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Transforming the health sector in Latin America

Article - October 21, 2016

Mega Pharma inaugurates the biggest pharmaceutical plant in Uruguay with $110 million investment


The most advanced pharmaceutical plant in Latin America sits impressively in the Parque de las Ciencias Free Trade Zone in Canelones, Uruguay. Constructed with an investment of over $110 million, the plant takes up 22,000 square meters and produces over 60 million units per year. It qualifies as an intelligent building with its automation systems for illumination and temperature control. The constant balance between natural and artificial lighting makes the main plant attractive for the visitors that are allowed entry to observe the production process. Visitors do not interfere with the operations, providing a unique experience that many facilities are not able to give. Built in an innovative and expanding area, Mega Pharma aims to increase their presence in the international market as they continue producing solid, injectable and ophthalmic products.  

One of the struggles for many companies in the international markets for pharmaceutical drugs is the complication that often arises from strict regulation and the requirements set in place by certification agencies. Uruguay does not have a certification agency that is recognized worldwide. Gianclaudio Broggi, CEO of Mega Pharma, explains, “For us, we begin to really recognize the health authorities in the United States, Europe and others. Doing this should give Uruguay a jump to participate in markets of regulatory high demand.” There are, of course, countries with high, middle and low regulatory requirements with many like Chile, Bolivia, and Central America allowing Uruguayan products to enter without issue. But to be competitive, Mega Pharma must comply with more rigid expectations. Mr. Broggi says that the company is “already in compliance with processes and documentation according to the highest standards” and that “if the country scaled up to high regulatory requirements, we would be ready tomorrow.”

Occasionally, certification agencies must come to physically evaluate the location of the Mega Pharma Labs in Uruguay, costing the company a hefty fee just to receive approval. Mr. Broggi explains, “First, you have to ask for your visit so they can come to the plant and later, each visit costs $30,000. It’s an added cost.” But these are just some of the companies involved with the larger production facilities like Mega Pharma. Others with less strict regulations make participation in the global market much easier.

Though some operating costs are higher with large companies, pharmaceuticals in Uruguay are among the cheapest priced in the region, often competing with products being imported from China, India and Pakistan. Over the last several years this has started to become more of a challenge due to the cheaper production cost for which countries like China are known. General Manager at Laboratory Ion, Guillermo Ripol, states, “Many times the packaging of a Uruguayan product is more expensive than the whole finished product that comes from China or India.” These competitors are beginning to present a challenge for the smaller businesses, requiring more innovation if they are to stay in the race as large companies take advantage of investments to improve standards to meet regulations for exports.

So, how does the growing pharmaceutical industry in Uruguay compete with imports? According to Mr. Broggi, quality is what will win out in the end. He says, “How we differentiate ourselves is by the quality of the brand. What we make is a good investment because we put quality into the product and into the way that we position the brand. We don’t sell generics.” Mega Pharma sells products that are referred to as “bio-equivalents,” which are interchangeable branded generics that have the same potency, effectiveness, and safety for the patient as other similar drugs. Says Mr. Broggi, “When you have a product like that, which has a lot of return on investment, there is an interest in this product and what you do is try to position yourself in a way that distinguishes you from others.” Of course, one of the most important factors is pricing. He says, “This is Latin America and we try to arrive at a price that is affordable.”

Pharmaceuticals in Uruguay are also being shipped internationally in the Mercosur and Latin America with prices that are, on average, half the cost of products in nearby countries like Argentina and Brazil. Because of this, the pharmaceutical industry boasts statistics like the $75 million in exports in 2014. On top of that, the industry also supplies 91% of the demand for pharmaceuticals within the country.

There are several other factors that make Uruguay attractive for pharmaceutical production. This sector in particular has experienced dynamic growth over the last decade, mostly due to investments of over $134 million made between 2010 and 2014 that focused on the development of research centers and new industries. Uruguay has several operating sites for regional headquarters. The service centers that are available coordinate the needs of supply chains of subsidiaries in Brazil and the rest of the Americas. The environment is stable and provides the large factories that produce most of the pharmaceutical exports with a platform for quality production at a competitive cost.

The advocacy for advances in research and development processes is based on the quality of human resources and the development of organizations like the Pasteur Institute, a non-profit foundation in Montevideo that focuses on preventing infectious diseases. The research and educational initiatives being carried out there are part of an overall movement to advance awareness and biological research within Uruguay and attract global attention.

Manufacturing services also add to the attractive environment for pharmaceuticals in Uruguay. With more than 30 production plants equipped to meet the needs and requirements of good manufacturing practices worldwide, production processes that must be carried out in a sterile environment can produce sophisticated end products like molecular biology kits. Uruguay is working towards expansion of pharmaceutical sales globally and is doing so with the continued investment in top-notch facilities and quality locations that are able to meet high expectations.

In 2013, pharmaceuticals manufactured for retail sale made up 59% of exports for the sector, followed by vaccines and antiserums. Over the last two years, the participation in the international market has increased by a total of 31% but still only represents 0.03% in the global market of pharmaceuticals. Most exports are destined for Latin America and Mercosur, but the ability to meet high regulatory requirements with new production facilities means that entering other markets such as the United States or Europe could be a possibility in the future.

As free trade zones where facilities like the Parque de las Ciencias focus on integrating the latest technology, companies like Mega Pharma continue to draw international investors to the region. Mr. Broggi says, “I think our company is a great commodity to showcase for Uruguay. When businesses arrive to Uruguay with new opportunities, they will be able to see that it is not just a country of agriculture anymore.”