The evolving RMA opportunities in IBERIA and LATAM PRESENTED BY JOSÉ MIGUEL FERNÁNDEZ NOVEMBER 2010 TO PAREXEL
Some interesting facts and figures Year 2008 Argentina Brazil Colombia Chile Mexico Portugal Spain CountrySerieTotal expenditure on health, %of gross domestic product 9,8 8,4 5,9 6,9 5,9 10,1 9Total health expenditure percapita, US$ PPP 801 904 518 999 852 2334 2902Pharmaceutical expenditure, %total expenditure on health 11,7 12,2 9,9 5,4 28,3 22,8 20,5Pharmaceutical expenditure percapita, US$ PPP 93,72 110,29 51,28 53,95 241,12 532,15 596 Year 2006 Argentina Brazil Colombia Chile Mexico Portugal Spain CountrySerieTotal expenditure on health, %of gross domestic product 10,2 8,5 6,2 5,9 5,7 9,9 8,4Total health expenditure percapita, US$ PPP 561 765 483 772 761 2151 2477Pharmaceutical expenditure, %total expenditure on health N/A 11 9,2 4,7 26,3 21,8 21,6Pharmaceutical expenditure percapita, US$ PPP N/A 84,15 44,44 36,28 200 469 535 Sources: WHO, WTO, UN, and local statistics agencies
More interesting facts and figuresGeneral Goverment Whole Region Brazil vs. Spainexpend in health /Total healthexpenditure in % -AVERAGE in Region-Western Europe 73,6 71,7LATAM 47,7 33,9 • Causes: • LATAM’s low efficiency model => high out of the pocket spent • Private coverage has been steadily growing in LATAM • But…there are also signs of a trend reversal • Colombia & Argentina look to have universal coverage and • More stable / new, P&R schemas
The key drivers in population / economicsCountry Economic Population HIV prevalence in Politics (Million People) adults % 2009Spain GDP contraction expected 46.5 0.33 Uncertainty with local to last until 2012 elections to be held in May 2011Portugal Flat GDP growth since ’06 10.7 0.55 Minority Socialist Gvmnt pendant to release reformsArgentina Possitive, though weak 40.9 0.5 Presidential election to be outlook for 2011 called in 2011Brazil Strong growth supported 199 0.6 Stability under Lula’s by foreign investment and heritage commoditiesChile Strong recovery, but 16.7 0.3 Stability with new cabinet mainly due to high copper just one year ago market pricesColombia Flat GDP growth in 2010, 45.7 0.6 New president and better outlook in 2011, FARC’s surrender would though weak. comfort investors.Mexico Flat GDP growth set up for 111.2 0.4 Chain of elections starting 2011, pushed by the in 2011, battered by weakness of US demand terrorism.
The pharma market in the countriesCountry Market Size, 2009 Main Payers Regulation (strong, Others (local (Millio USD @ weak, medium) and characteristics) exchange ratio) P&R schemaSpain 25,6 Regional Goverments and According to EMEA and Price and Reimbursement private insurance (12%) ICH standards. AGEMED is made up by the is the P&R Ministry Arm. Ministry but payers are STRONG. regional gvmtPortugal 5,04 Ministry of Health, few INFARMED is the state Few local players, and private insurance market agency which follows increasing dominance of share stringent rules to allow generics drug approval.Argentina 3,37 Three layers, 22% APS, No active control until Strong local players. P&R 34% semiprivate, 43% late 2009. OTC is strong. only since 2009 private OOPBrazil 15,1 SUS and other public Strict SUS and Ministerio Goverment to breach system (75%), private de Saude Control. TRIPS agreements if insurance (25%) . OOP. Preference to generics / needed (HIV pandemy) bioequivalentsChile 1,15 Public Schema, FONASA, No P&R schema to Strong local players; lack 50%, private insurance, «stimulate» competition. of price cap, lowest prices ISAPRE, 20%, 30% OOP in region. and othersColombia 2,24 54% Public Social Security Only for 5% of drugs, for Recent trade agreement Schema, 26% OOP, 20% the rest, only partial with US to ease exports. private insurance. reimbursement. Second fastest growing in regionMexico 15,5 Private Insurance (3%), No formal P&R schema. Counterfeiting is rampant Social Security (IMSS and But buying method is . New regulations for others, 61%), rest (non always public tenders. access to antibiotics put in workers, SSA, 36%) place, late 2009 (prescription)
SWOTs per country. Spain.Strenghts Weaknesses• Well developped Health • Budget deficit imposing Coverage System drastic measurements in• Well structured P&R P&R schema schema. • Generics are rapidly• Wide range of pharma labs, growing with strong local players to • Complex payers system support (15+ regional) • C/E awareness risingOpportunities Threats• Education for medium size and • Goverment plans to further cuts local pharma labs (outsourcing) on P&R-> rising unemployment• Biotech labs are increasingly in Pharma rising • Change on politics every 4 years.• MDs education (need it) in Payers and Administrators too Pharma Economics. linked to politicians• Partnering with Ministry of • Consolidation in the market, Health / local administrations living only niche local players.• Orphan drugs, actively supported by Ministry of Health
SWOTs per country. Portugal.Strenghts Weaknesses• Well developped Health • Budget deficit imposing Coverage System drastic measurements in• Well structured P&R P&R schema schema. • Generics are rapidly• Only one interface, growing Infarmed. • Local players dissapearing.• Well educated system (influenced by NHS and NICE guidelines)Opportunities Threats• Education for medium size and • Goverment plans to further cuts local pharma labs (outsourcing) on P&R-> rising unemployment• Medical Devices and nano- in Pharma medicine start ups and some • Consolidation in the market, established companies. living only niche local players.• MDs education (need it) in • Decissions to be taken from Pharma Economics. abroad (at multinational level)• Orphan drugs manufacturers
SWOTs per country. ArgentinaStrenghts Weaknesses• Many Local players • Fragmented and poor (majority of the market) perceived health system now dealing with P&R • Generics and copy-cut regulation dominants• Market Size to grow by near • P&R and market access just double digit in next years. trying to be establishedOpportunities Threats• Education for medium size and • Political unstability, with local pharma labs (outsourcing) elections to be called in 2011• Some consulting to goverment, insurance companies. • Fraud and OOP expenditure.
SWOTs per country. ChileStrenghts Weaknesses• Many Local players • Generics and copy-cut (majority of the market) dominants• Well perceived Health • No P&R schema. Insurance System, with • Market Access is done via coexistence of private and tenders and public bids public schema. mainly.• Stability. • Insurance companies favouring local players. • Poor market attractiveness (CAGR expected to be low).Opportunities Threats• Education for medium size and • Chile is on the warning list for local pharma labs and non ICH and GSP rules total distributors (outsourcing), compliance. specially because a large number • Pharma distribution is owned by of production is exported. few private groups. • Low prices (lowest in the region)
SWOTs per country. ColombiaStrenghts Weaknesses• Mix of local and foreign • Generics and copy-cut players. dominants• Trading agreement with US • No P&R schema (only for now opening entry to new 5% of listed drugs) players and increasing • Insurance companies market value. favouring local players.• CAGR expected to be above • Regulations are not clear double digit in next four enough. years. • Too much OOP expend.Opportunities Threats• Education for foreign exporters • Political theatre is not yet clear. (there are some good ones), but • Many population with no focused on generics and copy practical access to health cats. system.• Insurance Companies for foreigh • Poor distribution chain. firms.• Orphan drugs
SWOTs per country. BrazilStrenghts Weaknesses• Mix of local and foreign players. • Generics and copy-cut dominants• 2nd largest market in the region. • Too much OOP expend.• CAGR for the pharmaceutical • Fragmented market as per the market expected to be above payers schema (market access), double digit in next four years. local; regional, nationwide –• Abundant resources (MDs, almost 25% of the expend is private students, start ups). and OOP-.• Political momentum • TRIPS provisions not always• P&R stringent but clear respected• Clear goverment agenda (Milenium Objectives)Opportunities Threats• Biotech and small firms (local ones) • Generics favoured and patent• HIV and Oncology manufacturers infringement (TRIPs breach)• Orphan drugs • Many population with no practical access to health system. • Poor distribution chain.
SWOTs per country. MexicoStrenghts Weaknesses• Largest market in the region. • Counterfeiting and smuggling to• CAGR for the pharmaceutical USA market expected to be above • Too much OOP expend. double digit in next four years. • No P&R schema.• Foreign trade agreements and • Entry barriers for foreign NAFTA. manufacturers.• Awareness of Market Access policies• High healt expend by headOpportunities Threats• Foreign small manufacturers • Politics• Insurance Companies • Lack of reliable data.• Monterrey accumulates many of the • Many population with no practical access pharma industry. to health system.• Exporters to other markets –as market • Distribution chain owned by few players, access-. even from abroad.
Summary• Market attractiveness varies enormously within the considered region• LATAM is heading to open its market but still some countries are heavilyProtective (Chile).• CopyCats and Generics are starting to flood the market –all countries-.• Spain and Portugal are facing with increasing aging population, so, it isExpected that Health Expenditure Growth would be inmense in followingYears• In contrast, LATAM, specially Brazil and Colombia, has plenty of youngPopulation, who will demand better and more qualified Health Coverage.• Local players are strong in some countries, whilst in others are on theVerge of dissapear (Portugal) or simply distributing products.• Orphan drugs and biotech are really an opportunity in Spain and Brazil• Pharmaeconomics are used for the sake of decissions in a very limited scale in Chile, Colombia, Argentina, and at a large scale in Spain, Portugal, Brazil – starting to develop- and increasingly, Mexico.• Market attractiveness makes me think the better countries to start withAre…Spain, Brazil, Mexico, letting the others go at this stage.• But Parexel could also leverage existing knowledge in ICH / GSP into theregion, to attract future businesses.
Functional Matrix. Hospital health administrators Administration Prescription Pharmacy Budget and price Drug evaluation evaluation and Management and management track Control (tenders as well) Specialized Pharmacists/regional evaluatorsPharmacy Manager/regional board chair Medical Director/Ward Unit Director Finance and Admin Managers (CFO)Regional Administration and GPOs Project focus within dashed line
Hospital Drug Evaluation Process Multi-Tiered process though not sequentialRegional Level: Across Hospitals: Intra-hospital:• Regional Agencies Spanish Hospital Pharmacists Society Specialty Board*Joint Commission (Genesis) Pharmacy Board*Non-binding recommendations Very Influential guides Protocols review Binding documentsGenesis Group is becoming a very powerful C.O.P. to standardise drug review and evaluation
Hospital Working Model and Lines of Influence: Hospital Drug evaluation process (Customer Process) Solid lines= strong interaction External Dashed lines= weak interaction influences GreenNew Ligth to petitoryDrug 1-6 months ATB/Oncology Pharmacy Commision Board Outcomes R. Sales Reps K.A.M. Product Physician/Mktg Outcomes R.