Drug Market Set For Inflated Growth
BMI View: High inflation, currency devaluation, import and foreign currency controls, as well as other structurally distorting policies, in Venezuela have made the country's pharmaceutical market increasingly unattractive to multinationals. We expect the market to grow at below nominal GDP levels between 2011 and 2015, and experience a contraction in real growth terms.
Compared with our previous forecast, Venezuela's pharmaceutical market is expected to grow at a faster rate between 2011 and 2016, experiencing a compound annual growth rate (CAGR) of 22.2% in local currency terms, instead of the previously forecast 19.3%. This accelerating growth is largely due to the longer period of high inflation that BMI's Country Risk team is forecasting. Inflation averaging more than 20% over the past decade has been forecast to increase to 22.0% by end-2012, as some of the government-led disinflationary policies are no longer in place, and it will be extended to the end of 2016 due to a combination of political and economic factors.
BMI notes that despite the strict currency controls, Venezuelan authorities has also tightened regulations governing the import of pharmaceutical products, and consolidated its hold on the country's pharmaceutical sector, which includes stripping the sector of its priority status and cutting the amount of money allocated to drug production and sales companies. We expect that those key developments in Venezuela's drug market, combined with the government's cost-containment policies, will result in the country's real pharmaceutical sales contracting between 2011 and 2015.
|Extended High Inflation Period|
|Venezuela - Consumer Price Index, % y-o-y, ave|