Argentina's Pharmaceutical Market on the Rise as Total Sales Experience 14.4% Y/Y Growth for Q3 2009

Argentina's pharmaceutical market continues on the path of recovery as pharmaceutical sales report 14.4% year-on-year (y/y) growth to reach 3.04 million pesos (US$802,732) for the third quarter (Q3) of 2009. With this, the market reaches 8.57 million pesos for the first nine months of 2009, compared with 7.1 million pesos during the same period in 2008 (20.8% y/y growth). As reported by the latest figures of the national statistics institute (INDEC, including 75 leading firms in the market) local sales, which include national production and imports, experienced an 18.5% growth for the third quarter, while exports expanded by 23.8% during the period. Sales of total local production, which include exports and internal sales, reached 2.2 million for the quarter and 6.3 million for the first nine months of the year.

Comparing the third quarter with the second quarter, total sales experienced a 3.6% growth, with internal sales growing by 6.2% and exports dropping by 24.3%.

Market Breakdown

Looking into Argentina's pharmaceutical market breakdown, central nervous system (CNS) products continue leading consumption patterns in the country. Argentine patients have a strong culture of self-prescription and demand for psychological treatments, which build on the major characteristics of the national market.

Looking into most common CNS treatments in the country, psycholeptics, medications which provide a calming effect on patients, anti-epileptic drugs and analgesics remain as the top three.

Outlook and Implications

Looking into the last five years, pharmaceutical sales in Argentina have experienced a significant growth. For instance during the first nine months of 2005, total sales reached 4.2 million pesos, compared with 8.5 million pesos during the same period in 2009. While factors such as the devaluation of the peso have had a strong influence over these numbers, Argentina's process of recovery is evident. Growing demand represents a major opportunity for pharmaceutical firms, particularly for local players who have a leading role within the market with a 57% share of local sales. Leading firms include Roemmers and Bago.

Looking into 2009's performance and despite mounting fears of the effects of rising costs on production and drug prices, Argentina's pharmaceutical market has experienced a positive process of development. The government's efforts to control an upsurge in drug prices and maintain the affordability and availability of products, may help to maintain this positive performance through 2010. A major example of these actions has been reflected in the recent agreement to slash the prices of 600 drugs by 30% (see Argentina: 26 November 2009: Argentinean Government Signs Agreement to Slash 600 Drug Prices by 30%, Senate Bans Drug Sales Outside Pharmacies). This represents one of the initial steps in a stricter regulatory environment in Argentina, where tougher commercial rules for medications and the formalisation of previous unofficial efforts (mainly by Secretary of the Interior Guillermo Moreno) to control medication prices are taking place.

Meanwhile, looking into the country's balance of trade, the third quarter of 2009 presented major difficulties and brought a significant drop in figures. While this figure does not reflect a definitive overturn in exports' positive performance in the first two quarters, it does raise the alert for the long-term recovery process of the country's balance of trade. Major markets for Argentine firms include Brazil, Venezuela, Uruguay, Colombia, Chile and Mexico. Looking into imports, the rate of growth shows a slow but steady development of this sector. Major importers to Argentina include India, Switzerland, and Germany.

For 2010, Argentina's pharmaceutical market is expected to remain as the fourth within the region. Sales' rate of growth is very likely to continue on a positive trend of development. Major difficulties will continue to include the role of counterfeited medications within the market (estimated at 10% of sales), rising production costs, and devaluation of the peso. Government measures to deal with these setbacks will be very important over the next few years.