The National Commission for the Defence of Competition (CNDC, for its acronym in Spanish) found that the market for the production of medicinal oxygen in Argentina is highly concentrated and has low competitive dynamics, both at the national and local level.
There are only three major oxygen producers in the country, accounting for almost 90% of medical oxygen production: the recently merged Linde/Praxair, Air Liquide and Indura (local subsidiary of Air Products).
In the analysis of barriers to entry for new competitors, it was identified that the regulatory authority sets a degree of purity for medical oxygen that may inadvertently be limiting the proliferation of oxygen generators by the use of an alternative technology.
Unlike the traditional method of obtaining oxygen by air liquefaction, which produces oxygen with a minimum purity of 99%, the air pressure swing adsorption (PSA) technology, as used in Argentina and regulatory approved in other countries, allows oxygen with a purity of 93% (+/- 3%) to be obtained.
In the competition analysis, the CNDC considered that a regulatory amendment lowering the required degree of purity of oxygen obtained by the PSA method ̶ in line with internationally recognised pharmacopoeias ̶ could lead to the development of a method which, in competition terms, could function as a substitute product, at least for some uses, for oxygen produced by the traditional method. Based on international experience, the CNDC believes that this modification could exert competitive pressure on the prices that hospitals and clinics currently pay to suppliers of medical gases.
Therefore, the CNDC formulated a pro-competitive recommendation to the National Ministry of Health and the National Authority of Medicines, Food and Technology (ANMAT, for its acronym in Spanish) to evaluate the inclusion of medical oxygen obtained by the PSA method with a degree of purity of 93% +/-3% in the Argentine Pharmacopoeia as well as the adaptation of the regulations related to obtaining medical oxygen by the PSA method, in accordance with international standards, enabling its effective application and commercialisation throughout the national territory.
This regulatory amendment would allow health centres ̶ main consumers of this input ̶ to substitute part or all of the medical oxygen they require from gas-producing companies (which produce oxygen by means of the traditional method) with oxygen produced by the PSA method. This would contribute to reducing the quantities demanded on the market, generating an excess supply that would favour a reduction in the price of medical oxygen, a gas that is a key element in the treatment of illnesses for the development of human life and considered an essential medicine by the World Health Organisation.