The generic medicines market has a big potential of growth in the Latin American region. The governments within the region all have a factor in common: all need to improve the health systems, where medicines are key, with limited budgets. Essential medicines are not readily affordable to the poorest segments of the population. During the last PAHO's Directing Council in September (important meeting with the ministers of health of the region), the use of generics was a crucial topic as part of the agenda.  The (PAHO) Pan American Health Organization is promoting consistent policies for the use of generic medicines under quality conditions.

Countries such as Brazil and Argentina have approved new laws to encourage the use of generics and promote it in the medicine prescriptions by the doctors. As a result, Brazil faced the biggest growth in the generics, 600% reported between 1,999 and 2001. The sector represents 15% of the market. Meanwhile, in Argentina the generics grew from 1% of share in the market to 15%. In both cases the forecast indicates that the growth will continue. By 2006, Brazil is expected to grow to 17% and Argentina to 35% of the total market share.   

Chile is also facing changes in the government policies. In contrast with Brazil, Chile is not yet requiring the bio-equivalency tests, but the government is pushing toward this direction for the next year.  Additionally, the government plans to include as a requirement the generics in the medicine prescriptions by doctors. Chile already is one of the countries in the world with the highest use of generics, which represents 40% of the total market in units. 

With the new government directions and openness in the market, the region is also experiencing changes in trade. Exports are increasing in the biggest markets: Argentina and Brazil and also imports from countries such as India, a worldwide player with a high advantage in prices.  The average price of a generic medicine from India is 10 US cents, in comparison to 56 cents for a generic from Chile (one of the lowest in the region).  With high concerns for quality, price is not going to be the only factor to evaluate. Intrix predicts the industry will keep the dynamism and there will be a lot of opportunities and challenges to face during the next years in the whole region.

Mexico expects favorable demographics for the next three decades.  The demographic pyramid will narrow at younger ages and the working-age population will expand by 50% (in absolute terms) in the next 30 years. This change in age distribution will open a window of opportunity. It will create a social stability and better income distribution. At the same time investments in high education and training will be required to build a new generation of professionals and technicians with high quality standards of productivity. This will allow establishing conditions for production and competition in international markets.

Population 15-24 years, 2000-2020 (in thousands)  

Source: UNAM

Multinationals are transforming Brazil in an export platform. Giants like Mercedes-Benz, Continental, Voith, Siemens, Basf, Unilever, Ford, Motorola and Novo Nordisk have chosen their local branches as production centers of some items from their portfolios to export them to the rest of the world. Export platforms have been a growing trend in Brazil since 1999.

Companies began to create them in the early 1990's, when multinationals started defining capabilities centers by product groups. The focus was on the Asian countries because of the market sizes and exchange policy. Brazil joined the list only after the exchange rates policy redefinition. It has been representing a big influence in the country trade balance, and also develops local technological capabilities. From the 40 major Brazilian exporters (41% of the total exports) 22 are transnational. From January to August of 2004, they shipped a total of more than US$ 12 billion. However, Brazil is still far away from China and India, where the governments have investment attraction policies for new export plants. According to Mr.Antonio Corrêa de Lacerda, president of Sobeet (Brazilian Society of Studies of Transnational Companies and of the Economical Globalization), there is a passive process in Brazil, related more to the corporation strategies than to the governmental policies. For instance, Voith and Siemens built a joint venture to manufacture turbines and generators for hydroelectric plants Voith Siemens Hydro created in 13 countries. Consequently Brazil became a world excellence center in these products in 2000. All the generators sold worldwide by the group are made in Brazil. Source: Folha de São Paulo.