Brazil - The government aims to create a ‘super’ local producer able to compete internationally, but foreign producers are a big threat

Pfizer … is it acquiring Neo Química?

Generics sales continue to grow at a higher rate than the overall pharmacy sector, and they are expected to represent 20% of the sector by volume in 2010. Therefore, the sector is attracting foreign interest. In September 2009, it was rumoured that the local generic producer Neo Química was being acquired by Pfizer. This would be the second major acquisition in the generic sector in 2009, following sanofi-aventis’ acquisition of Medley. This wave of foreign acquisitions is a blow for the government which has been trying to create a leading local pharmaceutical group with the help of the National Bank for Economic & Social Development (BNDES). Other leading producers such as EMS, Aché and Eurofarma remain local.

How are foreign producers assessing the market?

Leading foreign pharmaceutical companies are strengthening their operations in the country. Brazil is the most important BRIC market for sanofi-aventis; the company is acquiring Medley. Daiichi-Sankyo, the only Japanese company with manufacturing operations in Brazil, is expanding its plant. GlaxoSmithKline has announced an alliance with Fiocruz’s Bio-Manguinhos to develop vaccines. Novartis is setting up a vaccines plant. Pfizer is strengthening its operations via a rumoured local acquisition. In the wholesaling sector, Celesio, the largest European wholesaler, has acquired a majority state in the Panpharma group. Other companies are re-assessing their operations. Boehringer Ingelheim, for instance, has signed a third-party manufacturing agreement with Zambon, whilst Roche has announced plans to sell its manufacturing plant in Brazil.

How are local producers responding?

Local manufacturing investments continue in order to increase market positioning locally and internationally. Cristália, for instance, has inaugurated a new R&D centre; the company claims to be the local producer with the highest R&D portfolio and investments. EMS is investing in a new Drug Delivery Systems (DDS) platform. Eurofarma continues to invest in its animal health division in the local market, whiltst it has acquired an Argentine pharmaceutical producer in order to develop its international operations. Hipolabor is building a second manufacturing plant for the production of antibiotics. Even public producers follow the same trend. Fundação para o Remédio Popular (FURP), for example, has inaugurated a new manufacturing plant for the production of generic medicines, the first of its type.

Further reading - An in-depth analysis of the Brazilian pharmaceutical market is available from Espicom: The Pharmaceutical Market: Brazil (published September 2009)