Global Insight Perspective | |
Significance | Drug sales in Venezuela are reported to have risen by 10.11% in unit terms during 2007. This equates to a rise of approximately 40% in terms of value. |
Implications | The strong growth can be attributed to higher consumer spending power, and the increased ability of the drug industry to actually meet most demand. In this, the industry was buoyed by CADIVI authorising foreign currency to the value of US$2.2 billion in 2007—67% more than in 2006. |
Outlook | The drug manufacturers' industry association, Caveme, insists that most of the past drug supply problems have now been ironed out, and that the future looks rosy. However, other sectors are predicting a drastic shortage of drugs in early 2008. |
According to Caveme's figures, which were reported in the Nacional newspaper, volume sales of branded medicines rose by 11.3%, while generic sales rose by 6.4%.
Demand was particularly high for medicines that relieve pain or promote a feeling of wellbeing, such as multivitamins and personal care products. Sales of these rose by 11.4%. Meanwhile, prescription medicine sales were up by 9.8%. According to Caveme's president, Stefano Zampa, the overall market size of 510 units equates to an annual per capita purchase of 18 packs, compared to the annual per capita purchase of 10 packs in Latin America as a whole.
Caveme's latest announcement did not reveal the drug market's growth in value terms, although previous estimates suggested that average drug prices would rise by 27% in 2007 (see Venezuela: 19 December 2007: Currency Controls May Disrupt Drug Supplies in Venezuela in 2008). If this estimate is accurate, then value sales would have risen by over 40%.
Caveme Downplays Medicine Supply Problems
In revealing the figures, Stefano Zampa downplayed the supply problems that have plagued the industry in recent years, and pointed to the fact that the government's currency control board, CADIVI, authorised all the foreign currency that the drug industry asked for. In total this amounted to US$2.2 billion, which was 67% more than in 2006.
Zampa did, however, acknowledge that at times the drug supply chain has experienced difficulties. One of the worst affected areas has been oral diabetes drugs, with two leading brands of metformin—Glucofage and Glafornil—falling into short supply. At the same time, supplies of the thyroid drugs Eutirox and Tirax were also disrupted. According to Zampa, the shortages resulted from the fact that these drugs are easily affordable, meaning consumers purchase them in large quantities.
For example, 30 days' treatment with Glucofage 500 mg costs just 2.84 Bolivares fuertes (US$1.32), while Glucofage 850 mg costs only 3.92 Bolivares Fuertes for a 30-day supply. Overall demand for metformin rose by 36.6% in 2007.
Outlook and Implications
The market's strong growth, which was attributed to higher consumer spending power, represents something of a triumph for the local industry in light of the supply problems that it has endured. These problems have continued because, although foreign currency is more readily available than in the past, it takes time for the industry's requests to be processed and for the funds to actually materialise. In practice, if demand for a particular drug increases by 10% or more, supplies are exhausted and in the meantime the shelves are left bare.
Despite these continued problems, Caveme insists that the situation is "getting better", that it has a strong relationship with CADIVI and that the two organisations collaborate closely on resolving any difficulties. Caveme's upbeat tone contrasts with the stance taken by the Venezuelan Pharmaceutical Federation, which has predicted a critical shortage of medicines in early 2008.