Currently valued at US$5.2 billion, the pharmaceutical industry in Brazil is considered the tenth largest market in the world and the second largest in Latin America, after Mexico. With 553 laboratories, it plays as manufacturing hub in South America. Despite declining pharmaceutical sales over the past few years, Brazil is still among the five largest sellers of medication units. It sold 1.6 billion packages of pharmaceuticals in 2002, according to a report by India Trade Promotion Organisation (ITPO), Sao Paulo, Brazil.
Nearly 20 per cent of the companies operating in the Brazilian market are foreign, mostly from the United States and Europe. Foreign companies account for approximately 75 per cent of the internal market. Most leading world pharmaceutical companies like GSK, Roche, Novartis have operations in Brazil. Major local manufacturers include Medley, EMS, Biosintetica, Europharma, JP Industria Farmaceutica, and Laboratorio Ache.
The pharmaceutical industry employs 47,000 people directly. The sector also comprises 130 pharmaceuticals wholesalers; 50,000 pharmacies and 280,000 active doctors.
The market for generic drugs in Brazil was formally regulated in 1999 in a government effort to reduce prices of medicines. Though prices dropped considerably, only 25-30 per cent of the population has regular access to medicine, at present. The introduction of generic drugs created a dynamic investment option in this market. For June 2002 to 2003, income from this sector reached US$ 224 million, an increase of 47 per cent in comparison with the previous year.
Canadian Apotex has already invested US$25 million to build a factory in Itatiba, São Paulo. After two years in the market, Apotex is the sixth largest company in the market for generic drugs. Other companies such as the Indian Ranbaxy and the German Hexal area also investing in Brazil. Brazil encourages new entrants in the generic market by offering preferential purchase options in public tenders and special financial investment conditions through state finance organizations.
The pharmaceutical industry in the country has a strong dependency on foreign markets, due to the lack of investment in the expansion and modernization of official laboratories.
According to the Syndicate of the Pharmaceutical Industry (SINDUSFARMA), total Brazilian imports of pharmaceutical products in 2002 were approximately US$1.5 billion, registering a 0.4 per cent increase over the previous year. US continues to be the key player accounting for about 50 per cent of the total imports. In addition, imports are set to rise as the demand for more sophisticated drugs continues.
Brazil exports pharmaceuticals to other MERCOSUR countries, mainly to Argentina. In 2001, exports to those countries increased 61 per cent, with Argentina being the largest recipient. It is expected that exports are likely to go up as local industry investment in export capabilities takes effect, with domestic manufacturers upgrading facilities to meet international standards.
On the R&D front, the domestic as well as multinational companies witnessed substantial increase in the research activity after the new Patent Law in 1997, with expenditures nearing US$100 million in 2000.Well-equipped facilities and high quality staff in selected Brazilian hospitals have allowed activity in the clinical research business to grow considerably.
Expenditure in R&D between 1994 and 2000 rose by over 500 per cent.
Lack of adequate domestic production, exorbitantly high tax structure for medicines are considered the banes in Brazilian pharmaceutical industry. In the 1970s, approximately 70 per cent of all antibiotics were manufactured locally; however, nowadays this level is much smaller. It is estimated that there is 40 per cent idle capacity in the country's pharmaceutical industries.
At 30 per cent, taxes applied to medicines in Brazil are among the highest in the world. The government collects over US$ 1 billion in taxes from the pharmaceutical.
Though the government provides medicines for enrolled patients in the treatment of specific diseases, over 80 per cent of drug expenses in Brazil are paid by patients themselves. There are no medicine reimbursement schemes in Brazil. The average annual per capita consumption of pharmaceuticals is approximately US$61, according to data from the Pan American Health Organization.
However, government is increasingly investing in medicine access programmes. It is hoped that a new legislation due to take effect shortly requiring that private health insurers partially reimburse the costs of medicines should make the pharmaceutical market grow considerably.