Explore countless opportunities for new alliances

DIVERSE AREAS OF PRODUCTION GMP Certified areas of production: Solids, Liquids, Creams, Soft Gelatin

Capsules, Inhalers, Hormonal, Sterile (prefilled syringes, antibiotics and lyophilized)

TRAJECTORY 40 Years of experience in production and commercialization of Human

pharmaceuticals, Veterinary pharmaceuticals and recently, agrochemi-cal products

TECHNOLOGICAL SUPPORT Cutting-edge technology in equipments that assure agile processes,

with high productive capacity and maximum quality

COVERAGE Subsidiaries in 14 countries, with our own facilities, warehousing and

highly qualified sales force

AUTONOMY Diversity in support services such as: advertising design, lithographic

printing, foreign trade service and Free Trade Zone Facilities

Business opportunities with Chalver- Manufacturing contract service to third parties- Purchase of raw materials and equipments- Exclusive licenses of product

Excellence and technology for life care!

www.chalver.compresident@chalver.com

Colombia today is not the Colombia of mainstream Hollywood. Once ravaged by domestic insecurity whose images of terror were exported to the rest of the world, the journey of Colombia over the past decade to its current economic, political, and social stability are a role model for Latin America and a reminder to all that Colombia is back. Colombia stands at the

dawn of the new decade with the worst of its history behind it and poised for a peaceful transition of presidential power. President Álvaro Uribe’s successor inherits a safer security environment; a robust economy that averaged over 5% growth from 2002-2007; a national health system covering 93% of Colombians; and the fourth largest pharmaceutical market in Latin America. A gateway to South or Central America depending on which way you face, the best place in Latin America to do business according to the World Bank, and one of Latin America’s best talent pools, the script on Colombia is being rewritten in ways no one imagined possible just 10 years ago.

COLOMBIA: where good drugs thrive

This sponsored supplement was produced by Focus Reports.

Project Director: Jessica Santos PereiraEditorial Coordinator: Manuel Felipe B. Mendoza

For exclusive interviews and more info, please log onto or write to contact@focusreports.net

More spotlights on pharmaceutical markets worldwide at

“Right handed,” by Fernando Botero

MAY2010FOCUS REPORTSS2

ColombiaReport

Christie’s Images/CORBIS

Progress from the peril

Like most economic sectors, pharmaceuticals have reaped the benefits of enhanced domestic security. The strength of Colom-bia’s resurgence is best measured by the profundity of its crisis.

For decades Colombia was engulfed in a conflict between govern-ment forces and insurgents who funded their war through the trade in illicit narcotics. The historical roots of the conflict stem from a complex disparity of political and economic resources amongst so-cial classes, with the worst of the crisis peaking in the late 1990s.

In 2002 newly-elected President Uribe made domestic security his #1 priority devoting massive resources to defense, which led to the disarmament of thousands of left-wing guerrillas and right-wing paramilitaries. Better security, an export-oriented growth strategy, and high commodity prices boosted economic growth. While the economy slightly contracted .2% last year, projections are for a quick rebound to 2.5% growth in 2010. Violence and insurgency threats still remain, but a confluence of reforms have rejuvenated the business landscape in Colombia.

As Virgilio Barco, Executive Director of Invest in Bogotá, ex-plains, “President Uribe’s focus on security was the beginning of

ColombiaReportSPONSOREDSUPPLEMENT

S3FOCUS REPORTSMAY2010

Left to right: Francisco De Paula Gómez, Executive President of Afidro, Alberto Bravo Borda, Executive President of Asinfar, Rolf E. Hoenger, General Manager of Roche Colombia

Claudia Varela, General Manager of Genzyme for Peru, Ecuador and Colombia

GLAXOSMITHKLINE Colombia S.A. Avenida Eldorado No. 91-50 Calzada Norte Tels,:417 8686 - 425 1270. Página Web: www.gsk.com

Imagine what it would be like, if we could find a cure for cancer, or an affordable vaccination for HIV/AIDS, or a medicine that could protect against heart disease or stroke.

Do more,

feel betterLive longer

Changing the

ColombiaReport

everything. Since then his committed team has worked to improve the business climate. Colombia’s consistently high position on the various business rankings is a testament to this dedication; it re-flects how deep the crisis was and the type of leadership present over the past decade.”

Pharma in a resurgent environment

Security concerns and globalization trends compelled dozens of multinational (MNC) pharmaceutical companies to close their Colombian manufacturing plants. Today only a handful

of MNCs operate their own plants, importing over 95% of their medicines.

“In their departure,” Barco adds, “they left an industry know-how. Colombia’s human resources in the medical and pharmaceu-tical field are renowned throughout Latin America. Many Colom-bian pharmaceutical companies purchased the plants of those who

left and have developed home-grown operations. They are strong, sizeable, and expanding in Latin America.”

The supply of over 60% of pharmaceutical companies being lo-cal producers mixed with the demand created by expanding health insurance coverage makes Colombia a predominantly generics market. “The average price of generics is one of the lowest in Latin America,” says Alberto Bravo Borda, Executive President of Co-lombia’s National Association of Local Laboratories (ASINFAR). “This is because of strong competition that drives prices down. With the expansion of healthcare, insurance companies are now covering the greatest part of the private market. This has led to more prescriptions and a growth in units.”

Nevertheless, MNCs’ success in the $2.2 billion Colombian pharmaceutical market still looms large. A small cluster of foreign MNCs provide close to 45% of market value with a plethora of lo-cal laboratories covering the rest.

Spending nearly 8% of its GDP on healthcare and having the third largest population in Latin America with 45 million people, the fiscal and structural indicators suggest a promising pharma-ceutical environment. Industry growth – 11% in 2008 and 7% in 2009 – is mainly driven by the institutional market. The influx of

MAY2010FOCUS REPORTSS4

Sean Reilly, General Manager for Pharmaceuticals and team of GSK

generics caused the retail market to decrease 9% in value last year despite increasing 3% in units. The institutional line, however, has posted a robust 32% compound annual growth (CAGR) over the last five years with a further 16% projected for the next three to five years.

As expected, MNCs vie for the pole po-sition in the institutional line with their re-search-based products for rare, infectious,

and chronic diseases. Local laboratories, meanwhile, remain committed to their tradition of generics that has branded suc-cess in the retail market. But the impressive performance of the institutional market has drawn their attention leading many to con-sider it a key growth sector.

A new challenge confronts Colombia furthering an interest in the institutional line. The budgetary shortfalls of the na-

tional health system and the ensuing Social Emergency Crisis (SEC) declared in Decem-ber strengthen an emphasis on cost-com-petitive products. More than a chance to provide cheap drugs, the SEC is an oppor-tunity to prove that Colombia’s 20-year-old healthcare reforms are still the optimal means to achieve the national dream of uni-versal coverage.

ColombiaReportSPONSOREDSUPPLEMENT

S5FOCUS REPORTSMAY2010

Left to Right: Chalver manufacturing plant, Jesús Chacón, President and Alejandro Valbuena, Vice President of Chalver

We Innovate Healthcare

What’s the best treatment?

Life writes the questions. We pursue the answers.

Our innovations help millions of people by alleviating

their suffering and improving their quality of life.

We give them hope. In Colombia, and around the world.

171x117_Patient_special_4c_e.indd 1 26.2.2010 10:21:34 Uhr

ColombiaReport

MAY2010FOCUS REPORTSS6

A dream nearly achieved

Colombia’s healthcare system is governed by The Law 100 of 1993 designed to provide universal healthcare access through a system of managed competition of providers.

Seventeen million Colombians under formal employment fi-nance their healthcare through a 12% income tax. Another 24 million citizens who are unemployed or live below the poverty line receive subsidized healthcare. All citizens are entitled to a portfolio of medicines and treatments issued by the Ministry of Social Pro-tection called the Obligatory Health Plan (POS).

A total of 63 public and private health promoting entities (EPSs) administer healthcare with government compensated risk-adjusted premiums for every individual covered. Under this structure and guided by the principles of universal coverage, health provision in Colombia has expanded from 25% of the population in 1993 to 93% today. “Very few countries have such an effective system,” asserts Francisco de Paula Gómez, Executive President of the Co-lombian Association of Research-based Pharmaceutical Laborato-

ries (AFIDRO). “Access to healthcare is a real fact which brings us closer to the expectation of a general insurance with universal coverage. This has substantially changed the behavior of the phar-maceutical market.”

Too much of a good thing

Ironically, the impressive 93% coverage rate has also indirectly contributed to the stress of the system. Because access to health-care is listed as a constitutional right, many patients sue health-

care providers for refusing to cover certain treatments not included in the POS. From 2006-2008 there were more than 346,400 law-suits, with the courts usually ruling in favor of the patients.

The result has been an explosion in costs for the government and EPSs. In December 2009, nine of the 15 largest EPSs said they were close to bankruptcy. Finance Minister Oscar Zuluaga esti-mated that $400 million would be needed to save the system.

In an immediate response to the crisis President Uribe declared a Social Emergency and issued 16 decrees that bypassed legislative approval. Decrees 128 and 131 generated the most controversy. Decree 128 mandated patients to finance treatments not included in the POS using personal savings or retirement funds. Decree 131 ruled that doctors who prescribed non-POS medicines could be fined up to $13,000. Because of widespread protests, the govern-ment repealed the $13,000 fine and limited out-of-pocket expenses to only the upper class. A final list of an updated POS will be is-sued in June.

Business as usual, Innovation as always

While the ending remains unwritten on the SEC, the success-ful business of innovation carries on as usual for MNCs in Colombia. AFIDRO companies even grew 11-12% on

average during the financial crisis. As Rolf E. Hoenger, General Di-rector of Productos Roche S.A., light-heartedly comments, “you cannot call 12% growth a crisis.” Roche in fact grew by 25% in Colombia in 2009 on the backs of its specialized products in the institutional market that constitute 80% of their business. With 55% of their portfolio in oncology and majority of the remaining 45% dedicated to other specialized treatments such as rheumatoid arthritis and cystic fibrosis, Roche’s biologicals are expected to dou-ble its current market share within the next three years.

A newcomer to Colombia in 2002, Genzyme’s growth of 20% in 2009, 46% in 2008, and 25% CAGR over the past five years is

ColombiaReport

S7FOCUS REPORTSMAY2010

SPONSOREDSUPPLEMENT

attributed in part to the typical growth of a new market entrant but also to their in-novative specialization in rare and orphan diseases medicines. Boasting a product portfolio for lysosomal disorders renal in-fections, oncology, and biosurgery, Clau-dia Varela, General Manager for Peru, Ecuador & Colombia, takes special pride in Genzyme’s pioneer role as an attendant to neglected patients. “It is the nature of Genzyme to work with niche patients in rare disorders,” says Varela. Genzyme has actively been identifying Mucopolysac-charidosis I (MPS I) patients in Colombia and through variations in rare diseases in developing countries are now discovering patients of MPS Types II & VI.

Concurring with the reliability of Co-lombia is GlaxoSmithKline (GSK). In 2008 GSK Corporate designed a “more growth, less risk” strategy with an empha-sis on emerging markets. According to Mi-chael Sean Reilly, GSK Colombia’s General Manager for Pharmaceuticals, Colombia neatly fits this description. “Latin America has a mix between stable and volatile, short term high-profit markets. Colombia is a stable market that is not expected to grow excessively over the next few years. You can count on a relative 5-10% growth, but you are not going to lose money. The risk analysis for Colombia is normally a lot less than what you see for Venezuela or Argen-tina which experience frequent big shifts in the market and the economy.”

To capitalize on growth in this low-risk environment GSK plans to diversify its tra-ditional business model and adapt to local market opportunities. Rather than relying on one or two blockbusters, the goal is to have many medium-sized products in dif-ferent areas. “Now we are looking for lo-cal growth opportunities from in-licensing products from European or Asian compa-nies that do not exist here in Colombia; local growth opportunities from vaccines; and opportunities from alliances with com-panies from China and India. This is a new strategy for us,” adds Reilly.

Gran Colombia anew

Colombia emerged as one of three sov-ereign countries following the col-lapse of Gran Colombia in 1830,

along with Ecuador and Venezuela. At the end of the 19th Century the United States seized control of Panama, then a Colombian province, thus ending Colombia’s ruling en-gagements abroad.

Pharmaceutically speaking, conquest of neighboring countries is back on Colombia’s radar. Colombia’s geographic positioning as the gateway to both Central and South America makes it natural for industrial sec-tors to have an abroad-oriented vision for nearby markets to penetrate.

“When you have 54% of the market, how much higher can you get?” asks Emilio Sardi, Executive Vice-President of Tecno-químicas, 15th in both sales and units in the 2009 retail market. “We can become very strong in Central America because they are small market countries that are not neces-sarily interesting for big multinationals. Our idea is to buy strong companies in each country and become a dominant player in the whole area.” Sardi’s strategy is similar to many other local companies: in the face of fierce domestic competition, penetrable and culturally similar foreign markets are just around the corner.

The regionalization of Tecnoquímicas was supported by the International Finance Corporation. “Their idea was for local companies to become regional. They want-ed companies good at selling generics to ex-pand abroad in order to help poor countries

and fulfill the World Bank’s social commit-ment,” says Sardi. A $25 million equity investment helped finance Tecnoquímicas’ 2009 purchase of the El Salvadorian phar-maceutical company Teramed. Future sim-ilar acquisitions are in store to bolster their regional presence.

Buy, conquer, and directly represent al-ways remains an option for companies flush

with cash. The more typical practice, how-ever, has been penetration through regional alliances. Farma de Colombia, fresh off its 50th anniversary in February, has leveraged strong relations with distributors to boost exports to 17% of its total revenue in 2009. “Panama is our gateway to the rest of Cen-tral America and the Caribbean,” says General Manager Mazen Makarem. “We

sell them our products, offer marketing in-put, and they do everything from there. It is not necessarily Farma de Colombia being present in these markets; rather, it is the dis-tributing companies themselves.”

With high quality standards set by IN-VIMA, Colombia’s regulatory agency for food and drugs, companies are in favorable positions to push exports abroad. Genfar, the leading seller in the retail market, labels itself “a multi-Latin company, 100% Co-lombian” referring to its regional presence in 14 countries.

Jorge E. Jiménez, founder of Biochem Farmaceútica and a self-described man “born in the pharmaceutical industry,” says his market of interest is “any regional country where we are not currently pres-ent.” With branded generics in antibiotics, antihistamines, flu and parasitic treatment, Biochem actively seeks distributing alli-ances to cover new regional markets. With over forty years industry experience work-ing for American, European, and now his own Colombian company, Jiménez drives Biochem with an expansion, yet, survivor mentality noting that “a company that does not grow is likely to disappear.”

Chalver Laboratories, founded in 1960 by Jesús Chacón, began manufacturing small products but was constantly driven by a mindset of growth. Purchase by purchase Chalver expanded to its present-day struc-ture of export and warehousing operations in 15 countries with over 380 commercial partners. “Our experience and market knowledge allows us to project ourselves as a company capable of growing consis-tently in the region with a broad scheme of products that are adjusted to each country’s needs,” says Chacón. The first Colombian company to offer an alternative medicine for prostate cancer, combining polymer and peptide, Chalver embodies the ten-dency of local generic producers to shape a cost-competitive environment. “Before our prostate cancer product the price for the original drug was around $500,” Chacón explains. “After our launch the price dropped to $120.”

MAY2010FOCUS REPORTSS8

ColombiaReport

Left to right: Mazen Makarem, General Manager of Farma De Colombia, Luis Gabriel González, General Manager of Vesaluis Pharma, Jorge E. Jiménez, General Manager of Biochem

ColombiaReportSPONSOREDSUPPLEMENT

S9FOCUS REPORTSMAY2010

Chalver is unique being a company that has pushed exports by basing itself within one of Colombia’s 69 Free Trade Zones (FTZs), an incentive which lowers their cor-porate tax by more than half of Colombia’s normal rate. The benefits of the FTZ’s sys-tematized processes, storage, and transpor-tation facilities, according to Chacón, allow Chalver “to provide better service and to become more efficient in a highly competi-tive market.”

“Home”work through alliances

According to Rodrigo Arcila Gómez, Executive Director of the National Business Association of Colombia

(ANDI), 71% of pharmaceutical industry production supplies the domestic market. With Latin America’s third largest popula-tion, there is still plenty of business to take care of at home.

Colombia’s sizeable population, health-care coverage, and unique epidemiological profile naturally make it an enticing mar-ket for foreign pharmaceutical companies. Farma de Colombia represents five compa-nies from countries ranging from the US, Switzerland, Mexico, and Brazil. “Fifteen years ago, however,” comments Makarem, “our licenses exceeded our own products. The situation reversed because of mergers and acquisitions” that granted market access to synergized companies. When Makarem began as General Manager in 1999 Farma de Colombia lost its license agreement with newly merged Astra-Zeneca, costing them $8 million. After company soul-searching Farma de Colombia emerged less reliant on licensing and determined to strengthen its own brand lines as it has done with Cal-cibon, the Colombian market leading cal-cium prescription, and Alzheimer treating Akatinol. “With Colombia approaching universal coverage and with the tremendous reach of the population to healthcare, there

is still an important private market which we focus very strongly on. The private sec-tor is a good arena to build the brands that we value,” Makarem notes.

The combination of blockbuster M&As and stricter INVIMA standards that forced companies out of the market produced op-portunities for smaller players dedicated to low-incidence diseases. Created in 1999, General Manager Luis Gabriel González explains that Vesalius Pharma’s purpose was to represent foreign companies enter-ing Colombia. González says that rather than competing in the crowded generics market, Vesalius, “deals in closed markets with exclusive products, manufactured by biotechnology companies that have no rep-resentation in the country.” Founded with a specialty on tuberculosis, Vesalius has ex-panded its portfolio to over 150 products for orphan diseases, anesthesia, intensive

care, and oncology. González’s logic for ambitious export

growth is refreshingly simple: there is a world of business out there. Colombia rep-resents only .26% of the global pharmaceu-

Diana Valencia, President of LatAm

MAY2010FOCUS REPORTSS10

ColombiaReport

tical market. There is a huge demand for rare disease treatment in the US, Mexico, and Brazil that Vesalius seeks to supply through strategic alliances. “The fundamental goal towards the future for Vesalius is to look for new alliances to cover the Latin American market. We believe that the Colombian market is a highly competi-tive and saturated one. The future of our company is in the rest of America,” he says.

A regional player at your service

As companies seek to cut drug development costs through out-sourced R&D, the global contract research organization (CRO) market is set to grow 14% over the next three years to

be a $35 billion industry by 2013. Situated in the tropics, Colombia is an advantageous market for clinical trials because of its population size, diversity, and proximity to the US.

LatAm Clinical Trials capitalizes on these dynamics. As a niche

CRO specialized in vaccine testing and infectious disease treatment, LatAm conducts Phase 1-4 testing and clinical trial management from project start to finish throughout Colombia, Panama, Costa Rica, Peru, and the Dominican Republic. “We have a tremen-dous knowledge of the cultural diversity of this region,” says Diana Valencia, LatAm’s Executive Director. Labeled by Valencia as an untapped region, Colombia, unlike Argentina and Brazil with their high volume of clinical research projects, has “opportunities through new, untested subjects,” she explains. Additionally, “the therapeutical profiles of our subjects overlap with the same areas that are associated with the ten major causes of mortality in the US. Colombia, epidemiologically, behaves very similar to devel-oped countries. We can also offer treatment and services in infec-tious diseases that are typically found in developing countries but are now emerging in the developed world.”

Taking the responsible LEED

More than suppliers of drugs and medicines, Colombian pharmaceutical companies embrace their role as socially responsible agents of change.

Novartis added a new dimension to its innovative identity in February when inaugurating its new nine-story office in downtown Bogotá as the first LEED-certified (Leadership in Energy and En-vironmental Design) building in Colombia. “I know that because of this building other buildings in this area, in this city, and in this country are going to follow the trend that we set,” says Maria Cristina Álvarez, General Manager of Novartis de Colombia. At the inaugural ceremony, President Uribe praised Novartis for its environmental stewardship and recognized the contributions of its work in instilling investor confidence in Colombia. Leadership and trendsetting is second nature for Novartis in social responsibility and industry practice. Investing over $19 million in 123 clinical trials from 2007-2010, Novartis’ R&D penetrates cardiovascu-lar, respiratory, and oncology areas in over 150 medical centers throughout Colombia. Additionally, they were the first pharma-ceutical company in Colombia to sign the United Nations Global Compact on socially responsible business practices.

A different type of risk

Proexport, the government agency for foreign investment and tourism promotion, launched a campaign inviting people to Colombia where “the only risk is wanting to stay.” Fifteen

years ago the message of visiting Colombia, risk, and staying behind carried starkly different imagery. Visitors to Colombia today will

find a safer atmosphere whose risk profile favors the country as a preferred investment destination. Colombia is lauded by pharma-ceutical executives as a talent pool because of its high level of educa-tion, work ethic, and professionalism. “When you ask an investor why they consider Colombia a trustworthy market, they will reply because of the strong workforce and excellent human resources,” asserts Arcila Gómez. “The country is riding a double wave of emerging market growth and improved domestic security,” adds GSK’s Reilly. “Colombia is a very resilient country with resilient people.” Recognizing its resurgence, the World Bank Doing Business Report in November 2009 named Colombia “the best place to do business” in Latin America.

Questions still surround the state of healthcare in Co-lombia as it navigates the transitions of the Social Emer-gency. POS reforms will usher change for new players, medicines, and technologies. National laboratories vehe-mently call for liberalizing intellectual property, while MNCs believe that the prospects of the industry rest with innovation and respect for its protection. But with the fu-ture still unwritten the current pieces are in play for the Colombian pharmaceutical industry to continue its success

of the past several years. Long stereotyped for its violence and lawlessness, the pharmaceutical industry is poised to put Colombia on the map for all the right reasons.

ColombiaReportSPONSOREDSUPPLEMENT

S11FOCUS REPORTSMAY2010MEDIA PAG HORIZONTAL.indd 1 26/03/2010 01:27:52 PM

Left to right: María Cristina Álvarez, President of Novartis Colombia Álvaro Uribe Vélez, President of the Republic of Colombia, and Daniel Vasella, Chairman of Novartis Global