Chapter I
Economic Commission for Latin America and the Caribbean (ECLAC)
(c) Public procurement The scope of commitments to open public procurement made by the countries of the region in their agreements with developed partners vary considerably. They are applicable only as follows: (i) above specified monetary thresholds (which vary according to the agreement, and also depend on whether goods, services or public works are involved); (ii) for the goods, services and public works that each country expressly designates; and (iii) to the entities (central, regional, local government, public enterprises or others) that each country expressly designates.9 (iv) According to the recognition, in several of the FTAs that the region’s countries have signed with developed partners (including the agreements with the European Union, CPTPP and USMCA) of the right of the parties to grant preferential treatment in public procurement to small and medium-sized enterprises (SMEs). As a whole, points (i) to (iv) give countries a significant margin of flexibility in the management of their pharmaceutical procurement. Moreover, competition in public procurement between nationally-owned and international laboratories is diminished by the fact that the former specialize in generics and the latter in innovative/patented drugs. Nonetheless, additional information specific to each case is required to estimate the impact of FTAs on the capacity of countries to promote local pharmaceutical production.
E. Firm size, ownership and specialization Despite the fact that Latin America and the Caribbean generated just 3.5% of global pharmaceutical sales in 2020 (at ex-factory prices) (EFPIA, 2021), the major global transnationals in biopharmaceutical industry, based on research and development (R&D), have a strong presence in the region. Most of these firms originate from Europe or the United States and have a long history. They are represented in the region through chambers and associations, at both the national and regional levels. Of the 20 transnationals most represented in the region’s trade associations, half were founded before the First World War, and only three in the twenty-first century (see annex 3.2). In fact, the most recent (2012) is a spin-off from the Abbott laboratory, which dates back to 1888. Although these are generally large firms, the largest being Johnson & Johnson with 132,200 employees and revenues of US$ 82.6 billion, several firms specializing in specific market niches have smaller revenues than the average of this group. The Latin American Pharmaceutical Industry Federation (FIFARMA) encompasses 11 national associations in Latin America and the Caribbean and 15 global firms.10 The latter also have individual representation in other national chambers and associations, alongside firms from the region and other foreign transnationals. National firms are also strongly represented in associations and chambers. Membership of the Latin American Association of Pharmaceutical Industries (ALIFAR), founded in 1980, includes more than 400 nationally-owned pharmaceutical companies from Latin American and Caribbean countries. The countries with chambers belonging to this association are Argentina, the Bolivarian Republic of Venezuela, Brazil, Colombia, Dominican Republic, Ecuador, El Salvador, Guatemala, Paraguay, Peru, the Plurinational State of Bolivia and Uruguay.
9
For example, Argentina and Brazil did not make commitments to openness at the subfederal level (that is, Argentine provinces and Brazilian states) in the EU-MERCOSUR agreement. 10 Trade associations from Argentina, Bolivarian Republic of Venezuela, Brazil, Central America, Chile, Colombia, Dominican Republic, Ecuador, Mexico, Peru, Uruguay and Venezuela.
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