Opportunities in Latin America Beyond the Olympics

Olympics fans aren’t the only ones turning their eyes toward Brazil. According to JLL’s fourth annual Life Sciences Outlook, the 2016 Summer Games host nation is also one of the world’s top 10 “Global Clusters to Watch,” thanks to its proven capacity for medical device manufacturing and a growing healthcare market. Increasingly, Latin America overall has been on the radar for life sciences companies seeking greater operational efficiency and opportunity, expanded market access, promising demographics, lower-cost land and labor, and emerging pathways to innovation.

National governments across Latin America have improved their stability and are entering into liberal trade agreements. With increasing support for healthcare and growing middle class populations in the region, consumer demands for drugs and treatments also are expanding. One report projects healthcare spending across Latin America to grow on average 4.6% annually through 2018 (1). Talent pools also are expanding as more citizens gain access to specialized training and education.

Many Latin American governments are improving R&D capabilities, with both university and incubator funding initiatives on the rise. Although the region’s share of life-science patent applications submitted under the International Patent Cooperation Treaty (PCT) make up just a small fraction of the global total, Latin America and the Caribbean increased their volume by 7% year-over-year in 2014 — a growth rate well above that of North America and Europe. Despite recent economic setbacks for Brazil and Venezuela, Latin America still offers opportunities for biopharmaceutical companies — both in terms of potential customers and highly efficient production and early research and development.

Brazil: Soaring Markets
According to JLL’s Life Sciences Outlook, medical sales in Brazil are projected to reach US$57.3 billion by 2020, in large part because of the growing purchasing power of the country’s middle class. The trajectory keeps with the growth of Brazil’s per capita healthcare expenditure, which grew by 14% between 2001 and 2011 (more than double worldwide growth rates). Brazil now ranks second among all nations as a medical device market.

Perhaps the greatest emerging opportunity lies in local R&D. Right now, privately funded research is relatively low, but Brazilian public policy is encouraging foreign direct investment and multinational partnerships. JLL experts are seeing stronger intellectual protections and strengthened support for research park and incubator development.

Mexico: Location, Support, and Quality Standards
For US companies, Mexico is a geographically convenient manufacturing country. Several multinational players house production operations in Mexico, including Merck and Bayer, AstraZeneca, Pfizer, and GlaxoSmithKline. The country also offers a favorable political climate and tightening quality standards. In terms of total gross production, pharmaceutical manufacturing is one of Mexico’s top three manufacturing industries, and its federal government is actively interested in strengthening the associated regulatory framework. Free-trade agreements are now in place with 44 countries, bolstering the nation’s import and export platforms.

Mexico’s innovation is rising as well, with a 7.1% year-over-year growth in PCT applications. Mexico now has the third-highest rate of higher education funding in the world and scores number one for government R&D funds. Furthermore, education levels are rising: 21% of Mexican workers now have tertiary education in engineering and manufacturing, and 6% in science.

Puerto Rico and Columbia: Notable Markets
As a well-established manufacturing hub, the US Commonwealth of Puerto Rico offers the same intellectual property protection and NIH funding opportunities as the rest of the United States as well as a strong pharmaceutical workforce and long history as a center for pharmaceutical operations. The US FDA already has approved 49 pharmaceutical plants and 70 medical device manufacturing sites in Puerto Rico, including those of prominent companies.

As the fourth-largest economy in Latin America, Columbia experienced notable year-over-year growth of PCT life sciences applications at 26.3%, according to JLL’s 2015 report. With its increasing stability and trend toward market liberalization, it is another promising target for future development.

The Latin American Lure
With its fast-growing populations, improving national healthcare systems, and attractive clinical trial environments, Latin America is gaining the attention and investments of bioprocessing companies from around the world.

Reference
1 2015 Global Health Care Outlook: Common Goals, Competing Priorities. Deloitte Global; www2.deloitte.com/content/dam/Deloitte/global/Documents/Life-Sciences-Health-Care/gx-lshc-2015-healthcare-outlook-global.pdf.

Roger Humphrey is executive managing director of the Life Sciences group at JLL;
1-908-698-1379; [email protected].