Report from Latin America

Published on: 
Pharmaceutical Technology, Pharmaceutical Technology-04-02-2013, Volume 37, Issue 4

Latin America's diverse growing market seeks regulatory harmonization.

Comelia Doerr/Getty ImagesLatin America is one of the top emerging markets in the bio/pharmaceutical industry. This region shows a great deal of diversity in its approach to pharmaceutical products as a result of differences in economics, resources, access to care, and definition of regulatory requirements by country.

Common guidelines from groups like the Pan American Health Organization (PAHO), part of the World Health Organization (WHO), and the Mercado Común del Sur (Mercosur), a lead trade organization, are just beginning to be implemented. There’s interest in greater harmonization, like Eastern Europe, across the region, but there still remains great divergence between individual countries.

With its population reaching 600 million people in 2011, Latin America is a fast growing region with equally fast growing economies. The top four Latin American economies and pharmaceutical markets account for more than 60% of the total population: Brazil (194 million), Mexico (115 million), Colombia (46 million), and Argentina (41 million). Other major players include Chile, Peru, and Venezuela (1).Latin American pharmaceutical sales in 2011 were at $62.9 billion, registering 8.9% growth in 2012. This is particularly significant when considered within the context of global sales of $995 billion in 2011. The diversity of the region, however, presents some challenges. In addition to the fact that guidelines from PAHO and Mercosur are just beginning to be implemented, it’s also worth noting that what exists are just guidelines, subject to regional and country specific variations. Other differences (e.g., economic differences, population differences, political differences) have profound implications for the pharmaceutical marketplace in Latin America.

Key regulatory considerations

The primary regulatory consideration across the Latin American region for pharmaceutical companies is the increasing trend toward standardized regulations. Each of the seven major markets has adopted regulations that are based on Mercosur or PAHO’s recommendations. For example, Brazil revised its GMP standards in 2010 to ensure greater consistency with Mercosur/PAHO recommendations. Updates to Brazil’s GMPs addressed the areas of quality, sanitation, hygiene, qualification and validation, contracts, and computer system validation. Since then, Brazil has been moving ahead with implementation, including the release of a guidebook for inspections in May 2012.

In other cases, such as Mexico, international agreements like the North American Free Trade Agreement protect foreign companies interested in expanding their business into the region. The Mexican federal commission for sanitary risk (COFEPRIS) also holds equivalence agreements with Health Canada and FDA for the regulation of drugs and medical devices. Additionally, in September 2012, COFEPRIS and the Chilean Public Health Institute signed a cooperation agreement that will allow for the harmonization of regulatory requirements within the Americas region, breaking the entry barrier present in many countries. The agreement, which is still at the “memorandum of understanding” (MOU) stage, is a bilateral mechanism that is eventually expected to allow the mutual recognition of marketing authorizations, inspection visits, and GMP certification. Mexico has also signed other equivalence MOUs with El Salvador and Ecuador, and a MOU is in the making with Colombia. MOUs with Brazil and Argentina are expected in the near future.

Even with all of these agreements, there is no Latin American equivalent of the European Medicines Agency—no common body with the power to facilitate greater consistency across countries. Mercosur and PAHO can make recommendations, but cannot enforce a common set of rules the way a common governing body can. And to complicate matters, even as countries implement regulations to be more aligned with Mercosur and PAHO recommendations, they may not implement the same regulations at the same time.

Despite the many efforts carried out by the major Latin American markets, the road toward total harmonization is steep. The main reasons are the size of the region and the number of countries included in the area, each of them with their own regulatory system, political background, and policy approach to healthcare and pharmaceuticals. One proposal has been that of convergence rather than harmonization similar to what is in use in the Asia Pacific Economic Cooperation Area (APEC). Regulatory convergence is a voluntary process in which the countries in question agree to work toward regulatory requirements that are similar, but not fully harmonized. Harmonization would require changing laws in each country and is, therefore, more difficult to achieve. Convergence of regulations is considered as the most viable solution for the Latin American region.

Other considerations for pharmaceutical companies interested in expanding in Latin America include regulatory risk profile. In general, Latin American pharmacovigilance systems have developed considerably since the early 1990s and continue to strengthen. Several countries have set up adverse events reporting systems for products in the market, and 10 countries have regulations reporting adverse events during clinical trials.

Countries that currently have low pharmacovigilance requirement levels must still develop a system and appropriate monitoring measures. They are strongly encouraged by the WHO to do so in a timely fashion. The Subregional Pharmacovigilance Programmme and the Pan American Network for Drug Regulatory Harmonization also assist countries in Latin America in developing pharmacovigilance regulations that are harmonized with other Latin American countries.

Product reimbursement

The way that payment is structured varies tremendously. For example, in Mexico, the government pays for approximately 45% of healthcare—significantly less than other Latin American countries. Other markets in the region, particularly Venezuela and Chile, have implemented Latin American social medicine (LASM) practices. In Venezuela, these practices have manifested as Mission Barrio Adentro, a national social welfare program comprised of neighborhood healthcare clinics built in the past decade intended to provide universal primary care to Venezuelans. Though both WHO and UNICEF have praised the program for its holistic approach to community health, critics have argued that building the planned 8500 local clinics siphons resources away from traditional hospitals.

It’s crucial that pharmaceutical companies understand how healthcare is delivered in each Latin American market, because there is such a degree of diversity. How payment is structured and care is delivered impact the number of stakeholders to whom companies have to present the case for their products.


Key market considerations

Beyond understanding the regulatory landscape of each market, there are other market characteristics to consider as well. For example, in some markets like Argentina, the majority of pharmaceutical sales are currently going to domestic companies. Chile, on the other hand, only produces a small amount of medical equipment locally, though some protectionist regulation meant to encourage local industry complicates the landscape for companies looking to expand there. Some countries, such as Colombia, produce pharmaceuticals that are imported by other countries in the region, especially Venezuela.

Beyond the current makeup of the pharmaceutical industry in each nation, understanding the demographics and political landscape of each market is essential. Chile, for example, while smaller in market size than Brazil or Argentina, has the highest gross domestic product (GDP) per capita in Latin America. In May 2010, Chile became the first South American country to join the Organisation for Economic Co-operation and Development (OECD).

The Mexican market offers some other demographics that make it attractive for healthcare. The population has continued to grow by nearly 9% between 2005 and 2010, at the same time that life expectancy also increased. In addition, the Mexican government has, in the past decade, launched programs aimed at expanding health insurance. In 2003, the government started Seguro Popular, which offered publicly provided health insurance to some poor families. In the years since, Mexico has launched other initiatives, including Medical Insurance for a New Generation aimed at disadvantaged children under the age of five, and Universal Care Coverage for Pregnant Women in 2009. Health spending is still lower than the OECD average, but coverage has increased.

The existing infrastructure must be kept in consideration. Mexico has a considerable manufacturing industry, but its research and development sector is less developed. Mexico spent $6.4 billion, or 0.4% of its GDP, in R&D across all sectors in 2011. As a percentage of GDP, this is less than half as much as Brazil spent the same year, and less than a quarter of the OECD average (2, 3).

Implications for successful market entry

Latin America clearly offers substantial business opportunities for pharmaceutical companies. The region represents a growing consumer base for the drug industry; by 2020 the regional population is projected to be as high as 687 million. The Latin American pharmaceutical market is now worth $45 billion and multinational companies consider success in Brazil and Mexico as essential. Some of the main challenges and opportunities in the region include:

  • Intellectual property. Legal oversight of intellectual property is often weak or not enforced in a number of Latin American countries.
  • Generics. Regional governments are making serious attempts to encourage the use of generics. This push may be a significant opportunity for pharmaceutical manufacturers with generic portfolios.
  • Clinical trials and R&D. Companies are finding Latin America attractive for R&D and clinical development. There are currently an estimated 4000 clinical trials being conducted. High enrollment rates, lower labor costs, and improving regulation have encouraged growth in outsourcing. Modernization of local regulatory guidelines is ensuring faster project start-up and shorter clinical trial approval times. There is also a strong knowledge and practice of International Conference on Harmonization (ICH) good clinical practice (GCP) guidelines and western medicine standards.
  • Political situation. Unsettling for multinational companies is the political shift to the left in some countries. However, a number of countries are working to introduce universal healthcare coverage that could create excellent long-term opportunities. Despite the political situation, many governments are highly motivated to make the region favorable for clinical studies and R&D.

Moving Forward in Latin America

As a developing market, Latin America is quite complicated and diverse in terms of regulatory, reimbursement, market, demographic, and political characteristics. As regulatory trends converge and the market continues to grow, the region represents a substantial opportunity for pharmaceutical companies, especially those that take the time to understand these characteristics and anticipate the direction each market will take.


1. The World Bank, Data, Population, total, 2012,, accessed Mar. 4, 2013.

2. “Battelle R&D Magazine Annual Global Funding Forecast Predicts R&D Spending Growth will Continue While Globalization Accelerates,” Battelle R&D Magazine, 2011., accessed Mar. 4, 2013.

3. Ministry of Commerce of the People’s Republic of China., accessed Mar. 4, 2013.