Industry Trend Analysis - Government Investment In Pharmaceutical Sector Will Remain Low - MAR 2017

BMI View: Direct government investment in the pharmaceutical industry of the Central Americas will remain low in the coming years. Governments will instead prioritise improving the business environment, act ing as facilitators for foreign direct investment by multinational drugmakers. P harmaceutical companies intending to expand within Central America must account for the region's substantial downside risks and small market size when formulating a growth strategy.

There are few examples of direct investment by Central American governments in their respective pharmaceutical industries. The region is not a hotspot for direct government investment, and we expected this to remain the case over the medium term given the lingering industry and operational risks. In BMI's Q217 Pharmaceutical Risk Reward Index (RRI), the Americas region scored 50.6 out of 100, below Western Europe (69.3), Central and Eastern Europe (51.1) and Asia Pacific (51.2), and above only the Middle East and Africa (39.8). The lowest scoring countries in the Americas region are predominately those of Central America, with industry risks like patent respect and country risks like business transparency weighing heavily. Before governments invest in the pharmaceutical industry, they will prioritise the improvement of the business environment. Although this focus does provide upside risk for multinational drugmakers looking to expand in the region, the benefits will still be limited by the downside risks of such a strategy and the small absolute size of the Central American pharmaceutical market.

Government Investment Overview

Q217 Americas Pharmaceutical Risk/Reward Index
Rewards & Risks Scores
*RRI scores out of 100, with 100 highest. Source: BMI.

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