Industry Trend Analysis - Limited Drugmaker Opportunities Underpinned By Small Pharmaceutical Market - MAY 2017

BMI View : Growth within Trinidad & Tobago's pharmaceutical market will be supported by the government's push towards advancing healthcare availability and accessibility. However, local drug manufacturing is severely limited which, coupled with a weak business climate, makes for a challenging environment for pharmaceutical firms to operate in. Plans to prioritise spending on healthcare will have positive implications for the pharmaceutical market's development; however , the government's ability to consistently support healthcare financing is inextricably linked to global oil prices.

Multinational company activity will remain limited in Trinidad & Tobago's pharmaceutical market. The Caribbean country's small pharmaceutical market size will impede any major investment into medicine launches and domestic manufacturing by foreign drugmakers over the next decade. However, when compared with neighbouring Caribbean countries in which familiar themes exist, Trinidad & Tobago's relatively well established healthcare system bodes well for the country's long-term commercial potential.

Limited Drugmaker Opportunities

We calculate that Trinidad & Tobago's pharmaceutical expenditure totalled TTD2.06bn (USD311mn) in 2016, with per capita pharmaceutical expenditure of USD228; marginally below the regional average of USD235 in the Caribbean. In terms of expenditure, Trinidad & Tobago falls significantly below the large Caribbean nations' markets (Cuba, USD3.83bn; Puerto Rico, USD1.61bn; Dominican Republic, USD685mn). We expect that multinational company interest will remain favoured towards these larger Caribbean markets over the coming years given their better-established manufacturing bases and close ties with the US. We forecast pharmaceutical sales in Trinidad & Tobago to reach TTD2.71bn (USD271mn) by 2021, corresponding to a five-year local currency compound annual growth rate (CAGR) of 5.4% (-3.7% in US dollar terms). Despite this moderate growth outlook, the commercial incentives for foreign drugmakers are largely limited by the country's lack of existing infrastructure, and the dominance of generic medicines.

Underdeveloped Pharmaceutical Market
Trinidad & Tobago Pharmaceutical Market Expenditure
e/f = BMI estimate/forecast. Source: BMI, UN Comtrade Database

Healthcare Commitment Improves Long-Term Potential

Posing upside to Trinidad & Tobago's pharmaceutical and healthcare market outlook, the People's National Movement (PNM) have committed to prioritising spending on healthcare. In 2016, the finance minister, Colm Imbert, announced that healthcare will remain a crucial sector in the public expenditure budget for 2016/17. Specifically, Imbert noted that the government would:

  • Address the shortage of medical personnel immediately;

  • Expedite surgeries and expand and improve the Chronic Disease Assistance Programme (CDAP) as well as the medical aid programmes;

  • Review and audit the Children's Life Fund;

  • Guarantee that by December 31, 2018, a National Health Insurance System will be in place and operational, thus bringing much-needed relief to all citizens.

Advancing the CDAP, in particular, will boost Trinidad & Tobago's pharmaceutical market attractiveness to international drugmakers whose product portfolio includes treatments for chronic illnesses such as cancer, diabetes and cardiovascular disease. While Trinidad & Tobago's pharmaceutical landscape is not appealing to multinational drugmakers in its own right, a rising burden of non-communicable diseases, combined with improved healthcare accessibility, pose upside potential to drugmaker opportunities. According to BMI's Disease Database, non-communicable diseases accounted for 76% of T&T's total disease burden in 2016, with cardiovascular diseases (19%), diabetes (11%) and cancers (8%) posing the highest burden.

Moreover, we note that compared with other Caribbean countries, Trinidad & Tobago has a relatively established healthcare system. According to the World Health Organization (WHO), per capita healthcare spending in the country reached USD1,275 in 2016. The government's focus on further improving per capita spending will generate revenue earning opportunities for pharmaceutical companies and healthcare providers in Trinidad & Tobago.

Source: BMI, World Health Organization

Gradual Economic Rebound

Trinidad & Tobago's economy is highly reliant on exports of crude oil and natural gas, the latter of which are indexed to the price of oil. According to our Country Risk team, Trinidad & Tobago will stage a modest growth recovery in 2017, driven by improving exports as energy prices average higher and new natural gas production comes on line. However, consumption will remain under pressure as the government attempts to rein-in its fiscal shortfall through tax increases and constrained expenditure.

Modest Rebound After Three Years Of Contraction
Trinidad & Tobago - Real GDP Growth, %
e/f = BMI estimate/forecast; Source: CBTT, BMI

Healthcare A Priority , Yet Remains Vulnerable

We expect that the healthcare sector is likely to remain insulated to any large-scale spending cuts over the coming years given its importance in maintaining social stability. Underpinning this view, the government have announced plans to prioritise spending on healthcare regardless of the economy's reliance on oil prices. Such prioritisation is positive for Trinidad & Tobago's healthcare sector, as government commitment to spending could result in increased pharmaceutical expenditure, therefore increasing the country's appeal to investors.

Political Commitment To Maintain A Healthy Forecast
Trinidad & Tobago: Healthcare Market Expenditure
Source: World Health Organization, BMI