Brazil, one of the major emerging powers of the world, is marking its presence in almost every dimension of the world economy, including the generic drugs industry. All the more, the pharmaceutical industry in Brazil, which was valued at US $9.8 billion in 2006, is gearing up to capture a significantly greater portion of the global pharmaceutical market in the near future. The country is one of the seven emerging markets that are tipped to contribute a quarter of the pharmaceutical industry's global growth within the next few years.

According to a market research report titled 'Generic Drugs Market in Brazil (2007-2011)' by a leading market research company RNCOS, in terms of sales value generics occupy nearly 11.8 per cent of the Brazilian pharma market (as of 2007). At present, Brazil is the largest generic drugs market in Latin America and due to its strong growth potential, the country is expected to become one of the world's largest generics market by 2011, accounting for 23 per cent share in the total Brazilian pharmaceutical market.

Because of this strong growth, many international players are positioning themselves to leverage from the soaring Brazilian generics market, which is currently dominated by the domestic generics manufacturers. The research anticipates the investment in the country to grow substantially and reach around US $350 million in short term.

According to Gadre, vice president of IMS and managing director of ORG IMS Research, India, the seven 'pharmerging' markets of China, Brazil, Mexico, South Korea, India, Turkey and Russia are expected to grow 12 to 13 per cent next year alone to reach US$85 to US$90 billion.

In terms of revenue, the pharmaceutical industry in Brazil is the tenth largest market in the world and the second largest in Latin America, after Mexico, at US$5.2 billion and directly employing 47,000 people.

Nearly 20 per cent of the companies operating in the Brazilian market are foreign, mostly from the US and Europe. Also, majority of the world's large pharmaceutical companies, such as GSK, Roche and Novartis have their operations in this country. In addition, foreign companies account for approximately 75 per cent of the internal market, said Gadre.

With 553 laboratories and 130 pharmaceuticals wholesalers on the manufacturing front, Brazil serves as a manufacturing hub in South America. Major local manufacturers include Medley, EMS, Biosintetica, Europharma, JP Industria Farmaceutica and Laboratorio Ache.

However, lack of adequate domestic production and exorbitantly high tax structure for medicines are considered the banes of the Brazilian pharmaceutical industry.

At 30 per cent, taxes applied to medicines in Brazil are among the highest in the world, with the government collecting over US$1 billion in taxes from the pharmaceutical industry a year. As a result the country's pharmaceutical industry has an estimated 40 per cent idle capacity, said Gadre.

However, the market for generic drugs in Brazil was formally regulated in 1999 in a government effort to reduce prices of medicines and this introduction of generic drugs has been creating dynamic investment options in this market for companies around the world.

"Brazil actively encourages new entrants into its generic market by offering preferential purchase options in public tenders and special financial investment conditions through state finance organisations," noted Gadre. For example, Canada's Apotex invested US$25 million to build a factory in Itatiba, São Paulo and after two years in the market, Apotex is the sixth largest company in the market for generic drugs.

Other companies such as India's Ranbaxy and Germany's Hexal have been actively investing in Brazil. From June 2002 to 2003 income from this sector reached US$224 million, an increase of 47 per cent.

On the research and development (R&D) front, the domestic as well as multinational companies witnessed substantial increases in the activity after the new patent law was introduced in 1997. For instance, between 1994 and 2000 R&D expenditure rose by over 500 per cent to US$100 million. The government is fostering R&D programmes and mergers and alliances in the local industry to create bigger local producers, which can compete with multinational subsidiaries.

In terms of clinical trials, well-equipped facilities and high quality staff in selected Brazilian hospitals have allowed activity in the clinical research business to grow considerably.

The healthcare sector in Brazil is a mix of public and private services with around 7,200 hospitals containing 500,000 beds, 280,000 doctors and 12,000 diagnostics clinics across the country.
According to Graciela Racaro, Parexel's director of clinical and regulatory in Latin America, in the clinical trial sector Brazil is the dominant country in South America.

Figures provided at last year's Drug Information Association (DIA) meeting in Atlanta by Dr Granville Garcia de Oliveira, a representative from the Brazillian regulatory authority, ANVISA, showed that 923 clinical trial applications (CTAs) and 56 new drug applications (NDAs) trials were approved in Brazil in 2006.

The clinical trials industry in Brazil began to evolve in 1996 when it established regulations that adhered more closely to International Conference on Harmonisation (ICH) guidelines, along with the establishment of a national bioethical committee that investigates institutional review boards (IRBs).

Cost saving is not the only factor driving the growth in this sector, but access to a large patient population of 180 million people who display both 'western' and third world diseases is another major drawcard for international trial sponsors.

In addition, while regulatory timelines are still considerably long - it often takes 9 to 12 months to have a site up and running - this is often made up for by much shorter recruitment times. Some sites have even recruited after two days.