The strengthening of the Brazilian currency during the second half of 2004 has helped the Indian companies operating there regain their market shares. Change in product mix and introductions of new products enhanced market share in the US$ 8 billion Brazilian market. Almost all the major Indian companies like Ranbaxy Laboratories, Strides Acrolab, Dr Reddy's Laboratories, Cadila Healthcare, Wockhardt Ltd, Orchid Chemicals & Pharmaceuticals, Torrent Pharma, Glenmark Pharmaceuticals, Unichem Laboratories, IPCA, etc., have already established subsidiaries for manufacturing or marketing in Brazil.
Ranbaxy Laboratories is among the top 5 generic companies in Brazil and it is the largest foreign generics pharmaceutical MNC in Brazil. The company has two subsidiaries in Brazil, viz., Ranbaxy Farmaceutica Ltda (70 per cent equity holding) and Ranbaxy Do Brazil Ltda (10 per cent holding). The subsidiaries' sales in Brazil increased by 37 per cent to US $ 31 million during 2004. These subsidiaries launched ten new generic molecules and three new-branded products. With the launch of Contiflo (Tamsulosin) and Cutison (Mometasone) in the branded segment, the total number of brands introduced in Brazil market reached up to five. Ranbaxy is setting up a new manufacturing plant in Sao Gonzalo near Rio de Janeiro to meet the growing demand.
Torrent Pharma, a Rs 470-crore plus Gujarat based pharmaceutical giant, has set up Torrent do Brasil Ltda during 2002-03 with an investment of Rs 17.79 crore in the equity capital. Subsequently, the company increased its investment to Rs 31.11 crore during 2003-04. The Brazilian subsidiary commenced operations and within its first year of operations and it has introduced 14 products in the market, so far. The subsidiary is planning to expand its field force, doctor coverage, territorial coverage and distribution coverage in the coming years. The company achieved sales of Rs 22.56 crore during 2003-04 as compared to Rs 2.42 core in the previous year. However, the company incurred a loss of Rs 4.19 crore mainly due to market developmental expenses.
With the restructuring its Latin America operations, Strides strengthened its geographical leadership. A semi-solids facility was commissioned in the Vittoria Pharmaceutical Complex to cater to domestic demand. Strides Acrolab Ltd initiated revamping of its business in Latin America during the year ended December 2004 and transferred the investments in Brazilian subsidiaries viz Industria Farmaceutica Brazilera Ltda (Infabra) and Cellofarm Ltda to Goodlanza S.A., Uruguay. Infabra has been merged with Cellofarm. Strides has transferred equity and preference shares in Infabra amounting to Rs 10.16 crore and Rs 4.32 crore respectively to Strides Latina. Further it has transferred equity investments in Cellofarm amounting to Rs 29.01 crore to Strides Latina.
Strides Latina transferred its shares to Goodlanza Group of Uruguay. Due to this, Strides Latina's relationship with the company has changed from that of a wholly owned subsidiary to an associate company.
Dr Reddy's Laboratories, the third largest Pharma company in India with net sales of Rs 1559 crore, has set up a subsidiary Dr Reddy's Farmaceutica Do Brasil Ltda with an investment of Rs 9.71 crore in the equity capital. The company's total assets stood at Rs 26.03 crore and its turnover touched to Rs 3.85 crore. However, the subsidiary company incurred a operating loss of Rs 11.46 crore during 2004-05.
Cadila Healthcare, an integrated company with strengths all along the pharmaceutical value chain and global presence, received the approval from ANVISA (the drug regulatory body of Brazil) for its Moraiya formulations factory during 2004-05. The company is now entering in the Brazilian market in a big way in the current year. The bio-equivalence facility of the Zydus Research Centre was approved by ANVISA and the company is filing the bio-equivalence products.
Wockhardt Ltd, through its subsidiary called Wockhardt Europe Ltd (WEL), has set up a subsidiary in Brazil - Wockhardt Farmaceutica do Brasil Ltda for marketing its biotech products. WFL established 10 per cent business of Wockhardt Farmaceutica at a consideration of US$ 21,055. Besides marketing Wockhardt's generic pharmaceuticals, this company will enter into marketing arrangements for biotech products with specialized firms. Brazil is one of the world's top 10 generic markets, growing at 30 per cent per annum.
Glenmark Pharmaeutical, a Rs 525-crore company, is in the process of entering Brazil market. It has acquired Klinger Labs, a ANVISA approved Brazilin company for a consideration of US$ 5.25 million. Glenmark is planning to increasing its share of revenue from developing markets and expects to achieve over 100 per cent growth in revenues from semi-regulated markets in next couple of years. Glenmark invested Rs 1.75 crore in equity capital of Glenmark Farmaceutica Ltda, Brazil and advanced Rs 11.39 lakh during March 2004.
Orchid Chemicals & Pharmaceuticals has set up a subsidiary in Brazil to cater to the product registration and marketing requirements as the Brazil is a large and fast growing market for cephalosporins. Orchid has stepped up its investments to Rs 54.07 lakh in the equity capital during 2004-05 from Rs 25.73 lakh in the previous year. The company has submitted for inspection of the injectable formulations facilities at Irungattukottai, by the Brazilian regulatory authorities.
Ipca Ltd has invested Rs 3.44 crore in equity capital of its wholly owned Brazilian subsidiary Laboratories IPCA Do Brasil Ltda. The company commenced the marketing operations during 2003-04 and its five products are already registered with regulatory authorities. Though its sales increased to Rs 24.19 lakh for the year 2003-04, the company incurred a loss of Rs 3 crore basically due to higher initial expenses. Unichem has strengthen its international operations by opening up subsidiaries in several countries including Brazil.
Thus the Indian Pharma companies are entering Brazilian market despite initial setback due to higher start-up expenses. However, with in couple of years, these companies will establish there R&D based cost effective products in this market. The major international companies are feeling the hit of entry of Indian products. The price of the product will play crucial role to fight competition in the Brazilian market.