Venezuela Pharmaceuticals and Healthcare Industry Update Quarter 3 2011

  • July 2014
  • -
  • Business Monitor International
  • -
  • 128 pages

BMI View: President Hugo Chavez's distortive economic policies are increasingly damaging Venezuela's attractiveness to pharmaceutical companies . The government's latest measure, which extends price controls to medicines not previously subject to the regulations, will cause a significant reduction in revenues for industry players operating in the country and potentially lead to fewer pharmaceutical suppliers and further drug shortages. The key risks on the downside include further measures in a similar vein and the expropriation of pharmaceutical business, with the nationalisation of some industry players in other markets already in play.

Headline Expenditure Projections
.. Pharmaceuticals: VEF26.70bn (US Dollar 6.21bn) in 2010 to VEF29.52bn (US Dollar 6.86bn) in 2011; +10.6% in local currency terms and +10.6% in US dollar terms. Projection up moderately due to new macro data.
.. Healthcare: VEF53.20bn (US Dollar 12.37bn) in 2010 to VEF63.63bn (US Dollar 14.80bn) in 2011; +19.6% in local currency terms and +19.6% in US dollar terms. Projection down moderately due to analyst intervention.
.. Medical devices: VEF3.83bn (US Dollar 891mn) in 2010 to VEF5.19bn (US Dollar 1.21bn) in 2011; +35.6% in local currency terms and +35.6% in US dollar terms. Projection up moderately due to new macro data.
Business Environment Rating: Venezuela is ranked as the 12th most attractive industry out of 17 industry s surveyed in the Americas. Scoring 39.5 out of 100, below the regional average score of 49.0, Venezuela stands above only Nicaragua, Honduras, El Salvador, Belize and Guatemala. Venezuela’s attractiveness suffers due to a difficult intellectual property (IP) environment, an unfavourable political regime that regularly speaks out against private enterprise and strict price controls that have recently been extended beyond non-essential medicines, despite promising demographic and epidemiological profiles.
Additionally, while we view the Venezuelan government's recent decision to devalue the currency as positive for the country's fiscal revenues, it will also negatively impact pharmaceutical industry growth in US dollar terms. Venezuela will remain one of the least promising regional investment destinations, with an increasingly marginalised role.

Key Trends & Developments
In June 2011, the Venezuelan government announced a series of initiatives intended to strengthen the country’s healthcare infrastructure and grow access for residents in the state of Aragua. This comprises a VEF51.00mn (US Dollar 11.8mn) expenditure for the rehabilitation of healthcare infrastructure, including the remodelling of clinics and 28 hospitals.
In June 2011, it was revealed that the Venezuelan government is constructing a pharmaceutical warehouse in the municipality of Jose Angel Lamas, in the state of Aragua. The 48,000 square metre facility, the first of five medical warehouses to be built in the country, is the product of an international agreement signed between China and Venezuela valued at just under US Dollar 864mn. Once completed, the depot will have the capacity to supply five surrounding states with prescription and over the counter (OTC) drugs.
BMI Economic View: We expect Venezuela to post real Gross Domestic Product growth at 1.9% in 2011 and 2.4% in 2012, up from the 1.4% contraction of 2010. While this implies that the economy is beginning to recover from its deep recession, huge structural imbalances within the economy to remain, and we believe that this recovery will be driven in large part by rising oil prices.
BMI Political View: We expect the issue of crime to dominate campaigning in Venezuela in the run up to the presidential election in 2012, as the country's economic problems are beginning to take a back seat to social issues in the frame of domestic politics. Due to the structural nature of crime, a dramatic reduction of Venezuela's sky-high homicide rate is unlikely to be made anytime soon.

Table Of Contents

Executive Summary 5
Industry SWOT Analysis 7
Venezuela Pharmaceuticals And Healthcare Industry Environment and Risk Analysis . 7
Venezuela Political Environment and Risk Analysis 8
Venezuela Economic Environment and Risk Analysis . 9
Venezuela Business Environment SWOT 9
Pharmaceutical Business Environment Ratings 10
Data : Americas Pharmaceutical Business Environment Ratings, Q311 . 10
Rewards 11
Risks . 12
Venezuela - Industry Summary . 14
Regulatory Regime 15
Other Regulatory Issues 15
Intellectual Property Environment 15
IP Shortcomings 17
International Collaboration 18
Trade Agreements . 20
Counterfeit Drugs . 20
Pricing And Reimbursement Regime . 21
Recent Pricing Developments . 23

Industry Developments. 25
Epidemiology 25
Communicable Diseases . 26
Non-Communicable Diseases . 28
Healthcare Segment . 29
Healthcare Segment Developments 31
Hospital Segment . 31
Private Healthcare Segment . 32
Supply Chain. 34
Research and Development . 35
Medical Devices 36

Market Projection Scenario . 38
Overall Industry Projection . 38
Data : Pharmaceutical Sales Indicators from 2007 to 2015 . 39
Key Growth Factors - Market . 40
Data : Healthcare Expenditure Indicators from 2007 to 2015 . 41
Data : Government Healthcare Expenditure Indicators from 2007 to 2015 . 41
Data : Private Healthcare Expenditure Indicators from 2007 to 2015 . 42
Key Growth Factors - Macroeconomic 43
Data : Venezuela - Economic Activity 45
Prescription Drug Industry Projection 46
Data : Prescription Drug Sales Indicators from 2007 to 2015 . 47
Patented Product Industry Projection . 48
Data : Patented Drug Industry Indicators from 2007 to 2015 . 49
Generic Drug Industry Projection . 50
Data : Generic Drug Sales Indicators from 2007 to 2015 51
OTC Medicine Industry Projection . 52
Data : OTC Medicine Sales Indicators from 2007 to 2015 . 53
Medical Device Industry Projection 54
Data : Medical Devices Sales Indicators from 2007 to 2015 55
Pharmaceutical Trade Projection . 56
Data : Exports and Imports Indicators from 2007 to 2015 . 58
Other Healthcare Data Projections . 59
Key Risks To BMI’s Projection Scenario . 60

Competitive Landscape 61
Pharmaceutical Segment 61
Company Activity 62
OTC Medicines . 64
Retail Pharmacy . 65
Company Profiles 66
Indigenous Firms Profiles . 66
Grupo Farma 66
Elmor 68
Strides Latina (Sumifarma) . 70
Calox International . 72
Leading Multinationals . 73
Pfizer 73
Sanofi-Aventis . 76
GlaxoSmithKline . 78
Boehringer Ingelheim . 80
Novartis 82
Merck and Co 84
Country Snapshot: Venezuela Demographic Data . 86

Section I : Population . 86
Data : Demographic Indicators, 2005-2030 . 86
Data : Rural/Urban Breakdown, 2005-2030 87

Section II : Education And Healthcare 87
Data : Education, from 2002 to 2005 . 87
Data : Vital Statistics, 2005-2030 . 87

Section III : Labour Industry And Spending Power 88
Data : Employment Indicators, from 2001 to 2006 . 88
Data : Consumer Expenditure, from 2000 to 2012 (US$) . 88
Glossary . 89
BMI Methodology 91
How We Generate Our Pharmaceutical Market Projections 91
Risk/Reward Ratings Methodology . 92
Ratings Overview 92
Data : Pharmaceutical Business Environment Indicators 93
Weighting 94
Data : Weighting Of Components . 94

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