Value of Argentina’s Pharmaceutical Market to Almost Triple in Value over One Decade, Says GlobalData Analysis

Friday 3 May 2013, Amsterdam

Argentina’s pharmaceutical market is expected to grow from a value of around US$5.6 billion in 2012 to US$15 billion by 2020, thanks to a strong presence of domestic laboratories, high-quality manufacturing capabilities and favorable clinical trial regulations, cites new analysis by research and consulting.

According to the new report, domestic laboratories account for over 50% of the Argentine pharmaceutical market. Key domestic companies include Roemmers and Bagó, while multinationals such as Bayer, Novartis, Roche, Abbott and GlaxoSmithkline (GSK) also operate in the country.

The trend towards domestic pharma production has existed for several decades in Argentina. Local players are provided with government benefits such as favorable tariff protection, while raw material import costs historically undercut the transfer pricing generally applicable for multinationals. This gives domestic players a competitive advantage in Argentina.

The Argentine government enacted a law as part of the Health Emergency Act, enforcing physicians to include generic names of prescribed products, enabling pharmacies to use generic substitution. The resultant increase in generic sales led to the growth of Argentine generic drug manufacturers. Argentina’s regulations governing intellectual property rights have also historically provided a distinct advantage to domestic companies, who were free to manufacture and sell products similar to patented versions. However, since Argentina became a signatory of Trade Related Intellectual Property rights (TRIPS) and General Agreement on Tariffs and Trade (GATT), local manufacturers could be negatively affected by restrictions on the manufacture and sale of patented products.

Argentina is also considered a favorable destination for cost-effective clinical trials within the Latin American region, and was one of the first Latin American countries to implement the recommendations of the WHO’s Good Manufacturing Practices and Control standards, endorsing compliance to an international set of quality standards for pharmaceutical production. Clinical trial standards are also similar to the International Conference on Harmonization – Good Clinical Practice (ICH-GCP) standards.

However, Argentina’s pharmaceutical industry faces some barriers. Argentine pharmaceutical companies lack the vast production capacities of Chinese and Indian companies, and are unable to compete with lower prices offered by them. Argentina also faces stiff challenges from other Latin American countries such as Mexico and Brazil, who have strengthened their pharmaceutical industries over the last decade.

In addition, the research and development (R&D) efforts of domestic pharmaceutical companies do not hold a fruitful history, and although investment has increased over the past few years, no local players have been able to develop new chemical entities, making it difficult for domestic companies to compete with innovative multinationals.

The Argentine medical devices market is predicted to grow at a more modest rate, from approximately US$1.7 billion in 2012 to US$2.4 billion in 2020.