Q COSTA RICA – Larry Ramírez, pharmacist and vice president of Farmacoop, the first pharmacy co-op in Costa Rica, has been running his business for 20 years and has also been involved with groups that are working to set up “rules” in the market before it gets too concentrated.
Data from the Ministry of Economy, Industry and Commerce (MEIC) for 2023 shows one of the first consequences – while independent pharmacies will have 100 fewer establishments in 2023 than 2018, chain stores added 189.
The voracious growth of the chains is visible, for example, the Ramírez pharmacy is located in Guadalupe de Goicoechea, on the east side of San José, in one of the areas where the competition is more predatory: a 4-kilometer radius, his business competes against six branches of Farmacia La Bomba, the closest being less than 2 kilometers away.
In Costa Rica, three distributors, GFI, CEFA and Cofasa, control 60% of the drug import and distribution market. Another 46 divide the remaining 40%, according to MEIC data published in 2019.
The wholesalers have their own pharmacy chains, GFI has Sucre and Farmacias Santa Lucía, for example – that get preferential prices on medicines.
Ramírez has seen this first hand, since he buys meds from CEFA, which is a part of the Cuestamoras business group – and they’re actually his competition since they own Farmacia La Bomba and Farmacia Fishel. He’s seen differences of up to 33% between the price he pays and the price his competition (the wholesaler pharmacies) charges.
“It would be cheaper for me to go buy it from them,” said Ramirez.
For example, the distributor sells him Concor at ¢30,535, where at La Bomba it is sold for ¢23.400.
“As an independent pharmacy I have to buy it for ¢30,000 and they sell it for ¢23,000,” said Ramírez.
The concentration of the drug value chain (laboratories, distributors and pharmacies) is called verticalization and is one of the reasons to which the director of Research at the MEIC attributes the decrease in independent pharmacies, since they have less muscle to get better prices and have sometimes lost the ability to set prices.
Ramírez referred to the big pharmaceutical chains in Chile and how they had huge price wars that even led to convictions for unfair competition and fines. However, the profits they made were way more than the fines, so it ended up driving out the small independent pharmacies. In the end, the larger chains colluded and raised the prices, so the consumers lost out.
He said, “It’s the same story wherever you go. Now Chile is trying to figure out how to help the independent pharmacies.”
The pharmacist insists that the efforts made by various governments, including the current one with their decrees, haven’t been successful because the whole process is flawed. He believes it’s essential to look at the whole thing and set up rules to make room for more competition.
“You don’t have to have a doctorate in Economics to realize that the problem lies in the distributors and pharmaceuticals,” he assures.