Report from Brazil September 2013

In Brazil, there are indications that the pharmaceutical industry has been living relatively comfortably despite global difficulties. Due to improved wages and jobs created over the past few years, thousands of Brazilians who never had access to drugs have been investing in healthcare and purchasing medicines, not only to treat illnesses but also as a means of prevention.

According to the Brazilian Association of National Laboratories Distributors (Abradilan), figures from IMS Health show that sales of pharmaceutical drugs in Brazil are expected to rise 15-20% this year compared to (Brazilian Real) R$49.6 billion (approximately US$21.6 billion) in 2012. The Gross National Product (GNP) for 2013 is expected to be 2.28% higher this year, according to Brazil’s Central Bank.

In 2011, the so-called “C class,” which represents 53% of the 200-million population in Brazil, contributed to 42% of the domestic sales of pharmaceutical drugs in 2011, while the wealthy “A and B classes” were responsible for 48% of total sales, according to IMS Health. Companies operating in Brazil are beginning to understand that it is important to target the middle class as they outnumber the wealthier classes and are willing to pay for all types of goods, including pharmaceuticals. As a result, production of pharmaceutical drugs is on the rise despite the high costs and taxes in Brazil. Investment plans, however, are ongoing with opportunities seen ahead, especially for biological drugs.

Government plans include local production
Biological drugs are cellular- or tissue-based medical products. They include, among others, vaccines, blood components, and living cells used to treat various diseases. The production is mainly though gene-modification processes, rather than synthetic. Producers have reported that biological drugs have greater accuracy to treat illnesses according to the Industry Syndicate of Pharmaceutical Products in the State of São Paulo (Sindusfarma).

In an interview with BioPharm International, Nelson Mussolini, executive president for Sindusfarma, said that “there is no doubt that biological drugs have great potential in Brazil. They will add to other drugs offered by the country’s public health system to treat illnesses such as rheumatoid arthritis, asthma, and various types of cancer. This fact can be proven by the actions developed by the Brazilian government to implement local production of biological drugs, through its Health Ministry and the Bank of Economic and Social Development (BNDES).”

According to Mussolini, Sindusfarma associates correspond to more than 90% of Brazil’s pharmaceutical market share, hosting companies that promote both national and international research as well as commercialize biologics and biosimilar products. “The health ministry would guarantee purchasing these drugs under the public health system and the BNDES would guarantee funding and financing for research and production of biological products,” added Mussolini.

The topic of biologics production has definitely caught the interest of policy makers, and the pharmaceutical industry sees it as an opportunity given that the government in Brazil is developing the biologics market. The Brazilian government strongly supports research partnerships in this field and is encouraging local production of biological drugs. According to Sindusfarma, the government is willing to pay as much as 25% more for locally produced biological drugs compared to what it pays for imported products.

Mussolini noted that while Argentina is also taking steps to localize production of biologics, Brazil will likely be the main player in Latin America for these products because of its growing pharmaceutical market. Although the biologics market is in its infancy and, therefore, specific figures are difficult to obtain, investments in this area have already been officially confirmed.

New production facility confirmed
Novartis told BioPharm International that the company will be building a new facility to produce biological drugs in Brazil. The Swiss pharmaceutical company will invest R$1 billion (approximately US$ 435 million) in a unit located in Jaboatão dos Guararapes, in the Northeastern state of Pernambuco, to produce vaccines against Hepatitis B.
Novartis Brazil said this plant will be the company’s first vaccine production site in Latin America. Construction is expected to be completed by June 2014, while production has been scheduled to start in 2016 according to the company.

According to Novartis, the company plans to export part of its vaccines output from the new plant and gradually transform the unit into a full-scale biologics producer. Novartis and Brazil’s federal government have signed transfer-of-technology (TOT) deals to produce drugs in government-owned facilities, hence, making the country less dependent on imported products and technologies.

Novartis is not the only company to sign TOT deals with the federal government. The country’s health ministry stated that it is negotiating approximately 27 deals with public and private laboratories to produce as many as 14 biological drugs nationally. The ministry’s objective is to increase the number of locally produced biological drugs for the treatment of breast cancer, leukemia, rheumatoid arthritis, and diabetes among others. According to government figures, the country would save around R$225 million (approximately US$ 97.8 million) a year with local production, using transferred state-of-the-art technology. With so many incentives, perhaps many other eyes will soon turn to the biological products market in Brazil.

About the Author
Hellen Berger is a business news correspondent based in São Paulo, Brazil.