Peru will offer longer-term growth opportunities to foreign pharmaceutical companies. Although per capita medicine spending in the country is among the lowest in Latin America, pharmaceutical companies can generate rapid sales growth due to the lack of mandatory medicine pricing system in Peru. More stringent quality controls, relatively weak domestic pharmaceutical industry, ongoing liberalisation of bilateral trade agreements and the recognition of 'High Sanitary Surveillance' as well as Peru's investor-friendly business environment will further benefit foreign companies.
Headline Expenditure Projections
- Pharmaceuticals: PEN4.38bn (US$1.62bn) in 2013 to PEN4.68bn (US$1.72bn) in 2014; +6.8% in local currency terms and +6.2% in US dollar terms. Local currency forecast decreased compared with Q114 projection due to less promising macroeconomic forecast.
- Healthcare: PEN27.64bn (US$10.22bn) in 2013 to PEN29.65bn (US$10.90bn) in 2014; +7.3% in local currency terms and +6.6% in US dollar terms. Local currency forecast decreased compared with Q114 projection due to less promising macroeconomic forecast.
Risk/Reward Rating: In BMI's RRRs for Q2 2014, Peru remains 10th out of the 18 markets surveyed in the Americas matrix. Peru's Reward and Risk scores are both viewed as being less favourable than the regional averages. A small market size and a deficient IP environment are some of the major drawbacks to the involvement of foreign companies in Peru. Nevertheless, Peru is still seen as being able to offer longerterm benefits to foreign investors, on account of the expected healthcare market development and economic growth.
Key Trends And Developments
- In January 2014, Peru's National Association of Pharmaceutical Industries (ADIFAN) reported that during the first ten months of 2013, local pharmaceutical production decreased by 5.7%, and domestic drug production output only accounted for 33% of installed manufacture capacity. Jose Enrique Silva Pellegrin, the president of ADIFAN, expected the full year local production growth to be flat or even negative. On the other hand, imports of medicines have increased significantly during the same period. In October 2013, import growth reached 18.6% year-on-year (y-o-y). Pellegrin noted that the decreased domestic production together with import rise has pushed local drug price high.
- In December 2013, Ireland-based Mundipharma Pharmaceuticals planned to expand in Peru as part of a larger strategy to expand its footprint in Latin American countries by 2015.
- In December 2013, Gerardo de Eguiluz, CEO of Sanofi Peru and Bolivia, stated that the company's revenue in Peru will soon reach US$100mn, four times of its 2009 sales in the country (US$25mn). Its flagship diabetes treatment, Lantus (insulin), accounted for 57% of the Peruvian market in 2013. Mr Eguiluz also stated that although cancer treatments have generated lots of public interest, the prevalence of cardiovascular diseases and diabetes are much greater than that of cancer, and Sanofi is in the leading position in Peru's cardiovascular drug market. In addition, Sanofi has a diversified product portfolio in Peru selling products in the areas including vaccines, orphan disease treatments, generic drugs and animal health medicines.