In 2021, Latin America ranked fourth globally in terms of production output of pharmaceuticals and medical equipment, with a turnover of USD123.9 billion. Going forward, the industry is forecast to record slow growth due to soaring inflation, subdued economic growth and persisting structural problems. Global supply chain disruptions and accelerating nearshoring, however, may present opportunities for Latin America’s drugs and devices producers.
This report comes in PPT.
The outlook for the pharmaceuticals and medical equipment industry in Latin America remains clouded by the region's slow economic growth, persisting structural problems and elevated poverty levels which result in lower domestic demand for pharmaceuticals. As a result, the region is expected to remain the fourth largest drugs and devices producer, expanding at the slowest pace among all global regions over 2021-2030.
Costa Rica is set to record the highest production value increase within the region, especially in medical devices, driven by various tax incentives, business-friendly policies, strong technological development and great interest from foreign investors. However, Puerto Rico is forecast to maintain its number one position in terms of the industry’s production value, supported by a concentration of world-leading life science producers, a broad manufacturing base and a skilled workforce.
As supply chain disruptions brought about by COVID-19 highlighted the need for production nearshoring, the US, one of the main export destinations for Latin American drugs and devices, is making efforts to reduce its dependence on China and to boost production in neighbouring countries. According to the Inter-American Development Bank, nearshoring could add USD78 billion in additional exports of goods and services in Latin America, with pharmaceuticals among the industries expected to benefit the most.
While production of pharmaceuticals and medical equipment in Latin America primarily targets cost-effective products, such as generics and biosimilars, domestic demand for innovative and high-complexity products, including biopharmaceuticals, is largely satisfied by imports from leading global producers operating in developed economies. China, Western Europe and the US remain the region’s major suppliers, with India actively aiming to increase its pharma exports to Latin America.
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