Pharma in Cuba: An Untapped Market?

Pharmaceutical Executive

If you’re like us at PharmExec, you’ve been reading the news of potentially thawing US/Cuban relations, and you’re wondering, how long before the flag of Cuba graces the Hall of nations at BIO International Convention?

 

Pharma in Cuba?                                                                                                               
If you’re like us at PharmExec, you’ve been reading the news of potentially thawing US/Cuban relations, and you’re wondering, how long before the flag of Cuba graces the Hall of nations at BIO International Convention? We’re less excited about the rolling of fine cigars than the potential for drug manufacturing sites, let alone whether Cuba offers drug makers a new untapped marketplace to sell their wares.

Just before the holidays US and Cuban officials made progress at lifting the decades old embargo and reestablishing diplomatic relations. How long it might be before truly normalized trade flows remains unclear.

We wondered whether US pharma and life science professionals will be landing at Jose Marti International, or sailing the roughly 100 miles from Key West to Havana Harbor, any time soon.

An Untapped Market?

Speaking to an industry advocate, Cuba as a market for drug sellers to target does not hold much immediate promise, and would take time to develop.

The advocate said that he does not see much potential for drug makers to move into the Cuban market. There is no foreign exchange, little capital and the market has been dominated by a substantial generics industry, he said.

Selling pharma products into Cuba has largely been from a humanitarian standpoint. Under the embargo, non-US vaccine makers have had advantages so those with the best options selling in Cuba have likely been GSK, Novartis, Sanofi, etc.

There’s a chance it could open up a decent market, but there really is not much reliable information, the advocate added. But if you take Venezuela as an example of a comparable market and comparable political setting, drug makers have moved out. No one trusts the government to be supportive of US drug makers, he said.

Much has also been said about Cuba’s healthcare system, claiming that the US and the rest of the world actually could learn a thing or two from Cuba’ healthcare successes at stressing preventative medicine and excellent child mortality rates.

The internationalism of its doctors who have traveled en masse to treat ebola and malaria in Africa, to cure the blind in South America, or to aid earthquake ravaged neighbor Haiti, have been a public relations coup for the island nation.

Note that this author wonders how a highly functioning healthcare system and chronic brain drain can simultaneously depict a nation, unless communist supporting MDs enjoy the benefits of the regime while the rest of the nation’s intelligentsia prefer to get out for one reason or another.

Communist dictatorships have rarely participated in PR and/or misinformation campaigns aimed at bolstering the appearance of their economic, healthcare, social services (#sarcasm).

Much has also been said about the economic promise that could be untapped should the embargo be lifted, but not all experts think Cuba’s economy is such an easy fix. Most agree any improvements, given relaxation of the embargo, will take time.

To quote Tyler Cowen in this post “I’m not super pessimist on Cuba, I just think they will need a long time to get to the point the Dominican Republic is at today.  Being “the next Costa Rica” seems for them impossibly far off”.

Manufacturing in Cuba – More Than Just Cigar Rolling?

Cuba does have a robust drug making industry, stated the advocate. The country does make generic drugs, and they have research capabilities. So the potential does exist for drug makers to seed manufacturing in Cuba where there is a culture, know-how and technical capability.

In regards to the potential for pharma co’s to set up manufacturing in Cuba, "I’m guessing the answer is yes, this will be an opportunity for drug makers and contract manufacturers to set up shop - but it might be a while," said Diane Palmquist, VP of Manufacturing Industry Solutions at GT Nexus.

‘I might wait for the first McDonald’s to open in Havana before investing too heavily there," Parlmquist quipped.

Cuba’s real economic standing, and potential remains clouded. It will be important to see how much capital this country really has, and how they are going to generate foreign trade, agreed both experts interviewed.

Certainly there is demand for trade that has been pent up for decades, Palmquist noted. Just look at the car companies lining up to establish inroads to sell in Cuba, not to mention classic car enthusiasts in the US looking to get their hands on the island’s well-documented car collection.

Certainly the proximity to the US is a plus. Additionally, there is an educated population, many of whom reside in the US (Miami). These groups have strong ties to Cuba and there money would go far if they return, noted Parlmquist. Why not set up manufacturing in Cuba? Pending the thaw in US/Cuba relations, opportunity may certainly exist.