The value of Argentina’s pharmaceutical market in 2008 was US$3.7bn. The updated forecasts see the market reaching a value of US$6.12bn by 2014, representing a compound annual growth rate (CAGR) of 12.68% in US dollar terms. With Argentina’s economy bouncing back after the economic crisis at the beginning of the decade, we expect the total value of the drug market to reach US$9.3bn by 2019.

However, the deep global recession has had a short-term impact on drug expenditure in Argentina, as out of pocket spending and government finances were hit, and the Argentine peso was devalued. Indeed, in 2009 we forecast that the drug sector will shrink by 10% in US dollar terms before recovering in 2010.

However, the long-term fundamentals of the market remain strong, and in BMI’s opinion Argentina is one of the most promising pharmaceutical markets in Latin America in terms of growth prospects.

Despite the economic downturn, Argentina’s government has promised to continue to invest heavily in public services in 2010, which should bode well for health expenditure. Total public spending is budgeted at ARS296.6bn (US$77.5bn), up 23.7% on 2009 levels. However, after its US$100bn debt restructuring in 2005, Argentina has struggled to raise credit on international markets, and this could impact government spending plans. This could in turn have a knock-on effect on levels of health expenditure.

Cristina Fernandez de Kirchner’s 2010 budget proposal estimates that the country’s primary surplus will increase to 2.3% of GDP, to ARS28.6bn (US$7.7bn), as the economy recovers from the global financial crisis.

The pharmaceutical sector has seen some investment in recent quarters. Brazilian pharmaceutical company Eurofarma took its first major step towards expansion across Latin America with the purchase of Argentinean drugmaker Quesada Farmaceutica. Eurofarma concluded an agreement to acquire 95% of Quesada in August 2009, with a commitment to purchase the remaining 5% over the following two years. Meanwhile, in September 2009, Indian drugmaker Glenmark announced that it was planning to set-up a facility in Buenos Aries to produce cancer drugs. When operational, the plant will have a total capacity of around 1mn vials and will be Glenmark’s world-wide hub for injectable oncology products.

Argentina has maintained its 7th place position in BMI’s Business Environment Ratings for the Americas Region. However, we have downgraded the country’s score for pharmaceutical market from 57 to 53 due to the short-term impact that the current economic crisis is having on pharmaceutical expenditure.

Ongoing problems in the market include inadequate intellectual property (IP) protection, which continues to act as a barrier to foreign investment.