Ecuador is the eighth largest economy in Latin America, with the pharmaceutical market valued at US$1.6 billion in 2020. The market expanded at a respectable CAGR of 5.5% in the 2015-2020 period, but sales growth accelerated to a high of 11.2% in 2020, compared with 2.8% in 2019, fuelled by double-digit growth in demand (in standard unit terms).

While IQVIA Market Prognosis expands its geographic coverage in Latin America to include IQVIA Market Prognosis Ecuador 2021-2025, this article analyses the pharma market situation as impacted by COVID-19 and provides an initial outlook at future trends.

Challenges in healthcare coverage and reach

Despite posting robust growth, the country is still faced with numerous challenges in meeting the healthcare demands of the population. Ecuador’s 2008 constitution guarantees the population’s right to health via universal public health services that are free at the point of delivery. However, an estimated 20-30% of the population - lower income groups, living in the central provinces, Amazonia and urban shantytowns - lack immediate access to health services as the government struggles to achieve the promised universal access to healthcare. Corruption is a significant problem in public sector. Delays in issuing the tender, combined with the COVID-19 pandemic, have generated increased opportunities for corruption, which is particularly rife in some public hospitals. Corruption and purchasing mismanagement are the subject of several ongoing investigations over wastage representing losses of several million dollars to public healthcare.

After eight years in discussion, a bill that would have reformed and improved the healthcare system was finally passed in 2020, but subsequently vetoed by the soon-to-be outgoing president, Lenín Moreno. The situation has been worsened by the COVID-19 pandemic, which has inflicted significant damage on the economy, triggering a sharp decline in GDP (-7.6%) and a major surge in unemployment. Real GDP is not expected to return to its 2019 level until 2024, according to the Economic Intelligence Unit.

COVID-19 and new government triggering momentum for change

Any major reform to the healthcare system seems unlikely in the near-term, particularly since the country is preparing for a presidential run-off in April 2021, which could increase the risk of political instability in 2021. Nevertheless, the COVID-19 pandemic has raised healthcare as a priority, which could provide impetus for robust growth in the pharmaceutical market over the forecast horizon. Interestingly, unlike in many other parts of the world, COVID-19 has led to a dramatic rise in pharmaceutical demand through retail pharmacies in Ecuador and has increased the health consciousness of patients. The pandemic has created new trends in the retail market, particularly an increase in demand for unbranded generics, some OTC products and certain ethical medicines, which can be obtained without a prescription.

While the number of chain pharmacy outlets continues to grow, for the first time in 15 years, independent pharmacies saw their market share increase modestly in 2020 as they benefited from travel restrictions and the boost to the retail sector brought on by the COVID-19 outbreak. The COVID-19 pandemic has also driven growth in out-of-pocket expenditure. However, while in the short-to-medium term private sector patients will still tend to pay out of pocket, take-up of private health coverage, especially pre-paid medicine plans, is expected to increase over the prognosis period. Branded generics, currently accounting for over half the retail sector volumes and just under half in value terms, will continue to dominate despite several laws and government policies aimed at encouraging the use of generics. To help rein in costs, a growing number of ‘strategic’ drugs are subject to price caps fixed on the basis of national or international reference pricing. Following an update in June 2020 comprising 82 market segments (based on presentation and concentration), the caps now cover around 2,050, representing about 48% of drugs by value in the retail market.

Separately, Ecuador’s Constitutional Court issued a landmark ruling in 2020 that seeks to improve processes for requesting medicines outside of the Essential Drug List (CNMB). New rules have subsequently been issued that may speed up the authorization process for use of non-CNMB drugs in the public sector. And although there is some way to go before Health Technology Assessment (HTA) becomes an inherent part of marketing approval decisions, encouragingly the most recent (10th) revision of the CNMB in 2019 added 64 new active ingredients, many of which are biologicals. Furthermore, rules for the registration of biological drugs and biosimilars were recently brought in line with international standards, eliminating the market entry of non-comparable biologicals. Biosimilars have also made inroads into the institutional market in recent years.

Finally, with an ambitious mass COVID-19 vaccination program - which started in January 2021 and aims to cover at least 60% of the population at an estimated cost of US$200 million - helping to drive economic recovery over the coming years, the pharmaceutical market in Ecuador has the potential to deliver solid growth in the 2021-2025 period, presenting exciting opportunities for the pharma industry.

What is Market Prognosis

With rapidly changing market dynamics, it is critical to evaluate key macroeconomic and healthcare-related issues across global markets to determine future investments at country, regional and global level.

Market Prognosis provides five-year growth prospects across 49 countries in five major geographical regions and two regions by macroeconomic status – Major-Developed Markets and Pharmerging Markets. This strategic market forecasting publication aids pharmaceutical companies in their strategic planning and corporate decision making and includes base and downside scenarios to reflect uncertainty around the evolution and impact of the COVID-19 pandemic.