In Healthcare

While GDP growth for Latin America had to be revised downward to a fairly modest 1.3% during 2018, we still noticed some of the upticks we predicted in the healthcare sector. We expect the growth trend to continue in 2019 — though other changes throughout the region will present significant challenges not just this year but for decades to come.

The Good

While we expected to see a big bounce back from Brazil — LatAm’s biggest hospital market, with 7,878 hospitals and surgery centers — we actually saw it happen even more strongly with Mexico, the second largest hospital market. Mexico posted several huge increases with the importations of medical equipment in 2018, and these imports are in fact a proxy to sales. Here’s a look at the equipment types that increased the most:

  • >100% increase in the amount of MRI machines, parts, components, accessories and consumables used in magnetic resonance imaging imported into Mexicoin 2018
  • >100% increase in the amount of endoscopy machines, parts, components, accessories and consumables used in endoscopy work imported into Mexico in 2018
  • >100% increase in the amount of X-Ray machines, parts, components, accessories and consumables used in X-Ray work imported into Mexico in 2018
  • 254% increase in the amount of ultrasound machines, parts, components, accessories and consumables used in sonograms imported into Mexico in 2018
  • 90% increase in the amount of anesthesia machines, parts, components, accessories and consumables used in anesthesia imported into Mexico in 2018

And while Brazil didn’t perform as strongly as we suspected, the country still posted significant increases in its importation of high-ticket medical equipment types, such as:

  • >75% increase in the amount of ultrasound machines, parts, components, accessories and consumables used in sonograms imported into Brazil in 2018
  • >65% increase in the amount of endoscopy machines, parts, components, accessories and consumables used in endoscopy work imported into Brazil in 2018
  • >15% increase in the amount of MRI machines, parts, components, accessories and consumables used in magnetic resonance imaging imported into Brazil in 2018

Beyond Brazil, Chile also showed growth in its importation of several different medical equipment types:

  • >85%% increase in the amount of ultrasound machines, parts, components, accessories and consumables used in sonograms imported into Chile in 2018
  • >60%% increase in the amount of endoscopy machines, parts, components, accessories and consumables used in endoscopy work imported into Chile in 2018
  • >15% increase in the amount of MRI machines, parts, components, accessories and consumables used in magnetic resonance imaging imported into Chile in 2018

The Bad

However, despite these upticks, we also noted some significant drops. Peru and Colombia both posted considerable drops in their medical equipment imports: in the case of Peru, it dropped anywhere from 40% to 100% in the equipment types we analyzed, which could be a reflection of the economic slowdown.

What’s concerning about seeing these drops are that longer-term health trends in Latin America suggest hospitals need to acquire MORE medical equipment, not less. We highlighted these trends in our 5 Mega-Trends in Latin America whitepaper, which you can find in the Analyses section. Two are particularly important in parsing LatAm healthcare in 2019 and beyond:

 

Obesity: By 2030 obesity rates in Latin America will reach 60% for women and more than 50% for men. In addition, obesity rates are highest among Mexicans (64%) and Chileans (63%).

Senior population: In 2018 there were 71 million seniors in LatAm—this figure will double by 2035. In addition, by 2055 seniors will be the largest age group in Latin America: 43% more populous than the next-largest age group and totaling 214 million.

 

Obesity is related to any number of conditions, including diabetes, which is already prevalent in Latin America and growing: by 2030 another 15 million Latin Americans will be diagnosed with diabetes, bringing the total figure to more than 40 million. It’s also related to high blood pressure —which currently affects between 20 and 40% of the region’s population—and heart disease, which causes 1.6 million deaths in the region each year.

Aging populations also tend to be sicker populations, suffering from a wide range of conditions that include heart disease, osteoporosis and dementia, which is projected to more than triple in Latin America between now and 2050: it will affect 27 million people versus the 7.8 million it affects now.

As a result, in 2019 and beyond we expect to see public healthcare systems in Latin America to be hit hard. While it’s true that private hospitals make up a higher percentage than public hospitals in many countries in Latin America (58% in Brazil, 61% in Mexico, 51% in both Argentina and Colombia), public hospitals often have 2 or 3 times the bed count of their private sector counterparts, which means they generally treat a higher volume of patients. As such, their resources will be stretched thin and this will bring some key consequences for 2019 and beyond:

  • Longer wait times for care
  • Lower quality of care
  • Lower healthcare outcomes for LatAm populations
  • Slow but steady migration from public to private healthcare systems in Latin America—among the those who can afford to do so

The Ugly

On one hand, macro trends in health conditions and demographics will cause greater strain on public healthcare systems. On the other, Latin American governments face a fiscal crisis, with high fiscal deficits as a percentage of GDP, including:

  • 8% for Brazil in 2018
  • 5% for Mexico in 2018
  • 5% for Argentina in 2018
  • 3% for Chile in 2018
  • 3% for Peru in 2018
  • 3% for Colombia in 2018

As a result, it could be difficult for public healthcare systems to keep up.

This could possibly produce some ugly results for LatAm healthcare. Public healthcare beneficiaries, including populations and private companies, may rise and challenge political forces.  This may pose a challenge to recently elected leaders throughout the region, such as AMLO in Mexico, Duque in Colombia and Bolsonaro in Brazil, as well as for leaders to come.

On the business side, we could see a slowdown in the acquisition of medical equipment and devices, not to mention pharmaceuticals, as public hospitals in Latin America find themselves with fewer financial resources to acquire the equipment and medications they need to keep up with greater demand.

The upside is the possibility of greater demand from private hospitals, but the volume of this demand may not be enough to offset a drop in the demand from public hospitals.

With tightening economic conditions, it becomes even more important for medical equipment/devices manufacturers and pharmaceutical companies to refine their sales plans with market intelligence that allows them to identify prospects more efficiently. Tools like HospiScope and SurgiScope can help companies strengthen their sales by using data that reflects current buying patterns in the market.

And finally, the struggle between fiscal conditions and the explosion of non-communicable diseases (NCDs) and an aging population may lead to a serious reckoning in Latin America in terms of next steps to support their public healthcare systems and helping mitigate with prevention with measures to discourage unhealthy habits and educate the populace about nutrition, exercise and lifestyle.

Next Steps

Contact us for LatAm healthcare market intelligence and research to help you size markets, use competitive intelligence to outmaneuver rivals, fill your sales team’s pipelines with rock-solid leads based on real-world buying habits in the medical equipment sector, evaluate potential acquisitions targets, understand new markets to optimize entry and much more.

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