You will benefit from the financial crisis if you factor Latin American countries in your global clinical trails right now


The financial markets are currently suffering hard times. Not only if you look at the big economies in North America, Europe and Asia, have global trends affected the financial markets, in Latin America as well. For the financial industry it will take some time to get this waves balanced. But from a cost perspective the financial crisis shows excellent opportunities. Especially the “global-thinking” Biotech & Pharmaceutical industry can profit from those developments.

On a cost perspective, the Biotech & Pharmaceutical industry will suffer higher costs from the Dollar, for example from countries like India and China. The significant cost drivers are usually the clinical trials during the R&D of new drugs that are executed on a global basis. To execute clinical trials globally has gained the level of an industry standard. But apart from efficiency aspects like better patient recruitment the development of underlying foreign exchange rates shall now be more in the focus of the budgets of the huge Biotech Pharmaceutical companies.

What has happened on the financial markets during the last time?

The recent developments in Latin America show high cost savings potentials due to the shortfall of underlying currencies in almost all countries.

According to Morgan Stanley sources the move in the Mexican peso – nearly 30% weaker in mid-October compared with its average of the previous two months – is not that much greater than the moves seen in Brazil, Colombia or much of the region. While a real/dollar exchange rate at 2.15 or 2.35 represents also an abrupt decline from levels of 1.60 seen in July or August, Brazilians can remember 2005 and indeed 2001 or 2002 when the exchange rate had been at these levels. In other counties as Chile, the local peso is at its lowest level since around July 2005, while the Argentinean peso is currently hitting levels not seen since May 2002. The currency of the still glooming economy in Colombia is weakening as well.

Overall the shortfall of currencies in Latin America is significantly and shows the price levels before the strong economical upturn in the beginning of the second millennium.

What does this mean for clinical trials?

Apart from better patient recruitment and the flexibility of the environment for clinical trials in Latin America also the current development of the financial markets shows excellent opportunities to decrease costs for clinical trials. The expectations for the next quarters will not foresee a change in this development. Hence it’s now the time to factor Latin America in the decision of pending and upcoming global trials.

Ref: ESTERN Medical Research: Nov-2008

Author Claus Buhmann - CFO of ESTERN Medical