Growth opportunity in Brazil, but no easy pickings
Massive growth in the retail pharmaceutical market in Brazil offers Big Pharma an opportunity to off-set slowing sales growth in more developed markets, says independent market analyst Datamonitor. However, local market problems need to be resolved before the full potential can be realized.*
The retail pharmaceutical market in Brazil was valued at $12.6 billion last year, having grown by an attractive 14.3% between 2008 and 2009, with retail sales accounting for 83% of the market. Strong sales growth driven by improving access to healthcare and pharmaceuticals has led Big Pharma to target the country to off-set slowing sales growth in more developed markets.
Mark Hollis, healthcare analyst at Datamonitor, comments: "Brazil's many advantages will be tempting to Big Pharma. Government initiatives and the Unified Health System (Sistema Único de Saúde; SUS), for example, have improved access to healthcare and pharmaceuticals for the steadily expanding population.
"Further, the country has weathered the global economic downturn well, and the burgeoning middle class are increasingly opting for branded drugs. Research and development (R&D) and manufacturing in Brazil has also flourished thanks to the National Economic and Social Development Bank's (BNDES) Profarma initiative." However, the government is still under pressure to reduce costs, and it is expected that the state's federal budget for pharmaceutical expenditure may be cut this year.
Mark adds: "Rather than forfeit extended treatment coverage, the government plans to reduce the over-consumption of expensive drugs, focusing on preventive care, and incentivising generics in an effort to ensure sustainability of the national health system."
Generic manufacturers will also benefit from the government's aims to eliminate similares by 2014 - these remain the most popular type of drug in Brazil, despite new similares having been prevented form entering the market since 2003. However, intellectual property (IP) protection in Brazil remains the most problematic area for branded pharma. From the perspective of the research-based drug industry, Brazil is one of the more difficult regions in which to enforce IP rights. Problems include the slow speed of patent reviews, conflict between the two agencies involved in granting pharmaceutical patents - the National Institute of Industrial Property (INPI) and ANVISA - insufficient trademark protection, and patent backlogs".
Mark concludes: "Given the issues regarding IP in Brazil, the optimum strategy for international players to enter the market is through acquisition of a domestic generics player, reflected by Sanofi-Aventis's recent acquisition of Brazil's second largest domestic drug manufacturer Medley. As such, Sanofi-Aventis is now the largest pharmaceutical company by sales in Brazil."
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Notes for editors
Mark Hollis is available for comment.
* Brazil Pharmaceutical Market Overview | Expanding healthcare access drives double-digit sales growth
To arrange an interview or for further details regarding this release please contact Joe Dixon in the Datamonitor press office on + 44 (0)161 238 4083, or email [email protected]
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