“2020 has been declared as the year of universal health coverage in Peru, so the country needs to expand its expenditure on healthcare, which is currently just 5.5% of the GDP. In other countries in Latin America this figure is closer to 8%.”
Could you provide some background information about Alafarpe?
Alafarpe is Peru’s Association of Pharmaceutical Laboratories. It has a history of more than 66 years, and represents the interests of 22 member companies. They include multinationals and laboratories that operate plants in-country. Members of Alafarpe come from diverse business models, as some are working to provide innovative therapies, while others are developing strategies to advance their generics businesses. However, one thing that is constant is they stand by the core values of innovation, quality and high ethics in the pharmaceutical industry. As an association, we support the development of public policy to improve the health system in the country, particularly considering Peru’s health system is highly fragmented, both on the institutional and the private fronts.
In Peru, there are 4 million people that do not have any sort of health insurance. We try to promote a more sustainable regulatory framework, while protecting free and healthy competition in the pharma industry. We also promote good practices in terms of corporate social responsibility. Alafarpe is a member of the UN’s Global Compact, which under the Millennium Development Goals promotes health and well-being. In this respect, we work on increasing awareness about issues related to the timely supply of medicine, the quality of generics and the funds needed to keep the system running.
What is the size of Peru’s market for pharmaceutical companies?
The market for pharmaceutical drugs in Peru is valued at US$ 1.9 billion. In 2018, the market expanded by 6%, but in 2019 growth slowed to just over 2%. This was due not only to lower economic growth in the country, but also to the delays in institutional purchases. Alafarpe members represent around 35% of the market, which means Peru has a lot of room to improve access to innovative therapies. The rest of the market is covered by both local laboratories and importers of generics and biosimilars.
Peru’s institutional market is probably one decade behind in terms of the introduction of new therapies. Multiple studies show that the use of innovative therapies can have a positive impact in terms of cost savings for hospitals and governments. Therefore, a strong bet on innovation should result in longer term economic sustainability of the system.
Are generics and biosimilars following international standards?
We need to ensure that generics and biosimilars comply with the standards of the World Health Organization. Last year there was a decree by the government to promote access to generics and biosimilars, which forces private pharmacies to have a list of generics available upon the customer’s request. However, the focus should be on making sure that molecules are fully interchangeable; in Mexico 100% of molecules are already interchangeable, and in Chile, they already have more than 1,000 interchangeable molecules. In Peru, we have just seen the approval of two interchangeable molecules, so there needs to be a strong push in this direction, especially for those therapies that involve large purchases in the system.
What is Peru’s positioning in terms of R&D and clinical trials?
In 2008, Peru was a good location for R&D with 158 trials, but in 2019 we only had 49 trials. We recently saw a modification to the regulation, so we expect the situation to improve. This is important because clinical trials are the only way for certain patients to access therapies that are not available in the country. Mexico is a good example of promotion of R&D, they are able to attract foreign direct investment and promote local talent. Peru receives a lot of R&D promotion in gastronomy and tourism, but not in clinical research. Peru should implement the tools to promote more R&D, with models such as risk-sharing schemes.
Has the recent consolidation of the market in Peru, with the merger of the two main chains of pharmacies, affected access to medicines at a fair price?
We have not seen a direct impact yet, although we have urged public entities like Indecopi to make sure there are not monopolistic practices. We need to have more players in this segment, and also Peru still has 1,000 independent pharmacies, so SMEs should play a strong role. Beyond this, let us not forget that the state is the main entity responsible for health coverage, so it is not acceptable that 58% of the vulnerable population (the people insured by the SIS system) cannot obtain their medicine directly at the medical center. There are windows of opportunity for the private sector to improve the logistics chain of the state. Access to medicine has been declared a human right, and this requires change from all stakeholders.
How could Peru improve access to high-cost therapies?
There is a gap of around S/ 3.2 billion per year (nearly US$ 1 billion per year) in terms of the investment made by the state, versus the needs of the population for high complexity illnesses. Budgets always look at past years’ expenditures, and that way it is impossible to close the gaps. Also, evaluation tools should be more sophisticated and look not only at curing diseases but also at improving quality of life in those cases where diseases are actually not curable.
What are the prospects for Peru’s pharma and healthcare industry?
2020 has been declared as the year of universal health coverage in Peru, so the country needs to expand its expenditure on healthcare, which is currently just 5.5% of the GDP. In other countries in Latin America this figure is closer to 8%. This is especially relevant for those high-complexity treatments, which are the ones that have a deeper impact on the families’ budget.