The report, entitled Latin America Prescription for Growth, identifies the region as one pharmaceutical industry leaders should be targeting, both as an area for research and development and as a market for innovative drugs.
The economic recovery of Argentina and Brazil and the strong manufacturing base developing in Mexico are all making Latin America much more appealing as a place in which to conduct development and production, according to PwC .
And the market is showing strong scope for growth. The United Nations projects the overall population of the region will increase by about 23 per cent over the next 20 years, from 504 million to 623 million, and mortality rates for cancer, heart disease and strokes and the incidence of diabetes are all increasing as a result of more sedentary lifestyles, smoking, drinking and obesity.
Demand for prescription drugs is consequently increasing as are therapy classes for cardiovascular and central nervous system illnesses. Classes for treatment of asthma are also experiencing similar growth, and this rising demand is mirrored by an increase in the number of clinical trials being undertaken in the region.
.The region's pharmaceuticals market is a fraction of the size of the US market but the number of clinical trials conducted in the region has risen tenfold between 1995 and 2000.
Simon Friend, global pharmaceutical leader at PwC, commented: "The pharmaceutical industry's main markets are under serious pressure and experiencing sluggish growth so there is a real need to diversify. China may be the popular target for other industries but in some parts of Latin America per capita expenditure on pharmaceuticals is more than double that of China."
The report also outlines approaches to breaking into the region, pointing out that Latin America is as diverse as it is vast and effectively consists of sub regions each with distinctive and different characteristics. It is essential, says PwC, to understand the particular features of the target country. Brazil and Mexico are the two biggest markets and have stable economies, manufacturing experience and potential for growth so are good first targets.
As a means of testing the market it is advisable to form an alliance with a local company. Once companies have an established base they can use it as a gateway from which to move into other Latin American countries.
Meanwhile, rather than set up separate marketing and sales operations in numerous different places it is worth outsourcing these activities to domestic firms with a sound understanding of the local market, says the report. This has the advantage of minimising the risks and costs associated with trading in a new territory.
Luis Madasi, PwC's Brazil & Latin America pharmaceutical leader, said:"This is a thriving and dynamic region which has so much to offer the global pharmaceutical industry and yet we are currently being overlooked."
The top 10 pharmaceutical companies account for only 42 per cent of sales in Brazil and 47 per cent of sales in Venezuela and Argentina. This compares with their half-share of the UK and French markets and almost 60 per cent in the US and Canada.