Chilean Pharma


Chilean Pharma
Country Report
With the reform of CENABAST requiring the outsourcing of all its distribution activities, logistics providers are
stepping up to meet the demand of
pharmaceutical laboratories. Just outside of Santiago,
iLogistica has
built a brand
new 8,000m2
storage warehouse with the
latest technology for the
most efficient
Raul Zamorano,
distribution of
General Manager,
pharmaceutical iLogistica
products. Having reconstructed almost from scratch
after the earthquake in February of
2010, the company has refurbished
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itself to become the strategic partner
for the industry. General manager,
Raul Zamorano, explains his company’s comparative advantage to serve
the pharmaceutical industry: “being
an entirely independent company that
is not linked to any pharmaceutical
laboratory, we can ensure the utmost
confidentiality of our clients’ data and
product information. We also have
no alliance with any of the players
in the industry and this allows us to
act freely always looking to serve our
clients in the most efficient and effective way possible. In this sense we are
positioned to become a trustworthy
partner for any international company
that wishes to distribute their products
in Chile and who might have reservations about the safety of their com-
I Logistica Santiago warehouse
pany’s data.” The company has gone
as far as developing a custom-made
software platform that allows the
greatest adaptability to the demands
of its customers. “In order to provide
the best traceability for our clients
we have developed our own software
platform that allows full customization to each one of our clients’ needs”,
explains Zamorano.
Photo Credit / Diego Carcamo Silva
Country Report
More spotlights on pharmaceutical markets
worldwide at
Chilean Pharma:
Exploring beyond copper
onsidered to be Latin America’s economic powerhouse, Chile is typically a solitary country that
is forgotten, or remembered, because it is the most politically and economically stable in the
region and therefore produces minimal headlines for the world—unless they involve tragic seismic events or heroic mining rescues. This loosely-populated nation of almost 17 million is
ranked as the 30th most competitive country in the world (ahead of Brazil and Mexico), holds an A+
credit rating, a AA grade for investments and is the only Latin American nation
accepted as a member of the OECD. With health indicators such as life expectancy
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and infant mortality rates that rival those of most developed nations, surely this
was produced by Focus Reports.
country’s healthcare and pharmaceutical sectors must also be thriving. Indeed
Chile’s pharmaceutical industry, estimated at US$1.5 billion in 2010 and expected
Project Director: Béatrice Collet
to reach US$2 billion by 2015, is lucrative but has not always been the most
Editorial Coordinator: Leonardo Barquero
popular among Big Pharma. For decades the country has been notorious for proContributor: Mariuca Georgescu
ducing the cheapest similar and generic drugs in Latin America, some of them
marketed in violation of patents and without proper bioequivalence studies. With
For exclusive interviews and more info, please
other serious issues such as the concentration of distribution channels into three
log onto
main pharmacy chains that control 93% of pharmaceutical sales and the domior write to [email protected]
nance of a “lowest price wins” public healthcare system, representing 80% of the
population, the country’s pharmaceutical sector quickly became uninviting for innovators. This was up until 2006 when then President Bachelet saw the great need
to overhaul the healthcare system of her country and began a series of reform policies that marked the
beginning of the sector’s revitalization. While efforts are still ongoing, the push for a modern and efficient healthcare system is in full force today and the country is now poised to offer fresh and attractive
opportunities within its own borders and beyond, for local and foreign companies alike.
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Country Report
Sanitizing the healthcare system
Pharmaceutical demand in Chile is focused on 80 diseases that are covered by
the Regime of Explicit Health Guarantees
(GES-AUGE) healthcare program enacted in 2005, which ensures governmentfunded coverage for patients regardless
of age, class, and ability to pay. While
this universal health plan covers fourfifths of the population, under Chile’s
dual healthcare system the remaining
20% is entitled to pick their coverage
from a number of private insurance
Country Report
providing better healthcare to a greater
number of people in Chile” by providing
consulting and advisory services to the
government’s reform initiatives.
Leading today’s healthcare reform
is Minister of Health, Jaime Mañalich,
who is determined to iron out the inefficiencies of the healthcare system to reflect the rest of the country’s economic
and political achievements. “A major issue for our healthcare system is related
to the structure and quality of health
institutions, including hospitals and reg-
“A major issue for our healthcare system
is related to the structure and quality
of health institutions, including hospitals
and regulatory entities.”
jaime mañalich ,
minister of health
companies known as ISAPRES. Jorge
Rodriguez, CEO and general manager
of Deloitte Chile, explains that “the private healthcare system began operating
in 1981 and since then it has been perfecting itself to offer the highest quality
services. Governmental authorities have
witnessed this transformation and today
are aiming to improve their provision of
healthcare so that it is on par with those
offered by the best private providers in
the country.” As a key partner to the
healthcare sector, Rodriguez aims “to assist the government in their objective of
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ulatory entities,” he asserts. Two main
entities on the Ministry’s radar are the
Public Health Institute (ISP), the regulatory agency for the pharmaceutical industry, and the National Supply Center
(CENABAST) that is the public purchasing entity and distributor for all public
hospitals and clinics—the pharmaceutical industry’s de facto biggest purchaser. A recent audit of CENABAST conducted by advisory firm PWC, brought
to light the severe inadequacies of the
institution and the desperate need for a
professionalization of its activities. Min-
ister Mañalich explains that “the underlying problem is that CENABAST does
not have the adequate facilities and capacity to handle the logistics required to
supply the system appropriately. We are
therefore proposing to delegate this responsibility to the private sector by having pharmaceutical laboratories deliver
directly to hospitals and clinics.” Initiatives such as this will save the government millions of dollars in health expenditures that will allow for the coverage
of higher quality treatments under the
GES plan, therefore narrowing the gap
between private and public healthcare
options. Other proposals in the pipeline include the liberalization of OTC
products that today are, paradoxically,
kept behind the counters and sold only
in pharmacies, as well as the creation
of a National Pharmaceutical Agency
(ANAMED) that will be solely charged
with the registration and regulation of
pharmaceutical products—a task that
today is overseen by the overwhelmed
LEFT: Maria Teresa Valenzuela, Director of
the Publich Health Institute (ISP); RIGHT:
Maximiliano Santa Cruz, National Director of
the National Institute of Industrial Property
and underbudgeted ISP. The director
of the ISP, Maria Teresa Valenzuela,
echoes the need for drastic change and
stresses that “the key area for this new
administration is the search for quality
in all possible aspects—from administrative management up to the most detailed analysis of technical processes”.
For Valenzuela this also means improving protocols and
approval of clinical trials, as well
as enhancing the
the institution by
“supporting the
Jose Manuel
accreditation of
Cousiño, Executive
three new centers
Vice President of CIF
of bioequivalence
in the country in partnership with three
major academic institutions”.
As regards the old tales of Chilean
imitators violating patents, the National
Institute of Industrial Property (INAPI)
has been at the forefront in setting the
record straight. Chile is one of the countries in the world that has signed on to
the most free trade agreements, including one with the United States and an
Association Agreement with the European Union. Maximiliano Santa Cruz,
national director of INAPI, admits that
Chile “committed to several obligations
in these treaties, many of them impacting directly on the pharmaceutical sector, such as extending the protection of
ing partner to the Chilean pharmaceutical sector, Rodrigo Castillo, business
manager for IMS Health in Chile, provides a more in-depth analysis when explaining that innovators “suffered more
in Chile up until 10 to 15 years ago,
when there was no patent protection and
the competition [there] was very strong.
At this point in time, Chile has managed
to learn how to compete and are in a
better position.” Furthermore, “multinationals are now consolidating and imFresh new field. let’s play ball! proving their market share and have fuAs a direct consequence of healthcare ture plans of getting their products into
optimization, international innovators the GES program, which would highly
are seeing greater opportunities to grow benefit them,” says Castillo. This retheir operations in the Chilean market. newed momentum is also evident in the
Jose Manuel Cousiño, executive vice sharp increase of clinical trials that are
president of the Chamber of the Phar- being conducted in the country by them
maceutical Industry in Chile (CIF), rep- with the aim that innovation is valued
resenting the international innovators for its worth in the local market. “Chile
has great research
in Chile, explains
centers and unithat the country
versities and a
“has the advantage
very good scienthat it is an econotific community,
my truly based on
which makes it atthe notion of free
tractive for these
trade and compekinds of studies,”
tition.” Now that
concludes Cousthe playing field LEFT: Monica Zerpa, General Manager of
has been leveled for Pfizer; Right: Rene Delsin, General Manager iño. The country
of Roche
has also updated
the MNCs, due to
is clinical research
better regulation by
the authorities and greater access to in- legislation to accelerate the work of ethnovative products within the public sys- ics committees and the approval times
tem, the possibilities for major growth for trials and is now the fourth-largest
are within grasp. As a strategic consult- market for clinical trials in the region.
patents in case of delays which we are
already running in INAPI and ISP.” Part
of his institution’s efforts to optimize
patent regulation includes a direct partnership with the national police’s “IP
brigade” in charge of IP enforcement
and national customs agencies. With
such proposals already rolling, Santa
Cruz is bold enough to proclaim that
“INAPI is going to be the best IP agency
in Latin America in the future.”
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Country Report
Leading the innovator revolution
in Chile is none other than megalith
Pfizer, who today is following close on
the heels of the national pharma companies coming in as the No. 1 MNC in
the country. Undoubtedly the company
has benefited from its recent acquisition
of Wyeth, not only in the expansion of
its product portfolio and sales force, but
also because Pfizer Chile general manager, Monica Zerpa, was the former
general manager of Wyeth in Chile. Ever
the optimist, and one of the very few top
women executives in the industry, Zerpa believes that Pfizer has “many opportunities here, thanks to the solid regulatory framework for the pharmaceutical
market and to the country’s economic
and political stability.” She is of the
opinion that MNCs brought upon their
own past failures in the Chilean market
because they chose to focus on the challenges of the industry. “I think multinational pharmaceutical companies in
Chile have remained very static in their
approach and we must become more
flexible regarding the prices, services,
and access to products that we offer. We
need to learn how to become more agile
and responsive to this dynamic market,
and that’s what I aim to bring to the
company,” she says.
This agility is exemplified by Zerpa’s
decision to “create a sales structure with
representatives specially trained to support
our institutional clients, such as hospitals,
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Country Report
patient programs, and CENABAST. The
Chilean government has been modernizing the public healthcare system over
the years, and we
must ensure that
our services take
into account so
that patients have
wider access to
I am confident
that this will also Katia Trusich, General
make our prod- Manager of Genzyme
ucts and services
more competitive—vis-à-vis low-cost
generics.” Beyond their sales strategies,
Pfizer has seized the advantages of Chile’s
updated regulatory environment and rich
scientific community for clinical research
and has already completed 49 of its trials
in the country. Even more impressive is
Sanofi-Aventis’ dedicated clinical research
center in Santiago that in 2009 invested
US$6.3 million into its operations.
Indeed Mauricio Rosas, managing
director of Merck’s pharmaceutical division, also believes that the current
environment is promising for innovators. “Even though we are facing tough
competition from generics and private
labels, we are still top-of-mind for our
clients. Our sales force is exceptional
because it has managed to build strong
relationships with the practitioners,” he
says. Their sales prowess is so impres-
sive that they have been asked by BMS,
AstraZeneca, and Novartis to commercialize some of their products in the
Chilean market. “If we include the BMS
products that we distribute, then Chile
is actually the country with the highest
market share for Merck in Latin America. Moreover, Chile represents 5% of
the Latin American operations in terms
of sales for the group, which is a very
good figure taking into consideration
that the Chilean pharmaceutical market
in general is only 3% of Latin American sales,” details Rosas. Riding on the
company’s local excellence, he foresees
that “in the next few years the market is
expected to grow at 6% and we plan to
maintain our growth rate at the actual
level of 12%.” With such figures it is evident that global innovators have learned
the ways of the Chilean market and are
taking advantage of the opportunities
being created by the optimized healthcare sector. MSD general manager Henrik Secher expresses this best by saying:
“I wouldn’t say that we have completely
resolved these issues in Chile, but we
have been dealing with them for a lot
more time here and this means that we
have greater chances to fight back and to
leverage our position.”
Public healthcare goes premium
The country’s impressive economic success over the last decade, together with
the ongoing modernization of Chilean
healthcare, is creating a greater demand for innovative treatments. Chile’s increasing wealth is reflected by Santiago’s
shiny glass skyline and luxury megamalls, but also in the
quality of healthcare and medical treatments being demanded by the population, including those covered by the public
healthcare system. Furthermore, as a true free-market economy, the liberalization of the industry to include private healthcare providers and insurance companies is allowing patients
to pick and choose their medical treatment options, causing
first-class products and niche segments to become solid drivers of the industry. This trend is illustrated in the marked difference of a ranking of the top 10 pharma companies in the
country in terms of units sold versus one measured in terms
of value. The first only includes two innovator companies,
namely Merck and Bayer in the eighth and 10th positions,
respectively, whereas the second lists Pfizer as the fifth-mostimportant company, immediately followed by MSD, Bayer,
Merck, and GSK in descending order. Such figures are also indicative of the increasing consumption of innovative products
by the public system, including premium and niche products.
As a whole the country is slowly moving to improve the quality of treatments available to the population.
As the leader of the Chilean biotech offering, Roche is the
prime example of a company benefitting from upgrades in the
public healthcare system. General manager Rene Delsin comments on the successful implementation of pilot programs to
introduce new products into the public sector: “With these
programs, such as one for our HIV products, we were able to
gain access to the public system serving 80% of the population.” The company already dedicates 50% of its portfolio
to oncology products, most of which fall under the public
healthcare plan, and is currently growing above the market
driven by their biotech offering. Delsin describes the com-
pany’s strategy as one that is migrating from primary care to
high-tech drugs. Lilly has been taking a comparable approach
to the Chilean market by targeting therapeutic areas that are
currently not addressed by the public system. Cesar Buendia,
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Country Report
Country Report
Espacio Riesco
The buzz of renewed pharmaceutical and
healthcare sectors has extended beyond
the direct activities of pharma companies
and been spilt over to the service providers who are quickly adapting themselves to
cater to the new and improved industry. A
notable example of adaptation to the needs
of pharma companies is that of the largest
event space in the country, Espacio Riesco.
Sergio Gutierrez, general manager of Espacio
Riesco, describes that “we built this space in
order to address the need for large congresses and conferences in the country and
we began our operations by organizing the
International Gynecology Congress at which
we received more than 7,000 delegates.
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We are now counting with 180,000 square
meters in total, out of which approximately
40,000 square meters are covered, which
makes us the biggest multipurpose venue in
the country. In this regard, we now have the
capacity to accommodate 8,500 people for
a sit-down dinner and not only for fairs and
conferences.” The conference center has its
own in-house services for options such as
catering and decoration, and is increasingly
host to a number of pharmaceutical events.
Gutierrez offers his vision for the future of
Espacio Riesco by asserting that “we want
to consolidate ourselves as the leader in the
market of fairs, conferences, congresses and
big corporate events.”
Sergio Gutierrez, Espacio
Riesco General Manager
general manager for Chile, Peru, Ecuador, and Bolivia, explains that “given
Chile’s highly competitive environment,
I would say the main challenge is indeed
to continue providing new innovative
treatments to address unmet medical
needs, which is our main objective, in
a way that is timely and cost-effective”.
The company is leveraging their position in the market by specializing in
neurological diseases, erectile dysfunction, and diabetes that are all covered
under the AUGE-GES plan. Buendia
further states that “as long as there are
patients that can benefit from innovative products then we as a company will
strive to provide them.”
Another unusual success story has
been that of Hospira in Chile, which
until very recently functioned as the
headquarters for the Southern Cone
region. Even though the company has
not introduced new pharmaceuticals
beyond its initial eight products since it
began its operation, it have managed to
double its sales in the last five years entirely based on its high-tech medical devices. Aldo Arata Muñoz, general manager of Hospira Chile, explains, “This
year my plan is to open up the market
to our infusion security software and
to expand our sales in this segment by
convincing the hospitals that this is a
very important issue for them. It won’t
be an easy endeavor, but it is definitely
our big chance for growth, and I would
like Hospira to be the first company
working on this issue in Chile to differentiate our medical devices in this
way.” The company is betting that its
software offering will be valued by the
public hospitals enough to drive its sales
beyond its past performance.
Similarly, Baxter has been expanding its business in Chile by focusing on
its end-stage kidney disease and hemophilia products. As a matter of fact, the
company is one of the few MNCs that
still has production facilities in Chile
and has been putting them to good
use at the local level. General manager
Christian Quiroga elaborates that, “To-
day, we also export products to other
Baxter facilities in Ecuador and Central
America, but that only represents about
10% of our total production. The rest is
entirely for the local market.” The Argentine manager has been exploring to
further diversify its portfolio in the public system as a means to drive growth.
“In Chile, bioscience products, which
include therapies for hemophilia, are
awarded on a tender basis, and represent
one of our greatest growth opportunities,” concludes Quiroga.
As premium and niche segments are
increasingly recognized, new product
offerings have been constantly sprouting throughout the country, bringing
the most innovative treatments into
the market. Genzyme only established
itself in the country in 2008, but nevertheless has managed to introduce 15
of its products for rare diseases mostly
through the use of educational initiatives. “We have done a lot of work on
medical education, which is the main
challenge for rare diseases, because you
need to make sure that doctors are fully
trained to correctly diagnose patients
and have an impact in the development
of the disease” says general manager,
Katia Trusich. Her strategy for the
company is based on the need to “create access to medicines and support the
development of new policies that are
more open and have higher standards
of care for its patients. If we manage to
make these changes, then our growth
and revenue will follow naturally.” The
educational approach has also been essential for companies like Novo Nordisk, who aim to transmit the vast advantages of their modern insulin products
to Chilean doctors. They certainly have
done a fair job so far considering that
they have more than 55% of the market
share for insulin products and are the
official providers for the state.
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Country Report
Farmindustria plant
Small dog, big bite
Today it is evident that changes in the
healthcare system have not only affected
Big Pharma but also the local industry
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Country Report
that has had to adapt,
shape up, and keep
the pressure on the
competition. This has
helped develop entirely
new strategies and scenarios, including international mergers and
acquisitions that today
have made “national”
industry a difficult
term to define. This is
the new face of Chilean pharma.
When global pharma shut down local
production plants back
in the ’80s and ’90s,
contract manufacturing became essential
to placate national demand for pharmaceuticals. As a direct answer to this
need, Farmindustria bought the former
Schering-Plough manufacturing plant in
1998 to later become the largest contract
manufacturing in the country. Today
Farmindustria is responsible for 40% of
all contract manufacturing in the country and has created its own laboratory
known as Laboratorio Volta. Roberto
Volta and Farmindustria, describes
that “the company began as a
very small operation 12 years ago,
but that was the
Andres Rudolphy
perfect moment
Fontaine, General
to enter the marManager of
ket because at that
time the majority
of the global pharmaceutical companies
were shutting down their manufacturing facilities in the country. In parallel there were the local companies that
were growing very quickly and did not
have the capacity to produce all of their
products.” Farmindustria has remained
at the cutting-edge of the industry by
investing 50% of its profit on new technology and equipment every year. Furthermore, they have maintained flexibility as a key element of their operations
and Roizman describes the company as
one “that is willing and able to adapt
to the specific needs of our clients. If
one of our customers comes to us with
a proposal illustrating a new production process with higher quality control
standards, then we will do our best to
implement the changes and to achieve
the highest levels that are required by
the international industry.”
Beyond this the company recently developed a “partnership with Eurofarma
in Brazil that is a very reputable company
with an extensive international network
already in place … and in this way Volta
can increase its role in the region”, explains Roizman. The company also is
pushing its limits to experiment with innovation and has gone as far as to exploit
the country’s natural resources to develop a supplemental treatment for cancer
derived entirely from
a national berry
known as Maqui.
Another notable
example of evolution within the local Chilean industry
is that of the No. 2
company, Andromaco, that, despite its Francisco Medone
Crovetto, CEO of
two manufacturing ­ITF-Labomed
sites, is concentrating its efforts entirely on the commercialization of its products. It goes as far
as claiming that even if its production facilities were to shut down, it would still
maintain their current market position
entirely based on its sales and marketing
expertise. The company is now focusing on penetrating smaller markets in
the region, such as Bolivia and Central
America, and even plans to acquire ship with the Italian group Italfarmaa company closer to those loca- co, Labomed was acquired in 2009 to
tions. Argentine Laboratorio Bago, form the current ITF-Labomed, which
served as an entry
has also decided to use its Chilean
point into the Latin
operation for a similar purpose by
marexporting the majority of its proket for the Italian
duction to the Andean markets.
mother company.
In a similar fashion, ITF-LaNow that they are
bomed CEO Francisco Medone
part of a European
Crovetto tells his company’s story
of building an international network of partners: “Chile’s market Hernan Pfeifer Frenz, group, “We have
aspirations to have
size and high competition made me re- General Manager of
Laboratorio Chile
alize that as a non-innovative company
the best way for me to grow was through plant that is certified by EMEA,” conlicensing agreements. I then proceeded cludes Crovetto.
to look for licensing partners abroad to
bring new products into the market, and National pharma remixed
today 50% of our products are licensed Despite the optimism in the air, the
and the other 50% are our own branded country is still considered to be the most
generics.” After many years of partner- competitive pharma market in the West-
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APRIL 2011
Country Report
ern hemisphere. Such notoriety is still
partly due to a preference for similars
and generics by the public healthcare
system, with original drugs only representing 19.2% of the market. Another
major factor is also the robust manufacturing capacity that Chile has developed
over the decades despite the small size
of the market. Most exemplary of this
is the national manufacturing giant,
Laboratorio Chile, “which today is the
market leader in both branded and pure
generics, and No. 2 in exports and the
OTC market,” explains general manager Hernan Pfeifer Frenz. The company
is the producer of one out of every four
pharmaceuticals consumed in the country, and exports 20% of its production
to 14 countries. The company’s success
was so glaringly obvious that the company was acquired by IVAX in 2001
LEFT: Maria Angelica Sanchez, Executive Vice
President of ASILFA; RIGHT: Fernando del
Puerto, General Manager of Pharma Investi
as part of a strategic expansion into
the Latin American market, and consequently by Teva in 2006 who acquired
IVAX’s global operations. All the same,
Laboratorio Chile still retains its monolithic brand name as part of the country’s pride and joy.
Other notable national companies
Top 20 Ranking
Prescription Drug Sales in Units
(% Mkt Share)
Laboratorio Chile
Laboratorio Saval
Laboratorio Bago
Instituto Sanitas
Pharma Investi
Laboratorio Pasteur
Laboratorio Prater
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are Laboratorios Saval and Instituto
Sanitas, both operating state-of-theart production facilities certified under
GMP standards and offering extensive
product portfolios that cover the therapeutic gamut—from oncology to central
nervous system (CNS) disorders, from
cardiology to infectious diseases. These
triumphs of Chilean pharma today are
reverberating in the region like never
before, with Laboratorio Recalcine acquiring several Argentine laboratories
in the past few years and, even more
impressively, a UK allergy-oriented vaccine producer in 2009. Some regional
players have decided to become a part
of the action in Chile, as was the case
with Argentina’s pharmaceutical champion Roemmers, who entered the market through its local subsidiary named
Pharma Investi and ranked in the top
10. Pharma Investi general manager
Fernando del Puerto points out that the
company “increased its sales fivefold in
the last seven years … moved up in the
ranking and improved its position mostly through organic growth.”
The Industrial Association of Pharmaceutical Laboratories (ASILFA) that
was created to defend the interests of the
generic and local manufacturers is working hard to erase the blemished past of
patent violations and to shape a compliant and high-quality national industry. In line with governmental reforms,
Maria Angelica Sanchez, executive vice
president of ASILFA, explains that its
current agenda is focused on raising
production standards and increasing the
role of innovation as part of the Chilean industry. The first step to achieve
this is by ensuring that national health
authorities are efficient and up-to-date
with global regulatory norms. “The new
presidential administration has already
begun to address some of our concerns
by tackling these problems in small committees that deal with specific topics.
These discussions will also include other
companies that are not part of our association,” she explains.