Dallas, Texas (PRWEB) September 19, 2014
In 2003, the government launched the Inside the Neighborhood Mission (Misión Barrio Adentro), which it hoped would increase the efficiency of the healthcare system (see Section 6.1.3.). In 2009, it invested VEF28 billion ($13 billion) in an Autonomous Service of Pharmaceutical Elaborations (Servicio Autónomo de Elaboraciones Farmacéuticas, SEFAR) production plant, which provides medicines at a cheaper rate than private pharmaceutical manufacturers (MPPCI, 2009). These initiatives are expected to drive the Venezuelan pharmaceutical market.
The pharmaceutical market was valued at approximately $4.1 billion in 2008 and $10 billion in 2013, having grown at a Compound Annual Growth Rate (CAGR) of 19.7%. It is estimated to reach $22.2 billion in 2020 at a CAGR of 12.0% from 2014 (CIFAR, 2007; CIFAR, 2012). The estimated drop in the growth rate is due to the frequent devaluation of the Venezuelan bolívar (from VEF4.3 per US dollar to VEF6.3 per US dollar in February 2013) and shortages of drugs in pharmacies. Due to currency devaluation, the value of the pharmaceutical market will be less in US dollar terms than in local currency terms.
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In 2008, Venezuela reinstated the “Industrial Property Law of 1955”, which prevents the patent of medicines and food. This step will prove to be a challenge for manufacturers of branded drugs operating in Venezuela. In 2003, the government imposed a price regulation for essential medicines (classified according to the criteria of the World Health Organization (WHO)). In November 2011, the Fair Price Law (Ley de Costos y Precios Justos) was introduced to regulate the prices of products and profits (to a maximum of 30%) in the pharmaceutical industry. These price freezes are likely to negatively affect pharmaceutical companies.
The supply of pharmaceuticals is heavily dependent on imports. The pharmaceutical imports market grew at a CAGR of 17.8% from 2008 to 2013 (ITC, 2014). Furthermore, pharmacies face a shortage of essential medicines due to short supplies, despite the efforts of the government. The imports of pharmaceutical products are anticipated to increase due to the inefficient and non-favorable domestic healthcare market.
The Rafael Rangel National Institute of Hygiene (Instituto Nacional de Higiene Rafael Rangel, INHRR) is the main regulatory authority for pharmaceutical products, working under the guidance of the People’s Power Ministry for Health (Ministerio del Poder Popular para la Salud, MPPS). The Pharmaceutical Review Board (Junta Revisora de Productos Farmacéuticos, JRPF) works under the INHRR and MPPS. The JRPF is an advisor to the MPPS on matters related to the effective and ongoing monitoring of registration, promotion, dispensing, sale, pharmacovigilance and clinical trials of drugs (INHRR, 2014a). According to the established procedures, the time for the approval of a new drug is 180 days. For generic drugs, it is 60 days. However, lack of clarity in the regulatory system and language barriers when applications and documents are required to be submitted in Spanish make the drug approval process a major challenge for foreign Multi-National Companies (MNC) (CIFAR, 2014b).
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Venezuelan healthcare facilities are mainly limited to primary hospitals due to a high share of primary care in the overall healthcare provision. The number of secondary and tertiary hospitals is very low. The government provides easy access to primary hospitals to the population through Inside the Neighborhood Mission I (Misión Barrio Adentro I) program. Under this program, primary care centers are available in rural and urban areas to provide healthcare services to the whole population.
In Venezuela, the share of the government in healthcare expenditure was 31.8% in 2013, while private expenditure accounted for 68.2% (World Bank, 2014h). The private sector’s share is higher than the public’s due to high Out-of-Pocket (OOP) payments.
Oil-based economy is vulnerable due to growing inflation and emerging crude oil black market. The devaluation of the currency, continued banking interventions and the nationalization of assets in the petroleum, alternative energy and banking sectors have led to a decline in foreign direct investments, but government initiatives are expected to bring economic stability
The economy is mostly dependent on oil revenue, which accounts for approximately 96% of export earnings, 45% of budget revenue and approximately 12% of Gross Domestic Product (GDP) (CIA, 2014). The economy is struggling to grow under the negative pressure of increasing inflation and the emerging black market. Even though Venezuela has the world’s largest oil reserves, its production rate has decreased in recent years. Venezuela’s foreign currency reserve decreased by 27% in 2013 (Record, 2014; Goodman, 2013).
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