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Latin America _ Share in Global Pharma Markets

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					       LATIN AMERICA
    BUILDING A SUSTAINED
                BUSINESS




                  International Innovators
1                   www.i-innovators.com
    CONTENTS

       PRIORITIZING THE COUNTRIES
       MARKET ENTRY IN IDENTIFIED COUNTRIES
       2 MOST IMPORTANT ISSUES FOR INDIAN EXPORTERS:
        PAYMENTS, LOGISTICS
       POSSIBLE OBSTACLES




                                                  International Innovators
2                                                   www.i-innovators.com
    PRIORITISING THE COUNTRIES

       FALLACY OF ONE “LATIN AMERICAN MARKET”.
       DO NOT CONSIDER THE CONTINENT AS ONE UNIQUE MARKET, EVEN THOUGH SPANISH IS
        THE PREDOMINANT LANGUAGE.
       VIEW LATIN AMERICA AS:
       MERCOSUR (ARGENTINA, BRAZIL, PARAGUAY, URUGUAY) & CHILE
       ANDEAN COUNTRIES (BOLIVIA, COLOMBIA, ECUADOR, PERU, VENEZUELA)
       MEXICO (Gateway to NAFTA)
       CENTRAL AMERICAN COUNTRIES
       CARIBBEAN ISLANDS
        Marketing your product based on Trade Pact allows for more efficiency due to
        common tariffs, taxes and standards. Also geographic contiguity allows for lower
        traveling costs.

                                                                            International Innovators
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    COUNTRIES THAT MATTER

       ARGENTINA
       BRAZIL
       CHILE
       COLOMBIA
       MEXICO
       PERU
       VENEZUELA
                            International Innovators
4                             www.i-innovators.com
    COMPARISON OF MACRO ECONOMIC INDICATORS OF 7
    IMPORTANT LATAM COUNTRIES

                                  Argentina            Brazil                Chile                Colombia             Mexico                Peru                 Venezuela


    Area            Sq Km (mln)               2.76                    8.51               0.75                 1.13                     1.9               1.28                 0.91


    Population      Million                 36.73                171.85                14.97                  39.3              100.29                 26.62                  23.2


    GDP             PPP (est)     $ 374 Billion        $ 1 Trillion          $ 185 Billion        $ 255 Billion        $ 815 Billion         $ 112 Billion        $ 195 Billion


    GDP/Capita      PPP (est)     n.a.                           $6,100              $12,500               $6,600               $8,300                $4,300               $8,500


    GDP by Sector   Agriculture                    7                   14                     6                   19                    6                     7                    4


    %               Industry                      37                   36                    33                   26                   26                    37                   63


                    Services                      56                   50                    61                   55                   68                    56                   33


    Pop < Poverty   %                             26                   18                    21                   18                   27                    54                   32
    Line



                                                                                                                                                    International Innovators
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    LATIN AMERICAN TRADE GROUPINGS

                                   NAFTA
                                    MEXICO


                                                     CENTRAL
                                                     AMERICA



             ANDEAN
               PACT



                         BOLIVIA                                 MERCOSUR
                       COLOMBIA
                       ECUADOR
                           PERU                                         ARGENTINA
                                                                           BRAZIL
                      VENEZUELA
                                                                        PARAGUAY
                                                                         URUGUAY


                                             CHILE

                                                               International Innovators
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    DEVELOPING THE MARKET
    1.   Participate in an international trade fair (Europe/USA) to
         develop contacts with Latin American companies.
    2.   Do secondary research, and desk marketing.
    3.   Short Travel through 4-5 countries (Argentina, Brazil,
         Colombia, Mexico) to prioritize Country/Trade Block.
    4.   Use the identified country as a hub for forays into other
         neighboring countries.
    5.   Participate in a local trade fair.
    6.   Tie up with local agent/distributor/importer.
    7.   Set up own office (or Exit).
    8.   Set up JV (or Exit).
                                                              International Innovators
7                                                               www.i-innovators.com
    SELECT A REGION AND
    A HUB COUNTRY

       MERCOSUR - THE LARGEST MARKET, VERY
        SOPHISTICATED.
       BRAZIL: MOST ATTRACTIVE - VOLUME & BETTER PRICES.
        NEEDS TO BE DEVELOPED VERY METHODICALLY.
       URUGUAY: use FTZs for stock and sale.
       PARAGUAY: Small JV for “Mercosur Origin”.
       CHILE: Excellent country to do business with. But economy
        remains largely dependent on a few sectors—particularly
        copper mining, fishing, and forestry. Sustained economic
        growth depends largely on world prices for these commodities.

                                                          International Innovators
8                                                           www.i-innovators.com
    SELECT A REGION AND
    A HUB COUNTRY (…contd.)

       ANDEAN PACT - RECEPTIVE TO INDIAN
        GOODS. But be careful of Payments.
       Colombia: Guerrilla violence and low world oil prices will likely
        continue to undermine the economy
       Peru: After decades of terrorism that destroyed the economy,
        Fujimori’s economic reforms led to a huge increase in
        demand.
       Venezuela: The petroleum sector dominates the economy,
        accounting for roughly a third of GDP, around 80% of export
        earnings, and more than half of government operating
        revenues.


                                                              International Innovators
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 ALL COUNTRIES FOLLOWING
 FREE MARKET ECONOMIES

    OPENING MARKETS
    LOWERING TARIFFS
    PRIVATISATIONS
    ATTRACTING FOREIGN INVESTMENTS
    BUT WATCHOUT FOR BILATERAL TRADE TREATIES
     e.g. CHILE-MEXICO.      Mexican products come in at
     0% duty into Chile (and vice versa). This can prevent
     many Indian products from going in e.g. Betalactams,
     which have a 11% duty.

                                                 International Innovators
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 ARGENTINA




             International Innovators
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 BRAZIL




          International Innovators
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 CHILE




         International Innovators
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 COLOMBIA




            International Innovators
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 MEXICO




          International Innovators
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 PERU




        International Innovators
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 VENEZUELA




             International Innovators
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 BUSINESS DEVELOPMENT ISSUES:

    PAYMENT / PRICING / CREDIT TERMS
    LOGISTICS
    REGISTRATION / BUREAUCRATIC APPROVALS
    REQUIREMENT OF LOCAL COY. -
        FOR GOVT. TENDERS
        FOR TECHNICAL SUPPORT / SERVICING
        LOCAL STOCK FOR SPOT SUPPLIES



                                             International Innovators
18                                             www.i-innovators.com
 UNDERSTAND THE LOCAL COSTS
 (example: IMPACT OF TAXES IN BRAZIL)


 PURCHASE PRICE FOB            $ 20,000
 SEA FREIGHT                   $ 3,000
 TAX ON FREIGHT                $    600
 IMPORT DUTY 23%               $ 8,050
 (on a minimum import price)
 SUB TOTAL “A”                 $ 31,650
 IPI 15% on “A”                $ 4,748
 SUB TOTAL “B”                 $ 36,398
 **ICMS 18% (Sao Paulo         $ 6,552
 state) on “B”
 SUB TOTAL “C”                 $ 42,950
 OTHER COSTS 6% ON “C”         $ 2,577
 TOTAL LANDED COST             $ 45,527
 IN IMPORTER’S
 GODOWN



                                          International Innovators
19                                          www.i-innovators.com
 UNDERSTAND LOCAL
 INTEREST RATES & CREDIT TERMS

    HIGH INTEREST RATES. (Brazil has gone upto
     45%. Now 19-24% for medium sized coys).
    CHECK ON LOCAL CREDIT TERMS FOR YOUR
     PRODUCT. (B2B thumb rule 10% sight, 60% 30
     days, 20% 60 days, 10% 90 days).
    HIGH L/C COSTS. Check on Trade Insurance.


                                        International Innovators
20                                        www.i-innovators.com
 USE INTEREST RATE ARBITRAGE

    High Interest Rates locally (for small/med companies)
     discourage them if offers are at sight. Encourage them if
     credit terms are long.
    They then sell locally for a lesser period, and apply the
     money on interest markets for the remaining period.
    Used North American Company to buy sight / 60 days from
     Indian suppliers, and sold 90/120 days credit to Latin
     American buyers.

                                                    International Innovators
21                                                    www.i-innovators.com
 USE FREE TRADE ZONES

    IMPORTANT FOR
       LOWERING FREIGHT COSTS

       PROMPTER DELIVERY

       BUYER INSECURITY REG. QLTY (ARGENTINE COMPANIES
         PREFER DELIVERIES FROM URUGUAY FTZs AFTER QUALITY CHECK.
         THIS IS TO AVOID LIQUIDITY PROBLEMS DUE TO REJECTIONS).


        MIAMI/PANAMA FOR NORTH
        URUGUAY FOR MERCOSUR

                                                       International Innovators
22                                                       www.i-innovators.com
 BARRIERS

    From vested interests that fear Indian prices
     (& also due to economic policies):
        REGULATORY (SLOWWWWWWWW)
        MINIMUM IMPORT PRICE
        MINIMUM IMPORT DUTY
        CREDIT RESTRICTIONS (Brazil till recently)
        ANTI DUMPING DUTY
        SGS INSPECTIONS
        GENERAL CORRUPTION
        EXCHANGE RATE FLUCTUATION IMPORTANT IMPORTANT
        OVER INVOICING

                                                         International Innovators
23                                                         www.i-innovators.com
 SOME TRADE TIPS
    SEND ATLEAST THE INTRODUCTORY LETTER IN SPANISH (EXCEPT
     BRAZIL WHERE PORTUGESE).
    AVOID “LARGEST /LEADING INDIAN COY.”
    INITIALLY TIE-UP WITH THE LOCALLY POWERFUL TO GO UP THE
     LEARNING CURVE.
    DO NOT SIGN ANY EXCLUSIVITY RIGHTS WITHOUT GOING TO THE
     MARKET. ALSO AVOID RIGHTS TO MANY COUNTRIES WITH ANY ONE
     SINGLE COY.
    CHECK LIABILITY BEFORE SETTING LOCAL OFFICE.
    MONITOR ECONOMIC TRENDS. THIS HELPED EXPOSURE TO BRAZIL &
     VENEZUELA CRASHES.
    CREATE WEB SITES WITH SPANISH & PORTUGESE ALSO.

                                                      International Innovators
24                                                      www.i-innovators.com

				
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