The pharmaceutical market in Brazil has recorded a decrease of USD2.50 billion in turnover from 2013 to USD28.1 billion this year. Despite double-digit growth, the domestic pharma market has dropped one position on the global ranking because of negative exchange rate effects.
IHS Life Sciences perspective | |
Implications | The Brazilian pharmaceutical industry association Interfarma has reported that the pharmaceutical market in Brazil recorded USD28.1 billion in turnover year to date (YTD), a decrease of USD2.50 billion from 2013. Consequently, the Brazilian market has dropped one position on the global ranking. |
Outlook | The Brazilian government announced in August that the economy had entered recession during the second quarter and that the contraction could extend through to 2016. The domestic pharma industry is therefore likely to continue to face challenges well into next year. |
The Brazilian Research-based Pharmaceutical Manufacturers' Association (Interfarma), based in IMS data, has reported that the pharmaceutical market in Brazil recorded USD28.1 billion in turnover this year, a decrease of USD2.50 billion from 2013.
Consequently, the Brazilian pharma market has dropped one position on the global ranking from sixth place in 2013 to seventh. The drop was due to the negative currency exchange rate, despite double-digit growth in the domestic market, states Interfarma's president Pedro Bernardo.
However, Interfarma has forecast that the Brazilian pharmaceutical market could rank fourth on the list within the next three years, behind the United States, China, and Japan. However, in light of the current economic conditions, the goal for now is to keep the market in the same position while the real recovers against the US dollar.
Retail market slows down
Although more resilient to the crisis in general, drug sales in the retail sector are beginning to show the first signs of slowing. The retail sector represents about 75% of the Brazilian pharmaceutical market.
Brazil's Pharmaceutical Industry Syndicate (Sindusfarma) has reported that revenues were up 9.4% compared with the equivalent month in 2014. However, in terms of volume, sales grew only 2% in the same period.
Outlook and implications
The negative effects of the depreciation of the local currency have been more notable on exports, as the decline in imports resulting from the weakness of the domestic market stood at 8.44%. The devaluation by 22.6% of Brazil's real against the US dollar in the first seven months of this year failed to boost exports by the Brazilian pharmaceutical industry, which fell 15.99% during the period (source: Sindusfarma).
Furthermore, the difference between exports and imports of medicines are likely to increase the pharmaceutical trade deficit (see Brazil: 29 September 2014: Brazil's pharma industry association estimates pharmaceutical trade deficit of USD6 bil. in 2014). The deficit increased from USD3.4 billion in the first seven months of 2014 to USD3.2 billion in the equivalent period this year.
Brazil's government announced in August that the economy entered recession in the second quarter and that the contraction could extend through to 2016. In addition, the Brazilian currency has depreciated 33% against the US dollar this year, as the country entered recession and a corruption scandal at state oil giant Petrobras engulfed the political system (see Brazil: 23 September 2015: Brazil's local currency weakness likely to affect pharma companies' financial performance in H2 and Brazil: 1 June 2015: Brazil's Senate approves provisional measure that increases taxes on imported products, including medicines). The local pharma industry is therefore likely to continue to face challenges well into next year.
Despite the pessimistic forecast for the Brazilian pharmaceutical market, the market may continue to attract international pharma companies, given the unmet demand for drugs from a growing middle class in the country.