Citi s Online Academy Presents: The Pharmaceutical & Healthcare Industry in Latin America Jamie Davies Head of Pharmaceuticals & Healthcare Business Monitor International Oscar Mazza Consumer & Healthcare Industry Head Citi Transaction Services Latin America
Agenda Introduction Risk/Reward Ratings Case Studies 1 2 3 4 5 7 Market drivers Company Activity Q&A min 3 min 2
Introduction Established in 1984. Headquartered in London, with regional offices in Singapore, Johannesburg and New York City. Clients include corporations, investment banks, consultancies, governments and academic institutions. Over 1 research analysts. Image: the City of London 3
The Global Context Pharmaceutical Sales In 211 Asia US$265bn Europe US$329bn Latin America US$7bn Middle East US$16bn Africa US$19bn North America US$358bn Source: BMI BMI View: moderate risk, moderate reward 4
The Global Outlook 1,6 1,4 Pharmaceutical Sales (US$bn) Middle East +116% Africa +145% Latin America +119% 1,2 1, Asia +82% 8 6 Europe +18% 4 2 North America +22% 28 29 21 211 212 213 214 215 216 217 218 219 22 221 Source: BMI BMI View: emerging markets to drive industry growth 5
Economic Expansion Real GDP Growth In 212 China India Peru Chile Colombia Argentina Brazil Mexico Russia Venezuela United States Japan United Kingdom Germany France Eurozone -1 1 2 3 4 5 6 7 8 Source: BMI BMI View: Latin America has several favourable economies 6
Drivers Of Market Growth Healthcare Spending In 211 Guatemala Paraguay Dominican Republic Puerto Rico Ecuador Venezuela Brazil Mexico Chile Argentina Nicaragua Honduras El Salvador Belize Peru Bolivia Panama Uruguay Costa Rica Colombia Government Private % 1% 2% 3% 4% 5% 6% 7% 8% 9% 1% Source: WHO BMI View: surprisingly divergent 7
Demographics Population Growth In 211 Venezuela India Colombia Mexico Peru United States Chile Brazil Argentina United Kingdom France China Eurozone Japan Russia Germany -.4 -.2..2.4.6.8 1. 1.2 1.4 1.6 Source: BMI BMI View: appeals to vaccine manufacturers 8
Japan Germany France United Kingdom United States Russia Argentina Chile China Brazil Mexico Peru Venezuela Colombia India Demographics Pensionable Population As % Of Total Working Population In 211 5 1 15 2 25 3 35 4 45 Source: BMI BMI View: truly ageing populations decades away 9
Disease Burden Diabetes Prevalence In 211 Mexico Russia Japan United States Chile Brazil Venezuela China Colombia India Germany France United Kingdom Argentina Peru 2 4 6 8 1 12 14 16 Source: IDF BMI View: a typical emerging markets profile 1
Healthcare Access Number Of Hospitals Beds Per 1, Population Argentina Brazil Canada United States Panama Chile Mexico Peru Ecuador Paraguay Uruguay El Salavador Costa Rica Belize Venezuela Bolivia Guatemala Nicaragua Honduras.5 1 1.5 2 2.5 3 3.5 4 4.5 5 Source: PAHO BMI View: an under-appreciated growth driver 11
Company Activity Acquisitions Fixed capital investments Partnerships Other BMI View: a sharp uptick in activity 12
Foreign Company Performance BMI View: only surpassed by Asia Pacific 13
Anti-American? BMI View: outperformance by European firms 14
Risk/Reward Ratings Market expenditure Spending per capita Market growth Urban/rural split Pensionable population Population growth Patent respect Policy enforcement Approvals expediency Economic diligence Policy continuity Lack of bureaucracy Legal diligence Business transparency Market Rewards Country Rewards Market Risks Country Risks Rewards Risks Risk/Reward Rating BMI View: an objective assessment tool 15
Risk/Reward Ratings Brazil Pharmaceutical Risk/Reward Rating Market expenditure Spending per capita Market growth Urban/rural split Pensionable population Population growth IP Laws Policy/reimbursements Approvals process Economic structure Policy continuity Bureaucracy Legal framework Corruption Note: the higher the score, the more attractive the market feature 1 2 3 4 5 6 7 8 9 1 Source: BMI BMI View: a frequent initial market 16
Risk/Reward Ratings Latin America Pharmaceutical Risk/Reward Ratings Brazil Argentina Mexico Colombia Chile Peru Panama Costa Rica Belize El Salvador Venezuela Guatemala Nicaragua Honduras Regional Average Attractiveness i.e. priority for product launch 1 2 3 4 5 6 7 Source: BMI BMI View: an increasingly attractive region 17
Foreign Company Case Study: Sanofi 9 8 7 6 5 4 3 2 1 Sanofi's Performance In Latin America Q29 Q39 Q49 Q11 Q21 Q31 Q41 Q111 Q211 Q311 Q411 12 1 8 6 4 2 Latin America Sales (EURmn) (LHS) Latin America sales as % of global sales (RHS) Source: Sanofi BMI View: strength through organic and inorganic growth 18
Local Company Case Study: Genomma 45 4 35 3 25 2 15 1 5 The Relative Performance Of Genomma Lab Internacional And The Mexico IPC Index Genomma Mexico IPC Index Source: Bloomberg BMI View: should concentrate on its domestic market 19
Market Case Study: Brazil Highlighted by multinationals. Pricing pressures. Unfair public-private partnerships? Brazil's Pharmaceutical Market 35 3 25 2 15 1 5 29 21 211 212f 213f 214f 215f Sales (US$bn) Change % y-o-y 3 25 2 15 1 5 Current forecast Early 211 forecast Image: Oswaldo Cruz Foundation (Fiocruz) Expenditure (BRLbn) y-o-y % growth Expenditure (BRLbn) y-o-y % growth 211 212f 213f 214f 215f CAGR 42.9 47.9 53.3 58.9 64.4 1.7 16.4 11.7 11.2 1.5 1.1 39.6 42.6 46.1 49.9 54.1 8.1 7.5 7.6 8.3 8. 8.6 BMI View: the recent outperformer 2
Market Case Study: Mexico No energy liberalisation? Dependent on US economy. General security concerns. Mexico's Pharmaceutical Market 2 15 1 5 29 21 211 212f 213f 214f 215f Sales (US$bn) Change % y-o-y 15 1 5-5 -1-15 -2 Image: Petróleos Mexicanos (Pemex) oil rig in the Gulf of Mexico Current forecast Early 211 forecast Expenditure (MXNbn) y-o-y % growth Expenditure (MXNbn) y-o-y % growth 211 212f 213f 214f 215f CAGR 161 175 189 24 22 8. 8.5 8.3 8.1 7.9 7.7 152 156 161 165 17 2.8 2.5 2.6 2.8 2.9 2.9 BMI View: a positive surprise 21
Market Case Study: Venezuela High oil prices. Repatriation of revenues. Anti-American sentiment. Venezuela's Pharmaceutical Market 1 8 4 3 2 Image: Hugo Chavez 6 4 2 29 21 211 212f 213f 214f 215f Sales (US$bn) Change % y-o-y 1-1 -2-3 -4 Current forecast Early 211 forecast Expenditure (VEFbn) y-o-y % growth Expenditure (VEFbn) y-o-y % growth 211 212f 213f 214f 215f CAGR 33.3 41.2 49.8 59.3 69.5 2.2 24.6 23.8 21.1 19. 17.1 29.4 36.1 42.8 49.9 57.6 18.3 1. 23. 18.4 16.7 15.4 BMI View: October 212 election is key 22
Market Case Study: Argentina Under-reporting of inflation. Patent approval backlog. Import restrictions. Argentina's Pharmaceutical Market 1 8 6 25 2 15 Image: Instituto Nacional de Estadística y Censos, INDEC 211 212f 213f 214f 215f CAGR 4 2 29 21 211 212f 213f 214f 215f Sales (US$bn) Change % y-o-y 1 5 Current forecast Early 211 forecast Expenditure (ARSbn) y-o-y % growth Expenditure (ARSbn) y-o-y % growth 37.9 45.4 53.7 62.9 72.8 17.7 3.7 19.6 18.4 17.1 15.7 34.2 39.9 46.2 53.2 6.9 15.5 17.2 16.7 15.8 15.2 14.3 BMI View: consistently defying risks 23
25 Conclusion The Pharmaceutical Markets Of Latin America 2 Local currency market growth (211-216 CAGR) 15 1 5 Brazil Venezuela Paraguay Ecuador Bolivia Nicaragua Argentina Uruguay Peru Colombia Panama Guatemala El Salvador Costa Rica Chile Honduras Mexico 5 1 15 2 25 x-axis = per-capita pharmaceutical spending in 211 (US$); size of bubble = absolute market size (US$bn) BMI View: crucial to identify opportunities and risks 24
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