Colombia's deteriorating regulatory regime will continue to limit the country's attractiveness to multinational pharmaceutical companies in the coming years. Despite the country's growing rates of medicine consumption, the increasing compulsory license risks and patent regulation burdens as well as substandard pricing controls will remain critical threats to pharmaceutical investment in the country over the long term .
Headline Expenditure Projections
Pharmaceuticals: COP9,101bn (USD3.31bn) in 2015 to COP9,581bn (USD3.10bn) in 2016; +5.3% in local currency and -6.6% in US dollars.
Healthcare: COP59,425bn (USD21.6bn) in 2015 to COP64,692bn (USD20.9bn) in 2016; +8.9% in local currency and -3.4% in US dollars.
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In our Q316 regional Risk/Reward Index, Colombia is ranked eighth oout of 19 markets surveyed in the Americas region, unchanged from the previous quarter. The country's overall Risk/Reward score was 53.0, just above the regional average of 50.1. Colombia boasts above-average Rewards and Risks, although we caution that the country's intellectual property regime will continue to represent barriers to multinational involvement. Nevertheless, Colombia will continue to be of interest from a longer-term point of view, not least on account of its substantial population.
Key Trends and Developments
In April 2016, Colombia's Health Minister, Alejandro Gaviria, announced that the government will issue a Declaration of Public Interest, which will provide a legal pathway for the compulsory license on Novartis' anticancer drug, Gleevec/ Glivec (imatinib), in Colombia. This is the first step for the Superintendency of Commerce to issue the compulsory license for the production of this drug in Colombia.
In April 2016, Tecnoquimicas, one of the largest domestic drugmakers in Colombia, entered a partnership with mAbxience, a Spanish biopharmaceutical company specialized in research, development and manufacturing of biosimilars. The development is expected to increase the industry's capacity to supply biosimilars.
BMI Economic View
Headline growth in Colombia will continue to decelerate in 2016. Elevated inflation and weakening labour market dynamics will erode households' purchasing power, while rising interest rates will make capital more expensive to obtain, undermining real private consumption growth. We forecast real GDP growth of 2.4% in 2016 (revised from 2.9% previously) and 2.8% in 2017 (from 3.3% previously), notably slower than the average expansion of 4.6% during the previous five years.
BMI Political View
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