Industry Trend Analysis - Supply Chains Pose Risks To Drugmaker Revenues - MAR 2017

BMI View: Drug shortages in Argentina are a potential risk for both pharmaceutical companies and the public 's health . For example, on a regional basis , t uberculosis is not a significant problem in Argentina ; however, supply chain issues may exacerbate the impact of the disease. Systemic drug shortages would compromise the ideals set out in President Macri's universal health care plan , although government action is likely to prevent serious disruption .

Argentina's pharmaceutical supply chain is shaped by state and province laws designed to prevent agglomeration of market share in the retail drug sector. The policy has preserved the status of local pharmacies but prevents economies of scale through the wider supply chain, leading to increased instability compared to more concentrated markets. Drug shortages of tuberculosis (TB) medications through 2016 are indicative of the weakness in Argentina's distribution system, and highlight the risks that surround the supply chains of greater commercial significance.

TB Drug Shortages Have Broad Implications

The Argentine Society of Infectious Diseases (SADI) has published an open letter criticising the government for the lack of TB medicines available in the country. The claims were supported by leaders from the University Hospital of Buenos Aires, who noted shortages of at least six key TB drugs through 2016. From a drugmaker perspective, the spread of this problem to other therapy areas would be highly detrimental to Argentina's market attractiveness. From a patient perspective, there are well known consequences resulting from interruption or irregular compliance with TB treatment, including therapeutic failure and the emergence of resistant strains.

Market-Specific Factors Create TB Risk

On a regional level, TB is not a significant problem in Argentina; however, country-specific factors mean that the impact of the disease could increase if drug shortages continue. Our analysis shows that the incidence and burden of TB in Argentina is well below the regional average. Despite this, the supply issues are concerning when contextualised with the country's growing HIV burden ( see ' Political/Economic Factors Will Create Divergent Epidemiology ' , December 1 2016), and additional reports of HIV drug shortages through 2016.

Argentina: TB Risks Remain Despite Relatively Low Impact
Latin America: Per Capita Incidence Of Tuberculosis In 2014 (LHS) Per Capita Tuberculosis Burden (DALYs), 1990-2030 (RHS)
f = BMI forecast. Note: Line shows average incidence (46) across Latin America (LHS). Source: World Bank, World Health Organization (WHO), BMI

Drug Shortages Compromise The Ideals Of Universal Health Coverage

A key tenet of President Macri's plans to provide universal health coverage in Argentina rests on the expanded provision of medicines ( see ' Universal Health Plan To Boost Healthcare Expenditure ' , August 4 2016), and systemic drug shortages would oppose the ideals of this system before it is even in place. On TB specifically, recent developments from the Ministry of Health show that it is aware of the problem and actively looking for solutions. In December 2016, the Ministry of Health finalised an agreement with representatives of Rio Negro province and the country's public laboratory unit (PROZOME) for the additional supply of TB medicines. The first delivery of drugs is planned for April 2017, with second and third batches planned for August and December.

Universal Healthcare Will Expand Government Expenditure
Argentina: Healthcare Expenditure Forecast
Source: BMI/World Health Organization (WHO)