Global Insight Perspective | |
Significance | Novo Nordisk has pledged an extra $30 million to constructing a new facility in Monte Claros, bringing the total investment to US$230 million. |
Implications | The additional funding will be directed at introducing further production lines. Novo Nordisk’s new facility is expected to hold an initial production capacity of around 168 million units of insulin per year, most of which will be exported to meet global demand for its products. |
Outlook | The company’s decision to expand its investment in Brazil shows that the country is an important distribution centre for other markets. Moreover, this investment also endorses Novo Nordisk’s plan to become the leading player in the diabetes market at both a local and global level. |
Novo Nordisk Steps Up Investment in Brazil
Oscar Porto, president of the Brazilian arm of Novo Nordisk, said that the company will raise the investment in constructing the Monte Claros manufacturing facility from US$200 million to US$230 million, local newspaper Gazeta Mercantil reports. The new plant for the Danish company, which is the world leader in diabetes care, will be located in the state of Minas Gerais. It is expected to open in 2007 with an overall production capacity of 168 million units of insulin. It is being built near the plant that Novo Nordisk acquired from local insulin specialist Biobrás in 2002. It is understood that the Danish company plans to export most of the new facility’s insulin production to Latin America, Europe, Asia and Africa.
Porto added that Novo Nordisk is currently restructuring its distribution system in Brazil, and has recently set up a new distribution centre in Curitiba, in Paraná. It is in the process of transferring most of the distribution operations from its centre in Barueri, in Sao Paulo, to Paraná, to speed up the unloading and distribution of imported pharmaceutical products. The new distribution centre has a capacity of 20 million units, significantly higher than in Barueri. The company has further projects in the country, including the expansion of both its packaging division for oral diabetes treatments and its raw material production division, with investments of US$30 million.
Outlook and Implications
Novo Nordisk’s decision to increase investment and restructure its local operations in Brazil falls in line with plans to expand its diabetes treatment franchise locally and globally. The investment is one of the company's largest outside Denmark, and comes despite Brazil's low participation in Novo Nordisk’s global operations. At present, Brazil accounts for only between 1% and 2% of the company’s overall global revenues, although this percentage is likely to increase after operations start at its Monte Claros manufacturing facility next year.
The construction of the Monte Claros unit is also expected to boost Novo Nordisk's position in the Brazilian market for diabetes treatments. This market was worth around US$100 million in 2005, and is estimated to reach overall revenues of US$180 million within five years. The diabetes market has been growing in recent years and is very competitive, with several leading companies seeking to enter this segment. Bayer (Germany), is currently commercialising its Glucobay (acarbose) treatment, while Bristol-Myers Squibb (BMS, United States) plans to launch its type 2 diabetes drug Murglitazar (pargluva) this year. Meanwhile, Eli Lilly (United States) intends to introduce its type 2 diabetes drug Byetta (exenatide) at the beginning of next year and Novartis (Switzerland) and Merck & Co. (United States) are waiting for regulatory approval for their respective diabetes treatments Galvus (vildagliptin) and Januvia (sitagliptin phosphate).
Related Articles:
- Brazil: 22 February 2006: Novo Nordisk Launches Levemir in Brazil
- Brazil: 19 October 2005: Novo Nordisk Receives Brazilian Approval for Diabetes Treatment Levemir
- Brazil:7 November 2003:Danish Drug-Maker Novo Nordisk Constructs New Plant in Brazil