Peru's Pharmaceutical Industry Predicted to Grow by 16% in 2008

According to Noticias Financieras, this year-end prediction was made by Simon Hagger, general manager of AstraZeneca Peru, who noted that the pharmaceutical market grew by 17.67% in the first half of 2008. Subsequently between July and August, the growth rate fell to 15.94% but Hagger is confident that this rate will be maintained until the end of the year.

According to Health Action International (AIS), Peru's pharmaceutical market will therefore have grown by 282% since 2000. In value terms, the 2008 market size of US$885 million equates to a per-capita spend of US$31.30. Meanwhile, in volume terms, the drug market's per capita consumption is expected to reach 3.5 units in 2008, compared with 2.7 units in the year 2000. The average price per unit is currently in the region of US$6.00.

Amid the big overall increases, in geographic terms the distribution of medicines is very sporadic. For example, although the capital city Lima accounts for around 30% of the population, it is responsible for 60% of consumption.

Growth is Attributed to "Similares" and to Generics

Breaking down the market further, Hagger noted that growth is being driven by so-called "similares" (i.e. branded generics), which are expected to account for a 45% market share by the end of the year. This would be similar to the share taken by innovative products. Hagger also noted that the share taken by standard (i.e. unbranded) generics is expected to remain stable at 5.3%.

Noticias Financieras noted that Hagger's assessment of the growth rate of generis is disputed by Víctor Dongo, director general of Peru's drug market regulator, Digemid. According to Dongo, generics have been increasing their share of the market, fuelled by government purchases. Dongo explains that "over the past five years, the public health network (i.e. Minsa, Essalud, and political institutes) has increased its share of the total drug market from 15% to 80% in 2007. This year, we expect this proportion to grow further".

Although Dongo did not give a specific market forecast for 2008, he believes that last year's growth rate of 9.3% will at least be maintained.

Drug Prices Set to Fall by 3%

According to Hagger, medicine prices are set to fall by 3% by the end of the year, which would represent a dramatic break from recent trends: prices were up by 8.95% in 2007, by 3% in 2006, and by 2.73% in 2005. Hagger attributed the drop in prices to greater competition among local companies and by the consequent introduction of new branded generics. AstraZeneca's marketing manager, Olga Zhiganova, noted that a new branded generic is being launched every day.

However, Dongo doubted that there would be a decrease in the actual price paid by consumers, given that increases have been over 3% at the consumer level.

Outlook and implications

Despite Hagger's upbeat forecasts for 2008, growth in future years is expected to be adversely affected by the current financial crisis. Hagger has therefore revised his 2009 growth forecast down to 13%, although he is still expecting private sector growth to reach 23%. Market size estimates for Peru are, however, notoriously inconsistent. Last year, estimates ranged from US$600 million (+5%) to US$650 million (+15%) (see Peru: 6 November 2007: Drug Makers Value Peruvian Market at US$600 mil).