BMI View: Growing demand for pharmaceuticals, compounded by underdeveloped manufacturing capabilities will ensure commercial opportunities for foreign investors within Central America over the long term. Multinational drugmakers and medical suppliers will also continue to benefit from favourable tax incentives and growing medicine consumption driven by a booming burden of chronic disease. Sluggish economies and political instability will remain problematic, though pharmaceutical and health expenditure will continue to rise throughout the region.
Headline Expenditure Projections
Pharmaceuticals: USD3.7bn in 2014 to USD3.9bn in 2015; +5.6%. Our forecast has been maintained since Q 3 15 .
Healthcare: USD16.8bn in 2014 to USD17.8bn in 2015; +5.8%. Our forecast has been revised upwards since Q 3 15 due to revised historical data.
Based on our analysis and assessment of the market's appeal to pharmaceutical companies in our Q315 Pharmaceutical Risk/Reward Index (RRI), the Americas scores 47 out of 100, below Western Europe (76), Asia Pacific (56), and Central and Eastern Europe (56), but above the Middle East and Africa (43). Of the six Central American countries surveyed Costa Rica's RRI score ranks first at 44.4, followed by Panama (42.8), Guatemala (38.8), Nicaragua (34.3),) Honduras (33.4), and El Salvador 32.6.
Key Trends And Developments
The Supreme Court of Honduras issued an arrest warrant for National Congress Vice-President Lena Gutierrez and 15 other people in connection with a corruption scandal in the country's healthcare system. The scandal involves alleged embezzlement that cost the Social Security Institute about USD120mn.
Guatemala's Health Office of the Human Rights Ombudsman announced that the Guatemalan public health system has seen no improvement to its drug and medical supply shortages in recent months. The PDH cited concerns over infrastructure and human resources as contributing factors to the system's struggling supply chain.
Panama's Ministry of Health (MINSA) has unveiled the second phase of the Electronic Health Information System (SEIS) in the health centre of El Chorrillo in Panama City. During the second phase of the programme, 110 health facilities are expected to be covered in 2015. The system is aimed at covering as many as 300 centres in the future.
Russia and Nicaragua announced plans to jointly construct a production plant for low-cost vaccines in a bid to increase health coverage in Nicaragua and throughout Latin America. The new plant will be built in Nicaragua's capital city of Managua, and is likely to be operational in late 2016.
UK-based drugmaker GlaxoSmithKline announced expansion plans to its business in Costa Rica. The move will create about 150 jobs in its customer service centre in the coming 18 months. The company will seek professionals in the areas of business administration, accounting, information technology and various engineering specialties..
BMI Economic View
The region's economic trajectory remains divergent. Panama will continue to be the regional outperformer, boasting the strongest economy of Central America, excluding Mexico. Countries like Costa Rica and Guatemala, who previously suffered from struggling economies, will begin to see financial improvements in 2015 through strong investment, an uptake in private consumption, and national savings through tax reform. El Salvador will also see mild economic improvements as heightened consumption drives economic growth. Guatemala and Honduras will remain in weak economic positions, with expectations for little investment opportunities.
BMI Political View
Regional corruption and security risks continue to pose threats to Central America. Drug cartels, counterfeit products, heightened crime, and violence will remain major concerns to Central American political stability. Social unrest in Honduras and Nicaragua will be particularly problematic in 2015 as the political landscape of these countries becomes threatened through accusations of government corruption and poor business environments.