Brazil Country Market
Insights and Opportunities
Overview: The Brazilian pharmaceutical industry is comprised of 270 companies and is the largest market in Latin America. This represents a total market value of US$ 17 billion in 2008, with an estimated 20% growth. Brazil is also among the five largest pharmaceutical markets in the world in terms of unit sales.
According to Brazil’s Pharmaceutical Industry Syndicate (SINDUSFARMA), Brazilian pharmaceutical product imports in 2007 approximated US$ 4.2 billion. This reflects a 35% increase over the previous year's level. The U.S. exports account for approximately 20% of Brazilian pharmaceutical imports.
About 80% of pharmaceutical companies operating in Brazil are national, but they are only responsible for a minority of domestic sales. Foreign firms mostly from the United States and Europe, along with their Brazilian subsidiaries, supply 70% of the market, not including direct sales to the Government.
Multinationals operating in Brazil have expressed concerns about the slow to non-existent approval of pharmaceutical patents in the country, with roughly 18,000 pharmaceutical patents currently pending approval. Also, 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 sector.
The cascading tax method applied on manufactured goods in Brazil affects several industries, and it is one of the most important topics that private industry has raised with the Government. The process aimed at reducing taxes on pharmaceutical production is slow and bureaucratic. According to Government statements, however, taxes applied on pharmaceutical products are expected to decrease in order to make drugs more affordable for the population. However, these decreases are expected more at the state level rather than the federal.
Generic Pharmaceutical Products: U.S. firms seeking to enter the Brazilian market should be aware that the local generic drug market is growing rapidly. Generic drugs first entered the Brazilian market in 1999. Since then, the sector has grown rapidly and is estimated to have accounted for 14.2% of sales in 2007. Nearly all generic production is purchased by state public health care systems as part of the government’s program to distribute medicine to the poor. It is estimated that in 2008, the generic market will reach US$ 1 billion in sales represented 20% of total sales.
Opportunities: Brazil’s Pharmaceutical market represents an excellent opportunity for US firms for a variety of reasons. The size of the pharmaceutical market is significant, and this market will likely grow as the Government lowers taxes on these products. Tax decreases will not only increase per client sales for current patients, but will bring into the fold those currently forgoing medication because of financial constraints.
Opportunities for U.S. firms to export raw materials to Brazil are abundant. Approximately 85% of the raw materials used in the production of generic drugs in Brazil are imported. In addition, we see major demand for equipment and services associated with the construction of pharmaceutical manufacturing plants, representing another opportunity for US exporters.