Though smaller than regional powerhouses Brazil and Mexico, the Colombian pharmaceutical market has been expanding at a rapid pace in the past few years. Growth prospects for the industry were significantly boosted in 2012, when a reform to the Mandatory Health Plan (Plan Obligatorio de Salud, POS) widened the spectrum of benefits under the subsidiary scheme.

Today, the POS covers nearly all pharmaceuticals. Meanwhile, the increase in coverage over the past decade has also contributed to the rise in medicine consumption. According to IMS Health, a vendor of health care data, sales for prescriptive drugs rose by 5.7% in 2013, reaching $1.38bn. The industry as a whole is estimated to have grown around 6% in the same year.

Given a lack of regulation guiding the industry, particularly the generics market, the government’s attention has shifted towards strengthening this area. The recent introduction of price controls is set to expand patients’ access to medications, ending the monopoly some drugs have enjoyed in the market. However, industry analysts argue not enough is being done.


The industry’s regulatory framework is fragmented. The pharmaceutical market is overseen not by the National Superintendent of Health ( Superintendencia Nacional de Salud, SNS), but by a separate entity, the National Institute for the Surveillance of Pharmaceuticals and Foods (Instituto Nacional de Vigilancia de Medicamentos y Alimentos, INVIMA).

INVIMA is responsible for determining which pharmaceutical products and foods are allowed onto the local market, while the recently created Health Technologies Evaluation Institute (Instituto de Evaluaciones de Tecnologías en Salud, IETS) is tasked with determining whether a product can be made available under the POS. The Superintendent of Industry and Commerce, meanwhile, oversees prices for pharmaceutical products. Given the fragmentation of the regulatory framework, the health reform initiated by President Juan Manuel Santos has proposed to have the SNS take the responsibility as sole supervisor of the market.

Price Caps

Due to the lack of price regulation, Colombia has traditionally had some of the highest pharmaceutical prices in the region. In an attempt to lower health care costs, the government announced in mid-2013 the introduction of price controls on 32 of the most expensive pharmaceutical products, including medications for the treatment of cancer and HIV. Price ranges for these medications were determined by taking into account prevailing prices in a number of countries in the region as well as within the EU. According to the Ministry of Health and Social Protection, the measure is set to save an average of $180m annually.

Since the announcement price caps have been extended to several different drugs, bringing the total to more than 500 as of early 2014. Alejandro Gaviria, the minister of health and social protection, told local press in early 2014 that the list of medication affected by the price control regulation will continue expanding. The move is a key step for reducing health care costs and enhancing regulation. Sandy Sommer, executive director at the Colombian division for the pharmaceutical group AstraZeneca, said that price regulation is important for Colombia in order to support and sustain the country’s wider health care model.


Besides expanding patient access to medications, the introduction of price caps is expected to promote the use of generics and end the monopoly some drugs have enjoyed in the local market. By law doctors are not required to indicate brand names on prescriptions, with public health care institutions easily able to dispense generics. These efforts have already led to an increase in the share of the market for generics, which now account for nearly 40%. The value of the private market is estimated to be above $2bn.

Unlike regional powerhouse Mexico, Colombia’s regulatory framework remains weak in some areas. According to Sandra Cifuentes, general manager for the Andean region at pharmaceutical group Shire Colombia, the lack of regulation enforcement, particularly at the institutional level, has had adverse effects on the quality of generics since bioequivalence or bioavailability tests are not required. “Bioequivalence is vital in the production of generics because it certifies the consumer that it is a true copy of the original with the same active ingredient,” Cifuentes told OBG. The lack of regulation has also affected consumer confidence in generics, with consumers generally opting for brand-name products.

According to the local press, the government is also working on a new set of regulations for the biotechnology segment. Nonetheless, industry players are concerned that with the aim of cutting overall costs the new regulations will still allow products without the necessary bioequivalence standards to enter the market.

Juan Manuel Fonseca Saravia, general manager at health research group Abbott Colombia, told OBG, “Biotechnological products, being the most expensive on the market, are taking a huge financial toll on the system. If there is no requirement for bioequivalence tests, there will be more competition and lower prices. However, quality standards and consumer safety should not be sacrificed in favour of lower prices.” The proposed changes still fail to meet World Health Organisation standards, according to industry players.

Market Dynamics

While the generics market has traditionally been dominated by local players, growth prospects are once again attracting foreign groups. In 2012, French firm Sanofi acquired local generic producer Genfar. Following the acquisition, the French company now accounts for 30% of local generic sales. MK Laboratories, meanwhile, account for another 20% of the market. Together, the two dominate the segment.

Since the government only requires international patents to produce drugs locally, it is fairly easy for multinationals to set up shop in Colombia. More than 20 pharmaceutical multinationals are currently operating in the country. Recent trade agreements have also enhanced Colombia’s attractiveness, facilitating access to new markets. Eduardo Franky Pardo, general manager at local group Zambon Colombia, told OBG, “Recent agreements such as the Pacific Alliance will allow us to register medicines in one country and sell them in four, without import or export taxes.” However, given the lack of adherence to regulations by local companies, foreign players may at times find themselves at a disadvantage. “Multinational companies, by virtue of being part of international associations, must adhere to international best practices, while local companies are not required to and therefore are more tempted to adopt unethical practices,” Carlos Manuel González, general manager of the Colombian branch for Novo Nordisk, a pharmaceutical company, told OBG.


For the past few years local innovation has remained stagnant, mostly as a result of a lack of incentives. Despite intellectual property protection, the lack of enforcement and the difficulties associated with competing with low-price generics are making it challenging for companies to make significant investment in this area. “Everything is in place to open up the channels to attract innovation, but bureaucratic issues and unethical practices are preventing companies from seriously considering this,” Sommer told OBG.