Latin America Country Report


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This presentation is intended to educate anyone wishing to distribute a product in Latin America. Although it is healthcare specific, it may be used as a guide for any other products.

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  • Latin America Country Report

    1. 1. Latin American Outlook Despite general recession, opportunities for companies to enter this southern market or to grow their market share do exist.
    2. 2. Where your company is located <ul><li>A North American manufacturer of products wishing to enter, or expand its presence in Latin America and the Caribbean (LATAM) cannot anticipate what operating environment it will face in the region over the next five years. </li></ul><ul><li>The economic forecast for LATAM continually undergoes revision. The past few years have seen declining growth in the area economy and in the economies of most LATAM nations, including lower than previously expected export growth in most countries. </li></ul><ul><li>Furthermore, political uncertainty in some countries and the unstable economy of others could suffocate a recovery in domestic demand for US made products. </li></ul><ul><li>LATAM market participants are now concentrating on cost-cutting measures and better price-performance ratios as ways to overcome the challenges posed by the market contraction of 2002. </li></ul>
    3. 3. Public Healthcare <ul><li>Before this economic downturn, the market for healthcare in LATAM was quite promising (see Table I). </li></ul><ul><li>However healthcare services in LATAM have been severely affected by the recent regional slump. A study conducted by the “ Organizaci ó n Mundial por el Derecho de los Pueblos a la Salud ” reveals that more than 65% of the regional population, mainly people in the middle and lower income groups, have lost all or most of their healthcare coverage. Many households replaced private healthcare coverage with reliance on public services. </li></ul>
    4. 4. Table I
    5. 5. Health spending based on GDP <ul><li>A correlation between health status and health expenditure as a percentage of gross domestic product (GDP) can be discerned across the countries. Better-performing nations are spending above 6% of GDP on healthcare, while countries with lower economic performance are under 5% of GDP. Paraguay and El Salvador are exceptions to the rule; health expenditures in these countries are 7.3 and 8.9% of GDP, respectively. The inconsistency may be attributable to variations in efficiencies of spending. </li></ul>
    6. 6. News Not all bad <ul><li>The news is not all bad. Regional economic recovery and growth are expected in the next few years. The World Bank estimates growth in LATAM GDP to be perhaps 3.7% for 2005. </li></ul><ul><li>Companies with LATAM ambitions do have options. The first thing they should do is identify the key issues affecting the stability of economic growth in the area and then plan to capitalize on the business opportunities offered in the seven largest LATAM markets: Argentina, Brazil, Chile, Colombia, Mexico, Peru, and Venezuela. </li></ul>
    7. 7. LATAM Healthcare Systems
    8. 8. Social Strata <ul><li>LATAM countries are marked by extreme contrasts between social strata. The rich are far removed from the poor, and those in power are entitled to privileged healthcare. Wealth, family lineage, and education are primary determinants of social position. These economic and cultural divisions in LATAM have produced a two-tiered healthcare system. </li></ul><ul><ul><li>The public system handles problems related to conditions of poverty, such as inadequate sanitation and infectious diseases. </li></ul></ul><ul><ul><li>The private sector provides sophisticated healthcare to the wealthier families. </li></ul></ul><ul><li>Manufacturers must provide lower-cost versions of their products as well as their standard line, in order to be able to supply the two distinct market segments. </li></ul>
    9. 9. Economic Challenge <ul><li>More than 80% of the LATAM population must be considered low-income. Financial resources are limited in most households; a chronic illness, or even an acute ailment, can pose a significant economic challenge. Consequently, providers in LATAM commonly seek lower-cost alternatives for medical treatment and healthcare. </li></ul><ul><li>Foreign manufacturing companies might also consider pursuing opportunities to supply raw materials for domestic production and engaging in joint-venture arrangements with local manufacturers. (Brazil Project we ’ ll discuss later) </li></ul>
    10. 10. Aging Population <ul><li>The aging population is also having an effect on the market. The health system is under increasing pressure to supply products that serve the diagnostic needs of the older demographic group while being constrained by the financial issues already noted. In summary, the main characteristics of the healthcare sector in LATAM are the following:  • The system lacks resources for disease prevention programs. • The main financers of the system, government and private health insurance, do not have a deep understanding of the needs and requirements of its clients. </li></ul><ul><li>• Minimal levels of automation and standardization in both management and clinical processes make fraud common. </li></ul><ul><li>• Healthcare system clients, suppliers, and financers are poorly connected. </li></ul>
    11. 11. Trends <ul><li>As a general trend, health projects in the least-developed countries focus on primary healthcare and disease control. </li></ul><ul><li>In the middle-income countries, projects focus on health sector reform, service delivery, and management. </li></ul><ul><li>Firms with expertise in epidemiology and HIV/AIDS are well positioned to compete for projects financed by the World Bank, Inter-American Development Bank, and Pan American Health Organization. </li></ul>
    12. 12. Strategies for Maximizing Sales
    13. 13. Distribution and Promotion <ul><li>To be successful in entering the LATAM market or enlarging its business in the region, a foreign company must investigate available channels of distribution in order to identify the best for a particular product line or market niche. </li></ul><ul><li>The firm must also decide whether to employ a distributor or pursue direct sales. Engaging in direct sales requires that each country’s import regulations and norms related to the distribution of the products be fully comprehended. The ability to make the appropriate decisions depends on the company having a thorough understanding of its product’s position in the marketplace. Such awareness will enable the distribution channel to be exploited to the greatest advantage. </li></ul>
    14. 14. Local Representatives <ul><li>Local representatives can assist in dealing with distribution issues. </li></ul><ul><li>Agents are able to expedite the process and avoid unnecessary expenses. </li></ul><ul><li>Distributors often market a variety of product lines, winning customers by offering a more attractive product mix. Typically based in major cities, distributors either market products on a national basis or use sub-distribution chains. </li></ul>
    15. 15. Potential Distributor <ul><li>Potential distribution partners should be investigated to determine their style of doing business, their financial circumstances, and their standing in the local medical community. </li></ul><ul><li>Also, manufacturers should be aware of the country-to-country variation in the legal implications of hiring a direct representative. Any foreign company selling a product in LATAM must meet applicable legal requirements and the technical standards stipulated by the local regulatory agency. </li></ul>
    16. 16. Style of doing business <ul><li>“ Style of doing business” is an important consideration. In meeting with a potential LATAM business partner, foreign company executives should allow local social and cultural standards and practices to prevail. </li></ul><ul><li>Business meetings should be scheduled at least two weeks in advance and should always be confirmed a couple of days before the appointment. They normally begin with a period of casual socializing, occasionally are interrupted, and may last longer than anticipated. Patience and understanding are key in maintaining a positive relationship with Latin American business partners. </li></ul><ul><li>North American firms doing business in this region should keep in mind that deadlines are often less meaningful than in their own culture. That has ramifications for forecasting and delivery schedules. </li></ul>
    17. 17. Promotion of Products <ul><li>As anywhere else, it is very important that manufacturers selling in LATAM promote their products. </li></ul><ul><li>Appropriate targeting channels are industry associations, senior doctors at key hospitals, and professional magazines. </li></ul><ul><li>Educational sessions may be the most valuable means of promotion. They provide the quickest return. </li></ul><ul><li>The perception outside of the region is that a lack of healthcare expertise on the local level is characteristic. Fostering good relationships is essential—but experience will reveal the existence of professionals with expertise. </li></ul>
    18. 18. Procurement and Payment <ul><li>Procurement and Payment. Most LATAM countries have a need to replace old instrumentation. Foreign companies should investigate the best financial avenues for institutional funding during the period between product registration and eventual approval. </li></ul><ul><li>Loan rates can vary from 5% outside of Latin America to 300% locally, so companies should plan ahead for financing through particular institutions. </li></ul><ul><li>The culture in LATAM expects for you to finance your product line as they introduce and sell it </li></ul>
    19. 19. Public Tenders <ul><li>Most of the LATAM public health systems use public tenders to meet their procurement needs. Requirements, standards, and procedures for submitting and approving tenders and bid applications are highly regulated. </li></ul><ul><li>Price plays an important role here. Normally, tenders are published annually. Most government bodies have their own supplier registration system. </li></ul>
    20. 20. Conclussion <ul><li>Today, the monetary market in Latin America and the Caribbean is restricted, while the demand for healthcare products is increasing. The present situation is relatively quiet. Now is a good time for North American companies to initiate the product registration process that takes 3 to 18 months, depending on the country. They should use this period for market investigation and segmentation, customer education, and information dissemination. When registration is complete and the end of the recession is coming over the horizon, the promise of success will be at hand. Companies should establish a market monitoring program, take advantage of available Latin American capabilities, and create an action plan for leading the market. Relationship building during this period of financial uncertainty can yield competitive advantages later. </li></ul>