Peru Pharmaceuticals and Healthcare Report Q4 2008

Summary

The Peruvian pharmaceutical market is considered one of the less attractive in the Latin American region, according to BMI's updated Business Environment Rankings for Q408. However, while Peru is found second from the bottom among the 10 regional markets, its poor placing due largely to the small market size and low per capita spend on drugs actually masks a number of opportunities in the market. The government is committed to the improvement of generics penetration, as part of wider healthcare system reform, which has already attracted a number of foreign players. Most recently, in August 2008, USbased Vanguard Pharmaceutical signed a contract to sell the generics portfolio of India's Arbro Pharmaceutical in Latin America, including Peru, and the Caribbean. Vanguard, which has gained access to some 150 preparations, is in the process of setting up operations in Peru, as well as Brazil and Paraguay, in a bid to compete in government tenders and to create a distribution network to penetrate the private sector.

On the domestic front, the existence of companies engaged in the production of lowcost similares (nonbioequivalent copies of patented medicines that do not infringe process patents) is threatened by the tightening of intellectual property (IP) regulations. Given the extensive poverty in the country, the removal of such products from the market has the potential to negative impact access to medicines for much of the population. On the upside, the market for legitimate generics is expanding, supported by government measures, such as generic substitution, and the growing privatelabel market, which has been carved by the expanding retail chains.

Other healthrelated industries are also providing opportunities for foreign players. While the Peru's medical devices market is expected to grow at a pace below that for the pharmaceutical market, increased public health expenditure should boost the importance of tenders. The recently ratified USPeru Free Trade Agreement (FTA) should provide a major boost for US medical device exports to Peru, given that customs duties on most medical device imports will be removed on implementation of the agreement. By 2012, the market is expected to reach a value of PEN858mn (US$317mn), up from around PEN562mn (US$180mn) in 2007, although major medical purchases by the public sector can distort the overall market value in any given year.

In the meantime, Peru will retain its place among Latin America's investment grade elite, underpinned by our longheld view that Peru's sound macroeconomic fundamentals and robust economy, driven largely by domestic demand, make it a highly attractive destination for longterm foreign investors. Although there are some signs of overheating, and a more rapid deterioration of the current account than previously expected, we see the economy growing at 7.0% this year, with risks currently skewed to the upside. While still strong external demand and record high commodity prices are partly responsible for Peru's impressive performance of late, we note that domestic demand remains the key driver, suggesting to us that the economy will remain relatively well insulated from rising global macroeconomic uncertainty.

Contents

• Executive Summary
• Peru: Pharmaceuticals And Healthcare Industry SWOT
• Peru Political SWOT Analysis
• Peru Economic SWOT Analysis
• Peru Business Environment SWOT Analysis
• Pharmaceutical Business Environment Ratings
• Business Environment Rankings
• Limits Of Potential Returns
• Risks To Realisation Of Returns
• Market Summary
• Regulatory Regime
• Intellectual Property Regime
• Trade Agreements
• Counterfeit Pharmaceuticals
• Pricing Regime
• Reimbursement Regime
• Other Regulatory Issues
• Industry Developments
• Epidemiology
• Healthcare Sector
• Health Insurance
• Pharmaceutical Sector
• Recent Company Activity
• Pharmaceutical Retail
• Medical Devices
• Industry Forecast Scenario
• Key Growth Factors Industry
• Key Growth Factors Macroeconomic
• A Shiny Outlook For Growth
• Prescription Market Forecast
• OTC Market Forecast
• Patented Market Forecast
• Generics Market Forecast
• Export/Import Forecasts
• Other Healthcare Data Forecasts
• Key Risks To BMI's Forecast Scenario
• Competitive Landscape
• Company Profiles
• Leading Multinationals
• SanofiAventis
• Merck & Co
• GlaxoSmithKline
• Novartis
• Pfizer
• Indigenous Manufacturer Profiles
• Farmaindustria
• Unimed
• Hersil
• BMI Forecast Modelling
• How We Generate Our Pharmaceutical Industry Forecasts
• Pharmaceutical Business Environment Ratings Methodology
• Ratings Overview
• Weighting
• Sources
• List of Tables
  • Table: Peru Medical Device Market Forecast
  • Table: Peru's Drug Market Indicators, 20042012 (PENmn unless otherwise stated)
  • Table: Peru's Health Expenditure Indicators, 20042012 (PENmn unless otherwise stated)
  • Table: Peru Economic Activity
  • Table: Peru's Prescription Drug Market Forecast, 20042012 (PENmn unless otherwise indicated)
  • Table: Peru's OTC Market Indicators, 20042012 (PENmn unless otherwise stated)
  • Table: Peru's Patented Market Indicators, 20042012 (PENmn unless otherwise stated)
  • Table: Peru's Generic Market Indicators, 20042012 (PENmn unless otherwise stated)
  • Table: Peru's Pharmaceutical Import/Export Trends (US$mn)
  • Table: Peru's Other Healthcare Data Forecasts, 20042012
  • Table: Peruvian Pharmaceutical Companies That Acquired GMP Accreditation In 2006
  • Table: Pharmaceutical Business Environment Indicators
  • Table: Weighting Of Components