Brazil's domestic pharma industry has for the first time taken a market share of more than 50%, reporting sales of BRL15.79 billion (USD6.9 billion) during the first half of the year.
IHS Life Sciences perspective | |
Significance | For the first time, the Brazilian domestic pharmaceutical industry has surpassed in terms of sales and market share the international pharmaceutical companies based in Brazil. |
Implications | The growth of Brazilian pharmaceuticals was driven by the increased presence of generics in the market, with locally produced generics accounting for 70% of the overall "copies" market, which includes generics and "similars". |
Outlook | The domestic industry will continue to experience a boost from Brazilian government policies fostering domestic production of medicines, technology-transfer agreements, and public-private Productive Development Partnerships. |
Brazil's local industry reported sales of BRL15.79 billion (USD6.9 billion) during the first half of the year accounting for a market share of 50.8% in value terms. This is the first time the domestic industry has surpassed in sales and market share the international pharmaceutical companies based in Brazil, reports the National Association of Pharmaceutical Laboratories (Alanac), based on IMS data.
According to the Brazilian newspaper Veja, national pharmaceutical companies remain focused on "copy" products, with domestic producers accounting for 70% of generic sales in value terms in Brazil's overall copies market, which includes generics and "similars". The local industry has also gained ground in the production of innovative medicines, reporting an 18% share in this market, reports Henry Tada, CEO of Alanac. According to Tada, "The national industry depends on the sales of generics and biosimilars to invest in research and development of innovative medicines."
Finally Alanac has highlighted that during recent years, Brazilian pharmaceutical groups such as EMS and Hypermarcas have reported a better performance than international pharmaceutical companies based in Brazil such as Pfizer (US) and Sanofi (France, see Brazil: 2 September 2014: EMS Group consolidates position in Brazil).
Outlook and implications
It is interesting to note that the Brazilian government is becoming increasingly keen to foster the domestic production of most drugs that have so far been imported, and if lacking the technology – as in the case of biological drugs – is eager to set up technology-transfer agreements and public-private Productive Development Partnerships (see Brazil: 14 August 2014: Brazil to regulate medicine prices through Productive Development Partnerships). Brazil's local manufacturers are looking to expand their capacity in the short-to-medium term, so that Brazil can become independent and self sufficient in terms of producing drugs such as vaccines and treatments for some chronic diseases via technology-transfer agreements with foreign firms (see Germany: 27 August 2014: Brazilian antitrust agency approves Bionovis and Merck KGaA's partnership agreement and Brazil: 25 June 2013: Brazil to expand local production of biologic drugs with 14 new products).
Sales of local medicines appear to be driving growth in Brazil's overall pharmaceutical market, which, as previously reported by IHS, was up by 16% year on year (y/y) in the 12 months to November 2013, reaching BRL57 billion (see Brazil: 19 December 2013: Drug sales in Brazil rise by 16%). Brazil was the leading Latin American pharmaceutical market in 2013, totalling BRL32.92 billion in revenue and 4.04 billion in units.
Despite the strong growth of the local pharma industry as reflected by the latest data reported by Alanac, São Paulo-based pharmaceutical industry association Sindusfarma has stated that the pharma industry has become less profitable owing to the high price of labour and taxes. However, it is important to highlight that the Brazilian government has recently extended the list of medicines with tax reduction (exemption from PIS/COFINS). This measure is expected to benefit pharma industry profits and support more growth in the pharmaceutical market in Brazil (see Brazil: 30 June 2014: Brazilian government extends list of medicines with tax reduction).
The recent Alanac data may be seen as a warning to multinational manufacturers wishing to sell innovative medicines on a large scale in the booming Brazilian economy: the data suggest Brazil is using more drugs provided by local manufacturers in order to cut down on import costs. Meanwhile, the positive consolidation has allowed the domestic industry to export some of its produce to other Latin American countries such as Mexico and BRICS members such as Russia (see Russia: 23 June 2014: Russia's Microgen and Brazil's Butantan Institute to enter into vaccine development agreement and Mexico: 18 July 2014: Brazil's Cristalia to export HIV treatment to Mexico).