When it comes to pharmaceutical exports, Latin America has historically been confined to the margins of the global life science industry. In 2023, the region accounted for a mere one percent of worldwide pharmaceutical exports, down from 1.97 percent a decade earlier, despite housing over eight percent of the world’s population. Such dynamics can be explained by a strong tradition of locally manufactured medicines and import substitution industrial policies that have endowed Latin American pharmaceutical supply chains with a somewhat elevated level of resilience.
“The COVID-19 pandemic exposed the vulnerabilities inherent in many countries’ life science supply chain architectures. Almost overnight, many nations suddenly discovered that their pharmaceutical security depended entirely on distant production capacity that could not be relied upon, though Latin American markets tended to fare somewhat better than most,” recalls Ricardo Amtmann, president of Sanfer Group.
“Local and regionally embedded manufacturers like us were able to fulfil a strategically critical role,” agrees Gianclaudio Broggi, CEO of Megalabs. “When the pandemic struck and disrupted global logistics and trade in conventional medicines, we already possessed on-the-ground manufacturing capacity throughout the region to produce essential medicines, so managed to ensure Latin American patients with chronic conditions received an uninterrupted supply of medicines. This contrasted sharply with Europe’s experience, where markets confronted severe supply shortages of essential products – metformin being one notable example,” he recounts.
Indeed, markets like Colombia, Mexico, and Brazil have long employed industrial policies that promote the local manufacturing of pharmaceuticals such as by making ‘local content’ a key criterion of being able to win government life science tenders. “Colombia’s government, for its part, has adopted a comprehensive industrial policy with a Consejo Nacional de Política Económica y Social (CONPES) for Reindustrialisation designed to advance pharmaceutical sovereignty that coordinates multiple ministries and budgetary efforts to support the domestic production of essential medicines and raw materials,” explains Francisco Rossi, Director of the country’s National Food and Drug Surveillance Institute (INVIMA).
In addition, the Colombian Ministry of Science and Technology is proactively supporting both public and private projects in the manufacturing of medicines deemed essential to public health. “These projects combine public funding, academic research, and international technology transfer, all contributing to a long-term vision of regional production capacity and innovation,” Rossi explains.
Meanwhile, the Pan American Health Organization (PAHO) has been making inroads at a regional level to further strengthen production capacity and bolster Latin American’s technological self-reliance in areas such as vaccine manufacturing. “We’ve successfully managed to facilitate partnerships between multinational vaccine developers and manufacturers in Latin America to implement tech-transfer because our proposition offers compelling value to all participants,” says Jarbas Barbosa, PAHO’s Director. “For multinational pharmaceutical companies, our regional platform eliminates the traditional country-by-country regulatory approval process, which can require months of preparation and millions in regulatory costs for each jurisdiction. Moreover, when vaccines are offered through our Revolving Fund, they receive automatic acceptance across all participating countries, significantly reducing time-to-market and regulatory burden,” he details.
“Our regional demand aggregation capabilities enable manufacturers to achieve economies of scale while providing multi-year contract stability that supports production planning and investment decisions. The recent agreement with Argentina’s government, Pfizer, and Sinergium-Biotech Laboratorios for the new pneumococcal vaccine technology transfer exemplifies this model’s potential impact – enabling local production while securing access to innovative 20-valent pneumococcal vaccines at unprecedented affordability,” Barbosa continues.
Sustained Investment
Multinational drug developers, at the same time, appear to be responsive to the call to produce locally. “Brazil is home to one of Pierre Fabre’s few manufacturing sites outside France, as well as a dedicated innovation centre. The majority of our production facilities remain in France,” confides Danielle Bibas, CEO of the French midcap in Brazil. “We source from France what is appropriate from a research and development perspective, but we actually produce the majority of products sold in Brazil locally – in Maricá, Rio de Janeiro. We adopt formulations developed externally, but manufacture them locally,” she confides.
“Latin America benefits from robust local manufacturing partners that are competent and technically sophisticated, so it makes sense to leverage that capacity while simultaneously supporting national objectives,” agrees Sinan Atlig, president for the LatAm Cluster & emerging markets chief commercial officer at Pfizer. “We have been very active in this area since 2012, when we signed our first agreement in Argentina to locally produce a pneumococcal conjugate vaccine for national supply. Building on that foundation, we recently expanded the partnership to manufacture a next-generation version offering protection against seven additional serotypes,” he reveals.
As such investment in local production facilities is growing. “Between 2024 and 2026, we will be deploying approximately 160 million USD across facilities in Argentina, Paraguay, Brazil, Mexico, and Uruguay,” confirms Patricio Rodriguez CEO of Adium. “We maintain a fundamental conviction that achieving sustainable success in Latin America requires local manufacturing presence and sanitary independence – the capability to manufacture virtually our entire product portfolio within the region, thus mitigating geopolitical volatility and supply chain disruptions that characterise the current global environment,” he asserts.
API Dependency
There is widespread acknowledgement, however, that Latin America still remains in a state of dependency for certain specific areas of manufacturing – notably the production of Active Pharmaceutical Ingredients (APIs). “Presently, approximately a full 80 percent of our region’s APIs are imported, largely from Asia and the Far East, and this places us in a rather vulnerable state,” laments Ruben Abete, Executive Secretary of the Latin American Association of National Pharmaceutical Industries (ALIFAR).
The true dangers of this were laid bare at the end of 2019 when India and China imposed export bans. “I remember there were no muscle relaxants available to intubate patients in intensive care and without them, patients’ lives were placed at risk,” elaborates Abete. “Ensuring that Latin America can call upon its own proprietary production capacity in this area and that it does not depend exclusively on external decisions is the essence of health sovereignty and must constitute one of our core collective priorities and responsibilities,” he insists.
One obstacle to correcting this fundamental imbalance is that the production of APIs locally within the region makes uncertain economic sense under prevailing market conditions. Mexico’s Sanfer Group provides a case in point. “Previously we enjoyed a long history of involvement in API manufacturing through multiple international partnerships, including Miles Laboratories for citric acid production since the mid-twentieth century, as well as collaborations with SmithKline for the manufacture of albendazole and cimetidine, and with Beecham for beta-lactams. These were significant facilities, particularly the citric acid plant, which exported to 40 countries and ranked among the three or four largest citric acid manufacturers worldwide,” recounts Ricardo Amtmann. “However, as ecological regulations intensified, water costs escalated dramatically, and energy prices increased substantially, these three facilities became economically unviable and ultimately closed, meaning that Mexico lost most of its API manufacturing capacity,” he reflects.
Groups like ALIFAR are therefore proactively taking steps to try and restore that part of production back to the region through coordinated schemes and concerted action. “We are collaborating with governments and the PAHO to define a regional strategy. The idea is not for each country to set up dozens of plants; rather, we must think in terms of a shared production network that guarantees the essentials and provides a sound economic basis,” confides Abete. “Technological self-reliance represents a critical component of health security that cannot be addressed through traditional public health measures alone. It requires a comprehensive and coordinated regional production capacity strengthening programme that fills in the gaps left by market forces,” concurs PAHO’s Jarbas Barbosa.
Amtmann meanwhile notes that Asia’s stranglehold on API production has become a globally shared problem for the rest of the world and identifies potential scope for Mexico to reposition itself as a supplier to the rest of North America. “The United States is now prioritizing nearshoring and friendshoring and actively seeking API production from proximate, economically aligned nations. This represents the emerging paradigm. The challenge lies in achieving the necessary scale whilst managing the substantial water and energy consumption. Whether Mexican production can compete economically with China or India remains uncertain, but the focus has undoubtedly shifted from price to supply chain resilience,” he thinks.
Future Export Platform?
Indeed, in line with the post-pandemic tendency towards de-globalisation and regionalization of trade dynamics, some market insiders foresee a future role for Latin America as a pharma exporter. “The predominant underlying trend is the integration of North America as a unified, robust pharmaceutical supply hub. We are witnessing the US government seriously pursuing supply chain de-risking from China and India, seeking reliable partners capable of fulfilling this supply requirement. Mexico increasingly emerges as that reliable partner. Authorities on both sides – Mexican and American – are identifying this strategic opportunity and advancing it aggressively,” observes Guy Savoir, CEO of Carnot Laboratories.
“Mexico unquestionably occupies a privileged position to support the US in this endeavour. Specifically regarding finished dosage forms, the market possesses high capacity and high-quality capabilities – approximately 140 facilities already FDA-approved, with perhaps a similar number that could achieve approval in the near future,” he argues.
Sanfer, for its part, has already started to tap into this emerging opportunity. “Mexico, as the immediate neighbour of the world’s largest pharmaceutical consumer, enjoys distinct advantages and we are convinced this represents a transformational opportunity for businesses like ours,” confides Amtmann. “Already we are supplying two or three stock-keeping units to the world’s largest pharmaceutical purchaser, and we are fast developing additional products,” he confirms.
Real progress on this front, however, will depend upon additional policy reform such as differentiated tariff structures favouring North American products over alternatives. “Ultimately for this to take shape, we will require intelligent rules of origin that incentivise local manufacturing. We need alignment of government procurement favouring regionally manufactured products – encompassing Mexican public tenders alongside Medicare, Medicaid, and Affordable Care Act programmes. Additionally, we will need to see harmonised regulatory and intellectual property environments enabling accelerated, efficient product development and registration regionally,” thinks Savoir. “This represents a critical element within US-MCA renegotiation,” he affirms.
