Can you introduce Bagó to our readers and explain the role it plays in the Argentine pharmaceutical ecosystem?
Bagó has been operating in Argentina for 91 years and is one of the country’s leading pharmaceutical groups, holding approximately 12% market share in the national pharmaceutical market. The company has a strong footprint, including three fully-owned compañies: Montpellier, Bioprofarma, and Laboratorios Bagó, which operate in different segments such as outpatient care, specialty treatments and rare diseases. Bagó also collaborates across the value chain, with partnerships in distribution through Disprofarma, a joint venture with Danone in the nutritional sector, and involvement in Synergium Biotech for biological product production, including vaccines. The company’s vertically integrated structure enables it to cover various aspects of health care, both locally and regionally.
Bagó’s expansion started in the 1990s with focus on Latin America, where it now has a significant presence across South America. The company has a leadership position in Argentine, Bolivia, Ecuador, Mexico, Chile, Peru, Paraguay, Colombia and Uruguay, with a growing presence in Brazil. Bagó has a legacy of exporting products internationally, from Europe to Southeast Asia and beyond. Its success is driven by organic growth, with over 10 production plants across Latin America. Bagó is still privately owned by the Bagó family, transitioning into the third generation, and despite the global nature of its operations, Argentina remains vital, contributing nearly 40% of total revenue.
You mentioned that in the 40s Bagó began exporting to Europe. How did the company achieve the international presence it has today?
By the late 1940s, Laboratorios Bagó had become the first Argentine company to export pharmaceutical products to Europe. Years later, in 1968, the company launched "Trifacilina," becoming the first ampicillin on the Argentine pharmaceutical market, which represented a substantial advance in therapeutics available in the country at that time. However, in the 1990s, we expanded further into Europe, followed by a move to Southeast Asia, where we saw substantial growth opportunities. Our strategy has always been to prioritize the quality of our products, which allowed us to successfully enter these new markets. By the early 2000s, we were recognized for our high-quality products in Southeast Asia, with a significant presence in markets like Singapore and China, among others.
By the 2010s, Bagó’s reach extended to 20 countries, with products distributed in over 50 worldwide. As a pharmaceutical group, our exports of value-added products have exceeded $50 million, and our performance has contributed to a dynamic and competitive national industry. Today, despite macroeconomic challenges, the Argentine pharmaceutical industry remains an important player in global markets, with a focus on maintaining high standards and innovation in production.
How has the changing macroeconomic environment in Argentina over the past year and a half affected your operations, and how is Bagó adapting to these challenges?
The pharmaceutical industry, like many others, requires long-term investments, which are hindered in an unstable macroeconomic environment. In the 1990s, despite high costs, Argentina’s economy provided the stability needed to invest in the production of high-value products, making the country competitive in international markets. However, over the past 15 years, constraints like payment limitations and import restrictions have reduced the dynamism of our operations. Bagó has always adapted to these challenges by maintaining its innovation and investment focus, with plans to invest in new technologies and products once the economic situation stabilizes.
Recent years, we have reassessed our production platforms and invested in new facilities, such as synthetic peptides and pharmaceutical active ingredients. We’ve also prioritized expanding our export capabilities and growing within the top five pharmaceutical groups in Latin America. Our growth strategy is organic, as we aim to modernize our production plants and ensure that future developments remain in line with our long-term vision, despite short-term hurdles. Even during periods of economic instability, our resilience has been evident, as we continue to invest in our manufacturing capacity, showing commitment to both domestic and international growth.
Given the challenges to the Argentine economy, how does the exchange rate impact your business, and what role does macroeconomic stability play in your operations?
While exchange rates are an important factor, macroeconomic stability is the more significant driver of competitiveness for us. As a pharmaceutical company exporting high-value products, our main focus is on stability, which allows us to make necessary investments in technology and production capacity. While the exchange rate fluctuations in Argentina can be concerning, we prioritize a stable macroeconomic environment that supports long-term investments in production and innovation.
For example, Argentine pharmaceuticals companies are expected to achieve more than $1 billion in export sales, despite the recent peso appreciation. This shows that the export dynamic is not solely driven by the exchange rate but by the global recognition of our product quality. In the pharmaceutical industry, once you invest in a plant and production, the process is long-term, requiring up to five years for regulatory validation. The ability to invest in such a way and create value is less dependent on the exchange rate than on overall economic stability.
What is Bagó’s perspective on the potential for foreign investment in Argentina, and how would the entry of new competitors impact the market?
Bagó views the potential for foreign investment as an opportunity for growth and improvement. We have a long history of successful partnerships with international companies and see new competitors entering the market as a way to foster innovation and improve the sector overall. However, it is important that these new players respect the local regulatory framework and operate under equal conditions. We have a strong presence in 20 countries and a solid reputation in the pharmaceutical industry, which allows us to embrace competition confidently.
In the current economic climate, the entry of new players is welcome, but in the short term, we must overcome the challenges posed by limited access to capital and technology. Despite these difficulties, we remain committed to modernizing our production facilities and maintaining a competitive edge. The Argentine pharmaceutical industry, with its local capital and market share, is well-positioned for growth, and we believe that both local and foreign players can thrive by working together in this evolving environment.
How do you assess Argentina’s innovation landscape, and what is Bagó’s role in fostering innovation within the healthcare sector?
Innovation in Argentina, particularly in healthcare, is highly creative, and the country has a well-developed healthcare system compared to other Latin American nations. However, one of the main challenges for innovators here is securing funding, as there are limited channels for bringing in international capital. At Bagó, we have reinvigorated our commitment to innovation by launching the InnoBagó program, which connects startups in precision medicine and other health-related fields with our network of partners.
This program was designed to address gaps in healthcare delivery and improve patient outcomes, rather than focusing solely on business-driven solutions.
Through InnoBagó, we have supported several startups in their early stages, such as those focused on early-stage diagnostics for diseases like Alzheimer’s and Parkinson’s. While these diagnostic tools hold promise, the clinical utility is complex, as knowing you are at risk of developing a disease years ahead of time doesn’t always lead to actionable outcomes. Nonetheless, the goal of InnoBagó is to bridge the gap between health innovators and patients, improving lives through technology and collaboration. We aim to make meaningful contributions to the healthcare ecosystem by supporting technologies that can enhance patient care and transform the healthcare landscape.
