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Spotlight on Argentina

More than 500 U.S.-based companies concentrated in energy, manufacturing, information technology and financial services operate in Argentina, the second largest South American country by GDP behind Brazil. BONEZONE asked the following professionals for their take on the orthopaedic market in their country:

Maria Cristina Bardelli, Managing Partner, Victhor Implantes
Gustavo Guitelman, Director, LABORATORIOS SL S.A.

In your experience, what unique challenges are faced by companies that do business in the Argentina orthopaedic market? What are the unique advantages?

Maria Cristina Bardelli: Our unique challenges include the following. Attaining sustained Research & Development (R&D) spend is one of the long-term challenges for Argentina’s orthopaedic industry. Without adequate R&D spend, it is very difficult to develop and design new, cutting edge products that would result in differentiation and sustained competitive advantages. The Argentine market has a relatively small scale which prevents individual companies from spending heavily in R&D. Further, government funding targeting this area is scarce, and policies to promote R&D have been inconsistent. Moreover, there is no concerted effort among privately-held firms to tackle the R&D challenge jointly.

Another challenge facing the industry is the need to increase productivity and reduce costs while keeping up to speed with the price/delivery time/quality demands of a competitive orthopaedic sector. Additionally, we face the challenge of developing flexible production capabilities able to accommodate both sudden surges and slowdowns in demand.

The industry is also facing pricing pressure as a result of market entrants producing very low-priced implants with questionable quality (some of them not even approved by the regulatory body ANMAT), and the Social Security Services looking to offer low-cost implants to its member/patients.

Finally, branding strength remains an obstacle: most Argentine surgeons and hospitals have a strong preference for U.S. and European implants, even though there are available reasonably priced, locally manufactured implants meeting international quality standards and surgeons’ requirements.

Our unique advantages include the following. Argentina’s orthopaedic industry is young and full of growth opportunities over the long term. The industry has a bright future, and producers able to create strategic alliances will be major beneficiaries from this growth.

The market enjoys a vibrant, demographically-driven demand in procedure volume of hip and knee replacements. Further, the opportunity for high-quality domestic manufacturers to gain market share from importers and distributors of U.S. and European implants represents additional growth potential.

The industry also enjoys flexibility and cost competitiveness, which are advantages for internal and external markets.

Finally, the technical expertise prevalent among local, privately-held producers, such as Victhor Implantes, is world-class. This, combined with a relatively small market, results in the possibility of customization and working closely with doctors and patients to develop unique, “tailor-made” solutions.