BMI View: The Uruguayan government is committed to improving healthcare standards in the country. This is evident in the high percentage of public funds dedicated to healthcare in comparison with most Latin American countries. While Uruguay's small domestic pharmaceutical market, with its low growth rate, offers multinationals few commercial incentives, Uruguay's favourable investment policies, close relationships with other regional countries, and geographic location make it an attractive regional pharmaceutical production hub. We believe there is potential for foreign investors to generate significant long-term growth.
BMI's country risk team has highlighted a growing risk of further deterioration in Uruguay's real private consumption growth, and expected relatively robust government consumption growth . We believe that the healthcare sector is strongly positioned in the country's current public/private spending trajectory. According to the World Health Organization (WHO)'s health expenditure database, total government healthcare expenditure in Uruguay reached US$2.5bn in 2011, up by 21% and accounting for 68% of total spending. Its government contribution as a percentage of total healthcare expenditure was the second highest in Latin America in 2012, pushing its per capita healthcare spending to US$1,178 - higher than all other Latin American countries, including Brazil, Mexico and Argentina.
|Highest In The Region|
|2012 Healthcare Spending Per Capita In Major Latin American Countries|
|High Public Sector Contribution|
|2012 Government Healthcare Spending, % Of Total In Major Latin American Countries|
We believe that public contributions to healthcare in Uruguay will continue to grow, improving domestic healthcare standards and access to medicines. However, we note that although the healthcare system in the country are evolving towards universal health coverage, public funding in Uruguay currently only provides basic coverage of essential medicines and minimal care in urgent cases. This is a reflection of the fact that Uruguay's pharmaceutical market is one of the smallest in Latin America, with its per capita spending on medicines (at US$92 in 2012) - below major markets such as Brazil (US$135), Mexico (US$115), Argentina (US$214) and Venezuela (US$339), but above second-tier markets like Peru (US$52) and Colombia (US$88). The market's growth rate for 2013 calculated in local currency terms is also one of the lowest in the Latin American region. In addition, the country has a fairly flat pharmaceutical trade balance in comparison with other Latin American countries.
|Small Market With Limited Growth|
|Uruguay Pharmaceutical Market Outlook|
However, drugmakers should be encouraged by Uruguay's trade liberalisation, strategic location, favourable business environment, institutional stability and its government's equal treatment of foreign investment and domestic investment, as well as its tax exemption policies for foreign investors. We also note that operational costs in the country are some of the lowest in the region, making Uruguay an attractive regional pharmaceutical production hub for foreign drugmakers in the long term.
 Business Monitor Online - Uruguay - Economic Analysis - Weakening Consumer Posing Downside GDP Risk - 17 June, 2013