EMIS Insights - Colombia Pharma and Healthcare Sector Report 2020 - 2021

COLOMBIA
PHARMA & HEALTHCARE

SECTOR 2020/2021
An EMIS Insights Industry Report
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ABBREVIATIONS
ACESI Colombian Association of Public Hospitals and Health Centres
ADRES Social Security Fund Administrator
ANDI National Business Association of Colombia
ASINFAR Association of Colombian Pharmaceutical Industries
CBD Cannabidiol
CCF Family Compensation Funds
CILFA Argentine Chamber of Pharmaceutical Manufacturers
CNPMDM National Commission for Prices of Drugs and Medical Devices
COP Colombian Peso
DANE National Administrative Department of Statistics
DNP National Planning Department
EMP Prepaid Medicine Companies
EPS Health Promotion Companies
EPSI Indigenous Health Companies
ESS Social Health Companies
FOSYGA Solidarity and Guarantee Fund
GIHS Great Integrated Household Survey
GVA Gross Value Added
INVIMA National Food and Drug Surveillance Institute
IPS Health Service Provider
MinSalud Ministry of Health and Social Protection
OBSERVAMED Drug Observatory of the Colombian Medical Federation
OECD Organisation for Economic Co-Operation and Development
OTC Over-the-Counter
PAS Additional Health Plan
PROESA Research Centre for Social Protection and Health Economics
POS Mandatory Healthcare Plan
REPS Special Registry of Health Services Providers
SGSSS General System of Social Security in Health
SuperSalud Superintendence of Health
THC Tetrahydrocannabinol
WHO World Health Organisation


01 EXECUTIVE SUMMARY p.5
CONTENTS Sector in Numbers
Sector Overview
Sector Snapshot
Sector Outlook
Driving Forces
Restraining Forces
02 SECTOR IN FOCUS p.14

Main Economic Indicators
Main Sector Indicators
Demographic Trends in the Americas
Health Profile
Global Positioning
Foreign Direct Investment
Employment and Wages
03 COMPETITIVE LANDSCAPE p.23

Timeline Colombia Pharma & Healthcare
Highlights
Pharmaceutical Manufacturing Competition
Pharmaceutical Retail Competition
Social Security Health Insurance Competition
Top M&A Deals
M&A Activity, 2018–2019
04 COMPANIES IN FOCUS p.31

Entidad Promotora de Salud Sanitas SAS
Salud Total EPS SA
Droguerias y Farmacias Cruz Verde SAS
Tecnoquimicas SA
Organizacion Clinica General del Norte SA
05 REGULATORY ENVIRONMENT p.42

Government Policy
Social Security Health Insurance System

06 PHARMACEUTICALS p.46
CONTENTS Highlights
Main Events
Production
Sales
Drug Prices
Institutional Drug Market
External Trade
Imports
Exports
07 HEALTHCARE p.57
Highlights
Main Events
Health Infrastructure
Focus Point – Number of Health Centres by

Department
Top Hospitals
Medical Professionals
Focus Point – Number of Medical Professionals

by Department
Public Health Expenditure

Private Health Expenditure
Social Security Health Insurance
Focus Point – Number of Affiliates to Social
Security Health Insurance, Non-Subsidised
Segment, by Department
Focus Point – Number of Affiliates to Social
Security Health Insurance, Subsidised Segment,
by Department
Private Health Insurance
08 RETAIL CHANNELS p.73

Pharmacy Stores

COLOMBIA PHARMA & HEALTHCARE SECTOR 2020/2021
An EMIS Insights Industry Report CONTENTS
01
EXECUTIVE
SUMMARY

Copyright © 2020 EMIS, all rights reserved. 5
01 EXECUTIVE SUMMARY CONTENTS
Sector in Numbers
74.7 6.2 No.4

years Crude Death Largest
Pharmaceutical
Life Expectancy Rate per 1,000 Market in Latin
at Birth People America
5.5% 7.7%
CAGR CAGR 44.9mn
Affiliates to Social
Public Health Private Health Security Health
Expenditure Expenditure Insurance
2013–2018 2013–2018
USD 9.2%
1.28mn 2bn CAGR
Employees in
Pharma & Trade Deficit in Private Health
Healthcare Pharmaceuticals Expenditure
2019–2023
Note: Data for 2018.

Source: CILFA, PAHO, CEIC, DANE, GIHS, SuperSalud, MinSalud, UN Comtrade, Fitch Solutions, EMIS Insights
COLOMBIA PHARMA & HEALTHCARE SECTOR 2020/2021 6

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Sector Overview
Colombia was the fourth-largest pharmaceutical market in Latin America in terms of sales volume in
2018, with a large and growing population, a universal but underfunded social security health
insurance system, and a small but rapidly developing private health insurance market. The local
pharmaceutical industry is focused on the production of generic drugs, with the rest of the segments
largely supplied through imports. This has resulted in chronic trade deficits in pharmaceuticals, which
reached USD 2bn in 2018, as Colombia met 47.8% of its domestic demand with imported drugs.
Nevertheless, several pharma and healthcare segments remain with strong growth potential,
including medical cannabis, homeopathic medicines and private healthcare services.
Entry Modes
In recent years, brownfield investment has been the main entry mode in the pharma and healthcare
sector of Colombia, as a result of the depreciation of the national currency against the US dollar since
2015, which created opportunities for new players to acquire domestic assets at bargain prices. M&A
activity was quite strong in 2018 and 2019, and largely concentrated in the medical cannabis
manufacturing and private healthcare segments. Among the foreign investors that expanded their
presence in Colombia through acquisitions in this period were Spanish hospital operator Quironsalud,
a unit of German group Fresenius, Spanish diagnostic services provider Atrys Health, US groups GNCC
Capital and Medicine Man Technologies, and Canadian nutraceutical producer BCX.
Segment Opportunities
Colombia presents ample investment opportunities for the production of medical cannabis and its
derivatives, as a result of a supportive government policy, regulated by Law 1,787 from July 2016, and
favourable weather conditions. Foreign players still opt to enter the segment through acquisitions of
small domestic companies that have already been granted licences, however, as the arduous licencing
procedure creates significant risks for greenfield investments. Another segment with strong growth
prospects is patented drugs not subject to price controls, such as anti-inflammatory drugs, due to low
competition from generics and strong consumer preferences towards branded drugs. Investment
opportunities also exist in the production and sale of homeopathic medicines, thanks to their high
popularity among both patients and doctors in Colombia.
Government Policy
Since taking office in August 2018, president Ivan Duque’s administration has adopted several
measures to contain public expenditure on health. Among these are expanding the list of drugs with
price caps and a restructuring of the social security health insurance system in the form of partial or
total liquidation of companies with poor performance. The government has also fully exempted
pharmaceutical manufacturers from VAT since January 2020, in an effort to reduce production costs
and improve the competitiveness of the domestic industry.
Source: WHO, PAHO, DANE, CEIC, CILFA, Vanguardia, El Tiempo, Portafolio, EMIS DealWatch, EMIS Insights

Sector Snapshot
Colombia Pharma
& Healthcare Sector
HEALTHCARE
EXPENDITURE*
COP 18.4tn COP 51.2tn
Private Public
PHARMACEUTICALS* Health Insurance: COP 7.0tn
Others: COP 11.4tn
USD 2,964mn
Production Value
EXPORTS
USD 350.6mn
Export Value
53,118 tonnes
Export Volume IMPORTS
DOMESTIC MARKET
Packed Medicaments: USD 308mn Value: USD 5,007mn USD 2,394mn
Wadding, Gauze, Bandages: Import Value
USD 19mn Volume: 430mn units
77,934 tonnes
Import Volume
Packed Medicaments: USD 1,303mn
DRUG CATEGORY Blood and Vaccines: USD 700mn
Generic Drugs: USD 2,183mn
Patented Drugs: USD 1,990mn
OTC Drugs: USD 834mn
KEY PLAYERS’ NET REVENUES

1. EPS Sanitas: COP 3,354bn
2. Salud Total EPS: COP 2,688bn
3. Droguerias y Farmacias Cruz Verde: COP 1,697bn
4. Tecnoquimicas: COP 1,370bn
5. Organizacion Clinica General del Norte: COP 552bn
* EMIS Insights estimates

Note: Data for 2018.
Source: MinSalud, SuperSalud, UN Comtrade, CILFA, WHO, Fitch Solutions, EMIS Company Database

Sector Snapshot
Colombia Pharma & Healthcare
In 2018, total health expenditure in Colombia stood at COP 69.6tn, an increase of 4.7% y/y, according to
EMIS Insights estimates. During the year, public health spending rose by 4.7% y/y to COP 51.2tn,
representing 73.5% of total expenditure on health. Private health spending grew by a similar rate of
4.8% y/y to COP 18.5tn. Overall, Colombia spent 7.1% of its GDP on healthcare in 2018, down from 7.2%
in 2017.
Colombia has two separate schemes for health insurance. There is the larger social security health
insurance system, divided into government-subsidised and non-subsidised or contribution segments.
45.46mn people were in this system as of December 2019, fairly evenly distributed among the
subsidised (22.83mn people) and the non-subsidised segments (22.63mn people). Secondly, there is a
small but expanding private health insurance market, with a total of 1.4mn affiliates, as of June 2019.
In terms of health infrastructure, Colombia ended January 2020 with a total of 10,404 health centres,
of which 90.4% were privately held, 9.4% were controlled by the government, with the remaining 0.2%
being of mixed public–private ownership. As of January 2020, there were 77,456 medical professionals
registered in Colombia. The largest group were medical sterilisation specialists, with an 18.7% share,
followed by dentists (18.2%), and general practitioners (5.8%).
In 2018, domestic pharmaceutical production rose by 9.7% y/y to USD 3bn, according to EMIS Insights
estimates, on the back of strong domestic demand. Notably, the domestic pharmaceutical industry –
largely skewed towards generic and OTC drugs – remains highly dependent on the evolution of
internal demand; in 2018, about 88.2% of the production was sold in Colombia. During the year, retail
drug sales in the country rose by 2.5% and 10.3% y/y in volume and value terms, respectively, favoured
by strong demand across all segments, in particular patented drugs.
In 2018, Colombia imported pharmaceutical products for USD 2.4bn, up 9.3% y/y. The US, Germany and
Switzerland were the main suppliers, with a combined 47.9% share in total drug imports. The main
imported products during the year were packed medicaments (a 59.6% share), followed by blood and
vaccines (32.5%). On the other hand, pharmaceutical exports declined for the fourth year in a row, by
0.3% y/y, to USD 350.6mn in 2018. Key export destinations were Ecuador, Peru and Panama, which
absorbed 51.1% of external sales. The main export products were packed medicaments (an 88.5%
share), followed by wadding, gauze and bandage (5%). In 2018, the combination of rising imports and
sustained decrease in exports widened the country’s trade deficit in pharmaceuticals to USD 2bn, up
by 11.1% y/y. Despite the solid growth of imports, Colombia actually decreased its dependence on
imported drugs in 2018, as the latter accounted for 47.8% of the domestic apparent consumption,
down from 48.3% in 2017. This is related to the active import substitution policy of the government.
The main results of this is the formation of clusters for the production and export of pharmaceuticals,
such as the Valle del Cauca pharmaceutical cluster.
Source: MinSalud, SuperSalud, REPS, UN Comtrade, CILFA, WHO, Fitch Solutions, EMIS Insights

Sector Outlook
Comments
The outlook for the Colombian pharma and healthcare sector is positive. Oxford Economics projects
the gross output of the healthcare and social works subsector to grow at a CAGR of 3.5% in US dollar
terms over 2019–2023, and the domestic pharmaceutical industry at a CAGR of 2.8%. On the other hand,
the consultancy Fitch Solutions forecasts total health expenditure in the country to increase
significantly in 2020, and maintain robust growth rates in 2021–2023. Private health expenditure will
mark this pace, supported by the rapid development of the private health insurance segment. In turn,
public health spending is set to grow at a slower but solid pace, as the government tries to balance
the higher costs from the enlargement of the mandatory healthcare plan (POS), with improved
operating efficiency of the social security health insurance system. In terms of pharmaceutical sales,
Fitch Solutions projects a small expansion in 2020, followed by a moderate pace of growth afterwards.
Patented drugs will be the fastest-growing segment, as a result of the rising demand for medium- and
high-complexity medical treatment. Meanwhile, a relatively weak intellectual property protection
regime, and cost-containment efforts by the government will support the generic drug segment. The
expansion of generic drug sales in value terms will nevertheless be limited by intensifying price
competition among domestic players.
Pharmaceuticals Gross Output Healthcare and Social Works Gross

Output
3.61 3.70 35.82 36.90
3.42 3.52 34.65
3.31 33.40
32.12
5.3%
3.6%
3.1% 3.1% 4.0%
2.7% 3.7%
2.5% 3.4%
3.0%
2019f 2020f 2021f 2022f 2023f 2019f 2020f 2021f 2022f 2023f
Pharmaceuticals Gross Output, real USD bn Healthcare and Social Works Gross Output, real USD bn
y/y change y/y change
Source: Oxford Economics, Fitch Solutions

Sector Outlook
(cont’d)
Public Health Expenditure Private Health Expenditure
17.0
16.0 10.9
15.0 10.0
14.2
13.3 9.1
8.4
7.7
6.6%
6.0% 6.2% 6.1%
9.5% 9.2% 9.1%
9.0%
3.3%
0.5%
2019f 2020f 2021f 2022f 2023f 2019f 2020f 2021f 2022f 2023f
Public Health Expenditure, USD bn y/y change Private Health Expenditure, USD bn y/y change
Total Pharmaceutical Sales Total Pharmaceutical Sales by Type,

USD mn
6,000
5.50
5.25 5,000 896
5.04 860
828
797 800
4.80 4.85
4,000
2,220
2,101 2,177
3,000 2,044 2,049
4.0% 4.3% 4.6%
0.9% 2,000
-4.1% 2,109 2,217 2,379

1,000 1,962 1,996
0
2019f 2020f 2021f 2022f 2023f 2019f 2020f 2021f 2022f 2023f
Total Pharmaceutical Sales, USD bn y/y change Patented Drugs Generic Drugs OTC Drugs
Source: Fitch Solutions

Driving Forces
In 2018–2019, the development of Colombia’s pharma and healthcare sector was supported by the
favourable macroeconomic context, as the partial recovery of the domestic oil and gas sector
propelled overall economic activity. Moreover, as the Colombian peso remained weak, foreign
investors were encouraged to expand their presence in the country, either by brownfield investments
or by forging strategic partnerships with local players (e.g. French drug maker Fareva, Canadian
medical cannabis group Canopy Growth Corporation). Moreover, a new wave of investments is
emerging in the medical cannabis segment, thanks to key natural advantages for the production of
cannabis plants in Colombia, and a quite developed regulatory framework.
External
The favourable macroeconomic landscape in 2018 and 2019 was one of the driving forces of the
Colombia’s pharma and healthcare sector. On the one hand, solid GDP growth, supported by a
moderate recovery of the domestic oil and gas sector, pushed up household out-of-pocket expenditure
on health. On the other hand, the ongoing depreciation of the Colombian peso against the US dollar
coupled with the rising demand for medium- and high-complexity medical treatment has been a
powerful combination for a surge of the foreign investment in the healthcare segment. Among the
most active foreign investors were Spanish healthcare groups Quironsalud and Atrys Health.
Additional positive impact came from the government’s active drug import substitution policy, which
resulted in the formation of clusters for the production and export of pharmaceuticals. One prominent
example is the Valle del Cauca pharmaceutical cluster, which benefits from a vast network of
academic institutions, research centres and high-complexity medical centres (e.g. Fundacion Valle del
Lili) based in the area, which provide a highly skilled workforce.
Internal
Medical cannabis is one of the most promising segments of the Colombian pharmaceutical industry,
as supportive government policy and favourable weather conditions allow up to four harvests per year
of high-quality medical cannabis, attracting an increasing number of foreign players in the country.
Homeopathic medicines is another segment with strong growth opportunities, due to the popularity
of medicines made from natural ingredients among both patients and doctors in Colombia, especially
for the treatment of gastrointestinal tract diseases. On the other hand, the continued expansion of
the national network of high-complexity private health centres in recent years has been a major driver
for the healthcare segment. The country has some of the best-equipped private hospitals in Latin
America, such as Fundacion Santa Fe de Bogota in the city of Bogota, and Fundacion Valle del Lili in
Betania, Antioquia. Although it is small in terms of affiliates (1.4mn people as of June 2019), the
private health insurance system continues to expand, favoured by the rising middle-class population
and a growing number of companies offering private health insurance plans as a social benefit to
their employees.
Source: MinSalud, ADRES, UN Comtrade, Global Health Intelligence, La Republica, El Tiempo, Planta Doce, EMIS Insights

Restraining Forces
Both internal and external factors have impaired the development of the pharma and healthcare
sector in recent years. As the funding crisis in the social security health insurance system continues
to deepen, the government has resorted to a direct intervention in the scheme, adopting measures
such as liquidating some companies, restricting the geographical scope of operations of others, and
reallocating affiliates to the top performing players. The domestic pharmaceutical industry is largely
specialised in generic and OTC drugs, while production of patented and biosimilar drugs remains
small. This makes Colombia highly dependent on the imports of innovative drugs to meet the rising
needs of its population.
External
In 2018 and 2019, the financial situation of the social security health insurance system continued to
deteriorate, especially in the subsidised segment, due to a combination of rising costs related to the
mandatory healthcare plan and new government measures to contain public health spending. The
government began a restructuring of the social security health insurance system, concerned about
the efficiency and solvency of some players, causing uncertainty for both patients and medical
professionals. Between August 2018 and January 2020, four EPS companies were fully liquidated (i.e.
SaludVida EPS, EPS Comfacor, EPS Cruz Blanca and Emdisalud EPS), while another three (Medimas,
Coomeva and Comparta) were banned from offering their services in some regions. This resulted in
the reallocation of 2.7mn affiliates to other entities, mostly in the second half of 2019. The government
also stepped up efforts to regulate drug prices by setting price caps on 54 patented contraceptive
drugs in January 2019. The measure disrupted local supply and led to short-term shortages, as
producers were unable to meet the higher demands.
Internal
A key constraint for Colombia’s pharmaceutical industry is its excessive specialisation in generic and
OTC drugs to the detriment of patented and biosimilar drugs. The lack of a strong manufacturing base
for patented drugs makes the country reliant on imports and susceptible to foreign exchange
volatilities. The domestic prices of patented drugs rose significantly above overall inflation in 2018
and 2019, due to the depreciation of the Colombian peso against the US dollar. In the case of
biosimilar drugs, although a regulatory framework has been in place since September 2014, the
segment has been slow to develop, due to the high costs manufacturers incur for extensive
bioequivalence studies, licensing and specialised equipment. On the other hand, a major restraining
factor for the healthcare subsector is the rising shortage of medical professionals, mainly due to
reduced quotas for post-graduate students in medical faculties and the high cost of medical
education. This shortage has been further aggravated by delays in the recognition of university
degrees obtained abroad. As of January 2020, some 4,000 medical professionals in Colombia were
awaiting recognition of their foreign diplomas.
Source: MinSalud, Supersalud, DANE, REPS, El Tiempo, Portafolio, La Republica, RCN Radio, EMIS Insights

02
SECTOR
IN FOCUS

02 SECTOR IN FOCUS CONTENTS
Main Economic Indicators
2013 2014 2015 2016 2017 2018 2019
Total Population, mn, year-end 47.1 47.7 48.2 48.7 49.3 49.8 50.4
GDP, current prices, COP bn 713,627 762,903 804,692 863,782 920,194 978,477 766,923
GDP, constant prices, y/y change, % 4.6 4.7 3.0 2.1 1.4 2.6 3.1
GDP per Capita, current prices, USD 8,109 7,999 6,089 5,780 6,327 6,692 6,427
Chemical Manufacturing GVA, current prices, COP bn 10,401 10,571 11,814 13,456 13,609 14,101 10,984
Chemical Manufacturing GVA, constant prices, y/y change, % 3.1 0.9 5.0 2.1 -0.2 2.7 0.7
Chemical Manufacturing GVA, current prices, % of GDP 1.5 1.4 1.5 1.6 1.5 1.4 1.4
Healthcare & Social Works GVA, current prices, COP bn 24,336 27,064 29,420 31,806 35,801 29,363 31,902
Healthcare and Social Works GVA, constant prices, y/y change, % 9.0 2.6 6.0 3.0 5.2 5.3 6.2
Healthcare and Social Works GVA, current prices, % of GDP 3.4 3.5 3.7 3.7 3.9 3.0 4.2
Monetary Policy Rate, year-end, % 3.25 4.50 5.75 7.50 4.75 4.25 4.25
Exchange Rate USD/COP, year-end 1,923 2,392 3,149 3,001 2,972 3,275 3,294
Exchange Rate USD/COP, year-average 1,869 2,002 2,742 3,054 2,951 2,956 3,281
Pharmaceutical Trade Balance, USD mn -1,820.0 -1,857.9 -1,828.2 -1,681.6 -1,839.4 -2,043.5 n/a
Pharmaceutical Exports, USD mn 497.3 524.2 504.0 426.9 351.7 350.6 n/a
Pharmaceutical Imports, USD mn 2,317.2 2,382.1 2,332.1 2,108.5 2,191.2 2,394.1 n/a
Source: CEIC, DANE, Central Bank of Colombia, IMF, UN Comtrade

Main Sector Indicators
2013 2014 2015 2016 2017 2018
Total Health Expenditure, COP bn 51,829 54,522 58,722 62,311 66,496 69,632*
Public Health Expenditure, COP bn 39,084 40,956 44,067 46,178 48,876 51,174*
Private Health Expenditure, COP bn 12,744 13,566 14,655 16,144 17,620 18,458*
Number of Affiliates to Social Security Health Insurance System,

42,824 43,647 44,640 44,376 44,481 44,898
thou, year-end

22,670 22,883 23,180 22,172 22,435 22,658
Subsidised Segment, thou, year-end

20,155 20,764 21,460 22,205 22,046 22,240
Non-Subsidised Segment, thou, year-end
Drug Production,* USD mn n/a 3,188 2,184 2,345 2,702 2,964
Retail Drug Sales Value, USD mn n/a 5,046 4,012 4,027 4,541 5,007
Retail Drug Sales Volume, mn units 347.2 355.4 391.4 387.4 419.3 429.9
Patented Drug Sales Value, USD mn n/a 1,954 1,560 1,575 1,789 1,990
Generic Drug Sales Value, USD mn n/a 2,235 1,774 1,775 1,992 2,183
OTC Drug Sales Value, USD mn n/a 856.7 678.0 677.0 760.0 834.0
Number of Employees in Healthcare and Social Works, thou, year-

995.9 1,071.7 1,040.0 996.3 997.1 1,045.0
end
Number of Employees in Pharmaceutical Manufacturing,

38.3 42.7 51.4 48.7 38.3 49.7
thou, year-end
Number of Employees in Pharmaceutical Retail, thou, year-end 179.5 163.0 162.2 157.8 214.4 185.7
* EMIS Insights estimates

Source: DANE, GIHS, WHO, Fitch Solutions, SuperSalud, EMIS Insights

Demographic Trends in the Americas
Crude Birth Rate per 1,000 People, 2018 Crude Death Rate per 1,000 People, 2018
Bolivia 22.7 Uruguay 9.4

Paraguay 20.5 United States 8.4
Ecuador 19.6 Cuba 8.2
Peru 18.6 Argentina 7.6
Venezuela 18.4 Canada 7.6
Mexico 17.5 Bolivia 7.2
Argentina 16.8 Brazil 6.3
Colombia 14.7 Colombia 6.2
Uruguay 13.8 Chile 6.2
Brazil 13.7 Paraguay 5.8
Chile 13.0 Peru 5.7
United States 12.6 Venezuela 5.7
Cuba 10.6 Ecuador 5.1
Canada 10.5 Mexico 4.9
Fertility Rate, Births per Woman, 2018 Life Expectancy at Birth, years, 2018
Bolivia 2.8 Canada 82.7
Paraguay 2.4 Cuba 80.1
Ecuador 2.4 Chile 79.9
Peru 2.3 United States 79.7
Argentina 2.3 Uruguay 77.8
Venezuela 2.3 Mexico 77.5
Mexico 2.1 Argentina 76.9
Uruguay 2.0 Ecuador 76.8
United States 1.9 Brazil 75.9
Colombia 1.8 Peru 75.5
Chile 1.8 Venezuela 74.9
Brazil 1.7 Colombia 74.7
Cuba 1.7 Paraguay 73.3
Canada 1.6 Bolivia 69.8
Source: PAHO

Health Profile
Mortality Rate per 100,000 People by Comments

Cause, 2016
With a median age of 31.3 years in 2018 (above the
434 average of 30.4 years for he Latin America and the
Non-Communicable
Diseases
559 Caribbean region) Colombia’s population is ageing
543
at a rapid pace. Significantly, the percentage of
9 the population aged 65 years or older rose from
Breast Cancer 11 6.5% in 2013 to 8% in 2018, according to PAHO. The
8
acceleration of the ageing process in recent years
8 is mainly due to a decline in the crude birth rate
Prostate Cancer 10 per 1,000 people, which dropped from 16.1 in 2013
5
to 14.8 in 2018. Moreover, the fertility rate has
13 slightly declined (1.9 children per woman in 2013
Lung Cancer 26 to 1.8 in 2018), while the crude death rate per 1,000
23
people increased from 5.8 in 2013 to 6.2 in 2018.
20
Diabetes Mellitus 35
According to the latest available data from WHO,
21 Colombia in 2016, Colombia had lower mortality rates from
Americas Average both communicable and non-communicable
39
Cerebro-Vascular
44
World Average diseases compared to the average for the
Diseases
77 Americas region. However, in terms of mortality
due to external causes, Colombia fared
87
External Causes 65
considerably worse. This is attributable to the
65 high number of deaths from interpersonal
violence in the country (43 deaths per 100,000
59
Communicable
69
people in 2016, compared to just 18 in the
Diseases
153 Americas). However, Colombia has improved in
this respect, as the number of deaths related to
22
Respiratory Infections 31
violence peaked at 62 per 100,000 people in 2010.
40 This is explained by advances in the peace
process between the Colombian government and
21
Infectious and Parasitic
22
insurgent groups, such as the Revolutionary
Diseases
74 Armed Forces of Colombia (FARC).
Source: WHO, PAHO

Health Profile
Top 10 Causes of Death in Colombia, 2017
1. Ischemic Heart
3. Interpersonal 2. Stroke Disease
Violence
4. Alzheimer’s
Disease
5. Chronic Obstructive
Pulmonary Disease
6. Chronic 7. Lower
Kidney Disease Respiratory Infect
8. Road Injuries 9. Diabetes
10. Stomach Cancer
Top 10 Risk Factors for Death and Disability in Colombia,* 2017
1 2 3 4 5 6 7 8 9 10
33.3% 30.2% 30.9%

21.7%
15.4% 15.5%
2.2% 6.8%
-7.6%
-38.1%
High Blood Dietary Risks High Body- Malnutrition Tobacco Alcohol Use High Fasting High LDL Impaired Air Pollution
Pressure Mass Index Plasma Cholesterol Kidney
Glucose Function
* Percentage change compared to 2007

Source: Institute for Health Metrics and Evaluation

Global Positioning
Comments
Colombia was the fourth-largest pharmaceutical market in Latin America in terms of sales volume in
2018, with 430mn units sold and a 5.9% share of the regional market (which amounted to 7.3bn units),
according to IQVIA. Between 2013 and 2018, pharmaceutical sales in the country expanded at a CAGR
of 4.4% per year, supported by solid economic growth and an increase in the private health spending,
particularly related to the rapid development of the private health insurance market. As a result,
Colombia was the third most dynamic pharmaceutical market in the region, trailing the expansion of
retail sales only in Brazil (7.6% CAGR) and Peru (4.6% CAGR) during the 2013–2018 period. Colombia’s
importance as a regional market depends mostly on the size of its population, the third-largest in
Latin America behind Brazil and Mexico. However, according to EMIS Insights estimates, Colombia is
in the middle of the pack in terms of pharmaceutical sales per capita, ranking sixth in the region with
8.6 units in 2018. In terms of private health insurance, Colombia was sixth out of 34 countries in the
Latin America and the Caribbean region, with a 14.1% share of prepaid health spending in total health
spending in 2019, according to a study of the Global Burden of Disease Health Financing Collaborator
Network with the participation of PROESA published in The Lancet medical journal.
Top 10 Global Pharmaceutical Markets, Top 10 Pharmaceutical Markets in Latin

2018,* USD bn America, 2018, mn units
United States 484.9 Brazil 4,181

China 132.3 Mexico 956
Japan 86.4 Argentina 702
Germany 53.5 Colombia 430
France 36.8 Chile 276
Italy 34.4 Central America 230
Brazil 31.8 Ecuador 225
United Kingdom 28.4 Peru 159
Spain 24.6 Uruguay 90
Canada 22.2 Paraguay 55
* Based on wholesale price data from IQVIA

Source: IQVIA, CILFA, PROESA, The Lancet, EMIS Insights

Foreign Direct Investment
Comments
Between 2014 and 2019, the pharma and healthcare sector attracted a total of USD 1,197mn of foreign
direct investment (FDI) in the form of equity capital, according to EMIS DealWatch database. Of this,
USD 855.2mn were invested in pharmaceutical manufacturing, USD 294.4mn in healthcare service, with
the remaining USD 47.5mn in pharmaceutical retail. As per EMIS DealWatch, 2018 was marked by a
surge in FDIs in the domestic pharmaceutical manufacturing industry. The most attractive segment
for foreign investors was medical cannabis production, mainly as a result of the favourable climatic
conditions and a supportive government policy. In 2019, the medical cannabis segment continued to
be the main driver for the FDI in the sector. Nevertheless, investors’ interest has somewhat slowed
down, as the Colombian government is adopting an increasingly careful approach for the granting of
new production licenses. Some of the key deals in the medical cannabis segment in 2019 included the
February 2019 acquisition of Colombian cannabidiol producer BioCann Pharma by US group GNCC
Capital for USD 120mn; the June 2019 acquisition of local cannabis grower Green Equity by US
cannabis products trader Medicine Man Technologies for USD 5.4mn; and the June 2019 purchase of
domestic cannabis oils and concentrates producer LifeLine Pharma by Canadian nutraceutical
producer BCX for USD 4.5mn.
FDI Flow in Pharma & Healthcare Sector, FDI Flow in Pharma & Healthcare Sector
USD mn by Segment, 2019
Pharmaceutical
Retail 20.2%
800.0
Healthcare
223.1 Service
20.0%
90.0 Pharmaceutical
44.5 39.5 Manufacturing
0.0 59.8%
2014 2015 2016 2017 2018 2019
Source: EMIS DealWatch, EMIS Insights

Employment and Wages
Comments Number of Employees in Pharma &

Healthcare Sector
According to EMIS Insights estimates based on
data from DANE, the number of employees in the
1,277 1,254 1,250 1,280
Colombian pharma and healthcare sector reached 1,214 1,203
1.28mn at end-2018, up 2.4% y/y. The number of
employees in pharmaceutical retail fell by 13.4%, 5.74% 5.61%
5.58% 5.51% 5.47%
reflecting the ongoing consolidation of the retail 5.27%
drug market. On the other hand, employment in

pharmaceutical manufacturing surged by 29.7%
y/y, driven by the steady increase in local
production. Employment in healthcare and social
works services also rose, by 4.8% y/y, supported
mainly by the development of the private health 2013 2014 2015 2016 2017 2018
services market. Number of Employees, thou, year-end
Share of Total Employment
Number of Employees by Segment, Average Monthly Wage by Segment,

Dec 2018 COP, 2018
Pharmaceutical Manufacturing 1,847,084
Pharmaceutical
Retail 14.5%
Healthcare & Social Works 1,543,640
Healthcare &
Social Works
81.6% Pharmaceutical Pharmaceutical Retail 1,013,162
Manufacturing
3.9%
Source: DANE, GIHS, EMIS Insights

03
COMPETITIVE
LANDSCAPE

03 COMPETITIVE LANDSCAPE CONTENTS
Timeline Colombia 1871 Market Players
Pharma & Healthcare Spanish doctor Alejandro Gastelbondo

opens the first modern pharmacy store in
the city of Bogota.
1911 Market Players
French entrepreneur Bernard Pauly establishes the

first drug manufacturer in Colombia – Laboratorio
1927 Development Milestones
Franco-Colombiano (Lafrancol). The first pharmaceutical school in Colombia is

created within the Medical Faculty of the state-
run National University of Colombia.
1946
The Ministry of Health (MinSalud) is established.
Development Milestones
The government adopts a comprehensive regulatory
framework for the social security and private health
insurance systems through Law 100-1993.
The government regulates the additional

healthcare plans (PAS) as high-end plans 2012 Market Players
complementary to the mandatory healthcare
plan (POS). M&A boom in the pharmaceutical industry, with major
strategic investors – Sanofi, Fagron, Blau Farmaceutica
and CFR Pharmaceuticals – entering Colombia through
acquisitions of local drug manufacturers.
The government adopts price caps for a list of

1,000 drugs, initiating a period of direct
government regulation on drug prices. The government approves Law 1,751, or the
Statutory Health Law, which expands the medical
treatment options for affiliates of the social
security health insurance system.
The government establishes a legal framework 2017 Development Milestones

for the production and exports of medical
cannabis in Colombia through Law 1,787. The Social Security Fund Administrator (ADRES) is
created to centralise the management of all funds
related to the social security health insurance system.
2018 Market Players

2019 Market Players
The International Financial Corporation (IFC) Mexican beverage group FEMSA acquires full
makes a USD 90mn equity investment in ownership of the second-largest pharmacy chain
Colombian drug maker Grupo Procaps. in Colombia – Droguerias y Farmacias Cruz Verde.
Source: MinSalud, SuperSalud, Company Data, EMIS DealWatch

Highlights
Overview
The level of competition in Colombia’s pharma and healthcare sector varies across segments. There is
some concentration in pharmaceutical manufacturing, with the top ten players accounting for 47% of
retail drug sales in the country in 2018 and reasonable competition in the subsidised segment of the
social security health insurance system as well, where the ten largest companies had a combined
69.7% share of affiliates at end-2019. The non-subsidised social security health insurance segment
shows higher levels of concentration, with the top ten providers accounting for 94% of the affiliates
at the end of 2019.
Market Structure
The role of foreign capital in the Colombian pharmaceutical manufacturing industry is significant,
with eight of the top 10 companies by net revenues of foreign origin in 2018. The main foreign players
were Bayer (Germany), Abbott Laboratories (the US) and Sanofi (France), with a combined 20% share of
total net revenues. On the other hand, the pharmaceutical retail segment is dominated by Colombian
companies, with just two of the top ten retailers controlled by foreign capital. These are Farmacias
Cruz Verde, owned by Mexican beverage group FEMSA, and Yanbal de Colombia, the local subsidiary of
Peruvian cosmetics products retailer Yanbal.
Main Players
In 2018, the major player in the pharmaceutical manufacturing industry in Colombia in terms of net
revenues was Tecnoquimicas, controlled by Colombian entrepreneurs from the Barberi family. On the
other hand, the leader in pharmaceutical retail was Supertiendas y Droguerias Olimpica, a multi-
purpose retailer based in the city of Barranquilla, Atlantico department, and owned by the Colombian
Char Abdala family. Meanwhile, the largest player in social security health insurance was Nueva EPS,
a joint venture between six family compensation funds (Cafam, Colsubsidio, Compensar, Comfenalco
Valle, Comfenalco Antioquia, Comfandi), and the state-run insurer Positiva.
Market Entries
In 2018 and 2019, Colombia recorded a large number of foreign investors entering the pharmaceutical
and healthcare sector through acquisitions of local players. Most of the deals corresponded to the
medical cannabis manufacturing segment. There was also strong M&A activity in the health services
segment. Among the most active foreign investors was German healthcare group Fresenius, which
through its Spanish arm Quironsalud, acquired three private hospital operators in 2019 (Clinica
Medellin, Clinica Las Vegas and Clinica del Prado) for a combined value of USD 111.8mn. In November
2019, the company also purchased local medical diagnostics group CediMed for USD 44.7mn, while in
December 2019, it took over the private hospital Centro Medico Imbanaco in Cali for USD 332.2mn.
Source: SuperSalud, EMIS Company Database, EMIS DealWatch

Pharmaceutical Manufacturing
Competition
Top 20 Pharmaceutical Manufacturers in Colombia by Net Revenues,* 2018
Net Revenues, 2018, Net Revenues, 2017, Net Revenues, 2018, Total Assets,
Ranking Company
COP bn COP bn y/y change Dec 2018, COP bn
1 Tecnoquimicas SA 1,369.7 1,290.5 6.1% 1,986.0
2 Bayer SA 1,130.5 1,225.3 -7.7% 711.9
3 Lafrancol SAS 878.6 819.6 7.2% 548.6
4 Sanofi-Aventis de Colombia SA 838.8 743.2 12.9% 601.0
5 Procaps SA 719.7 682.4 5.5% 1,047.6
6 Novartis de Colombia SA 664.7 556.5 19.4% 474.5
7 Laboratorios Baxter SA 569.2 535.0 6.4% 779.2
8 Pfizer SAS 559.5 732.9 -23.7% 614.2
Merck Sharp & Dohme Colombia

9 414.2 358.3 15.6% 292.8
SAS
10 Genfar SA 371.2 379.9 -2.3% 291.4
11 Tecnofar Tq S.A.S. 273.7 170.8 60.3% 374.8
12 Merck SA 261.4 359.9 -27.4% 265.2
13 Boehringer Ingelheim SA 240.4 376.6 -36.2% 202.3
14 Scandinavia Pharma Ltda 212.5 155.4 36.7% 243.1
15 CI Farmacapsulas SA 204.0 191.7 6.4% 330.1
16 Laboratorios La Sante SA 193.6 193.0 0.3% 454.4
17 Jgb SA 159.5 203.9 -21.8% 103.8
18 Laboratorios Synthesis SAS 157.9 165.0 -4.3% 143.5
Laboratorios Chalver de Colombia

19 154.6 132.6 16.6% 174.9
SA
20 Novamed SA 148.7 129.4 15.0% 75.2
* NAICS code: 3254

Source: EMIS Company Database

Pharmaceutical Retail Competition
Top 20 Pharmaceutical Retailers in Colombia by Net Revenues,* 2018

Net Revenues, 2018, Net Revenues, 2017, Net Revenues, 2018, Total Assets,
Ranking Company
COP bn COP bn y/y change Dec 2018, COP bn
Supertiendas y Droguerias Olimpica
1 6,124.0 5,709.0 7.3% 3,992.5
SA
Droguerias y Farmacias Cruz Verde
2 1,696.7 1,425.5 19.0% 850.7
SAS
Cooperativa Multiactiva De
3 Empleados De Distruidores De 1,159.7 1155.70 0.3% 365.1
Drogas Copservir Ltd
4 Eticos Serrano Gomez Ltda 727.5 635.3 14.5% 366.3
5 Yanbal de Colombia S.A.S. 596.4 684.8 -12.9% 356.4
6 Union de Droguistas SA 533.2 481.6 10.7% 299.5
Corporacion Hospitalaria Juan

7 425.9 374.6 13.7% 441.6
Ciudad
8 Distribuidora Pasteur SA 286.0 287.3 -0.4% 202.9
9 Medicamentos Especializados SAS 252.0 135.1 86.5% 192.4
10 Helpharma SA 210.6 187.1 12.6% 56.8
11 Jade Farmacia Homeopatica S.A.S 152.3 2.1 7,328.1% 635.2
12 Genomma Lab Colombia Ltda 130.1 113.2 14.9% 56.9
Cooperativa Emssanar Servicio

13 129.1 120.0 7.5% 69.3
Farmaceutico
14 Agrocampo SAS 96.6 95.2 1.5% 85.8
15 Disortho SA 93.8 91.5 2.5% 115.3
16 Dropopular SA 90.6 87.7 3.3% 41.0
17 Astellas Farma Colombia S A S 90.5 40.1 125.7% 90.1
18 Prosalon Distribuciones SAS 89.1 52.1 70.9% 85.6
19 Ivanagro SA 88.3 86.7 1.8% 44.0
20 Bella Piel SAS 81.5 52.7 54.7% 28.4
* NAICS code: 446


Competition
Comments
The social security health insurance system in Colombia has two distinctive segments. The
government-subsidised segment includes a total of 41 companies with a combined 22.8mn affiliates at
end-2019. This subsidised segment is diverse, formed by four types of entities: the largest group is of
seven social health companies (ESS), accounting for 45.8% of total affiliates. ESS companies are non-
profit organisations with the specific purpose of providing health insurance services to low-income
households living in urban areas. In addition, the subsidised segment includes health promotion
companies (EPS) – 20 for-profit entities with a combined 36% share of affiliates; indigenous health
companies (EPSI) – five for-profit entities with a combined 5.9% share, and family compensation funds
(CCF) – nine non-profit organisations that provide general services (not only health services) to local
communities with a 12.2% share. The non-subsidised segment – which is regulated by the government
but does not receive public funding – is more homogeneous, comprising 44 entities with a total of
22.6mn affiliates at end-2019. The non-subsidised segment is dominated by EPS companies, with 22
such entities with a combined 96.5% share of affiliates. The remaining 3.5% share is distributed
among 22 EPSI, ESS and CCF entities.
Top 10 Subsidised Social Security Health Top 10 Non-Subsidised Social Security

Insurance Providers by Number of Health Insurance Providers by Number of
Affiliates, thou, Dec 2019 Affiliates, thou, Dec 2019
Coosalud ESS 2,381 Nueva EPS 3,772
Mutal SER ESS 1,919 MPS EPS 3,537
Nueva EPS 1,895 Sanitas EPS 3,098
Asmet Salud ESS 1,820 Salud Total EPS 2,956
Emssanar ESS Famisanar EPS 2,131

1,796
Medimas EPS 1,692
Savia Salud EPS 1,539
Compensar EPS 1,619
Comparta ESS 1,481
Coomeva EPS 1,481
Cajacopi Atlantico CCF 1,079
SOS EPS 745
Capital Salud EPS 1,045
Aliansalud EPS 238
Medimas EPS 964
Source: SuperSalud, Rankia, El Colombiano, El Espectador

Top M&A Deals

Top 10 M&A Deals in Colombia’s Pharma & Healthcare Sector,* 2018–2019
Country of Deal Value, Stake,

Date Target Company Deal Type Buyer
Buyer USD mn %
Latin American and Caribbean 230.1

Jul 2018 Acquisition Aphria Inc Canada 100.0
Assets of Scythian (Official Data)
224.0
Sep 2018 ICC Labs Inc Acquisition Aurora Cannabis Inc Canada 100.0
(Official Data)
Promotora Medica Las

214.7
Sep 2018 Americas SA (Grupo Acquisition Auna Peru 97.3
(Official Data)
Empresarial Las Americas)
120.0
Feb 2019 BioCann Pharma SAS Acquisition GNCC Capital Inc United States 100.0
(Official Data)
Spectrum Cannabis Colombia 53.5

Jul 2018 Acquisition Canopy Growth Corp Canada 100.0
SAS (Official Data)
IDC Salud Holding SLU

Germany; 44.7
Nov 2019 Cedimed SAS Acquisition (Quironsalud); Fresenius SE 100.0
Spain (Official Data)
& Co KGaA
31.3
Apr 2018 ColCanna SAS Acquisition Scythian Biosciences Corp Canada 90.0
(Official Data)
Minority Stake Undisclosed investor(s); 21.9

Feb 2019 Khiron Life Sciences Corp n/a 17.5
Purchase Company manager(s) (Official Data)
Minority Stake 18.6

May 2019 Khiron Life Sciences Corp Undisclosed investor(s) n/a 10.3
Purchase (Official Data)
Maricann Group Inc 16.8

Nov 2018 Colma Pharmaceutical SAS Acquisition Canada 100.0
(Wayland Group) (Official Data)
* NAICS codes: 3254, 446, 621
Source: EMIS DealWatch

M&A Activity, 2018–2019
Number and Value of Deals in Colombia’s Deals by Deal Value, USD

Pharma & Healthcare Sector*
Undisclosed;
8 40.6%
6 6
741.6
3 3 3
100.1-
2
500mn;
1 12.5%
7.6 31.3 27.1 141.9 44.8 0.0 44.7
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 50.1-100mn;
2018 2019 0-50mn; 3.1%
43.8%
Value of Deals, USD mn Number of Deals
* NAICS codes: 3254, 446, 621
Deals by Deal Type Deals by Region of Investor
Colombia
12.5%
EMEA 9.4%
Minority Undisclosed
Stake 9.4%
Purchase
Acquisition 15.6%
84.4%
North
America Caribbean
62.5% Region 3.1%
South
America
3.1%
Source: EMIS DealWatch

04
COMPANIES
IN FOCUS

04 COMPANIES IN FOCUS CONTENTS
Entidad Promotora de
Salud Sanitas SAS
Highlights Income Statement, Individual, COP bn

Entidad Promotora de Salud Sanitas SAS (EPS
Sanitas) was founded in 1994 as a private entity
1.2% 1.2% 1.3%
with the goal of operating in the non-subsidised
segment of the General System of Social Security
in Health (SGSSS) in Colombia. It was established
by Spanish healthcare company Organizacion
Sanitas Internacional (OSI). The Spanish company
3,354
entered the Colombian healthcare market in 1980,
2,659
when it founded a private health insurance
1,645
company under the name of Colsanitas, and later

on, in the early 1990s, it established several
44
32
31
20
19
12
private health centres. In April 2018, OSI

2016 2017 2018
rebranded itself as Keralty, and transferred its
Net Revenues EBIT
headquarters to the city of Bogota, Colombia. Net Profit EBIT Margin
As of August 2019, Keralty operates in Colombia,

Venezuela, Brazil, Peru, Mexico, the US, Spain, the Balance Sheet, Individual, COP bn
Philippines and Indonesia. In August 2019, Keralty
had a total of 218 health facilities in Colombia,
including general clinics, medical centres, dental
clinics, ophthalmological centres and
laboratories, as well as a network of 3,906
1,246
affiliated health services providers, distributed

890
214
among 252 cities. The company had some 14,519

151
589
108
employees.
As of December 2019, EPS Sanitas was the third-

-206
largest player in the non-subsidised segment of

-351
the SGSSS system in Colombia, with a total of

2016 2017 2018
3.09mn affiliates. As of February 2020, it had an
affiliated network of 44 health centres across 16 Total Assets Shareholders' Equity Net Debt
of the country’s departments.
Source: EMIS Company Database, Company Data, La Nota Economica

Entidad Promotora de
Salud Sanitas SAS (cont’d)
Highlights Number of Affiliates to Non-Subsidised

Social Security Health Insurance System,
In March 2019, EPS Sanitas unveiled details for an thou, year-end
ambitious expansion plan, comprising the
3,098
opening of 12 new health centres in Colombia by
the end of 2019. In a March 2019 interview with
2,526
Diario Santa Fe newspaper, Juan Pablo Rueda,
2,220
CEO of EPS Sanitas, commented that one of the
1,846
key factors favouring the company’s expansion
plan is the increasingly tighter regulation of 1,487
1,306
small EPS companies by SuperSalud, which limits 1,161
growth of these players in the domestic market,
and, at the same time, favours the expansion of
established large players.
Moreover, Rueda added that the main focus of

2013 2014 2015 2016 2017 2018 2019
the company’s expansion plan was to open
primary medical attention centres in mid-sized
cities in the interior of the country, such as Number of Health Centres by
Soacha (Cundinamarca department), Neiva (Huila Department, Feb 2020
department), Cucuta (Norte de Santander Bolivar 2
Atlantico 3 Cundinamarca 2
department), and Valledupar (Cesar department).
EPS Sanitas also set the goal of reaching 2.9mn Santander 2
affiliates in the non-subsidised segment of the Valle Del Antioquia 1

Cauca 6
social security health insurance system by the
end of 2019, which it achieved; the company
closed the year with 3.1mn affiliates.
In a June 2019 interview with La Republica Others 9
newspaper, Sergio Martinez, Global CEO of

Keralty, commented that during 2019 Keralty
pledged to invest a total of USD 100mn in the
Colombian subsidiaries of the parent company Bogota 19
(EPS Sanitas and Colsanitas), mainly in the
expansion and modernisation of their health
infrastructure.
Source: Company Data, La Republica, Diario del Cauca, Diario Santa Fe

Salud Total EPS SA

Salud Total EPS SA was founded in 1991 as a
private health insurance company by a Colombian 1.6% 2.0%
consortium led by the insurance companies
Seguros Atlas (a 35.7% equity stake), Promotora
de Inversion Superior (26.9% share), Desarrollo
2,688
(26.5%) and a group of 49 physicians (10.9%).
2,228
1,928
In 1994, Salud Total received authorisation from

the National Superintendence of Health
(SuperSalud) to operate in the non-subsidised
53
51
43
35
24
segment of the General System of Social Security

-23
in Health (SGSSS) in Colombia under the name of

Salud Total EPS. In 1996, Salud Total EPS also 2016 2017 2018
received a licence to operate in the subsidised Net Revenues EBIT

Net Profit EBIT Margin
segment of the SGSSS.
In 1997, Salud Total opted to discontinue its

operations in the private health insurance Balance Sheet, Individual, COP bn
segment and concentrate exclusively in the social
security health insurance system.
As of December 2019, Salud Total EPS had a total

of 3.38mn affiliates, of which 91.5% corresponded
1,067
to the non-subsidised segment of the SGSSS, with

830
684
the remaining 8.5% to the subsidised segment.

199
165
109
The company also had an affiliated network of

1,387 health service providers across 16 cities in
Colombia.
-72
-85
-219
Salud Total EPS ended 2018 with 4,064 employees,

2016 2017 2018
down from 4,582 at the end of 2017.
Total Assets Shareholders' Equity Net Debt
Source: EMIS Company Database, Company Data, El Tiempo

Salud Total EPS SA

(cont’d)
Highlights Number of Affiliates to Non-Subsidised

Social Security Health Insurance System,
At the end of 2018, the number of affiliates of thou, year-end
Salud Total to the non-subsidised segment of the
2,956
social security health insurance system rose by 2,851
2,681
6.4% y/y. The largest increase was recorded in the
cities of Sincelejo (+24.3%), Santa Marta (+15.5%), 2,290
2,144 2,110
Villavicencio (+13.9%), Pereira (+12.5%) and 1,984
Girardot (+12.2%). The reach of the company, in
terms of the non-subsidised segment, spanned
555 municipalities, whereas in the case of the
subsidised segment it was 242 municipalities.
In a July 2019 interview with La Republica

newspaper, Juan Gonzalo Lopez, CEO of Salud
Total, commented that the company’s 2019
2013 2014 2015 2016 2017 2018 2019
investments were to be almost entirely focused
on adoption of new technology solutions inside
the company’s health centres. In particular, the Number of Affiliates to Non-Subsidised
company is promoting the use of electronic Social Security Health Insurance System
health records among the 1,400 external health by Branch, thou, Dec 2018
services providers working with Salud Total.
Bucaramanga
Pereira
Salud Total also invested in expansion of its Cartagena 163.8
133.0
217.1 Ibague
health centre infrastructure in 2019, with the 129.6
opening of a new health centre in the city of
Barranquilla
Soacha, Cundinamarca department. The new 297.4
facility has 53 doctors’ offices and 14 observation Others
719.0
rooms for low-complexity medical services. It
required an investment of USD 3mn. Medellin
353.0
Bogota
838.5
Source: Company Data, RCN Radio, La Republica

Droguerias y Farmacias
Cruz Verde SAS

Droguerias y Farmacias Cruz Verde SAS (Cruz
Verde) was founded in 2012, when Chilean
4.5% 5.0% 5.0%
pharmaceutical retailer Socofar, operator of the
Cruz Verde pharmacy chain in Chile, entered the
Colombian market. Socofar acquired a 60% stake
in Colombian pharmaceutical chain Farmasanitas
1,697
from Spanish healthcare company Organizacion
1,425
Sanitas Internacional (OSI) for USD 70.4mn.
1,221
Socofar subsequently rebranded the chain to

Farmacias Cruz Verde.
85
71
56
39
27
18
In 2015, Socofar acquired the remaining 40%

share from OSI, becoming the sole shareholder of 2016 2017 2018
Cruz Verde in Colombia. Net Revenues EBITDA

Net Profit EBITDA Margin
In December 2019, Mexican beverage group
FEMSA through its retail trade division Femsa
Comercio acquired a 40% stake in Socofar, from Balance Sheet, Individual, COP bn
Chilean entrepreneur Guillermo Harding.
According to Mexican newspaper El Economista,
the deal was valued at between USD 550mn and
USD 600mn.
Cruz Verde operates in four separate

851
pharmaceutical segments in Colombia: consumer

702
583
retail, institutional market (EPS health insurance

providers), wholesale drug distribution, and
228
190
162
hospital drugs. As of August 2019, the company

had 350 stores distributed across 26 departments
-3
-12
-37
in Colombia. The company ended 2019 with 2,963 2016 2017 2018
employees in the country. Total Assets Shareholders' Equity Net Debt
Source: EMIS Company Database, Company Data, EMIS DealWatch, La Tercera, El Economista

Droguerias y Farmacias
Cruz Verde SAS
(cont’d)
Highlights Current Assets by Type, Dec 2018
In an August 2019 interview with La Republica
newspaper, Jorge Schirmer, general manager of
Trade and
Cruz Verde in Colombia, said that the company Other
planned to open 60 new stores in Colombia by Receivables
47.3%
the end of 2019. The company was to focus on the
departments of Valle del Cauca, Antioquia,
Atlantico and Bolivar.
Schirmer also added that a key development for

Cruz Verde in 2019 was the acquisition of
Medicarte, a Colombian private health service Cash and
Inventories Cash
provider specialised in ambulatory treatment of 47.7% Equivalents
patients with high-cost drugs. Medicarte had a 5.0%
total of 17 health centres, distributed in 13 cities
at end-2019.
In January 2020, the Secretariat of Health of the

city of Bogota closed a Cruz Verde store in the Profitability Ratios
Suba district of the capital, following a fatal
17.0%
accident in which two children died after their
mother was mistakenly sold an analgaesic 14.4%
instead of a laxative. Cruz Verde immediately
accepted responsibility and launched an internal 11.3%
investigation of the accident. The Office of the

Attorney General of Colombia also launched an
investigation of Cruz Verde’s drugs storage and
4.6%
delivery processes. 3.9%
3.2%
2016 2017 2018
Return on Assets, ROA Return on Equity, ROE
Source: Company Data, La Republica, La FM

Tecnoquimicas SA

Tecnoquimicas SA was founded in 1934 by a group
of Colombian entrepreneurs under the name of 6.9%
5.7%
Colombian Sales Company (CSC). Initially, the
company specialised in the retail of 0.9%
pharmaceutical products in the city of Bogota.
In 1950, Tecnoquimicas acquired domestic drug
1,370
1,290
1,284
manufacturer Laboratorios Fixalia, entering the

pharmaceutical manufacturing segment. In 1957,
CSC changed its name to Tecnoquimicas, while
199
152
107
maintaining the same ownership structure. As of

90
78
12
December 2019, Tecnoquimicas is controlled by

Colombian entrepreneurs from the Barberi family. 2016 2017 2018
Net Revenues EBITDA
As of December 2019, Tecnoquimicas specialises Net Profit EBITDA Margin
in the manufacturing and sale of several
pharmaceutical products, including OTC and
prescription drugs, nappies for babies and adults, Balance Sheet, Individual, COP bn
pharmaceutical products for animal health,
plasters, personal care products and beauty
25.36
products.
As of December 2019, the company had a total of

eight manufacturing plants in Colombia, with a 2.52 3.73
combined 33 production lines. Of these eight
1,986
1,701
plants, five were located in Valle del Cauca

1,569
1,231
department, two in Cauca department, and one in

1,097
302
290
225
894
Bogota. Moreover, the company operated three

pharmaceutical manufacturing plants in El
2016 2017 2018
Salvador, serving countries in Central America.
Total Assets Shareholders' Equity
Net Debt Net Debt/EBITDA
Source: EMIS Company Database, Company Data

Tecnoquimicas SA
(cont’d)
Highlights Number of Production Lines by

Department, Dec 2019
In October 2019, Tecnoquimicas announced the
completion of three investments projects in the
industrial complex located in the municipality of Valle del
Cauca
Villa Rica, Cauca department. They demanded a 14
combined investment of COP 199bn. The key
project involved the expansion of the nappy-
manufacturing plant by the addition of new
machines for each of the main nappy production
lines (babies, small children and adults). The
other two investment projects comprised the
construction of plants for sterile pharmaceutical Cauca
18 Bogota
products. 1
Moreover, as of October 2019, Tecnoquimicas had

three investment projects for the Villa Rica
complex in implementation stage. Their combined
budget stood at COP 297.6bn. These comprise the Number of Distribution Centres by
construction of a new plant for semi-solid drugs, Department, Dec 2019
the expansion of the effervescent solid drug
Narino Magdalena Valle del
plant, and the acquisition of machines for the 2 2 Cauca
adult nappies production line. 1
Also in October 2019, Teconoquimicas announced Atlantico

2
plans to invest COP 169.7bn in expansion and
modernisation of the industrial complex in the
municipality of Jamundi, Valle del Cauca Risaralda
department. The company plans to build a new 3 Others
7
solid drug manufacturing plant and a quality
control laboratory as well as to expand the
Bogota
existing production lines for liquid capsules. 3
Antioquia
6
Source: Company Data, La Republica, El Pais

Organizacion Clinica
General del Norte SA

Clinica General del Norte was founded in 1969 in
12.5%
the city of Barranquilla, Atlantico department, as 11.8%
a private clinic under the name of Clinica del
Nino. Among its founders were Colombian
7.8%
paediatricians Rafael Llanos Munire and Jose
Maria Lora Diago, and Colombian entrepreneur
552.1
David Herrera Uruena. In 1976, the company
505.6
467.2
adopted its current name, after expanding its

operations from paediatric services to general
63.3
55.3
medical care.
43.3
37.5
34.6
33.7
In 2018, Clinica General del Norte was the largest
individual private clinic in Colombia by net 2016 2017 2018
revenues. Net Revenues EBITDA

Net Profit EBITDA Margin
Among the main services offered by the clinic are
cardiovascular surgeries, medium- and low-
complexity diagnostics, treatment of oncology, Balance Sheet, Individual, COP bn
hepatobiliary diseases and haemophilia. The
clinic carries out about 50,000 medical 1.25
0.87
procedures each month.
Clinica General del Norte also has a strategic

partnership with ten private health centres,
646.6
located in the cities of Barranquilla, Cartagena,

536.2
Santa Marta, Cienaga and Bogota, for treatment

452.0
of high-complexity diseases.
323.4
260.1
235.3
56.3
55.1
In August 2019, Clinica General del Norte

announced the opening of a new bone marrow
2016 2017 2018
transplantation department. The new department,
Total Assets Shareholders' Equity
which has 12 rooms, will complement the Net Debt Net Debt/EBITDA
haemato-oncological treatment for bone marrow
diseases already available in the centre.
Source: EMIS Company Database, Company Data, Diario La Libertad

Organizacion Clinica
General del Norte SA
(cont’d)
Gross Profit, COP bn Profitability Ratios
14.7% 14.4%
10.4%
552.1
7.7%
505.6
7.0%
477.9
467.2
414.5
387.3
5.2%
91.1
79.9
74.2
2016 2017 2018 2016 2017 2018
Net Revenues Cost of Goods Sold Gross Profit Return on Equity, ROE Return on Assets, ROA
Current Assets by Type, Dec 2018 Current Liabilities by Type, Dec 2018
Trade and
Other
Receivables
17.3%
Current
Loans and
Borrowings
20.0%
Cash and
Cash
Equivalents
12.8% Trade and
Other
Inventories Payables
65.9% 73.6% Other
Current
Other Liabilities
Current 6.4%
Assets 3.9%

05
REGULATORY
ENVIRONMENT

05 REGULATORY ENVIRONMENT CONTENTS
Government Policy
Regulatory Bodies
The main regulatory body for the pharmaceutical and healthcare sector in Colombia is the Ministry of
Health and Social Protection (MinSalud). It oversees all the country’s all health centres, maintains
medical professionals’ registrations, supervises local pharmaceutical manufacturers, and regulates
domestic drug prices. The National Superintendence of Health (SuperSalud), an entity under the
jurisdiction of MinSalud, is responsible for the inspection, surveillance and control of the social
security health insurance system, the General System of Social Security in Health (SGSSS). Another
body related to the SGSSS is the Social Security Fund Administrator (ADRES), an autonomous body,
created in August 2017 to centralise the management of all public and private funding of the SGSSS.
The public funding includes general government spending on health, as well as special funds for the
funding of the system (e.g. FONSAT, FOSYGA). ADRES also manages all mandatory social security
health contributions made by affiliates to the non-subsidised segment of the SGSSS. In addition to its
revenue collection role, ADRES refunds medical costs incurred by health insurance providers related to
the treatment of affiliates to the SGSSS not included in the mandatory healthcare plan (POS). It also
covers centralised drug purchases. The National Commission for Prices of Drugs and Medical Devices
(CNPMDM), created by Decree 706 from 2016, is responsible for establishing price caps on drugs in
Colombia, taking into consideration international reference prices.
Private Health Insurance Regulation

The private health insurance system has been under government regulation since the adoption of Law
100-1993 in 1993, which created the General System of Social Security in Health (SGSSS). The law
established a mandatory healthcare plan (POS), which includes a series of guaranteed medical
services and drugs to be provided by the social security health insurance system. The law also
introduced a separate group of non-mandatory health insurance plans, known as additional health
plans (PAS) offered by private health insurance companies and financed directly by the affiliates.
However, in order to subscribe to a PAS plan, an individual must be affiliated to a POS plan supplied
by a company of the social security health insurance system. Therefore, the coverage of PAS is
different by law and usually includes a larger number of benefits than those in POS plans. Among
them are access to medical services of private health service providers (IPS), supplementary medical
procedures, personal assistance, hotel and accommodation services. In 1998, Decree 806 of MinSalud
ruled that PAS plans could be offered by three type of entities, including the Health Promotion
Companies (EPS, the entities active in the social security health insurance system), the Prepaid
Medicine Companies (EMP), and other types of private health insurers. This has formed a competitive
environment in the health insurance market, offering companies the opportunity to achieve synergies
and economies of scale from operating in both the SGSSS and private health insurance segments.
Source: MinSalud, ADRES, SuperSalud

Government Policy
(cont’d)
Lower Tax Burden for the Pharmaceutical Manufacturing Industry

In December 2019, the Colombian Congress enacted a new tax reform – Law 2010. It replaced the 2018
tax reform, which had been declared unconstitutional by the Constitutional Court due to procedural
flaws. The new law kept most of the provisions of the previous tax reform and introduced new ones,
which entered into force in early January 2020. A key amendment is the exemption of domestic
pharmaceutical manufacturers from VAT. Under the previous legislation, all sales of intermediate and
final pharmaceuticals products had a 0% VAT rate, but drug manufacturers in Colombia were levied
with the standard VAT rate of 19% on purchases of all non-pharmaceutical inputs (e.g. cardboard
boxes, plastics). The new reform zeroed VAT on the purchases of all raw materials by drug makers.
According to government estimates, it will reduce the tax burden of the local pharmaceutical industry
by COP 380bn per year and potentially lower end drug prices. Jose Luis Mendez, president of ASINFAR,
commented in an interview with El Espectador newspaper that the reform will reduce the production
costs of local drug makers and increase their competitiveness against companies that only import
drugs in Colombia.
Medical Cannabis Regulation

Colombia enjoys one of the best climates in the world for production of medical cannabis, due to
being near the Equator with relatively stable temperatures, rain regime and sunshine hours during
the year. However, the country’s regulatory framework is still incomplete, which restrains any
investment boom in the segment. As of December 2019, the production and sale of medical cannabis
in Colombia is regulated under four type of licences, depending of the psychoactive content (THC or
CBD) and the product’s end use (domestic or foreign markets). The production of psychoactive THC-
based products is authorised only in certain forms (oils, creams and seeds), with fewer restrictions for
non-psychoactive CBD-based products. The stricter licensing regime is for the production of
psychoactive THC-based products destined for the domestic market. In the latter case, the licensing
procedure is slow and arduous, as the government aims to limit the possibility of drug cartels gaining
any foothold in legal cannabis operations. Meanwhile, the licensing regime for exports of CBD-based
raw inputs for medical products is less restrictive, as the government aims to attract foreign investors
in the development of this particular segment. A key hurdle before the segment remains the strict
regulation of cannabis farming, as manufacturers of basic CBD products such as oils, must source at
least 10% of their inputs from small farmers, who, in turn have difficulties in meeting the stringent
regulation for legal cannabis farming. It entails the installation of video surveillance systems and
electrical fences, police monitoring and electronic checks on workers, among other measures.
Moreover, granting of licences for farming is slow, while the introduction of foreign varieties of
cannabis requires a lengthy approval process.
Source: EY, El Espectador, El Tiempo, Semana


System
The General System of Social Security in Health (SGSSS) – or the social security health insurance
system of Colombia – was formally created in 1993 by Law 100-1993. This regulation organised all
public health expenditure under the form of a mandatory social security health insurance system,
operated by either private companies or mixed public-private entities, collectively known as health
promotion companies (EPS). However, a few exceptions for pure state-run health insurance companies
were allowed by Law 100-1993 for the Defence Forces and for employees of certain public companies
(e.g. the state-run oil producer Ecopetrol). This marked a large regulatory shift from the previous
public health scheme used between 1970 and 1993, where the federal government directly funded and
operated a network of state-run healthcare facilities.
Law 100-1993 also established that EPS companies were to be divided into two separate schemes: a
contribution scheme was created for all formal employees, pensioners, retirees and self-employed
workers. As of December 2019, the non-subsidised system has essentially been funded through a
mandatory contribution equivalent to 12.5% of the monthly income of all the affiliates, with the
exception of pensioners and retirees, as the latter contribution is 12% of their monthly income. In the
case of formal employees, the employer must contribute a sum equivalent to an 8.5% share of the
wage, with the remaining 4% share being paid by the employee. In the case of pensioners, retirees
and self-employed workers, the contribution is paid entirely by the affiliate.
In addition, a subsidised scheme was created for unemployed people, casual workers and vulnerable
groups of the population. However, people in these groups are not automatically included in the
subsidised health insurance scheme. Instead, a special government body – the National Planning
Office (DNP) through the Potential Beneficiaries Identification System (SISBEN) – identifies and
includes affiliates to the subsidised scheme. SISBEN has a set of rules for electing potential affiliates,
prioritising new-borns, population living in rural areas and indigenous communities.
The subsidised scheme is funded via direct transfers from the national, departmental and municipal
governments, and also through a series of specialised funds. The largest of these funds is the
Solidarity and Guarantee Fund (FOSYGA), which collects a portion of the contributions made by
affiliates to the non-subsidised regime (up to a 12% share of total contributions). Other special funds
include the Compulsory Insurance Fund for Traffic Accidents (FONSAT), which is funded by a portion of
vehicle insurance policies; and a series of small funds that collect special taxes on gambling and the
sales of alcoholic beverages, tobacco and weapons.
Source: MinSalud, ADRES, SuperSalud

06
PHARMACEUTICALS

06 PHARMACEUTICALS CONTENTS
Highlights
Overview
In 2018, the retail drug market in Colombia rose by 10.3% y/y to USD 5bn, mainly on the back of robust
demand for patented drugs. This favoured the expansion of the domestic pharmaceutical production,
which reached a value of USD 3bn, up by 9.7% y/y, according to EMIS Insights estimates.
Pharmaceutical imports also grew, by 9.3% y/y to USD 2.4bn in 2018. In contrast, in line with the lower
external demand stemming from the intensifying competition in the regional market, pharmaceutical
exports continued to fall, by 0.3% y/y to USD 350.6mn. As a result, Colombia’s trade deficit in
pharmaceuticals widened from USD 1.8bn in 2017 to USD 2bn in 2018. In 2018, the largest segments of
the domestic pharmaceutical market in terms of sales value were generic drugs, with a 43.6% share,
followed by patented drugs (a 39.7% share) and OTC drugs (16.7%).
Drivers and Constraints

The favourable macroeconomic landscape coupled with the steady increase in both public and private
health expenditure have been the main growth drivers of local pharmaceutical industry in recent
years. Further positive effects were felt due to the internationalisation of Colombian drug makers and
the formation of production and export clusters where academic institutions, research centres and
highly-skilled professionals were concentrated in one location, such as the Valle del Cauca
pharmaceutical cluster, for example. On the other hand, the local pharmaceutical industry has been
held back by government measures to contain public health spending (e.g. price caps on high-cost
drugs) as well as by the expanding illegal sales of patented and OTC drugs (at up to 50% lower price
than that in the legal market) in municipalities bordering Venezuela, such as Los Patios, Villa del
Rosario, Cucuta and El Zulia.
Outlook
The outlook for the domestic pharmaceutical market remains moderate. The consultancy Fitch
Solutions expects drug sales to rise by 0.9% y/y in US dollar terms in 2020, impaired by intensifying
competition among local generic and OTC drug producers, and by a recent fiscal reform that
exempted local drug manufacturers from VAT. In the short term, these factors will reduce prices of
drugs in those segments, which will counterbalance the steady increase in the sales volume. As the
market adjusts to the new context, drug sales in value terms are forecast to return to growth rates of
above 4% per year in the 2021–2023 period. Patented drugs will remain the major driving force of the
market, thanks to the growing and ageing population, the rising incidence of chronic diseases, and
the expansion of the coverage of the mandatory healthcare plan (POS).
Source: CILFA, Fitch Solutions, UN Comtrade, EMIS Insights

Main Events
 In August 2019, US biotechnology company Amgen announced that it had registered its first
biosimilar drug in Colombia under the Amgevita brand. Based on the active ingredient
adalimumab, it is used for the treatment of a wide range of inflammatory diseases, such as
rheumatoid arthritis, psoriatic arthritis, ankylosing spondylitis, Crohn’s disease, ulcerative colitis,
psoriasis, hidradenitis suppurativa, uveitis and juvenile idiopathic arthritis. The development of the
drug required an investment of USD 26mn. In an August 2019 interview with La Republica
newspaper, Gianfranco Biliotti, CEO of Amgen Colombia, commented that the company currently
ranks 12th in terms of total pharmaceutical sales in Colombia, with a main focus on patented drugs
for the institutional drug market. Biliotti added that the company anticipates strong growth of the
biosimilar drug segment in line with the government efforts to contain public spending on health.
Moreover, Amgen is also partnering with Colombian companies from the social security health
insurance segment in order to gather clinical data on the local population, for later use by data
science and artificial intelligence techniques and development of new pharmaceutical products.
 In July 2019, Colombian drug manufacturer Procaps announced it had forged a strategic partnership
with Canadian medical cannabis manufacturer Canopy Growth Corporation to jointly develop CBD-
and THC-based pharmaceutical products in Colombia. The partnership will benefit from the Canopy
Growth’s cannabis crop production in the Huila department, where the company operates a farm
with a total area of 126 ha. Thanks to Procaps’ expertise in encapsulation techniques, the two
companies will mostly develop medicines in the soft gel form, which are in increasing demand in
Latin America. In September 2019, Procaps said the first medicine from the cooperation with
Canopy Growth was already in development. The companies plan to launch the new drug on the
domestic market in 2020, after receiving authorisation from INVIMA.
 In February 2019, Colombian biopharmaceutical company Genfar, controlled by French group Sanofi,
announced that it had signed a strategic partnership with French drug maker Fareva. Under the
agreement, Fareva will invest in expanding Genfar’s manufacturing plant in the municipality of
Villa Rica, Cauca department, and produce Genfar pharmaceutical products under a licensing
scheme. According to Alexis Moyrand, manager of French drug manufacturer Sanofi for Colombia
and Peru, the goal of the partnership is to speed up the expansion strategy of Genfar in Latin
America.
Source: Radio Santa Fe, Portafolio, El Heraldo, La Republica

Production
Drug Production,* USD mn
3,188
2,964
2,702
2,345
2,184 15.2%
7.4% 9.7%
-31.5%
2014 2015 2016 2017 2018
Drug Production, USD mn y/y change
* EMIS Insights estimates based on the apparent consumption method
Comments
In 2018, the production of drugs in Colombia expanded by 9.7% y/y to USD 3bn, according to EMIS
Insights estimates. On the other hand, the domestic retail drug market rose at a higher rate of 10.3%
in US dollar terms during the year. Nevertheless, this gap was not entirely bridged by imports, as the
share of foreign drugs in the domestic market fell from 48.3% in 2017 to 47.8% in 2018. Moreover, as
exports dropped by 0.3% y/y in 2018, the combined figures suggest an increase of the local production
destined for the domestic market. In an October 2019 interview with Portafolio online portal, Ana
Maria Vesga, director of the Pharmaceutical Chamber of the National Business Association of
Colombia (ANDI), remarked that the still high share of imports in the total pharmaceutical sales is the
result of the extreme specialisation of domestic drug manufacturer in cheap generic drugs. Vesga
added that domestic production of both patented and biosimilar drugs remains underdeveloped. In an
August 2019 interview with RCN Radio, Luis Pinto, haematologist and speaker for Colombia drug
maker Laboratorios Legrand, remarked that the production of biosimilar drugs in Colombia – regulated
by Decree 1,782 from September 2014 – has been slow to advance, due to the high costs that
manufacturers must incur for bioequivalence studies, licensing and specialised equipment. Thus, the
segment offers lower profitability for domestic drug makers when compared to generic drugs.
Source: Fitch Solutions, UN Comtrade, RCN Radio, Portafolio, EMIS Insights

Sales
Comments
In 2018, the retail drug market in Colombia expanded by 2.5% y/y, reaching 429.9mn units. However, in
USD terms, the market rose by an accelerated rate of 10.3% y/y, mainly on the back of higher sales of
costly patented drugs. In August 2019, ADRES presented a report on the performance of the
prescription drug market in 2018. According to the report, the top five prescription drugs not included
in the mandatory healthcare plan (POS) in 2018 were: artificial tears (a total of 332,581 units prescript);
Pregabalin, used for the treatment of epilepsies (254,070 units); Acetaminophen with hydrocodone, an
opioid for the treatment of pain (167,564); Metmorfin hydrochloride with sitagliptin, used for the
treatment of diabetes (163,002 units); and Acetaminophen with phosphate codeine, a painkiller (117,766
units). However, both the prescription and OTC drug segments face increasing pressure from the
expanding illegal drug market in municipalities bordering Venezuela, such as Los Patios, Villa del
Rosario, Cucuta, and El Zulia (comprising the sales of both drugs smuggled from Venezuela and fake
pharmaceuticals produced in Colombia). In an October 2019 interview with La Opinion newspaper,
German Gomez, manager of a pharmacy store in the city of Cucuta, remarked that in some cases, drug
prices on the black market are half those on the legal market, especially for high-cost products such
as insulin.
Retail Drug Sales Value Retail Drug Sales Volume
5,046 419.3 429.9

5,007
391.4 387.4
4,541
355.4
4,012 4,027
12.8%
10.3%
10.1%
0.4% 8.2%
2.4% 2.5%
-1.0%
-20.5%
2014 2015 2016 2017 2018 2014 2015 2016 2017 2018
Retail Drug Sales Value, USD mn y/y change Retail Drug Sales Volume, mn units y/y change
Source: Fitch Solutions, CILFA, La Opinion, Portafolio, El Tiempo

Sales
(cont’d)
Comments
According to Fitch Solutions, in 2018, the sales of all three main drug segments posted strong growth
rates in US dollar terms. The largest increase was recorded in the sales of patented drugs (up by 11.2%
y/y), followed by OTC drugs (+9.7%) and generics (+9.6%). In July 2019, the National Food and Drug
Surveillance Institute (INVIMA) approved the sale of the first biosimilar drug in Colombia. In particular,
INVIMA authorised US drug maker Mylan to sell the active ingredient trastuzumab under the Ogivri
brand for the treatment of breast cancer. According to INVIMA, as of July 2019, there were 28 other
biosimilar drug registrations under evaluation, the majority of them corresponding to imported
foreign drugs.
Another drug segment with strong growth potential in Colombia is homeopathic medicines. In a
November 2019 interview with Portafolio online portal, Edgar Moss, manager for Colombia of German
drug maker Heel, specialised in medicines made from natural ingredients, remarked that Colombia is
the second-largest market for the firm, only behind Germany. Moss remarked that homeopathic
products are popular among both patients and doctors in Colombia, especially for the treatment of
gastrointestinal tract diseases.
Retail Drug Sales by Type, USD mn

6,000
5,000
857 834
4,000 760
678 677
3,000 2,235 2,183

1,992
1,774 1,775
2,000
1,000 1,954 1,789 1,990

1,560 1,575
0
2014 2015 2016 2017 2018
Patented Drugs Generic Drugs OTC Drugs
Source: Fitch Solutions, La Republica, Portafolio, El Tiempo

Drug Prices
Comments
In 2019, the prices of both drugs and medical equipment in Colombia rose well above overall inflation
in the country. Doctor Jose Luis Mendez, president of ASINFAR, commented in a September 2019
interview with El Tiempo newspaper, that the majority of patented drugs sold in Colombia are
imported, which makes their prices highly sensitive to foreign exchange volatility; between 2018 and
2019, the Colombian peso lost 9.8% of its value against the US dollar. The local pharmaceutical
industry is also reliant on the import of key raw materials, such as active pharmaceutical ingredients,
which further raises production costs. In recent times, the government has stepped up efforts to
regulate prices of patented drugs. A key example is a group of 54 patented contraceptive drugs, for
which the government set price caps from January 2019 onwards, taking international reference prices
into consideration. The measure led to a decreases of between 50% and 80% in the prices of these
drugs. Even so, it also caused temporary shortages of contraceptive drugs, especially in the first
quarter of 2019, as producers struggle to meet higher demands. As of January 2020, CNPMDM, the
agency in charge of setting price caps for drugs, regulated a total of 2,487 drugs. The majority of them
were patented drugs for the treatment of chronic diseases (e.g. diabetes, cancer, chronic kidney
failure) mainly sold in the institutional drug market.
Drugs Consumer Price Index, Dec Medical Equipment Consumer Price

2018=100 Index, Dec 2018=100
105 105
104 104
103 103
102 102
101 101
100 100
99 99
Apr-19
Dec-18
Oct-19
May-19
Aug-19
Sep-19
Nov-19
Dec-19
Jul-19
Jan-19
Feb-19
Mar-19
Jun-19
Apr-19
Dec-18
Oct-19
May-19
Aug-19
Sep-19
Nov-19
Dec-19
Jul-19
Jan-19
Feb-19
Mar-19
Jun-19
Overall CPI Drugs CPI Overall CPI Medical Equipment CPI
Source: CEIC, DANE, EMIS Insights, El Tiempo, Dinero

Institutional Drug Market
Comments
The institutional drug market in Colombia is largely decentralised, with the majority of purchases
made by the individual entities of the social security health insurance system. The purchases involve
both medications that are part of the mandatory healthcare plan (POS), and those that are not (non-
POS). In the case of POS medicaments, the entity has a pre-defined budget, and so has incentives to
obtain the best possible price. In the case of non-POS medicaments, the purchase is made by the
entity, but later is fully reimbursed by the Social Security Fund Administrator (ADRES). This
reimbursement system, colloquially known as recobros, provides less incentives to seek a lower price.
The high level of decentralisation of the institutional drug market is seen as one of the main factors
for the high public expenditure on health. In recent times, the government has taken several steps to
contain public spending, including by establishing price caps on high-cost drugs and by gradually
increasing the number of treatments with a pre-defined budget in the POS. Although ADRES has the
power to hold auctions for centralised drug purchases, in practice it does so in only a few cases
related to high-cost drugs. One of the few examples of direct purchases by ADRES corresponds to
drugs for the treatment of Hepatitis C. In 2018, ADRES bought 379 doses for the treatment of the
disease for COP 5.5bn, while in 2019, 961 doses for a combined value of COP 13.1bn.
Number of Active Pharmaceutical Ingredients in ADRES’ Reimbursement System
501 503 505

467 476
450
433
407 416
392
377
360
9.4% 8.9%
8.3% 8.0% 8.2% 7.9% 7.3%
6.1% 6.4%
5.8% 5.7%
0.8%
Jun-13 Dec-13 Jun-14 Dec-14 Jun-15 Dec-15 Jun-16 Dec-16 Jun-17 Dec-17 Jun-18 Dec-18
Number of Active Pharmaceutical Ingredients, period-end
Source: ADRES, El Espectador, Pulzo, Caracol

External Trade
Comments
Colombia recorded chronic trade deficits in pharmaceuticals, which widened to USD 2bn in 2018, a six-
year high. This was due to a significant expansion of imports by 9.3% y/y, combined with a slight
decline in exports by 0.3%. Despite the decrease in sector’s exports, Colombia has advanced in the
development of pharmaceutical clusters focused on production of drugs, destined both for the
domestic and foreign markets. A prominent example is that located in the Valle del Cauca
department, which accounted for 25.3% of the national pharmaceutical exports in the first eight
months of 2019, according to the state-run promotional agency Colombia Productiva. The cluster
comprises 21 companies, including US pharmaceutical group Baxter International, domestic drug
maker Tecnoquimicas, and Genfar – the Colombian subsidiary of French drug manufacturer Sanofi. It is
largely focused on the production and exports of antibiotics (e.g. Primaquine, used for the treatment
of malaria), vitamins, surgical instruments and medical supplies. In a November 2019 interview with El
Pais newspaper, Francisco Barberi, CEO of Tecnoquimicas, remarked that the high level of
international competitiveness of the Valle del Cauca cluster is a result of the vast network of local
academic institutions, research centres and high-complexity medical centres (e.g. Fundacion Valle del
Lili), which provide solid supply of highly-skilled workforce.
External Trade in Pharmaceuticals,* Share of Pharmaceuticals in Total

USD mn Exports/Imports*
4.70% 4.76% 4.67%
4.32%
3.90%
3.72%
2,394
2,382
2,332
2,317
2,191
2,109
524
504
497
427
352
351
1.41% 1.38%
0.85% 0.96% 0.93% 0.84%
-1,682
-1,820 -1,858 -1,828 -1,839
-2,043
2013 2014 2015 2016 2017 2018 2013 2014 2015 2016 2017 2018
Exports Imports Trade Balance Exports Imports
* Exports (FOB), Imports (CIF). HS codes: 3001, 3002, 3003, 3004, 3005, 3006.
Source: UN Comtrade, Colombia Productiva, El Pais

Imports
Comments Pharmaceutical Imports

In 2018, pharmaceutical imports rose for the
2,382 2,394
second year in a row, by 9.3% y/y to USD 2.4bn,
2,317 2,332
mainly on the back of high domestic demand for
patented drugs. Other product categories that 2,191
2,109
reported strong growth in imports were blood and
vaccines (up by 11% y/y) and wadding, gauze and 11.2%
9.3%
bandages (+8.2% y/y). The largest increase in
2.8% 3.9%
imports was recorded from Germany (up by 20.2%
-2.1%
y/y), followed by Switzerland (+9.1%) and the US
(+7.3%). As a result, these three countries -9.6%
consolidated their positions as the leading
suppliers of pharmaceuticals to Colombia, with a
2013 2014 2015 2016 2017 2018
combined 47.9% share of total imports in 2018.
Import Value, USD mn, CIF y/y change
Pharmaceutical Import Value by Type, Pharmaceutical Import Value by Source

2018 Country, 2018
United States 21.6%

Packed Medicaments 59.6%
Germany 17.9%
Blood and Vaccines Switzerland 8.4%

32.5%
France 5.3%
Other Pharmaceutical Goods 3.6% Mexico 4.1%

Belgium 3.5%
Unpacked Medicaments 1.7% Italy 3.5%
Ireland 3.4%
Glands and Organs 1.3% India 3.4%
Spain 3.0%
Wadding, Gauze, Bandages 1.2%
Others 25.8%
Source: UN Comtrade, El Tiempo, Caracol

Exports
Comments Pharmaceutical Exports

In 2018, pharmaceutical exports fell for the fourth
consecutive year, by 0.3% y/y to USD 350.6mn. 524.2
504.0
497.3
This was related to intensifying competition in
426.9
the drug market in other countries in Latin
America – the main export destinations of 351.7 350.6
Colombian pharmaceutical industry. In a
September 2019 interview with La Republica
newspaper, Luis Alfonso Diaz, CEO of Colombian 7.8% 5.4%
drug maker Pharmetique Labs – La Sante, -3.9% -0.3%
commented that the export potential of Colombia -15.3% -17.6%

in some niche pharmaceutical products is
significant, although not well utilised. Among
2013 2014 2015 2016 2017 2018
these are biosimilar drugs and generic drugs
combining several active ingredients. Export Value, USD mn, FOB y/y change
Pharmaceutical Export Value by Type, Pharmaceutical Export Value by

2018 Destination, 2018
Ecuador 27.2%
Packed Medicaments 88.5%
Peru 12.2%
Wadding, Gauze, Bandages Panama 11.7%

5.0%
Mexico 7.1%
Blood and Vaccines 3.9% United States 6.6%

Chile 5.7%
Other Pharmaceutical Goods 2.3% Guatemala 3.9%
El Salvador 3.7%
Unpacked Medicaments 0.3% Dominican Republic 3.1%
Costa Rica 2.7%
Glands and Organs 0.1%
Others 16.1%
Source: UN Comtrade, La Republica

07
HEALTHCARE

07 HEALTHCARE CONTENTS
Highlights
Overview
Colombia ended January 2020 with a total of 10,644 health centres, of which 9,624 were privately held,
1,002 controlled by the government and 18 under mixed ownership. On the other hand, the number of
registered medical professionals in the country reached 77,456 people, also as of January 2020. In 2018,
both public and private health spending expanded at more or less similar rates of 4.7% and 4.8% y/y,
respectively, according to EMIS Insights estimates. This was as a result of the steady rise of the
demand for medium- and high-complexity medical services and the positive macroeconomic
fundamentals that prompted the demand for private health services. In terms of health insurance, the
dominant scheme is the social security health insurance system, with 45.5mn affiliates at end-2019, or
90.3% of the population. Due to the large size of this scheme, Colombia features a relatively low share
of private health spending in total health expenditure, at 26.5% in 2018, as per EMIS Insights.
Drivers and Constraints

A major driver for the development of the domestic healthcare subsector in recent years has been the
expansion of the network of private health centres in the country, as a response to the rising demand
for high-complexity medical services. Among the most active companies have been Colombian non-
profit health centre operators Fundacion Santa Fe de Bogota and Fundacion Valle del Lili, as well as
Spanish healthcare group Quironsalud. On the other hand, a key restraining factor for the subsector is
the rising shortage of medical professionals stemming from poor working conditions and structural
problems in the domestic educational system. Another acute problem is the rising cost to the
government for reimbursement of medical treatment not included in the mandatory healthcare plan
(POS), stemming from the increasing number of patients and ineffective price control mechanisms.
Outlook
The ageing population and the rising incidence of chronic diseases will continue to push up both
public and private health expenditure in Colombia, albeit at diverging rates. Fitch Solutions projects
private health expenditure to expand at a strong CAGR of 9.2% between 2019 and 2023. This will be
attributable to the rising household out-of-pocket expenditure in a context of public cost-containment
measures and to the improved access of the middle-class population to private health insurance
stemming from intensifying competition in the segment. On the other hand, public health expenditure
is forecast to rise at a slower CAGR of 6.2% through 2023. The main factor for this will be government
efforts to improve the financial situation of the social security health insurance system by making it
smaller in terms of number of players, but more efficient, as companies with a poor operational
record are liquidated.
Source: SuperSalud, MinSalud, REPS, ADRES, Fitch Solutions, EMIS Insights, El Tiempo, Portafolio

Main Events
 In December 2019, the Colombian government tendered the construction of a new public hospital in
the city of Bogota – Hospital de Bosa – the first one ever in Colombia to be developed under the
public-private partnership model. With a capacity of 215 beds and a total built area of close to
30,000 m2, Hospital de Bosa will specialise in medium- and high-complexity medical treatment of
patients with chronic diseases. The Spanish consortium INORIN is responsible for the construction
and management of the hospital for the first 18 years of operation. The project will demand an
investment of COP 1tn and is expected to benefit more than 400,000 people living in the Bogota
districts of Bosa, Kennedy, Puente Aranda and Fontibon. Construction of the hospital is planned to
begin in 2021 and be completed by the end of 2023.
 In September 2019, Spanish diagnostic services provider Atrys Health acquired Colombian peer
Teleradiologia de Colombia Diagnostico Digital Especializado, specialised in telemedicine, for an
undisclosed amount. In a January 2019 interview with Valor Analitik online portal, Isabel Lozano,
CEO of Atrys Health, remarked that several factors attracted the company to the Colombian
healthcare market: the large and growing population, a rising demand for medium- and high-
complexity health services, and a significant shortage of medical specialists. According to Lozano,
these make Colombia one of the most promising markets for the telemedicine business in Latin
America, along with Peru.
 In 2019, German healthcare group Fresenius continued to expand its positions in Colombia through
acquisitions. The group, through its Spanish arm Quironsalud, acquired three private hospital
operators in 2019 (Clinica Medellin, Clinica Las Vegas and Clinica del Prado) for a combined value of
USD 111.8mn. In November 2019, it also purchased local medical diagnostics group CediMed for USD
44.7mn. In December 2019, the group acquired local hospital Centro Medico Imbanaco in Cali, with a
capacity of 350 beds, for USD 332.2mn. As a result, Quironsalud ended the year as one of the largest
private health centre chains in Colombia, with a combined infrastructure of five hospitals, 800
hospital beds, nine medical centres, and a workforce of around 5,000 people.
 In September 2019, the government of Atlantico department opened a new public hospital, located
in Manati. With an area of 2,458 m2, it specialises in a wide rang of urgent care services, such as
diarrhea and severe respiratory infections. The construction of the health centre required a total
investment of COP 9.3bn and is expected to benefit more than 16,000 people. It is part of the efforts
of Atlantico department’s government to improve public healthcare infrastructure in the more
isolated areas of the department.
Source: EMIS DealWatch, La Republica,El Tiempo, Valor Analitik, Redaccion Medica, Planta Doce

Health Infrastructure
Comments Number of Health Centres by Ownership

Type, Jan 2020
Colombia ended January 2020 with a total of
10,644 health centres, of which 9,624 (a 90.4%
share) were privately held, 1,002 were controlled
by the government (9.4% share), and 18 were
under mixed ownership (0.2%). The majority of
public health centres in Colombia are managed Public
1,002
by sub-national governments, as the public
health system is small and highly decentralised.
As of January 2020, just nine centres were under Private
9,624
the direct control of the federal government. Mixed
Ownership
18
Another typical feature of the Colombian public
health system is the existence of a total of 59
public health centres called “indigenous centres”.
These are funded by the federal government, but
managed by local indigenous communities, and
are mostly located in the departments of Cauca, Number of Public Health Centres by
La Guajira, and Narino. Type, Jan 2020
In terms of the private healthcare segment in
Colombia, there are few large private clinics and
Departamental
hospitals. These include a combination of non- 232
profit organisations (NPO) and standard for-profit
companies. Key examples of the former are
Fundacion Santa Fe de Bogota in Bogota and
Fundacion Valle del Lili in Betania, Antioquia
Municipal Indigenous
department. On the other hand, many of the large 696 59
for-profit private health centres are controlled by
Federal
foreign capitals: Clinica Las Americas in the city 9
of Medellin, owned by Peruvian business
Distrital
conglomerate Grupo Auna, and Clinica del Prado, 6
also based in Medellin and recently acquired by
Spanish healthcare firm Quironsalud.
Source: REPS

FOCUS POINT
Number of Health Centres by Department, Jan 2020
830
Atlantico
8.0%
553
Bolivar
5.3%
426
Cordoba
4.1% 657
Santander
6.3%
955
Antioquia
9.2%
Valle del 914 388

Cundinamarca
Cauca
8.8% 3.7%
1,511 4,410
Bogota 42.4%
14.5% Others
Source: REPS

Top Hospitals
Comments Top Five Hospitals by Number of Beds,

Dec 2018
According to US consultancy Global Health
Intelligence in the September 2019 edition of Hospital General de Medellin Luz
652
Hospirank, the two largest hospitals in Colombia Castro Gutierrez
in terms of number of beds were in Medellin,

IPS Universitaria Sede Clinica
Antioquia department, and managed by the Leon XIII
618
Medellin municipality. These are: Hospital
General de Medellin Luz Castro Gutierrez and IPS Fundacion Valle del Lili - Sede
510
Universitaria Sede Clinica Leon XIII. Another Betania
major public hospital is Hospital El Tunal in the
city of Bogota, managed by the Tunjuelito district Fundacion Santa Fe de Bogota 462
municipality. It ranked second in terms of
surgical equipment, and third in terms of Hospital Departamental de
448
maternity equipment. Villavicencio
Top Five Hospitals by Number of General Top Five Hospitals by Amount of Surgical
Operating Rooms, Dec 2018 Equipment,* Dec 2018
Hospital Universitario San Vicente

Hospital Universitario del Valle 198
19 Fundacion
Evaristo Garcia
Hospital El Tunal 159

Clinica Medellin, Sede Occidente 18
Fundacion Valle del Lili - Sede

Clinica Foscal 15 139
Betania
Fundacion Cardiovascular de
Clinica Las Americas 15 139
Colombia
Hospital Militar Central 15 Fundacion Santa Fe de Bogota 100
* Includes ventilators, anaesthesia machines, endoscopy machines, laparoscopic surgical equipment, and C-arms
Source: Global Health Intelligence

Top Hospitals
(cont’d)
Top Five Hospitals by Amount of Top Five Hospitals by Amount of

Equipment Dedicated to Oncology Equipment,* Dec 2018
Cardiovascular Health,* Dec 2018
Clinica El Rosario Sede el Tesoro 8
59
Fundacion
Fundacion Valle del Lili - Sede
7
Hospital Universitario Mayor Mederi 27 Betania
Hospital Universitario de la Hospital El Tunal 5

26
Samaritana
5
Clinica Reina Catalina 23 Fundacion
Fundacion Santa Fe de Bogota 4

Hospital Universitario Santander 22
* Includes angiogram machines, echocardiogram * Includes cobalt therapy machines, linear accelerators,
machines, and electrocardiogram machines radiotherapy equipment, mammography equipment,
and stereotactic mammography machines
Top Five Hospitals by Amount of Top Five Hospitals by Amount of

Diagnostic Imaging Equipment,* Maternity Equipment,* Dec 2018
Dec 2018
Hospital La Victoria III Nivel Sede
112
Fundacion Santa Fe de Bogota 25 Materno Infantil
Fundacion Valle del Lili - Sede Hospital Internacional de Colombia 100

22
Betania
Clinica Del Prado 88

Clinica Universitaria Bolivariana 17
Clinica Universitaria Bolivariana 88

DIME Clinica Neurocardiovascular 15
Hospital General de Medellin Luz

78
Clinica Las Americas 15 Castro Gutierrez
* Includes X-ray machines, ultrasound machines, * Includes incubators, cribs (newborn and radiant heat),
computerised tomography machines, gamma and ultrasound machines
cameras, magnetic resonance imaging machines,
and positron emission tomography machines
Source: Global Health Intelligence

Medical Professionals
Comments
As of January 2020, there were a total of 77,456 medical professionals in Colombia, registered in the
Special Registry of Health Services Providers (REPS), a national database managed by MinSalud.
According to the 2019 survey by the Colombian Doctors Association carried out among 9,000 medical
professionals in Colombia, there is significant dissatisfaction among medical professionals about
their working conditions. On the one hand, the survey showed a disproportionate wage scale, with a
doctor with between five and seven years’ professional experience earning an average of COP 3.3mn
per month, just 13.8% above the average wage of a nurse (COP 2.9mn per month). Another complaint is
the delays in wage payments by health services providers (IPS), delays being particularly acute for
doctors in rural areas, where there have been payment delays of up to three months. Another
challenge is the lengthy procedure involved in getting recognition of university degrees obtained
abroad. As of January 2020, according to the Ministry of Education data, there were around 4,000
medical professionals in Colombia awaiting recognition of their foreign degrees. This, in turn, results
in shortages of professionals in key medical specialties, such as anaesthesiologists, urologists,
oncologists, neurosurgeons and paediatricians.
Number of Medical Professionals by Number of Medical Professionals by Type

Specialty, Jan 2020 of Service, Jan 2020
Medical
Optometrist Specialist Dental
3.6% 3.7% Radiologist Inpatient
2.3% Services
Orthodontist 18.7%
5.2%
General
Practitioner
5.8% Diagnostics
Others and
42.5% Therapeutics
12.1%
Medical
Sterilisation Outpatient
Specialist Services
18.7% 66.2% Others 3.0%
Dentist
18.2%
Source: REPS, Ministry of Education, El Tiempo, Portafolio, Dinero

FOCUS POINT
Number of Medical Professionals by Department, Jan 2020
2,129
Atlantico
2.7%
2,715
Santander
3.5%
18,531
Antioquia
23.9%
1,887 2,218
Caldas Boyaca
2.4% 2.9%
Valle del 6,364

Cauca
8.2%
3,332
Cundinamarca
2,108 4.3%
Risaralda
2.7%
1,711
Huila 22,383 14,078
2.2% Bogota 18.2%
28.9% Others
Source: REPS

Public Health Expenditure
Comments
In 2018, public health expenditure in Colombia rose by 4.7% y/y to COP 51.2tn, according to EMIS
Insights estimates. In April 2019, the Global Burden of Disease Health Financing Collaborator Network
with the participation of PROESA published in The Lancet medical journal a study about health
spending in 195 countries, including 34 countries in Latin America and the Caribbean region. The study
ranked Colombia 10th in the region, with an estimated 65.8% share of the public health spending in
total health expenditure in 2019, mainly as a result of the large scope of the social security health
insurance system in the country. However, the government has recently adopted several measures to
curtail public health spending, in particular, expenses related to medical treatment not included in
the mandatory healthcare plan (POS), which are made by social security health insurance companies
on behalf of their affiliates and subsequently reimbursed by the government. These expenses, known
domestically as recobros, surged from COP 6tn in 2012 to over COP 10tn in 2018, according to the Drug
Observatory of the Colombian Medical Federation (OBSERVAMED). The sharp increase was related to
the rising number of social security health insurance affiliates that benefit from treatment not
included in the POS, and ineffective government price controls over the reimbursement of drugs to
entities of the social security health insurance system.
Public Health Expenditure* Public Health Expenditure by Type,*

2018e
51,174
48,876
46,167
44,067
40,956 Compulsory
39,084
Private
Insurance
7.6% Schemes
12.1%
5.9% Social
4.8% 4.8% 4.7% Security
Health
Insurance
Direct
80.4%
Government
Expenditure
7.5%
2013 2014 2015 2016 2017 2018e
Public Health Expenditure, COP bn y/y change
* EMIS Insights estimates for 2018 based on WHO data
Source: WHO, EMIS Insights, Minsalud, The Lancet, PROESA, El Espectador

Private Health Expenditure
Comments
In 2018, private health expenditure in Colombia rose by 4.8% y/y to COP 18.5tn, according to EMIS
Insights estimates. Household out-of-pocket expenses for pharmaceuticals and healthcare services
were the main driver for private spending, increasing by 5.3% y/y, while those related to private health
insurance grew at a more moderate rate of 3.8%. Nevertheless, the share of the private sector in total
health spending in Colombia stood at 26.5% in 2018, unchanged from 2017. According to the April 2019
study of the Global Burden of Disease Health Financing Collaborator Network published in The Lancet
medical journal, Colombia is among the countries in Latin America and the Caribbean with the lowest
share of household out-of-pocket spending in total health expenditure, ranking 30th among the 34
countries in the region. In particular, with a 20% share for household out-of-pocket spending, in 2019
Colombia was only above Saint Vincent and the Grenadines (a 19.1% share), Uruguay (17.1%), Argentina
(14.3%) and Cuba (9.4%). This is related to the large size of the social security health insurance scheme
– covering 90.3% of Colombians at end-2019, the expanding scope of the mandatory health plan (POS),
and the relatively low co-payments by the affiliates to social security health insurance system. On the
other hand, the country ranked 6th out of the 34 countries in the region in terms of share of private
health insurance in total health spending, with an estimated 14.1% share in 2019.
Private Health Expenditure* Private Health Expenditure by Type,*

2018e
18,458
17,620
16,144
14,655 Private
13,566 Health
12,745 10.2%
Insurance
9.1%
38.1%
8.0%
6.4%
Household
4.8% Out-of-
Pocket
Payments
61.9%
2013 2014 2015 2016 2017 2018e
Private Health Expenditure, COP bn y/y change
* EMIS Insights estimates for 2018 based on WHO data
Source: WHO, EMIS Insights, La Republica, The Lancet, PROESA

Comments
As of December 2019, there were 45.5mn affiliates to the social security health insurance system in
Colombia, an increase of 1.2% y/y. The number of affiliates in the subsidised segment rose by 0.8% y/y,
while the non-subsidised segment grew by a higher rate of 1.7% y/y, on the back of increasing formal
employment in the country. Nevertheless, both the subsidised and the non-subsidised segments have
been struggling in recent years. In July 2019, the Colombian Association of Public Hospitals and Health
Centres (ACESI) reported that entities from the non-subsided regime had a combined debt of COP
1,968bn to public health service providers (IPS), while those in the subsidised regime had a total debt
of COP 4,900bn. Due to the high levels of debt, some entities have begun to limit the provision of
high-cost medical treatment to patients, forcing patients to file court appeals in order to receive an
adequate treatment. In a January 2020 interview with RCN Radio, Olga Lucia Zuluaga, head of the
Risaralda Hospitals Association, warned that several EPS companies, mainly operating in the
subsidised segment, are disputing some of their accumulated debt towards the IPS companies,
creating additional tension in the system.
Number of Affiliates to Social Security Number of Affiliates to Social Security

Health Insurance System, Subsidised Health Insurance System, Non-Subsidised
Segment Segment
23.18 22.20 22.05 22.24 22.63

22.67 22.88 22.66 22.83 21.46
22.43 20.15 20.76
22.17
1.3% 1.2%
0.9% 1.0% 0.8%
3.4% 3.5%
3.0%
1.7%
0.9%
-0.7%
-4.4%
2013 2014 2015 2016 2017 2018 2019 2013 2014 2015 2016 2017 2018 2019
Number of Affiliates, mn, year-end y/y change Number of Affiliates, mn, year-end y/y change
Source: SuperSalud, ACESI, RCN Radio, EMIS Insights
,

(cont’d)
Comments
Since president Ivan Duque took office in August 2018, the SuperSalud has accelerated the liquidation
process of social security health insurance companies that were either in financial distress or were
performing poorly. Between August 2018 and January 2020, four EPS companies were liquidated (i.e.
SaludVida EPS, EPS Comfacor, EPS Cruz Blanca and Emdisalud EPS). The latter had a total of 2.4mn
affiliates, which were reallocated to other institutions. In the same period, SuperSalud forced another
three entities (Medimas, Coomeva and Comparta) to enter into a partial liquidation process – in
essence, it banned these entities from offering their services in some departments where they
registered poor performance, but allowed them to continue operations in others. These partial
liquidations resulted in the reallocation of 247,000 affiliates. The reallocation of all these affiliates –
mostly in the second half of 2019 – had a profound effect on the market, as the government
significantly restricted the assigning options, especially for those with high-cost chronic diseases and
pregnant women, moving them forcibly to a group of entities with good operating indicators (e.g. EPS
Sura, Salud Total EPS and Nueva EPS). However, after an initial four-month period, the reallocated
affiliates were allowed to move to another entity of their own choice.
Number of Affiliates by Age Group, Number of Affiliates by Age Group,

Non-Subsidised Segment, Dec 2019 Subsidised Segment, Dec 2019
6-19 Years 51-60 Years 51-60 Years

Old 18.1% Old 11.8% Old 10.8%
6-19 Years
Old 26.2% 61-70 Years
61-70 Years Old 7.6%
Old 8.0%
>70 Years 0-5 Years

Old 6.4% Old 7.5%
>70 Years
0-5 Years Old 6.9%
20-50 Years Old 5.4%
Old 50.3% 20-50 Years
Old 41.0%
Source: SuperSalud, El Heraldo, La Republica, La Opinion

FOCUS POINT
Number of Affiliates to Social Security Health Insurance,
Non-Subsidised Segment, by Department, thou, Dec 2019
1,131
Atlantico
5.0%
1,095
Santander
4.8%
3,936
Antioquia
17.4%
464 642
Caldas Bolivar
2.1% 2.8%
Valle del 2,480

Cauca
11.0%
1,444
Cundinamarca
543 6.4%
Risaralda
2.4%
486
Tolima
6,230 4,176
2.1% Bogota 18.5%
27.5% Others
Source: SuperSalud

FOCUS POINT
Number of Affiliates to Social Security Health Insurance,
Subsidised Segment, by Department, thou, Dec 2019
1,373
Atlantico
6.0%
1,019 Norte de
Santander
4.5%
2,289
Antioquia 1,313
Cordoba
10.0%
5.8%
1,448
Bolivar
6.3%
Valle del 1,759

Cauca
7.7%
936
Santander
1,128 4.1%
Narino
4.9%
956
Cauca
1,216 9,393
4.2% Bogota 41.1%
5.3% Others
Source: SuperSalud

Private Health Insurance
Comments
As of June 2019, according to SuperSalud, the number of affiliates to Colombia’s private health
insurance system reached 1.4mn, a 2.9% increase compared to July 2018. There were a total of 11 active
private health insurance companies in the country, as of June 2019. Nevertheless, the market features
relatively high levels of concentration, as the top four players – Colsanitas, Coomeva, Colmedica and
Sura – accounted for 80.3% of the number of affiliates. Nevertheless, Ignacio Correa, CEO of
Colsanitas, commented in a July 2019 interview with La Republica, that there is significant movement
of affiliates between companies, due to constant upgrades of the health plans offered, which
indicates a healthy level of competition. Diego Cubillos, scientific director of private health services
provider Clinica VIP, remarked in an October 2019 interview with Portafolio online that the private
health insurance market in Colombia has strong growth potential. In particular, Cubillos estimated
that potential target clients are all individuals with a net wealth above USD 70,000. This corresponded
to 5.5mn people or around 11% of the population of Colombia, as of December 2019. For Cubillos, the
main factors limiting the development of the market are cultural factors and the rising competition
from more affordable additional health plans (PAS) offered by companies in the social security health
insurance system.
Number of Affiliates to Private Health Number of Affiliates to Private Health

Insurance System by Department, June Insurance System by Company, June
2019 2019
Colsanitas SA CMP 472,380
Valle del Antioquia
Cauca 15.3% Coomeva MP SA 253,267
13.2%
Colmedica MP SA 240,079
Atlantico
6.9% Sura EPS 159,137
Sanitas SA EPS 78,624
Santander
2.3% CMP Medisanitas SA 65,036
Bolivar 1.6% Famisanar Ltda Cafam 58,174
SOS EPS 57,539
Risaralda
1.4% Servicio de Salud MP SA 9,303
Bogota Nueva EPS SA 4,317
51.2%
Others 8.0%
Salud Total SA EPS 2,846
Source: SuperSalud, La Republica, Portafolio, El Tiempo

08
RETAIL
CHANNELS

08 RETAIL CHANNELS CONTENTS
Pharmacy Stores
Top Pharmacy Store Chains by Sales Comments

Revenue, 2018
The domestic pharmaceutical retail market
features a moderate degree of concentration, with
Farmacenter 17.3% the five largest pharmacy chains accounting for
53.4% of sales revenues in 2018, according to the
consultancy Euromonitor International.
Droguerias y Farmacias Cruz

14.7%
During the year, the leading player was
Verde
Farmacenter, controlled by domestic cooperative
Cooperativa Nacional de Droguistas Detallistas
(Coopidrogas). Drogarias y Farmacias Cruz Verde,
Drogas La Rebaja 11.1% a subsidiary of the Mexican beverage producer
FEMSA, was the second-largest pharmaceutical
retailer in Colombia, with strong positions in the
hospital drug segment.
Droguerias CAFAM 6.3%
Third place in terms of revenues in 2018 belonged
to Drogas La Rebaja, controlled by Colombian
cooperative Copservir, which operates small-sized
Farmatodo 4.0% stores in urban areas. Meanwhile, in fourth place
was Droguerias CAFAM, a unit of Caja de
Compensacion Familiar CAFAM, one of the oldest
family compensation funds in Colombia.
Droguerias Colsubsidio 2.3%
In fifth place was Farmatodo Colombia, the
domestic subsidiary of Venezuelan
pharmaceutical retailer Farmatodo. In February
Droguerias Olimpica 2.2% 2019, Farmatodo announced an ambitious plan to
increase the number of its stores in Colombia
from 55, as of February 2019, to more than 100 by
February 2022. The company’s expansion plan will
Others 42.1% focus on large urban areas, such as Cali,
Bucaramanga and Medellin.
Source: Euromonitor International, Dinero, America Retail

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EMIS Insights - Colombia Pharma and Healthcare Sector Report 2020 - 2021

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EMIS Insights - Colombia Pharma and Healthcare Sector Report 2020 - 2021

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COLOMBIA

PHARMA & HEALTHCARE

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EMISPDF co-univalle03 from 45.5.165.19 on 2020-11-20 04:34:28 GMT. DownloadPDF.

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02 SECTOR IN FOCUS p.14

03 COMPETITIVE LANDSCAPE p.23

04 COMPANIES IN FOCUS p.31

05 REGULATORY ENVIRONMENT p.42

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Focus Point – Number of Health Centres by

Focus Point – Number of Medical Professionals

Public Health Expenditure

08 RETAIL CHANNELS p.73

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74.7 6.2 No.4

Note: Data for 2018.

COLOMBIA PHARMA & HEALTHCARE SECTOR 2020/2021 6

COLOMBIA PHARMA & HEALTHCARE SECTOR 2020/2021 7

KEY PLAYERS’ NET REVENUES

* EMIS Insights estimates

COLOMBIA PHARMA & HEALTHCARE SECTOR 2020/2021 8

COLOMBIA PHARMA & HEALTHCARE SECTOR 2020/2021 9

Pharmaceuticals Gross Output Healthcare and Social Works Gross

Source: Oxford Economics, Fitch Solutions

COLOMBIA PHARMA & HEALTHCARE SECTOR 2020/2021 10

Public Health Expenditure Private Health Expenditure

Total Pharmaceutical Sales Total Pharmaceutical Sales by Type,

-4.1% 2,109 2,217 2,379

Source: Fitch Solutions

COLOMBIA PHARMA & HEALTHCARE SECTOR 2020/2021 11

COLOMBIA PHARMA & HEALTHCARE SECTOR 2020/2021 12

COLOMBIA PHARMA & HEALTHCARE SECTOR 2020/2021 13

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Main Economic Indicators

2013 2014 2015 2016 2017 2018 2019

Source: CEIC, DANE, Central Bank of Colombia, IMF, UN Comtrade

COLOMBIA PHARMA & HEALTHCARE SECTOR 2020/2021 15

Main Sector Indicators

2013 2014 2015 2016 2017 2018

Number of Affiliates to Social Security Health Insurance System,

Number of Affiliates to Social Security Health Insurance System,

Number of Affiliates to Social Security Health Insurance System,

Drug Production,* USD mn n/a 3,188 2,184 2,345 2,702 2,964

Number of Employees in Healthcare and Social Works, thou, year-

Number of Employees in Pharmaceutical Manufacturing,

* EMIS Insights estimates

COLOMBIA PHARMA & HEALTHCARE SECTOR 2020/2021 16

Demographic Trends in the Americas

Bolivia 22.7 Uruguay 9.4

COLOMBIA PHARMA & HEALTHCARE SECTOR 2020/2021 17

Mortality Rate per 100,000 People by Comments

Source: WHO, PAHO

COLOMBIA PHARMA & HEALTHCARE SECTOR 2020/2021 18

8. Road Injuries 9. Diabetes

10. Stomach Cancer

Top 10 Risk Factors for Death and Disability in Colombia,* 2017

33.3% 30.2% 30.9%

* Percentage change compared to 2007

COLOMBIA PHARMA & HEALTHCARE SECTOR 2020/2021 19

Top 10 Global Pharmaceutical Markets, Top 10 Pharmaceutical Markets in Latin