At first glance, Latin America appears to be an attractive market for foreign companies and investors.
"The South American medical market is not uniform," says Horst Giesen, Director Global Portfolio Health and Medical Technologies at Messe Düsseldorf. Latin America's medical markets are highly complex and have individual characteristics, differing from state to state. They are largely linked to national health systems, but also to the respective economic and political situation. In Peru and Chile, for example, numerous new hospitals have been built in recent years to expand public health care. In Brazil, foreign investments in hospitals are possible since 2015, among other things, to support the consolidation of the Brazilian clinics. In Argentina, for example, the weak currency strengthened the local industry. At the same time, however, private Argentine companies in the medical technology sector preferred foreign imports, hoping that this would better protect their profits from inflation.
Despite all the differences, two main trends can be observed that are currently relevant for most of the Latin American medical market. They are a consequence of both the slump in raw material prices and the demographic development of recent years.
After the global economic crisis in 2008, South America's major economies recovered relatively quickly and soon recorded new growth. Worldwide demand for local raw materials remained high, particularly from Asian countries. From 2010, however, commodity prices began to fall and economic growth slowed. Latin American exports sank dramatically, particularly as a result of China's economic crisis in 2015 - a fact that had a negative impact on almost all aspects of the South American economy and is still having repercussions today: "Right now, Latin America is unfortunately economically not well positioned. Brazil’s economic power has clearly decreased in recent years. Its medical device market currently exhibits slow growth and exports to Brazil have also considerably decreased from a German perspective. Having said that, we also notice that the market is under slight consolidation", explains Jennifer Goldenstede, Head of Foreign Trade and Export Promotion, SPECTARIS – German Industry Association for Optical, Medical, and Mechatronic Technologies. The collapse in commodity prices led to budget cuts in many countries. Overall, there is still a high pressure for austerity and efficiency measures in almost all sectors of Latin America.
Compared to other sectors, the health sector was relatively spared - South America's health expenditure increased for example by 9.6 percent between 2000 and 2013 (source: https://www.gtai.de/GTAI/Navigation/DE/Trade/Maerkte/suche,t=gesundheitsmaerkte-in-lateinamerika-trotzen-dem-wirtschaftsabschwung,did=1500204.html; consulted 03/29/2018). One of the reasons for this exception is an opposite trend, which is based on demographic change and the population's rising expectations concerning the health systems.
Since the production of medical technology in South America itself is only weak, most of the demand has to be imported from abroad.
In most countries, public health care has been expanding in recent years in parallel with the aforementioned budget cuts. This expansion also aims to increasingly include previously overlooked population groups. Overall, social pressure on governments in this respect is growing: a growing middle class with purchasing power and increasing self-confidence is calling for an improvement of health services.
In addition, forecasts have been available since 1990 stating that the population's age structure will continue to shift in the future. Until 2009, the South American population continued to grow at an average annual rate of 1.1%. This ratio declined in the following years. The same trend is also predicted for the coming years. By 2020, the total population of Latin America is estimated to reach 670 million, with an increasing proportion of older people. (Source: http://www.spectaris.de/uploads/tx_ewscontent_pi1/Markt_Medtech_LA.pdf; consulted on 03/29/2018) The number of people over 65 is expected to be 86 million in 2030. (Source: https://www.gtai.de/GTAI/Navigation/DE/Trade/Maerkte/suche,t=gesundheitsmaerkte-in-lateinamerika-trotzen-dem-wirtschaftsabschwung,did=1500204.html; consulted 03/29/2018) Non-communicable diseases and obesity are on the rise. According to a study by the Population Reference Bureau, cancer, cardiovascular disease, diabetes and chronic lung disease are expected to account for 81% of all deaths in Latin America by 2030. (Source: https://www.prb.org/noncommunicable-diseases-latinamerica-youth-policybrief/; consulted 03/29/2018). Taking into account these major challenges, health systems are in danger to collapse in the future. Governments reacted with health agendas and programs such as Plan Nacer in Argentina, the taxpayer-funded Unified Health System in Brazil and the Social Health Insurance Program in Chile.
Since the production of medical technology in the region is very weak, the majority of the demand - in order to care for the aging population in the future and meet the health agendas mentioned - must be imported from abroad. Between 2005 and 2015, imports of medical technology therefore grew at an average double-digit rate per year. In Brazil they rose by 12.3%, in Colombia by 12.5%, in Chile by 12%, in Argentina by 14% and in Peru by 15%. (Source: https://www.gtai.de/GTAI/Navigation/DE/Trade/Maerkte/suche,t=gesundheitsmaerkte-in-lateinamerika-trotzen-dem-wirtschaftsabschwung,did=1500204.html; consulted 03/29/2018). Many governments have also responded - within the framework of their health agendas and taking into account the demographic forecasts - with legislative changes designed to make it easier for US and European medical technology providers to establish themselves on the Latin American market.
Trade fairs such as Hospitalar São Paulo and Meditech Bogotá play an important role in import and trade. "Hospitalar is the most important trade show in South America. All important international and national companies are represented, visitors come from all over South America and in some cases beyond, and the congress and lecture program also attracts many experts to São Paulo," says Hannes Niemann, Deputy Director REHACARE in Messe Düsseldorf's Global Portfolio Health and Medical Technologies. "Meditech is conceived as a domestic trade fair, which, however, increasingly has an impact on its immediate neighbours and thus also has Central America in mind," adds Horst Giesen.
The Latin American market for medical technology is thus on a comparatively good level - even though it is only slowly growing. Also, there are positive forecasts for the future that predict a further consolidation of this market.
The article was written and translated from German by Julia Unverzagt.