Maximum dose: healthcare companies chase government dollars to save lives in Latin America.

In Latin America's main economies, investments in healthcare rose 44% on average in the last two years, according to the World Health Organization, to US$48 billion in total in 2004, the last year it tracked spending.

Yet comparing healthcare in the region is like comparing apples and oranges, as the levels of healthcare standards are different, says Fernando de Barros Barreto, a consultant with Primeira Consulta, a consultancy in Brazil specializing in healthcare. Healthcare laws and other regulations are different too. That said, Brazil is the largest market in Latin America for healthcare companies looking to sell their wares to the government. According to the Brazilian Ministry of Health, federal spending in healthcare hit $15 billion last year, a figure that does not include salaries and debts.

In Brazil, the Ministry of Health gets involved in big projects, such as those that cater to organ-transplant and AIDS patients. In those cases, the government will buy expensive medicines, and it buys a lot of them, says industry consultant Herbert C. Goncalves. The Brazilian government runs an internationally recognized AIDS program, pumping $435 million into it each year, a budget that has increased regularly over the last few years. In four years ending 2006, investments to fight the virus rose 77%, and the number of patients in treatment increased by 43%, to 170,000 patients in 2005. The government expects to reach 215,000 patients by 2008.

The private sector plays a big role in that campaign. Bristol-Myers Squibb, a U.S. pharmaceutical giant that operates throughout Latin America, is one of the Brazilian government's largest suppliers of AIDS-related products. The company also sells medicines to treat hepatitis B, bipolar disorder and schizophrenia. Sales of those products have reached $100 million, which is 38% of the company's sales in Brazil, says Antonio Carlos Salles, the company's director of corporate affairs. It's not easy, though. "Our revenue grows year after year, but we are always in large and complex dens with the government," Salles says.

Bristol also supplies medicines to Argentina, but when it comes to AIDS drugs Brazil and Argentina are two very different countries. "In Brazil, 98% of the purchase of so-called AIDS cocktails are done by the government. In Argentina, healthcare providers make up a large part of the orders," Salles says.

The Lula administration and foreign pharmaceutical companies went through a nasty battle last year over AIDS medications. The government had threatened to break patent-protection laws if drug companies wouldn't lower prices. Many did. Anticipating a fight with the government, Bristol-Myers Squibb cut the price of the AIDS medication that it sells to the Brazilian government by 76% to protect its patent.

Boehringer Ingelheim provides medicines to combat Parkinson's disease, a debilitating disorder that typically affects older people. The company boosted its sales by at least 30% last year in Brazil, according to company manager Renato Negri. Sales of the Parkinson's medicines fetch $6.9 million, 7% of its total revenues in Brazil. "This is the most important medicine we sell to the government in terms of volume," says Negri.

Private pharmaceuticals will face some competition: the Brazilian government itself. To lower the costs of medicines for the end user, the Brazilian government has built its own laboratories in the country. The Instituto de Tecnologia em Farmacos is the country's largest state-owned laboratory, producing more than 60 medicines, among them, antiretrovirals. Last year, the Brazilian government bought for $6 million an industrial park in Rio de Janeiro from GlaxoSmithKline, a U.K. pharmaceutical, turning it into a technological research complex that will produce 10 billion pharmaceutical items such as pills, capsules, creams by 2007. The plant, known as Farmanguinhos, will make cheaper drugs and hopefully save the government $88.5 million a year by allowing it to sidestep buying more expensive, proprietary drugs. The government hopes to someday export discounted AIDS drugs to poor countries.

In some countries, people seek medical advice from their neighborhood pharmacist rather than a certified doctor often because they cannot afford to pay medical bills. Such is the case in Mexico. "In terms of investment in healthcare, we are behind countries like Turkey and Costa Rica," says Miguel Angel Oliva, director of public relations at Lilly Mexico, the Mexican subsidiary of U.S. pharmaceutical giant Eli Lilly.

That may be changing. The government wants to provide more coverage for its population, which would give more Mexicans access to healthcare and ultimately, prescription drugs. Pharmaceutical companies now see opportunities to sell to a growing $7.50 billion healthcare industry.

Mexico spends 6.2% of its total economic output on healthcare, according to the Organization for Economic Cooperation and Development, a non-profit development agency. (The United States spends 15%.) Mexico's figure is still relatively high when compared with developing countries like Slovakia, which spends 2% on health care. Yet most of the Mexican healthcare expenditure goes to pay salaries and pensions. That should change thanks to initiatives from the Fox administration, like Seguro Popular, a nationwide, $800 million program that gives some degree of coverage to working families.

"For Seguro Popular to become a true universal insurance, it will need crucial funds from the budget each year," says Oliva. "That will give us a very good opportunity to make the needed investments in healthcare." Lilly Mexico posts annual sales of $200 million, making the country its top Latin American market. Sales grew 16% in 2005 alone and are expected to grow again this year. Today, about half of the company's sales go to the private sector, 20% goes abroad to other Eli Lilly subsidiaries and 30% goes to the government.

Direct buy. "Seguro Popular can really help the industry because people will buy medicines from pharmacies and not directly from the state, as was the case before," says Jorge Lanzagorta Darder, general director of the National Pharmaceutical Industry Chamber. Drugs accounted for 52% of Seguro Popular's budget last year, compared with 34% in 2003. "This increase owes itself to the number of participants in the program and also to the increase in the subrogation of medicines to private pharmacies on the part of state-run healthcare services," says Juan Antonio Fernandez, who runs the Seguro Popular program.

In Colombia, public spending in the pharmaceutical sector has risen over the last few years due to an increase in high-cost diseases such as AIDS or cancer, driving up inflation. "Over the last three years, spending in this area has boosted the consumer price index by two points," says Alberto Bravo, president of the National Association of Pharmaceutical Industries. Currently, 79% of the medicines that the government buys come from within Colombia. The drug industry has grown domestically due to big investments made in the 1990s and efficiencies that came with competition.

For this year, Colombian healthcare providers will attempt to grow at home and in other markets, including Mercosur, the Caribbean and Central America. Alvaro del Castillo, president of Farmasanitas, a private company that sells to the Colombian government indirectly, says the private sector will be key to the success of the pharmaceutical sector. "We are vital in our role of finding efficient and opportune distribution of medicines for patients in the system," Castillo says.

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MARISOL RUEDA * MEXICO CITY 

LUCIANO SOMENZARI * SAO PAULO