2. Table of Contents
1. Introduction ............................................................................................................................. 5
2. Main Indicators of Pharmaceutical Industry ............................................................................ 7
2.1. Characteristics and Expenditure Structure of Healthcare in Uruguay ..................... 9
2.2. Pharmaceutical Industry Production.......................................................................... 11
2.3. Employment and Productivity .................................................................................... 13
2.4. Export and Domestic Market Prices ........................................................................... 15
2.5. Wage Levels................................................................................................................ 16
2.6. Pharmaceutical Companies in Uruguay ..................................................................... 18
2.7. Investments ................................................................................................................ 19
3. Exports and Imports of the Pharmaceutical Sector in Uruguay ............................................. 20
3.1. Exports and Imports of the Pharmaceutical Sector in Uruguay -Products ............. 23
3.2. Exports and Imports of the Pharmaceutical Sector in Uruguay - Countries........... 25
3.3. Exports and Imports of the Pharmaceutical Sector -Companies............................ 26
4. Domestic Market Structure .................................................................................................... 28
4.1. Chain Actors ............................................................................................................... 28
4.2. Market Size and Average Prices ................................................................................. 30
4.3. Leading Companies, Products and Market Share. ..................................................... 33
4.4. Distribution Channels ................................................................................................. 35
5. National Integrated Health System (S.N.I.S) .......................................................................... 41
6. Prospects for the Pharmaceutical Sector in Uruguay ............................................................ 44
7. Research and Development Centers ...................................................................................... 45
Annex – Strategic Plan for the Pharmaceutical Sector .................................................................. 52
Bibliography ................................................................................................................................... 54
2
3. 1. Executive Summary
The main objective of this report is to analyze the recent development and the perspectives of
the Uruguayan pharmaceutical sector. This industry has been one of the most dynamic in the
last decade and has achieved an increasing relevance in the Uruguayan economy, not only
because of its qualified personnel or the generation of value added, but also because it is one
of the main industries that have become a key driver in regards to innovation and research in
Uruguay. Therefore, the pharmaceutical sector has become one of the strategic sectors for
growth, not only for its export potential but also because of its investment attraction.
The report begins by showing the main indicators in this sector. From these indicators we can
confirm that the pharmaceutical sector production has shown an increasing trend in the last
decade. In addition, this tendency has been accompanied by a growing number of employed
personnel (with a profile focused on professionals and technicians), with an increasing
performance over the last few years and with remuneration levels which are considered above
the industry average. In Uruguay, the pharmaceutical industry has approximately 100
companies, that on average are relatively larger than the average of the national industry and
that have also invested far above the average of the industry, in many cases under the
Investment Promotion and Protection Law.
By examining the trade pattern in the Uruguayan pharmaceutical industry, we can verify that
approximately over half of the total production of the sector is subject to trade. Although
Uruguayan exports of pharmaceutical products have grown in the last ten years, Uruguayan
imports have been greater than exports in the period under review, recording a trade deficit.
Medicines are the main exported product representing in 2010 nearly 64% of the total;
followed by human and animal blood and pharmaceutical preparations and goods, with a total
participation of 20% and 6.4% respectively. Likewise, it is worth mentioning the incorporation
of antibiotic exports in 2010. The destinations for these exports are concentrated in the region
(Latin America), being the MERCOSUR countries the main buyers.
Subsequently, the structure of the domestic market of the pharmaceutical sector is analyzed.
Multinational companies that manufacture patented products worldwide and national or
regional companies that sell or manufacture similar or generic pharmaceutical products are
identified as the main actors. Moreover, examining the sales of these companies it is observed
that sales from regional and national laboratories show a similar behavior than those of
multinational companies. However, if sales are examined in physical units, the results show
that national laboratories present a greater activity than foreign laboratories. Subsequently,
3
4. average prices in dollars of medicines marketed by multinational laboratories increased 75% in
the period 2004-2010, while prices marketed by national laboratories increased 50%. It is also
introduced and analyzed the structure of the sales channels of pharmaceutical products for
human use: Private channel, consisting of drugstores and pharmacies, health insurance
channel and the public channel (Government).
In order to contextualize the analysis, the characteristics of the current National Integrated
Health System (SNIS) are briefly displayed, as well as the impacts that this system can bring
upon the distribution chains. In this regard, the potential impacts of the health reform on the
Uruguayan pharmaceutical industry could come primarily through changes in the distribution
of the number of members between the private sector (health insurance schemes), and the
public sub sector that could generate modifications in the participation of each of the
marketing channels (private, health insurance and State), or also through new regulations on
the production and marketing of medicines.
Finally, the main perspectives for the Uruguayan pharmaceutical sector are outlined. For the
following ten years the consolidation of the sector’s growth is foreseeable and its turnover is
expected to expand at an average annual rate of between 3%-9%. Also, this increase would be
evidenced by the export potential of the sector, mainly due to the small size of the domestic
market and the aging demographic structure of Uruguay (similar to those of developed
countries). On the other hand, this expected increase in production would be accompanied by
significant increases in the company’s productibility, given the increasing use of technology
and the incorporation of new technologies. A moderate increase in the concentration at
businesses-level is expected, simultaneously with a larger presence of foreign capital on
businesses property.
4
5. 1. Introduction
The Uruguayan pharmaceutical industry has presented a remarkable dynamism in the past
eight years, boosted by sales in the domestic and external market, with a significant growth of
investment in the sector together with the establishment of new research centers and new
industries.
During this period, the average increase in the Uruguayan pharmaceutical industry has
exceeded the manufacturing industry as a whole and the national economy, despite the
extraordinary growth observed in these years. Also, pharmaceutical industry exports have
been more dynamic than the total exports of the country, even though these have
experienced an historical “boom" regarding their growth, driven mainly by the emergence of
new export flows, a rise of international demand for Uruguayan commodities exports as well
as by the sharp increase of their international prices.
The pharmaceutical industry has been selected by the Government as one of the strategic
sectors to be boosted by industrial policy sector plans in the period 2010-2020, developed by
the “Productive Cabinet” (Gabinete Productivo) within the framework of the Sectoral Tripartite
Councils, with the participation of the main public and private actors involved in the industry.
The main objectives of the industrial plan is to strengthen the production chain, promoting
innovation and development as well as the internationalization of the production, by achieving
the following vision in regards to what the sector should be:
“To become a leading productive sector in South America and a worldwide reference. We want to be
recognized as a model sector due to the quality of our products, the technology we use and the
specialization of our human resources, which enables us to gain access to the most demanding markets
worldwide and continue to provide high quality medicine at affordable prices for all Uruguayans”.
The main objective of this report is to analyze the recent development and prospects of the
Uruguayan pharmaceutical sector. For this purpose, the report is structured as follows. First of
all, the report analyze the Uruguayan market for the pharmaceutical industry by stressing the
main indicators of the sector that account for the development and relevance that this
industry has acquired in the Uruguayan economy. Section four shows the business trade
analysis of the Uruguayan pharmaceutical industry. Afterwards, the structure of the domestic
market of the pharmaceutical sector is analyzed, exploring, in particular, the main agents and
the distribution chains amongst them. In section six the characteristics of the current National
1
Pharmaceutical Sectoral Plan, Productive Cabinet, June, 2011.
5
6. Integrated Health System (SNIS) are briefly displayed, as well as the impacts that this system
can bring upon the distribution chains. The perspectives and prospective of the sector are
presented in section seven. Finally, section eight lists some of the main tools through which
research and development of the pharmaceutical industry in Uruguay is conducted.
6
7. 2. Main Indicators of Pharmaceutical Industry
The national pharmaceutical sector consists of four production chains which are transversally
crossed by Biotechnology2: Pharmaceutical laboratories for human use; veterinarian
laboratories; laboratories for phytotherapy and nutraceutical products and manufacturers of
therapeutic devices.
Within pharmaceutical laboratories for human use we can find multinational companies which
manufacture patented products worldwide, national or regional companies that manufacture or
market similar or generic pharmaceutical products and sales offices engaged in the
intermediation of products within the sector.
Pharmaceutical laboratories for human use include pharmaceutical specialties, which can be
based on active principals of chemical origins or a result of biotechnological applications. An
existing classification is the following:
Patented Products. Are those whose manufacture is temporarily protected by the Patent
Law, enabling the laboratory that registered the patent to be the only one authorized to
produce or market these products, and because of this exclusivity, they are the most
expensive products which leave a high profit margin for the company.
Generic Products. Products that are characterized by having the same active principle of
patented products and that also have gone through bioequivalence testing (which show
that the same concentration in the destination body at the same speed can be
accomplished) to guarantee that they are interchangeable with the patented product.
In the veterinary sector companies with biological-veterinary specialties, pharmaceutical-
veterinary companies and sales offices dedicated to importing can be found. These laboratories
include products that are also based on chemical origin active principles or are a result of
biotechnological applications. Chemical- based supplies are imported while supplies from
biological origin are from national origin, as well as culture media. Its production is destined to
the domestic market and export.
Another industry chain include phytotherapy products which are obtained from plants and have
therapeutic purposes to prevent, mitigate or cure a pathological condition, it also includes
2
Defined by the United Nations Convention on Biological Diversion as, any technological application that uses
biological systems, living organisms, or derivatives thereof, to make or modify products or processes for specific use.
7
8. nutraceutical products which are isolated or purified products obtained from food. Even though
the development of this chain is emerging in terms of trade, alliances between public and
private actors along with local producers have been materialized, these have enabled Uruguay
to achieve a high level of quality in the international arena. This sector has many opportunities
for development since the international demand for natural products has grown significantly.
Diagnostic and therapeutic devices manufacturers produce reagents, reference and control
standard solutions, analytical tools, and systems designed for the use in the diagnosis of disease
or other conditions.
Biotechnology runs through each one of these sectors, and it is the most dynamic part, with
great opportunities for development mainly due to the fact that international demand for
biotechnological applications in the different segments of the human and animal pharmaceutical
industry is growing significantly.
Chart No. 1- Structure of the Pharmaceutical Chain in Uruguay
Source: Productive Cabinet
8
9. 2.1. Characteristics and Expenditure Structure of Healthcare in Uruguay
In order to analyze the Uruguayan pharmaceutical industry, the following summarizes the
demographic and social structure of the country.
In Uruguay the population growth rate is relatively low – 0.5% per year—which in the long run
does not favor the expansion of the domestic market of medicines and thereby the
development of the pharmaceutical industry. However, it is worth mentioning that in Uruguay
the entire population has formal healthcare coverage, according to data provided by the
Ministry of Public Health (MSP)3 .
On the other hand, elderly people (aged 65 and above) represent approximately 13% of the
total population. The relative weight of such group age, together with a life expectancy at birth4
average of 76 years old, generates a high consumption of medicines because this consumption is
greater in the aging population. In proportion to other Latin American countries, Uruguay is the
country with more elderly people over 65 years of age. As shown in the following graphics,
there is a strong tendency towards the increase in the aging of the country’s population.
Graph No. 1- Population by Gender and Five Year Age Groups
Source INE
On the other hand, in Uruguay, health expenditure remained approximately at 7.5% of the GDP
in 2009. Although this share has decreased in regards to previous years, even so, this percentage
is very high compared with other countries of Latin America, such as the cases of Paraguay,
Colombia and Ecuador.
3
Source: Creation of the National Integrated Health System 2005-2009, Ministry of Public Health
4
According to data provided by the National Statics Institute (INE), in 2010 life expectancy at birth for men was of 73
years of age whereas for women it was of 80 years of age.
9
10. Chart No. 2 – Health Expenditure (% of GDP)
Country 2006 2007 2008 2009
OECD (High-Income Economies) 11.15 11.12 11.29 12.08
High-income Economies 10.94 10.90 11.02 11.87
Argentina 8.45 8.44 8.44 9.53
Brazil 8.48 8.44 8.44 9.05
Chile 6.62 6.90 7.49 8.18
Latin America and the Caribbean 6.95 7.10 7.17 7.75
(Developing Economies)
Latin America and the Caribbean 6.94 7.09 7.15 7.74
Uruguay 8.24 7.81 7.78 7.45
Paraguay 6.43 6.24 5.97 7.08
Colombia 6.17 6.06 5.88 6.42
Ecuador 5.26 5.40 5.32 6.08
Venezuela 5.74 5.80 5.40 6.02
Bolivia 5.14 4.71 4.36 4.82
Peru 4.30 4.26 4.47 4.62
Source: Source World Health Organization National Health Account database (www.who.int/nha/en)
If the average of per capita health expenditure is evaluated (2006-2009), it is observed that
Uruguay shows an approximate expenditure of US$ 600 per-year; levels which are close to those
of Argentina’s and Brazil’s per capita health expenditures. Meanwhile, during this period; on
average 14% of health expenditure correspond to medicine expenses, according to data
provided by the National Statics Institute (INE).
Chart No.3 – Average per Capita Health Expenditure
Country Average in US$
2006-2009
High-Income Economies 4,225
Chile 705
Brazil 638
Argentina 612
Uruguay 618
Venezuela, RB 536
Latin America and the Caribbean 488
Latin America and the Caribbean
486
(Developing Economies)
Colombia 288
Ecuador 206
Peru 176
Paraguay 136
Bolivia 72
Source: Source World Health Organization National Health Account database (www.who.int/nha/en).
10
11. From the total health expenditure, it is essential to identify how much does public expenditure
represents. When this analysis is carried out, Uruguay shows that public expenditure on health
represents 63% of the overall expenditure. Chart No. 4 shows the list of countries in the region
with their corresponding percentage of public expenditure on health. Again, these figures are
similar to those of Latin America’s most developed countries.
Chart No.4 – Public Expenditure on Health as a Percentage of Total Health Expenditure
Country 2006 2007 2008 2009
Colombia 84 84 84 84
Argentina 56 59 63 66
Bolivia 68 66 63 63
Uruguay 53 54 63 63
Peru 59 58 59 59
Ecuador 44 42 42 48
Chile 42 43 44 47
Brazil 42 42 44 46
Paraguay 39 41 40 43
Venezuela 42 47 45 40
Source: Source World Health Organization National Health Account database (www.who.int/nha/en).
2.2. Pharmaceutical Industry Production5
According to data from the Economic Activity Survey (Encuesta de Actividad Económica-EAE)
developed by the National Statics Institute and corresponding to 2008; the Uruguayan Gross
Value of Production (GVP)6 of the pharmaceutical industry amounted to US$ 314 million.
Estimates prepared for the 2009-2010 period show that the GVP climbed up to US$ 327 million
and US$ 371 million respectively.
5
The information provided in this paragraph includes the productive activity of the pharmaceutical laboratories for
human use, veterinary, phytotherapy and nutraceutical. According to our own estimates, based on the work of
Bittencourt, et al (2010), participation in veterinary laboratories can be quantified in about 13% of the sector
production, while the participation of phytotherapy and nutraceutical laboratories can be considered marginal.
6
The gross value of production, industrial GVP, is defined as the sale of goods manufactured with domestic net raw
material from granted discounts, plus the income from sale of unprocessed raw material, minus the cost of sold
unprocessed raw material, plus manufacturing work for third parties, plus the variation of stocks of finished products,
plus the variation of stocks of products in process. The variation of stocks and sales are valued at producer price and
for this reason it includes taxes to net products subsidies.
11
12. Graph No. 2- Gross Value of Production of the Pharmaceutical Industry (US$ Millions)7
Source: Own estimates and elaboration based on the National Statics Institute.
To know the actual evolution of the sector, excluding the effect of "price" in the estimation of
the production value, it is appropriate to consider the Index of Physical Volume (IFV). In the
second half of the 1990s, as a result of the exodus of more than 20 multinational companies
such manufacturer companies, the pharmaceutical sector recorded a sharp decline in their
production levels. However, as of 2002 a recovery process began which has continued up to the
present day, along with the recovery of the entire manufacturing industry. This growth in the
pharmaceutical industry was maintained even in 2009, when the industry recorded a slight
decline as a result of the deepening of the international economic crisis. According to the
Industry Chamber of Uruguay (CIU) "while in 2009, the physical volume of the pharmaceutical
industry sales were not affected by the international crisis, when analyzing sales by destination,
it seemed that exports showed a significant contraction as of May 2009 on the occasion of the
reduced international demand, while the dynamics of sales in market offset said fall"8.
Figure three shows the evolution of the sector’s IPV , which shows clearly the drop recorded by
the pharmaceutical activity up to 2002, and since then a continuous growth that has evolved in
the same way as the industry as a whole. Likewise, and as it was mentioned above, after the
2002 crisis, the dynamism of the Uruguayan pharmaceutical industry has been significantly
superior to the manufacturing industry as a whole, which is significantly noteworthy since this
industry has shown one of the periods of highest growth in its history.
7
Data for the years 2006 and 2009 and 2010 are based on our own estimates.
8
“Enfoques Económicos”, Época III, Año 12, No.27. December, 2010, pág. 79
12
13. Graph No.3 – Physical Volume Index of the Pharmaceutical Sector and the Industry in General.
Base Year 2006
Source: National Statics Institute
2.3. Employment and Productivity
Between the years 1999-2003, the pharmaceutical industry employed approximately 2,200
people. From this year onwards, a steady path of increases in the number of employed
personnel began, placing this value in 2010 in about 3,860 employees approximately. It is
important to mention the high participation of technicians and professionals, and to a lesser
extent, the participation of operators during these last years.
Graph No.4- Number of Employed Personnel in the Pharmaceutical Sector. Base Year 2006
Source: National Statics Institute INE
On the other hand, there is available information from the Employed Personnel Index and from
the Hours Worked Index (HWI) of the pharmaceutical industry, which is important to consider.
13
14. The following graphics confirm that in 2004 a turning point occurred in the sector, mainly due to
the fact that from this year on, a significant increase in regards to employed personnel and
hours worked was recorded.
Graph No.5 – Variation of the Employed Personnel Index and Hours Worked Index. Base Year
= 2006
Source: National Statics Institute INE
From the above indicators, it is possible to get close to one of the sector’s productivity indicator.
In this sense, the apparent productivity of the sector, measured as the ratio between the
variations of IPV/EPI, shows a growing trend in recent years (see Grap 5).
From 2002 to present time, the pharmaceutical industry accumulates growth levels of
productivity of 12.2%, with an annual average increase of 1.3%, superior performance to the
one observed in the manufacturing industry as a whole.
Graph No.6 - Variation of Productivity Measured by the Ratio between the IPV and the EPI.
Base Year 2006
Source: National Statics Institute INE
14
15. 2.4. Export and Domestic Market Prices
Medicine prices have shown an increasing trend after the steep decline observed at the
beginning of the past decade, both in export and domestic market`s sales prices (measured in
current dollars).
According to the Chamber of Industry of Uruguay (CIU), external sales of medicine prices
showed an upward trend between the end of 2002 and mid-2009. However, over the last year
and a half, the sector’s export prices showed a significant reduction. Yet, export prices in 2010,
on average, were higher than those of the 2003-2005 period, but lower than the prices during
the 2008-2009 period.
Graph No.7 – Evolution of Prices of the Pharmaceutical Sector Measured in Current Dollars
Quarterly Mobile Series 2006 Base Indexes=100
Export Domestic Market
Source: National Statics Institute (INE) and Chamber of Industry of Uruguay (CIU)
For its part, selling prices of medicinal products in the domestic market expressed in dollars have
shown a sustained growth over time, driven mainly by the increase of prices (in Uruguayan
pesos) of medications, as well as by the appreciation of the local currency against the dollar.
Thus, nowadays the average prices of medicines sold in the domestic market measured in
current dollars are greater than those observed prior to the devaluation of 2002.
It is also worth mentioning that the evolution of medicine prices in the local market has not
been homogeneous within each therapeutic group. While in 2010 analgesics prices measured in
dollars were 34.3% higher than in 2000, prices of antibiotics were 22% lower.
15
16. Graph No.8 – Evolution of Internal Prices Measured in Current Dollars
Quarterly Mobile Series 2006 Base Indexes=100
Analgesics Antibiotics
Source: National Statics Institute (INE)
On the other hand, in 2010 medicine prices for respiratory disorders and medicines to prevent
cardiovascular diseases were 2.3% and 12.2% higher than those obtained in 2010.
2.5. Wage Levels
The Uruguayan pharmaceutical industry is characterized by employing a higher percentage of
professionals and technicians than the manufacturing industry average. According to data
provided by the Economic Activity Survey and developed by the National Statics Institute (year
2005), in which the employed personnel is disaggregated into job categories, 12.9% of the
employees in the pharmaceutical industry belong to a technical-professional scale, while the
average of the manufacturing industry is 2.6%. Likewise, due to significant investments in the
sector regarding machinery and technology during the 2005-2010 period, it is expected that the
proportion of the total amount of employed technicians and professionals has grown in recent
years, a tendency that will continue to increase in coming years according to specialized sources
of the sector. The evolution of wages in the pharmaceutical industry9 -estimated by the behavior
of the Average Wage Rate of the chemical industry- show a persistent recovery since 2004,
although in real terms the current levels of the pharmaceutical industry (2010) are considerably
lower than 10 years ago. However, measured in current dollars, wages in the sector are greater
9
The information corresponds to the Average Wage Rate (Indice Medio de Salarios -IMS) of the chemical industry,
sectoral cluster in which the pharmaceutical industry is located, maximum disaggregation level achieved in the INE
statistics. However, while there may be small differences regarding the behavior within the various sectors that make
up the chemical industry, it is understood that these sectors show a similar behavior over time.
16
17. than those observed at the end of the 90’s, mainly explained by the appreciation of the
Uruguayan peso against the dollar during these last years.
Graph No.9- Evolution of Wages in the Chemical Industry
Quarterly Mobile Series Índices base 2006=100
Dollars Actual uruguayan pesos
Source: National Statics Institute (INE)
On the other hand, the chart below shows the average annual remuneration received by the
pharmaceutical industry employees in the past four years, and the average cost per worker for
the industry during the same period10.
Chart No.5 – Average Annual Wage and Cost per worker of the Pharmaceutical Industry in US$
Average Average
Year
Wage Expense
2007 15,815 17,335
2008 18,788 21,035
2009 19,531 21,866
2010 23,104 25,868
Source: National Statics Institute and our own estimates
Despite recording a noticeable increase in wages and costs of workers of the national
pharmaceutical industry (46.1% to 49.2% respectively) in the past four years, explained mainly
by the significant increase (in dollars) of prices in the Uruguayan economy , the cost of human
resources in Uruguay continues to be very competitive when compared to the rest of the region.
10
Annual average remuneration includes payments for bonus (13th salary in the year) and holiday payment, while the
average cost per employee in addition to the remuneration received by them includes the costs of social laws
(contributions to the social security and national health insurance) carried out by the companies.
17
18. 2.6. Pharmaceutical Companies in Uruguay
In 2009, the national pharmaceutical industry had a total of 103 companies, representing less
than 1% of the total of existing companies in the manufacturing industry.
While classifying the sector’s companies according to the employed personnel range, it denotes
that 65% (67 companies) correspond to micro and small businesses (less than 20 people), 24%
(25 companies) employ between 20 and 99 people, and 11% (11 companies) are major
companies (100 employees or more). If this information is compared with the information of
the manufacturing industry we can confirm that companies from the pharmaceutical sector are
on average relatively larger than those of the national industry sector. This situation is related to
the significant investments and entry costs made by the pharmaceutical sector in order for
companies to operate under competitive terms.
Likewise, 88.1% of the employed personnel of the pharmaceutical industry belong to medium
and large companies (over 20 people), while this value is 65.3% in the overall industry and 56.1%
in the country. This shows that companies from the pharmaceutical industry are characterized
for creating important workforce, more than the industry average and the country in general.
Chart No.6- Number of Companies in the Pharmaceutical Industry by stretch of Employed
Personnel. Year 2009
Total of 100 or
1-4 5-19 20-99
Companies more
Country 110,818 91,998 14,748 3,433 639
Industry 14,853 10,944 2,922 784 203
Pharmaceutical
103 34 33 25 11
Industry
Source: National Statics Institute (INE)
Chart No. 7- Distribution of Employed Personnel by stretches. Year 2009
Distribution of Employed Personnel
According to Range
Total of Employed
1-4 5 - 19 20 - 99 100 and more
Personnel
Country 633,135 24.4% 21.2% 21.4% 34.7%
Industry in
127,934 22.2% 21.0% 25.0% 40.3%
General
Pharmaceutical
3,572 1.8% 10.1% 35.0% 53.1%
Industry
Source: National Statics Institute INE
18
19. 2.7. Investments
In the period 2004-2008, the sector invested an average of $ 13.4 million of dollars per year,
especially in 2006 and 2008 in which over 15 million of dollars were invested, as shown in the
graphic below. In relation to the value of production in the period under consideration, the
investment in the sector, on average, represented 6.8% of the aforementioned, reaching its
maximum participation in 2006, when it represented nearly 10% of the GVP. Even more
significant are the invested amounts when measured in relation to the operating surplus
obtained by enterprises in the sector, where the invested amounts correspond on average to
45% of the income generated by the national pharmaceutical industry. Therefore, one can
conclude, that the pharmaceutical industry invests a rather significant proportion of its profits in
the expansion of its productive capacity.
Graph No. 10- Gross Fixed Capital Formation- Pharmaceutical Industry
(Millions of US$ 2004-2008)
Source: National Statics Institute INE
If we analyze the investment by component for the last year of available information (2008), it
stands out that 47% (US$ 7.8 million) of the sector’s investment corresponds to machinery and
equipments used for production, while 35% (US$ 5.9 million) accounted for buildings and
construction, and 16.6% accounted for intangible assets, and the remaining 2.0% corresponded
to others. It is important to mention that within the framework of the Investment Promotion
and Protection Law (Law 16.906), whose mission is to promote and increase investment in the
country through the granting of tax benefits, several projects in the pharmaceutical industry
were promoted during the periods of 2005 to 2010. All projects declared of national interest by
the Application Commission (Comisión de Aplicación-COMAP11), under the protection of the
abovementioned law reached US$ 8.6 million in 2010, corresponding to a total of 11 projects.
11
The Investments Law Application Commission: Body responsible for the granting of benefits under the protection
of Law 16.906. Note (*): Investment made between January – August 2011, Source: COMAP.
19
20. During the period of January-August 2011, the sector’s investment were widely superior to all of
the considered years, they amounted to US$ 60.4 million with a total of 36 projects.
Chart No.8 – Projects Promoted by COMAP-Pharmaceutical Industry in Uruguay
US$ Millions Number of Projects
2005 3.1 4
2006 18.8 6
2007 2.4 2
2008 10.1 7
2009 20.4 12
2010 8.6 11
2011* 60.4 36
Source: Ministry of Economics and Finance (MEF)-COMAP
3. Exports and Imports of the Pharmaceutical Sector in Uruguay
The analysis of foreign trade in the Uruguayan pharmaceutical sector is of significant importance
since it enables the evaluation of the positioning of the country in the international market.
Approximately over half of the total production of the sector is subject to trade. The foreign
trade pattern of the Uruguayan pharmaceutical industry based on data from the National
Customs Directorate is analyzed below (DNA12 13- Dirección Nacional de Aduanas).
Uruguayan exports of pharmaceutical products have shown a growing trend in the last ten
years. This shows the growth of the sector in Uruguay and the strengthening of the industry.
Only in two opportunities a slight inter-annual decline of international sales was evidenced in
2002 and 2009. However, these declines, at levels of 6% and 8% respectively, coincide with the
economic crisis that affected the industry in general.
In 2010, the value of Uruguayan exports of pharmaceutical products reached a figure close to
US$ 105 million, slightly lower than the 2009 record, which amounted to US$ 114 million.
However, in the first half of this year, exports of pharmaceuticals have already accumulated a
12
Headings 2936, 2937, 2939 y 2941 of the Harmonized System from chapter “Organic Chemical Products” from
chapter 29 are included, and all the headings from chapter 30 “Pharmaceutical Products”
13
In the same way, as in the production data, the statistics of foreign trade do not allow a clear distinction between
exports (imports) of pharmaceutical products for human use from those of veterinary pharmaceutical products, since
the tariffs positions used in foreign trade statistics coincide. In a general sense, based on estimates of Bittencourt
(2010) and our own estimates, one can calculate the participation of the above mentioned in the total exported by
the pharmaceutical sector of a 30%, and 16% on imports.
20
21. total amount of 60 million, which suggests that if this pace continues, a new annual record will
be achieved.
When it comes to Uruguayan pharmaceutical imports, it is quite obvious that these imports are
greater than the exports throughout the entire period under review, determining a negative
trade balance. However, it is worth noticing that this gap is reduced considerably over the
period, being the trade deficit in 2010 26% less than in 2001.
Chart No.9 – Trade Balance of the Uruguayan Pharmaceutical Sector (US$ millions)
First Half
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
of 2011
Exports 31 29 30 43 52 62 76 104 114 105 60
Imports 144 100 86 92 96 107 123 151 149 188 104
Trade Balance -114 -72 -56 -49 -45 -45 -47 -47 -35 -84 -44
Source: Prepared by Uruguay XXI based on data from the DNA
Graph No.11- Uruguayan Exports and Imports of the Pharmaceutical Sector
Data in US$ millions
Source: Prepared by Uruguay XXI based on data from the DNA
The export coefficient can be calculated in order to quantify the percentage of total production
of the pharmaceutical sector destined for the external market. This indicator is calculated as the
division of the sector’s exports and the total production of the sector. By using the GVP the
export coefficient showed an upward trend up to 2009 (almost 35%). However, in 2010 the
export coefficient dropped as a result of the decrease in exports during that year while
production continued to increase.
21
22. The results obtained from the export coefficient show the increasing importance of the external
market to place the production of the Uruguayan pharmaceutical industry. Dousksas et al
(2008), consider that the main factors that have boosted the external sales of the national
laboratories are the following: The Uruguayan market has the lowest levels of prices in Latin
America, a cheap workforce compared to the destination countries of the domestic production,
a strategic logistic position to supply the region in due time and proper form, as well as installed
capacity which allows supplying new markets. The factors previously exposed, allowed to
expand sales abroad at an annual average rate of 14.5% during the last ten years. Meanwhile,
this strategy has improved the profitability obtained by national companies.
Although the current position of multinational companies do not have industrial plants installed
in Uruguay, in some cases they have established the strategy of centralizing the distribution in
Uruguay and supply other subsidiaries in the region from our country, mainly Paraguay and
Bolivia (to a lesser extent). This strategy enables companies to optimize resources and reduce
logistics costs. Consequently, re-exports of pharmaceutical products are carried out by
multinational enterprises during the export of pharmaceutical products (NCM 30 – Common
Nomenclature for the Common Southern Market), as well as in the domestic production of
medicines.
Graph No.12 – Export Coefficient (%)
Source: Prepared by Uruguay XXI based on data from the DNA
On the other hand, it is interesting to analyze the participation of imports in the total apparent
consumption as a way to quantify how much of the domestic demand is supplied with external
production. The apparent consumption is defined as the GVP plus the imports minus the
22
23. exports. This variable had a significant increase in the period 2003-2010, which confirms the
growth of the pharmaceutical industry in recent years.
As seen in the graphic below, imports of the pharmaceutical sector explain between 41 and 47
percentage points of the total apparent consumption over the last decade. These accounts for
the fact that imports satisfy an important part of the domestic demand of the sector.
Graph No.13 – Apparent Consumption According to Origin
Data in US$ millions
Source: based on data from INE and DNA
3.1.Exports and Imports of the Pharmaceutical Sector in Uruguay -
Products
A detailed analysis of the products comprised within the pharmaceutical sector should be
carried out in order to have a complete overview of the Uruguayan pharmaceutical industry. As
shown in the chart below, Medicines (NCM 3004) are the main exported product in the
pharmaceutical sector, representing in 2010 63.7% of the total. Other relevant exported
products are human and animal blood (NCM 3002), and Pharmaceutical Preparations and Goods
(NCM 3006), with a total participation of 19.5% and 6.4% respectively. On the other hand, it is
noteworthy the incorporation of antibiotics exports for a value of US$ 57,683 dollars in 2010.
It is also worth mentioning that the pharmaceutical sector includes exports with High
Technology Content (HTC). In 2010, the pharmaceutical sector had a 90% participation in
exports with High Technology Content. In addition, the pharmaceutical sector occupies the
second position in the ranking of the most innovative sectors, proving that 48% of companies
23
24. are innovative.Regarding the Sector’s imports, Medicines (NCM 3004) also occupy first place in
the ranking, followed by human and animal blood (NCM 3002), and non-dosed medications.
Chart No.10 – Uruguayan Pharmaceutical Exports by Product
Data in US$ millions
NCM % variation % part.
Description NCM4 2008 2009 2010
4 2010/2009 2010
3004 Medications 74.07 81.53 66.64 -18.3% 63.7%
Human and Animal Blood for
3002 13.99 14.80 20.44 6.9% 19.5%
therapeutic purposes
Pharmaceutical Preparations and
3006 4.99 6.46 6.68 0.3% 6.4%
Goods
Glands and other Organs for
3001 0.98 2.05 3.50 1.8% 3.3%
Opotherapy Uses
Natural or Reproduced by Synthesis
2937 2.64 2.54 3.17 0.8% 3.0%
Hormones
Pro-vitamins and Vitamins, Natural or
2936 5.06 4.66 2.84 -2.2% 2.7%
Reproduced by Synthesis
3003 Non-Dosed Medications 1.85 2.04 1.17 -1.1% 1.1%
2941 Antibiotics 0.01 0.00 0.06 0.1% 0.1%
Vegetable Alkaloids, Natural or
2939 0.01 0.01 0.05 0.0% 0.1%
Reproduced by Synthesis
Wadding, Gauze, Bandages and other
3005 0.08 0.07 0.04 0.0% 0.0%
related items
TOTAL 103.68 114.18 104.60 -11.75% 100%
Source: Prepared by Uruguay XXI based on data from the DNA
Chart No.11 – Uruguayan Pharmaceutical Imports by Product
Data in US$ millions
NCM % variation % part.
Description 2008 2009 2010
4 2010/2009 2010
3004 Medications 89.32 88.26 106.56 20.74% 56.61%
Human and Animal Blood for therapeutic
3002 24.97 26.99 38.17 41.42% 20.27%
purposes
3003 Non-Dosed Medications 7.61 7.39 9.53 28.92% 5.06%
3006 Pharmaceutical Preparations and Goods 6.70 6.38 8.41 31.83% 4.47%
Pro-vitamins and Vitamins, Natural or
2936 5.38 4.60 6.29 36.80% 3.34%
Reproduced by Synthesis
Natural or Reproduced by Synthesis
2937 5.10 4.27 5.55 30.15% 2.95%
Hormones
2941 Antibiotics 4.60 3.75 4.44 18.47% 2.36%
Glands and other Organs for Opotherapy
3001 2.21 2.78 4.38 57.85% 2.33%
Uses
Wadding, Gauze, Bandages and other
3005 3.03 3.58 3.76 4.95% 2.00%
related items
Vegetable Alkaloids, Natural or
2939 1.70 1.10 1.15 4.72% 0.61%
Reproduced by Synthesis
TOTAL 150.61 149.08 188.25 26.27% 100%
Source: Prepared by Uruguay XXI based on data from the DNA
24
25. 3.2.Exports and Imports of the Pharmaceutical Sector in Uruguay -
Countries
By observing the exports of the pharmaceutical sector by destination markets, these indicate
that they are concentrated in the region (Latin America), being the MERCOSUR member
countries the main buyers. Exports of pharmaceutical products to this bloc represent 34% of the
sector’s total exports.
On the other hand, it is worth mentioning that in 2010 the exports to “Zonamérica” Free Zone
represented 22.6% of the industry exports. This is due to the presence of Roemmers S.A.
Laboratories which operates in this Free Zone, re-exporting their products from “Zonamérica” to
other countries mainly from Latin America. It is important to take into account that this is the
leading exporting company in the sector.
As far as imports are concerned, the main suppliers of the Uruguayan pharmaceutical industry
are Argentina, United States and Brazil, representing all together 41% of the total imports in
2010.
Graph No.14 – Main Destinations of Uruguayan Exports of the Pharmaceutical Sector
Year 2010
Spain, 3,2% Bolivia, 2,6%
South
Africa, 3,3%
Ecuador, 3,8%
Chile, 3,9%
Others, 21,3%
Venezuela, 5,9%
Argentina, 6,9%
Zonamerica,
Brazil, 13,2% 22,6%
Paraguay, 13,3%
Source: Prepared by Uruguay XXI based on data from the DNA
Graph No.15 – Main Destinations of Uruguayan Imports of the Pharmaceutical Sector
Year 2010
25
26. Source: Prepared by Uruguay XXI based on data from the DNA
3.3.Exports and Imports of the Pharmaceutical Sector -Companies
The strong concentration of exports at enterprise level is confirmed if we examine said exports
in the pharmaceutical industry. The first four laboratories in the ranking account for 54.2% of
total exports. Roemmers laboratory is the main exporter with 22.8%, followed by Microsules
Laboratory (15.5%), Roche International (8.3%) and Urufarma (7.5%). On the other hand,
imports of the sector have a greater degree of diversification by companies. In this case, the first
ten jointly represent 58% of the total.
Meanwhile, leading companies should be examined according to whether they belong to some
of the representative bodies of the pharmaceutical sector (National Laboratories Association -
ALN) and the Chamber of Pharmaceutical Specialties and Related Sectors – C.E.F.A). Within the
ALN, we can find: Roemmers, Urufarma, Libra Laboratory, Farmaco Uruguayo and Celsius
Laboratories. For their part, Roche International and Abbot Laboratories Uruguay belong to
CEFA.
26
27. Chart No.12 – Leading Export Companies of the Pharmaceutical Sector
Year 2010 - Data in US$ millions
Company US$ Part. %
ROEMMERS S.A. 23.9 22.8%
LABORATORIOS MICROSULES URUGUAY S.A. 16.3 15.6%
ROCHE INTERNATIONAL LTDA. 8.7 8.3%
URUFARMA S.A. 7.9 7.6%
LIBRA LABORATORY S.A. 6.3 6.0%
SYNTEX URUGUAYA S.A. 6.2 5.9%
MERIAL S.A. 4.7 4.5%
PRONDIL S.A. 4.7 4.5%
CLAUSEN LABORATORY S.A. 4.3 4.1%
FARMACO URUGUAYO S.A. 3.9 3.7%
DIROX S.A. 2.8 2.7%
ABBOTT LABORATORIES URUGUAY S.A. 2.3 2.2%
SANTA ELENA S.A. 2.2 2.1%
LA RESERVA TRADING CO. S.A. 1.8 1.7%
CELSIUS LABORATORIES S.A. 1.7 1.6%
OTHERS 7.1 6.8%
TOTAL 104.6 100.0%
Source: Prepared by Uruguay XXI based on data from the DNA
Chart No.12 – Leading Import Companies of the Pharmaceutical Sector
Year 2010 - Data in US$ millions
Company US$ Part. %
ROCHE INTERNATIONAL LTDA. 22.0 11.7%
ROEMMERS S.A. 13.8 7.3%
GRAMON BAGO URUGUAY S.A. 9.7 5.2%
BAYER S.A. 9.2 4.9%
ABBOTT LABORATORIES URUGUAY S.A. 6.0 3.2%
MINISTRY OF PUBLIC HEALTH 5.8 3.1%
LIBRA LABORATORY S.A. 5.8 3.1%
GLAXOSMITHKLINE URUGUAY S. A. 5.7 3.0%
WARNER LAMBERT URUGUAY S.A. 5.6 3.0%
URUFARMA S.A. 5.3 2.8%
BOEHRINGER INGELHEIM S.A. 4.6 2.5%
S.A.NOFI AVENTIS URUGUAY S.A. 4.6 2.4%
CLAUSEN LABORATORY S.A. 4.5 2.4%
S.A.C.E.I.NICOLAS VAN HAAREN 3.5 1.9%
ASTRAZENECA S A 3.2 1.7%
OTHERS 78.8 41.8%
TOTAL 188.2 100.0%
Source: Prepared by Uruguay XXI based on data from the DNA
27
28. 4. Domestic Market Structure
To perform a proper overview of the behavior and development of the Uruguayan
pharmaceutical market, it is necessary to identify the main actors involved, as well as the
different production marketing channels.
4.1. Chain Actors
Within the pharmaceutical laboratories for human use, it is possible to distinguish three
different competitive groups, which can be defined by their nature as well as the competitive
strategies they employ. Based on their nature, they can be divided into:
- Multinational enterprises manufacturers of patent products on a global scale.
- National or regional companies that sell or manufacture similar or generic
pharmaceutical products.
- Sales offices engaged in the intermediation of products in this sector.
This third group centralizes its activity in public biddings, medicine purchases by the State, and
does not have a relevant participation in the rest of the production marketing channels.
Moreover, and in the majority of cases, these companies are importing offices, which carry out
imports from countries with low prices, mainly China and India. Thus, the following paragraph
focuses mainly in the behavior of the first two groups.
Multinational corporations are companies that are part of global pharmaceutical groups which
occupy first places in sales worldwide, with large investments in research and development. In
Uruguay, they are grouped under the Chamber of Pharmaceutical Specialties and Related
Sectors (CEFA).
Generally this group of companies is homogeneous in its structures and strategies. Regarding
their structures, most of them are sales offices or representations of these companies that
reports abroad, and generally depend on the regional office located in Argentina. On the other
hand, in their strategies they follow global guidelines, both for the company and for the
development of each product line, without further incidence in their definitions. Their strategies
are defined abroad, which implies difficulties regarding the adaptation to the local market, given
the implemented global strategies. Generally, multinational laboratories have as a strategy the
differentiation of their products from their main attributes: quality, image and efficiency;
However, in the Uruguayan market competition is mainly carried out through prices.
28
29. Currently, there are 17 multinational subsidiaries in Uruguay, most of which up until the 1980s
possessed industrial plants in the country and were focused on production. In the mid-1990s,
the openness to trade and the need to carry out large investments to upgrade their productive
structures in order to achieve the quality standards required by the parent company, led
multinationals to rethink ways to penetrate the Uruguayan market. Thus, the small size of the
Uruguayan market in comparison with other countries of the region, and the consequent low
profitability for multinationals, led to the decision of closing the existing industrial plants in
Uruguay and becoming importers from larger subsidiaries, located mainly in Argentina and
Brazil.
On the other hand, national laboratories and laboratories with regional capital - mostly from
Argentina - are grouped within the National Laboratories Association (ALN). Unlike
multinational laboratories, these groups of companies have more heterogeneous productive
structures and marketing strategies, covering from national family businesses to Latin American
multinationals subsidiaries or branches.
These laboratories emerged in the 1950s, and in recent years they have been expanding their
presence in the local and international market through important investments. This mainly
involved the purchase of industrial plants in disuse by multinational companies.
Up to November 200114, the general strategy pursued by these companies for the domestic
market was protected by the non- existence of a Patent Law in the country, which allowed them
to launch into the market a vast range of similar drugs. Therefore, they covered virtually all the
therapeutic spectrum and left to multinationals only those products that possessed exclusive
access to raw materials, active ingredients for their manufacture or very specific manufacturing
processes for those who did not have available technology, either by development or economies
of scale.
As a way to expand their participation in the market, national laboratories have, in addition to
their own production lines, the representation of international laboratories, generally European
or American, as part of their business strategy.
14
In 1999, the 17.164 Law came into force, this law regulates the relative rights and obligations of invention patents,
developed with help of the Technical Committee of Patents created by the Executive Branch along with the
participation of the ALN and CEFA. However, Article 127 of the aforementioned law, states expressly: "Inventions of
agricultural chemical and pharmaceutical products will not be patentable until November 1, 2001". Thus, the law does
not have retroactive effects on products that were already being marketed in the country prior to this date. These
products will continue to sell unless they fall into disuse or new therapies indicate their non- prescription.
29
30. Finally, in recent years, national laboratories began to destine an increasing part of their
production to the external market, taking advantage of the acquired "Know How”, the low
production costs and the reduced internal size.
4.2. Market Size and Average Prices
According to data from IMS Health, in 2010 the turnover of the domestic pharmaceutical market
for human use amounted to 331 million of dollars, which represented a 23% increase with
respect to sales in 2009 (273 million of dollars), this is explained by a 5% growth of sold units
and 17% due to the rise of prices in dollars. In the period 2004-2010, sales had an 80% increase
in current dollars.
Even though the domestic pharmaceutical market has expanded significantly over the past
seven years, with increases in the amounts of sold units as well as in the prices of medicines,
driven by the growth of the household incomes simultaneously with the appreciation of the
Uruguayan peso against the dollar, the behavior of sales vary within the two major subgroups of
laboratories previously defined.
Conforming to data from CEFA15, by breaking down the information according to the origin of
the capital of the laboratories for the period 2004-2010, we can observe that national and
regional laboratories sales showed a similar behavior to those of multinational enterprises
measured in values, with an expansion of 112.4% and 122.6% respectively (during the
aforementioned period). However, measured in physical units, national laboratories presented a
significantly higher dynamism than foreign laboratories with an increase of 39.8% and 25.4%
respectively. In contrast, the average price in dollars of marketed drugs by multinational
laboratories increased 77.4% in the period 2004-2010, while prices marketed by national and
regional laboratories increased 51.9%. Similarly, it is relevant to point out that like in 2010; the
average prices of medicines marketed by multinational laboratories were almost five times
greater than those of national and regional laboratories.
15
Due to the fact that different information sources were considered, estimates regarding the size of the domestic
market may vary from those presented in paragraphs above. Even so, we understand that the information is
complementary and contributes to the enrichment of the sectoral analysis.
30
31. Chart No.14 – Sales in the Domestic Market in Thousands of Dollars by Business Chamber
C.E.F.A A.L.N. TOTAL
Thousands Variation Thousands Variation Thousands Variation
Year US$ % US$ % US$ %
2004 49,543 1.0 109,266 6.2 158,809 4.5
2005 56,955 15.0 124,363 13.8 181,318 14.2
2006 60,330 5.9 126,854 2.0 187,184 3.2
2007 67,560 12.0 142,853 12.6 210,413 12.4
2008 86,080 27.4 176,838 23.8 262,918 25.0
2009 93,402 8.5 189,704 7.3 283,106 7.7
2010 110,295 18.1 232,096 22.3 342,391 20.9
Source: C.E.F.A
Chart No.15 – Sales in the Domestic Market in Thousands of Units by Business Chamber
C.E.F.A A.L.N. TOTAL
Thousands Variation Thousands Variation Thousands Variation
Year Un. % Un. % Un. %
2004 7,780 -4.8 70,394 6.9 78,174 5.6
2005 7,475 -3.9 74,945 6.5 82,420 5.4
2006 7,983 6.8 77,250 3.1 85,233 3.4
2007 7,872 -1.4 82,314 6.6 90,186 5.8
2008 8,681 10.3 89,239 8.4 97,920 8.6
2009 9,544 9.9 90,447 1.4 99,991 2.1
2010 9,759 2.3 98,399 8.8 108,158 8.2
Source: C.E.F.A
In 2010, according to data from C.E.F.A., the national and regional laboratories grouped in the
A.L.N accounted for 91% of market sales measured in physical units, while multinational
laboratories accounted for the remaining 9% of the market. However, in current dollars, the
A.L.N. laboratories have 68% of the domestic market while multinationals grouped in C.E.F.A.
account for 32% as a result of the higher prices obtained by these last group.
31
32. Graph No.16 – Participation in Domestic Market Sales according to Business Group
In Physical Units
9%
91%
C.E.F.A A.L.N.
Source: C.E.F.A.
With respect to the evolution of prices of medicines measured in current dollars in the domestic
market during these recent years, they have presented an upward trend, even though it is worth
noting that they are based on very low levels after the devaluation and economic crisis of 2002.
Graph No.17 – Prices of Medicines (US$) in the Domestic Market
Source: C.E.F.A
However, despite the increase observed in recent periods, the dollar prices of medicines in
Uruguay continue to have the lowest prices in the region, as shown in the following chart, which
presents information for the year 2008.
32
33. Graph No.18 – Comparison of Average Prices of Medicines in Latin America- Year 2008 (Prices
in US$)
Source: IMS Health
4.3. Leading Companies, Products and Market Share.
The domestic market for medicinal products is characterized on the one hand, by the low
concentration of sales at laboratories level as well as in products, and on the other hand, by the
relatively stable structure in the market share of the laboratories.
In regards to the fragmentation of sales at enterprise level, we can observe that the market
leading company accounted for 12.5% of the sales measured in dollars. Likewise, the five leading
companies accumulate 34% of the sales. Three of them correspond to national and regional
capital companies (A.L.N.), and two are multinational enterprises (C.E.F.A.).
Chart No.16 – Sales from Leading Laboratories
Sales in 2010
Company Business US$ Participation
Chamber Thousands % Units Share %
Roemmers A.L.N. 41,266 12.5% 9,557 13.0%
Bayer C.E.F.A 19,256 5.8% 2,722 3.7%
Roche C.E.F.A 18,690 5.6% 480 0.7%
Urufarma A.L.N. 16,735 5.1% 3,841 5.2%
Celsius A.L.N. 16,734 5.1% 5,316 7.2%
Others 218,494 66.0% 51,422 70.1%
Total 331,175 100.0% 73,338 100.0%
Source: IMS Health
For its part, the most marketed medicine in the private channel, both over-the-counter and with
prescription, has a market share of only 1.2%, while the main ten medications marketed in this
channel account for less than 9% of the market share.
33
34. Chart No.17 – Main Medicines by Trade Name in the Private Channel
Sales in 2010
Product Business
Laboratory US$
(Trade Name) Chamber Share %
Thousands
Divina 21 Urufarma A.L.N. 3,819 1.2%
Amoxidal Roemmers A.L.N. 2,957 0.9%
Yasmin Bayer C.E.F.A. 2,864 0.9%
Novemina Lazar A.L.N. 2,715 0.8%
Insulatard HM Roemmers A.L.N. 2,559 0.8%
Perifar Spefar A.L.N. 2,440 0.7%
Clexane Sanofi-Aventis C.E.F.A. 2,249 0.7%
Perifar flex Spefar A.L.N. 2,155 0.7%
Pharmaton Boehringer Ing C.E.F.A. 2,151 0.7%
Others 302,619 92.7%
Source: IMS Health
Analyzing the structure of sales, but at drug level, we observe that the main five marketed drugs
are close to 8% of the market share.
Chart No.Nº18- – Main Drugs by Trade Name in the Private Channel
Sales in 2010
Drug US$
Share %
Thousands
Drospirenone + Ethinylestradiol 8,180 2.5%
Bevacizumab 4,647 1.4%
Ibuprofen 4,129 1.2%
Acetylsalicylic Acid 3,852 1.2%
Metamizole Sodium 3,851 1.2%
Others 306,515 92.6%
Source: IMS Health
Finally, regarding the participation of the leading laboratories in the domestic market, in the
following chart16 you can see, that during the past seven years there has not been many changes
in market shares, beyond a slight growth of the participation of the leading laboratory.
16
Due to the fact that different information sources were considered, estimates regarding the size of the domestic
market may vary from those presented in paragraphs above. Even so, we understand that the information is
complementary and contributes to the enrichment of the sectoral analysis.
34
35. Chart No.19- Participation of the 10 Leading Laboratories
Ranked according to 2010 Values
Business
Company 2004 2005 2006 2007 2008 2009 2010
Chamber
Roemmers A.L.N. 8.14 7.87 807 8.70 8.39 8.94 10.37
Roche C.E.F.A. 7.40 6.99 7.11 6.91 6.83 6.82 6.98
Bayer C.E.F.A. 5.87 5.20 6.20 5.46 5.55 6.35 6.08
Celsius A.L.N. 5.80 6.21 5.11 6.15 5.91 5.60 5.30
Urufarma A.L.N. 3.27 3.53 3.47 3.64 4.31 4.65 4.99
Spefar A.L.N. 3.97 4.00 4.17 3.79 3.67 3.82 4.35
Fármaco uruguayo A.L.N. 3.06 3.58 3.83 4.10 4.06 4.12 4.29
Abbot C.E.F.A. 3.03 3.15 2.96 2.93 3.07 3.56 3.50
Libra A.L.N. 3.61 3.44 3.45 3.21 3.13 3.39 3.35
Lazar A.L.N. 3.46 3.28 3.45 3.34 3.45 3.38 3.03
Source: C.E.F.A
4.4. Distribution Channels
Currently, the structure of the sales channels for pharmaceutical laboratories for human use is
defined by the existence of three distinctive segments in this sector, which are the private
channel consisting of drugstores and pharmacies, the health insurance channel and the public
channel (Government). Each of these channels has different characteristics, such as marketed
volumes, periods and payment conditions, price levels, all of which determines different
profitability levels obtained by the laboratories in each one of these channels.
According to data from C.E.F.A. in 2010, measured in values, pharmacies and health insurance
schemes channeled 42% of medicine sales, health insurance schemes 36% and the State 22%.
Graphic No.19- Sales Distribution by Distribution Channels (US$)
Source: C.E.F.A
However, measured in physical units, the participation of the diverse sales channels varies
significantly, being the health insurance schemes and the State the agents who acquire the most
35
36. significant volumes, allowing them access to better prices and payment conditions, with regard
to pharmacies and drugstores.
Graph No.20- Sales Distribution by Distribution Channels (Physical Units)
26% 28%
Pharmacies and Drug
Stores
Health Insurance Schemes
State
46%
Source: C.E.F.A
Below is a brief analysis of each of the identified channels, its main features (prices and
marketed volumes) and the different strategies adopted by each group of laboratories.
Pharmacies
According to the sector’s report prepared by the Productive Cabinet in 200817, Uruguay had
approximately 1,300 pharmacies located in Montevideo, 600 in the interior of the country and
six drugstores, five of them located in Montevideo and one in the interior of the country.
Historically, the average sale price in this channel is the highest compared to the rest of the
channels, and therefore provides higher trade margins to participating laboratories.
Additionally, it has been characterized as the channel in which payment periods have been
shorter, usually at 50 days from the date of invoice, and the payments chain has not been
interrupted, with few exceptions, given that it is very fragmented by the existence of a large
number of pharmacies in the country.
Figure 1 – Operation of the Private Channel
Laboratory Drugstore Pharmacy Doctor Patient
Source: Productive Cabinet (2008)
17
Nowadays the number of community pharmacies could present a slight decline due to a tendency towards an
existing concentration in the sector in the last couple of years.
36
37. Although community pharmacies are characterized as small business units, in which the
stock of medicines is minimum and inventory turnover is low, the formation of chains of
pharmacies in Uruguay are becoming increasingly noteworthy. These chains place orders
directly to laboratories and possess a general deposit from which they distribute to other
branches. In this case, the relationship with drugstores is practically inexistent since working
with considerable volumes enables them to have access to more convenient prices and
payment periods directly from laboratories. Another modality that has been adopted by the
market in recent years is what it is known as a "Pool of Pharmacy". This new modality
includes a physical establishment which operates as a merchandise warehouse and enables
members to have direct contact with the laboratories, placing the order in important
volumes and therefore obtaining significant discounts.
Although in recent years the participation of the private channel in the total sales of
laboratories has remained practically unchanged, we do observe changes regarding the
channel itself, such as in the distribution between drugstores and pharmacies. According to
data from IMS Health – taken from Dos Santos et al. (2009) - While in 2003 only 19% of the
laboratories pharmaceutical products sales were marketed directly through community
pharmacies, i.e. without prior intermediation of drugstores, in 2008, 40% of sales were
marketed directly through pharmacies.
Chart No.20 – Sales in the Private Channel according to Business Groups
Thousands of Dollars Units Average Price
Year Var. Var. Var.
Var. Var. Var.
C.E.F.A. % A.L.N. %
C.E.F.A. % A.L.N.
% C.E.F.A. % A.L.N. %
-
2004 18,837 4.5% 38,972 3.9% 4,031 2.6% 14,509 0.9% 4,67 1.7% 2.69 5.1%
-
2005 22,388 18.9% 42,852 10.0% 3,941 -2.2% 13,773 5.1% 5,68 21.6% 3.11 15.6%
2006 23,393 4.5% 43,248 0.9% 3,933 -0.2% 14,178 2.9% 5,95 4.8% 3.05 -1.9%
2007 26,428 13.0% 49,971 15.5% 4,175 6.2% 15,100 6.5% 6,33 6.4% 3.31 8.5%
2008 35,174 33.1% 63,787 27.6% 5,080 21.7% 16,337 8.2% 6,92 9.3% 3.9 17.8%
2009 36,473 3.7% 66,506 4.3% 5,619 10.6% 16,776 2.7% 6,49 -6.2% 3.96 1.5%
2010 39,738 9.0% 85,442 28.5% 5,466 -2.7% 18,079 7.8% 7,27 12.0% 4.73 19.4%
Source: C.E.F.A
It is in this channel where the laboratories associated with the A.L.N. present higher average
sales prices, which are significantly higher than the prices marketed in the health insurance and
37
38. State Channels. Instead, for multinational laboratories grouped into C.E.F.A, the private channel
records the lowest prices of sales18, even though it presents the largest volumes.
Health Insurance Schemes
This channel comprehends Health Insurance Schemes and Private Insurances. Currently, we
have 40 Health Insurance Schemes in the country, 11 in Montevideo and 27 in the interior, while
there are seven Private Health Insurances associated with the National Integrated Health System
(SNIS). 20 years ago these institutions were authorized to have “Health Insurance Schemes
Pharmacies”, which give their members medicines for the value of a single-value ticket for all
medications. At the beginning, the local pharmaceutical industry was able to foresee that due to
the large volumes that they could handle and the associated lower costs of distribution, this
channel would be an interesting way of getting medications into the market. Soon, due to the
purchasing power achieved by the healthcare system, the average selling price dropped. The
figure below shows how the patient receives the medication through the laboratory by means of
this channel.
Figure 2 – Operation of the Health Insurance Channel
Laboratory Pharmacies from Doctor Patient
Health Insurance Schemes
Source: Productive Cabinet (2008)
Through this channel patients can have access to medications through a copayment which is
usually cheaper (although not always) than if the patient has to purchase the medication
through the private channel. Each of these institutions also presents a list of generic name
medications, better known as Vademecum19, which comprises the essential medicines
available for treatment of the population’s most common conditions. Physicians from these
institutions are forced to prescribe medications that are included in the aforementioned list.
In this way, laboratories face a double challenge; to be admitted in each institution’s
18
It is worth mentioning that the most expensive medications of the multinational laboratories products portfolio are
purchased by users through pharmacies within the health insurance schemes or provided by public health for users of
the public system. In the case of the former, it is cheaper for members of health insurance schemes to purchase this
type of medication through copayment than to purchase them in community pharmacies.
19
Set forth in Decree 321, August, 2003.
38
39. medical list and if this is actually achieved, to encourage their prescription by the medical
staff of the institution.
On the other hand, Douskas et al. (2008) point out that in Uruguay there are no medications,
except for over-the-counter medicines, which present a high level of participation in the private
channel, and that have not been marketed in the mutual channel before. Sales in this channel,
enables to propagate and circulate knowledge of the medicine both to physicians and patients.
Chart No.20 – Sales in the Health Insurance Channel According to Business Groups
Thousands of Dollars Units Average Price
Year Var. Var. Var. Var.
C.E.F.A. % A.L.N. % C.E.F.A. Var. % A.L.N. Var. % C.E.F.A. % A.L.N. %
2004 18,921 2.0% 36,124 3.8% 2,471 -6.0% 23,074 3.1% 7,66 8.7% 1,57 0.6%
2005 21,504 13.7% 35,613 -.,4% 2,495 1.0% 21,177 -8.2% 8,62 12.5% 1,68 7.0%
-
2006 23,236 8.1% 38,740 8.8% 2,726 9.3% 23,208 9.6% 8,52 -1.2% 1,67 0.6%
2007 25,227 8.6% 43,912 13.4% 2,488 -8.7% 26,619 14.7% 10,14 19.0% 1,78 6.6%
2008 30,524 21.0% 56,047 27.6% 2,582 3.8% 29,133 9.4% 11,82 16.6% 1,92 7.9%
2009 30,255 -0.9% 63,780 13.8% 2,713 5.1% 32,351 11.0% 11,15 -5.7% 1,97 2.6%
2010 34,382 13.6% 74,573 16.9% 2,978 9.8% 36,307 12.2% 11,55 3.6% 2,05 4.1%
Source: C.E.F.A
By fragmenting sales, according to business groups, we can observe a significant predominance
of the laboratories associated with the A.L.N, with a participation of 92% in the number of units
sold in 2010, although measured in values, their participation is significantly lower (68%), as a
result of the lower prices in regard to the laboratories associated with C.E.F.A. The prices of the
aforementioned in the health system channel are five and a half times higher than those of
national and regional laboratories.
State
Until 2001 the State purchases of medicines were carried out through independent biddings for
each body (hospitals, military health institutions, Social Security Bank-BPS, National Insurance
Bank-BSE, etc.). Payment periods exceeding 180 days or more was also a distinctive feature,
although with some laboratories they kept debts that exceeded the 24 months. After the
economic crisis of 2002, the Government sought to strongly reduce costs in the acquisition of
medications along with improvements in the financial situation of public health institutions. For
such purposes, the government implemented a purchase center which depends exclusively of
the Ministry of Economy and Finance (MEF), which consolidates the orders of all dependencies
and commits itself to shorter payment periods, thereby achieving a lower acquisition cost of
39
40. medicines and enabling laboratories to have a greater liquidity by having access to money in
shorter periods of time20.
A common practice of national laboratories is that they enter the state channel to achieve the
largest market share selling with lower profitability levels from those obtained in the private
channel, enabling them to achieve economies of scale and greater propagation and knowledge
of their products.
Chart No.22 – Sales in the State Channel according to Business Groups
Thousands of Dollars Units Average Price
Year
C.E.F.A. Var. % A.L.N. Var. % C.E.F.A. Var. % A.L.N. Var. % C.E.F.A. Var. % A.L.N. Var. %
2004 7,062 -13.9% 20,405 3.8% 567 -6.0% 19,535 3.1% 12,46 42.1% 1,04 5.1%
2005 9,449 33.8% 20,835 2.1% 529 -6.7% 18,539 -5.1% 17,86 43.3% 1,12 7.7%
2006 9,808 3.8% 23,933 1.9% 831 57.1% 21,848 17.8% 11,8 -3.9% 1,1 -1.8%
2007 10,962 11.8% 26,501 10.7% 568 -31.6% 22,695 3.9% 19,3 63.6% 1,17 6.4%
2008 14,442 31.7% 29,547 11.5% 395 -30.5% 23,071 1.7% 39,56 105.0% 1,28 9.4%
2009 20,718 43.5% 31,494 6.6% 585 48.1% 20,676 -10.4% 35,41 -10.5% 1,52 18.8%
2010 28,303 36.6% 37,986 20.6% 685 17.1% 21,634 4.6% 41,32 16.7% 1,76 15.8%
Source: C.E.F.A
As mentioned above, the State channel is the only one that on average pays the lowest prices in
comparison to the three other channels. Moreover, sales from this channel, measured in
physical units, are dominated by national laboratories, although they have recently lost some
participation by low-cost medications importing offices from Asian countries. Within this group
of laboratories, this channel is the only one who presents the lowest prices and subsequently,
the lowest levels of profitability. On their part, multinational laboratories limit their participation
in public biddings to high-cost medications. In this regard, as of 2008, the National Resource
Fund (Fondo Nacional de Recursos-FNR) incorporated new pathologies to its list of treatments,
and their medicines are only available in the product portfolio of multinational laboratories,
characterized by its high costs, which increased significantly the average prices received by this
group of laboratories.
20
Prior to the creation of the State Centralized Purchasing Unit (Unidad Centralizada de Compras del Estado-UCA), due
to the failure and delays of their payments, prices of sales carried out through this channel presented a high financial
component.
40
41. 5. National Integrated Health System (S.N.I.S)
Since 2005, many changes began to take place in the Uruguayan existing health system (Health
Reform) which implied changes in laws and regulations and from which the National Integrated
Health System (Sistema Nacional Integrado de la Salud - S.N.I.S) was created.
To a great extent, the reform was developed under the following guiding principles:
Universal access to health,
fairness in the access of health,
fairness in cost and financing of health,
quality healthcare, and
recover the financial sustainability of the system.
Considering that the changes generated by the creation of SNIS21 might have potential impacts
on the pharmaceutical industry in Uruguay, it was considered appropriate to briefly describe the
most relevant changes that were introduced. In this sense, the potential impacts of the reform
of health on the Uruguayan pharmaceutical industry could come mainly through:
o Changes in the distribution of the number of members between the private sector
(health insurance schemes), and the public sub sector that could generate modifications
in the participation of each of the marketing channels (private, health insurance and
state).
o New regulations on the production and marketing of medications.
Regarding laws and decrees approved, Law 18.131 which created the National Health Fund
(Fondo Nacional de Salud - Fonasa) and Law 18.211 which came into force January 1, 2008,
creating The National Integrated Health System (SNIS) are noteworthy. With the entry into force
of Law 18.131 new groups were integrated to the benefits of health insurance, including
employees from the State Central Administration and education officials, among others. On the
other hand, with the entry into force of Law 18.211, new users entered progressively by stages
to the SNIS, including under age children of dependent workers, retirees and pensioners and
most recently, university professionals and others with sectoral benefit funds. The data showed
below reveals the changes mentioned above.
Chart No.23- Expansion of the Integrated Assistance in the SNIS by Type of Provider
21
It should be noted that at the time of the present report, in Uruguay no papers or research has been done that may
quantify the plausible impacts of the health reform on the pharmaceutical industry. Moreover, this topic exceeds the
scope of this document.
41
42. Provider 2007 2008
Public Health (ASSE) 1,308,593 1,192,580
Health Insurance (IAMC) 1,491,874 1,806,750
Private Insurance 69,167 74,789
Military and Police Healthcare 250,000 250,000
Total of SNIS Users 3,119,634 3,324,119
% Population Coverage 93% 100%
Source: S.N.I.S – Ministry of Public Health
As shown in Chart 1, with the creation of the SNIS more than two hundred thousand people
were incorporated into the integrated health coverage. For its part, the number of members of
health insurance schemes increased in more than three hundred thousand people. Also, as the
different stages of admission of new groups to the SNIS begin to be implemented, a gradual
growth in the number of users of health insurance schemes and private health insurance and an
oscillating behavior in the case of public health can be observed.
Chart No.24 – Evolution of the Number of Users by Provider
March-
Providers 2007 2008 2009 2010 2011
Health Insurance Schemes 1,491,880 1,806,750 1,849,016 1,898,320 1,934,056
Private Insurance -- -- 78,364 81,486 82,287
Public Health (ASSE) 1,308,593 1,192,580 1,281,123 1,226,422 --
Source: S.N.I.S – The State Health Services Administration (ASSE)
It is worth remembering that the number of users within the health insurance schemes and
private health insurance, among other things, increase their power of negotiation before the
laboratories. It is also worth remembering that in the health insurance channel prices received
by laboratories are significantly lower than those received in the private channel (pharmacies
and drugstores). Therefore, it is feasible that the way to gain access to health benefits by users
of the system, or the type of chosen benefit, can determine changes in the means of access to
medicines, and thereby changes in the relative participation of each of the channels in the sales
structure. Thus, an increase in the participation of the health insurance and state channels, due
to a greater use of pharmacies from health insurance schemes or access to medicines through
public health (ASSE) could affect the profitability of the laboratories on an aggregate level,
especially for those that aim at the domestic market.
Another aspect which could have an impact on the Uruguayan pharmaceutical industry is the
regulations and controls from the Ministry of Public Health on medicines and pharmaceutical
laboratories. In this sense, article No.7 of the 18.211 law, states:
42
