agency. This data show combined domestic sales coupled with exported pharmaceuticals produced in Argentina surged 39.5% year-on-year in local currency terms and was worth ARS1.769bn (US$574mn). Domestic sales jumped 33.4% while export sales rose 98%. A weaker peso has helped local producers increase exports and government spending is up. In view of this data, as well as strong economic growth and pre-election largesse, BMI has upgraded its full-year forecast for total pharmaceutical market value growth to 7.8%in US dollar terms (8.1% in peso terms), with market value reaching US$2.58mn by the end of 2007. The average five-year annual growth rate for 2006 to 2011 is now 5.8%.

At first glance, BMI's forecast still appears overly cautious, given Q107 data. But the data are not complete. Exports in particular are running high – the peso reached a four-year low against the dollar in mid-July on the back of disappointing economic data. We see this factor hitting imports while the government maintains very stringent pricing controls on medicines in its continuing war on inflation. GDP growth is still forecast at a robust 7.0% y-o-y. Troublingly, the inflation data itself is suspect, as the government of President Néstor Kirchner has been accused of tampering with INDEC data. It is a charge that has not been proven but at the same time will not go away. Health cost data in particular looks suspiciously low, given what health insurers are saying about rate raises and the government's own data on drug spending.

As the country gears up for October elections – with Christina Fernandez Kirchner, the president's wife and a powerful political figure in her own right, the candidate of the current government – the squeeze on prices is unlikely to ease. The government negotiated with (some say brow-beat) health insurers to reduce health insurance plan costs at the beginning of this year by introducing more basic insurance packages at a lower price. But in the event, few opted for these plans, which sit better in the statistics – less than 3% of the population at last count. Now insurers want to up premiums again to reflect reality. Meanwhile, a freeze on medicines remains, if it is on occasion ignored, with government threats to 'name and shame' a key and, arguably very successful, enforcement method.

Pricing is the reason Argentina continues to score last in BMI's Business Environment Rankings in Latin America, along with poor intellectual property rules that fail to protect and promote bio-equivalent generics. One frustration is that the rules are populist and often don't look at consumer behaviour. As recent data from the Observatory for Health, Medicines and Society and the Argentine Pharmaceutical Confederation (Cofra) show, Argentines opt for branded (often patented or name-brand non-equivalent generics) medicines 80% over generics. Clearer rules would see clearer generic substitution with attendant cost benefits. Such moves look unlikely for now, as the election season reaches full swing.

Contents

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Chapter 1 - Executive Summary

Argentina Pharmaceuticals & Healthcare Industry SWOT

Argentina Political SWOT

Argentina Economic SWOT

Argentina Business Environment SWOT

Chapter 2 - Argentina: Business Environment Ranking

Business Environment Ranking

Economics – Long-Term Risk

Politics – Long-Term Risk

Regulatory Barriers

Domestic Sector Threat

Market Growth Potential

Market Size Ranking

Chapter 3 - Argentina: Market Summary

Table: Market Share Of Leading Drug Distributors

Chapter 4 - Regulatory Regime

Intellectual Property Environment

Table: Joint Declaration By Latin American Health Ministers, May 2006

Pricing & Reimbursement Issues

Table: Argentina's Drug Price Freeze (2005-2007)

Other Regulatory Issues

Table: MNC investment In Laboratory Testing In Argentina

Chapter 5 - Industry Developments

Healthcare Sector

Pharmaceutical Sector

Market Performance

Retail Pharmacy Sector

Multinational Sector Developments

Domestic Manufacturing Sector

Vaccines Sector

Chapter 6 - Industry Forecast Scenario

Overall Market Forecast

Table: Drug Market Indicators

Key Growth Factors – Industry

Key Growth Factors – Macroeconomic

Table: Economic Activity – Historical Data And Forecasts

Prescription Market Forecast

Table: Prescription Drug Market Indicators

Non-Prescription Market Forecast

Advertising

Competitive Landscape – OTC Pharmaceuticals

Table: OTC Market Indicators

Generics Market Forecast

Table: Generics And Branded Market Indicators

Export/Import Forecasts

Table: Import And Export Trade Indicators

Other Healthcare Data Forecasts

Table: Socio-Demographic Indicators

Key Risks To BMI’s Forecast Scenario

Chapter 7 - Competitive Landscape

Overview

Chapter 8 - Company Monitor

Profiles: Leading Foreign Companies

Pfizer

Roche

Novartis

GlaxoSmithKline (GSK)

Sanofi-Aventis

Merck & Co

Boehringer Ingelheim

Profiles: Indigenous Manufacturers

Laboratorios Roemmers

Laboratorios Bagó

Chapter 9 - BMI Forecast Modelling

How We Generate Our Industry Forecasts

Technical Process

Pharmaceutical Industry

Sources

Competitive Landscape for Latin America Pharmaceuticals and Healthcare: Sample of Companies Ranked

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Cross-border analysis of regulatory systems comparing the patenting environment, summarising regional pricing and reimbursement factors and monitoring the growth of the Pharmaceuticals sector across the region. Company SWOTs cover leading multinational and national drug companies operating in each market.

Network of Latin American Pharmaceuticals & Healthcare Sources

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BMI's Latin American Pharmaceuticals & Healthcare Reports are based on an extensive network of multilateral organisations, government departments, pharmaceuticals industry associations, chambers of commerce and company reports. Information sources include: