Market Information
Latin America and Caribbean

Biotechnology Sector Profile: Cuba

May 2002

Francisco Rodriguez
Commercial Officer
Canadian Embassy
Calle 30 esq. 7ma, Miramar
Ciudad de La Habana, Cuba
Tel.: (011-537) 204-2516
Fax: (011-537) 204-2044
E-mail: havan-td@dfait-maeci.gc.ca
Internet: http://www.infoexport.gc.ca/cu

Market Overview

The most populous island in the Caribbean (11.2 million), Cuba is Canada's largest export market in the region and offers good opportunities in the biotechnology sector. Biotechnology is one of the most important sectors within the current Cuban economic strategy. The sector's main role is to contribute to social development in areas such as public health and agriculture, as well as to attain the necessary competitiveness for its solidification as one of the country's sources of revenue.

The emergence of this industry has been possible due to Cuba's high scientific development level in the last few decades, as evidenced by the following data:

• a public health development rate that is among the highest in the world;
• over 10, 0000 graduates every year from some 200 university centres (with a teaching staff of more than 20,000 professors); and
• over 30,000 workers currently engaged in scientific development activities in 220 research centres.

In the 1990s, and in spite of the country's economic constraints, biotechnology was a prioritized development sector, with an investment program involving over $1.4 billion1.

Under this investment program, dozens of research and development (R&D) centres in the biotechnology and pharmaceutical industry have been created. Approximately 104 facilities (R&D institutions and pharmaceutical centres) exist, which have made many biopharmaceutical products available to public health, such as interferons, Hepatitis B and Meningitis B/C vaccines, Ateromixol, diagnostic systems-kits and equipment-and neuroscience equipment, etc. Some of these are attractive export products. Cuban biotechnology products are exported to more than 25 countries. Nearly 80% of pharmaceutical products employed in Cuba are locally manufactured-a proportion that authorities want to push even higher over the next few years. The growth of the local pharmaceutical industry, which by the mid-1990s was bringing Cuba some $148 million a year in export earnings, has not only covered domestic demand for medicines, but has also led to the development of products that compete on the international market today. Of the 785 pharmaceutical products sold in Cuba, 178 are imported. Nationally produced medicines are sold at heavily subsidized prices in the government network of pharmacies that sell products in Cuban pesos. The production of generic drugs is often affected by a lack of financial resources needed to purchase the necessary raw materials. In some cases, the cost of inputs is driven up by the problems posed by the 40-year-old U.S. economic and trade embargo. At present, around 40% of the raw materials used by Cuba's pharmaceutical industry are imported from Asia.

New coordinating instances, set up in the 1990s, are the scientific districts, which exist in all of the 14 provinces. They comprise related research centres, institutes of higher education, and relevant health institutions, including production enterprises interested in manufacturing and marketing novelty products.

Cuba's most important marketplace is the Western Havana Scientific District. It comprises 42 of the major research, educational, health and economic institutions related to the biotechnology field, which employs more than 4,000 scientists and engineers. The main institutions include Finlay Institute; Genetic Engineering and Biotech Centre (CIGB); National Bio-preparations Centre (BIOCEN); Molecular Immunology Centre (CIM); Immunoassay Centre; National Centre for Production of Laboratory Animals (CENPALAB); National Scientific Research Centre (CNIC); Pharmaceutical Chemistry Centre (CQF); and National Centre for Animal and Plant Health (CENSA).

Currently, among the main achievements of the West Havana Scientific District are the development of a wide set of vaccines and diagnostic systems for human and animal use, monoclonal antibodies, new cancer therapies, new drugs for human health, development of plant and animal transgenesis (e.g. plants and animals as bioreactors), the design of new scientific instruments, world leadership in brain research, development of biotechnology methods for implementing more organic agriculture, etc.

Opportunities

To maintain the level of sectoral development that has been achieved to date, and due to a serious shortage of financial resources, Cuba has kept this market open to foreign investment and is looking for more international interaction. The negotiation process for agreements with foreign partners is generally based on the following principles:

• Ownership of Cuban facilities is not negotiable.
• Agreements are negotiated to cover specific markets, not the entire territory.
• Negotiation is carried out on the basis of defined projects and products, not on the basis of a centre's portfolio.
• Ongoing research projects are negotiated; Cuba is not offering a surplus scientific capacity.
• Partnerships are approved for a given period of time.

In this regard, various agreements involving a number of countries, including Canada, but mostly from Asia and Latin America have been approved. The main investment form used so far is the establishment of overseas joint-venture companies. Their production is based on a given Cuban technology; commercialized technology. In addition, licences are granted for marketing of products overseas and, accordingly, royalties are to be paid.

Currently, new R&D biotechnology projects are available for international association with interested potential partners, which are included in a project portfolio that is available upon request. Further, Cuba imports state-of-the-art laboratory equipment and spare parts for its research facilities, as well as some raw materials that are required for the pharmaceutical industry.

Market Access Considerations

Commercialization of biotechnology products, arrangements for the import of laboratory equipment and spare parts, the negotiation of joint-venture partnerships and/or the financing of biotechnology projects are performed either directly by the production centres themselves or through associated companies such as Heber Biotec S.A.; CIMAB; DALMER Laboratories; ERON S.A.; TECNOSUMA and others. Generally, the Ministry of Foreign Investment and Economic Cooperation (MINVEC) oversees the process of negotiation of joint ventures and partnerships.

The main importer of pharmaceuticals and raw materials for the pharmaceutical industry is MEDICUBA, the import/export firm of the Ministry of Public Health. In the specific case of imports, both MINVEC and MEDICUBA take care of import procedures, including customs and duties.

Major Competition

Canadian companies interested in the biotechnology and pharmaceutical markets will face competition from European, Asian, American and Latin America companies. The U.S. embargo on medicine and medical supplies was lifted in 1992, and the sale and export or re-export of these types of products by U.S. companies are now authorized under licence. Sales must be financed by cash in advance or by third-country banks.

Other Useful Information Sources/Web Sites

CITMA Web site: http://www.cuba.cu/ciencia/citma/index.htm

Cuba, A Guide for Canadian Business: http://www.infoexport.gc.ca/docs/cu_expguide-e.pdf

Finlay Institute: http://www.sld.cu/instituciones/finlay.index.htm

Genetic Engineering and Biotech Centre (CIGB): http://www.cigb.edu.cu

National Bio-preparations Centre (BIOCEN): http://www.biocen.cu

Molecular Immunology Center (CIM): http://www.cim.sld.cu

For detailed market reports about this sector, please visit http://www.infoexport.gc.ca