Market Report, "Argentina Pharmaceuticals & Healthcare Report Q3 2013", published

High inflation has undermined foreign drugmakers' profitability in Argentina's pharmaceutical market. The potential currency devaluation will further erode the returns of foreign investment. Nevertheless, some multinationals continue to invest in the country, as its market size, relatively welldeveloped local manufacturing force and its strategic location mean Argentina remains an appealing prospect..

Headline Expenditure Projections:

Pharmaceuticals: ARS39.4bn (US$8.7bn) in 2012 to ARS49.4bn (US$8.9bn) in 2013; +25.3% in local currency terms and 2.7% in US dollar terms. The forecast figures remain the same as in Q213.

Healthcare: ARS198.7bn (US$43.7bn) in 2012 to ARS248.5bn (US$44.8bn) in 2013; +25.1% in local currency terms and +2.5% in US dollar terms. The forecast figures remain the same as in Q213.

Risk/Reward Rating: Argentina scores 59.3 in BMI's Pharmaceutical and Healthcare Risk/Reward Rating (RRR), making it the fourth most attractive pharmaceutical market in America. We have re-weighting the RRR components to improve the tool, and the adjusted scores for all markets in the Pharmaceuticals & Healthcare reports. Argentina's pharmaceutical market is expected to grow at double-digit rates through to 2016 in local currency terms, largely due to inflation.

Full Report Details at
- http://www.fastmr.com/prod/607103_argentina_pharmaceuticals_healthcare_report_q3.aspx?afid=303

Key Trends And Developments

* In Q113, ANMAT approved once daily Aubagio (teriflunomide) 14mg as a new treatment indicated for patients with relapsing forms of multiple sclerosis (MS); abatacept for the treatment of adults with moderate-to-severe rheumatoid arthritis and Kombiglyze XR (saxagliptin + metformin HCl extendedrelease) for the treatment of type 2 diabetes.
* In March 2013, GlaxoSmithKline (GSK) invested a total of US$123mn to establish a new quality control and production site at Phoenix, an Argentinean subsidiary GSK acquired in mid-2010. The project aims to develop and produce high quality, affordable medicines for Argentina's and other Latin American pharmaceutical markets.
* In February 2013, Merck Sharp & Dohme (MSD; a subsidiary of the US-based multinational pharmaceutical company Merck & Co) signed a trade agreement with local drugmaker Laboratorios Bago to promote its products used in the country's primary care system..

BMI Economic View: We forecast that the marked slowing in the Argentine economy will continue this year, with real GDP growth falling to 1.6% from our estimate of 2.0% in 2012, as a currency devaluation pushes inflation higher, weighing on consumer and government spending, and liberalised import policies result in a greater net export drag on real GDP growth. That said, we forecast that base effects and greater competitiveness will boost real GDP growth to 3.0% next year.

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