BMI's Executive Summary

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With estimated year-on-year (y-o-y) growth of 17% in 2007, down only slightly from 20% growth in 2006, Brazil represents one of the fastest-growing major pharmaceutical markets in the world. BMI estimates generics market growth of 44.0% as that segment continues to drive the overall marketplace. According to our newly-extended forecast for the five years to 2012, the Brazilian pharmaceutical market should see a 7.1% average annual growth rate, reaching a value of US$18.3bn in 2012.

As impressive as recent growth has been, volumes remain stagnant or declining, with industry association Febrafarma projecting a 1.77% fall in volumes sold during 2007. This trend is striking, given the substantial investments in expanding access to medicines made and pledged by the government of President Luiz Inácio Lula da Silva. With the economy growing and public and private spending surging, the slip in volumes is troubling. One factor is surely the replacement of older, less effective medicines with modern treatments and more effective drug delivery. But, inescapably, a major part of the equation is ineffective delivery via both the traditional wholesale and retail sector and government programmes, coupled with greater consumption of costlier medicines, generally at the top end of the market.

Still, Brazil's continued attractiveness for local and foreign players was reflected by a number of deals and new projects announced in Q407. After committing more than US$100mn to expand production earlier in the year, Novartis is reportedly planning a new vaccines production facility in Pernambuco state, an investment that could eventually reach US$500mn – although there had been signs in late October 2007 that the project could be delayed, reportedly due to concerns over Brazil's patent protections. Leading South African generics maker Aspen gained exposure to the market with its acquisition of 50% of Strides Latina, a subsidiary of fast-growing Indian player Strides Arcolab. French player Solvay and UK's AstraZeneca are said to be in actively eyeing local acquisitions. Importers are also prospering. According to a survey by local consultancy Lafis, Brazil's medicines trade deficit widened by 42% y-o-y over the first eight months of 2007, reaching US$1.8bn.

Nonetheless, multinational investments reflect a longer term confidence in the potential of Brazil as a production hub and are being met by new investments by domestic drugmakers. Local players Libbs and Medley announced substantial investments in technology and production capacity in a bid to maintain strong positions in the generics segment, as well as increase export capacity. Brazilian private equity company GP Investments reportedly paid BRL241.6mn (US$120.2mn) for 50% of generics and overthe- counter (OTC) maker Farmasa. The strong local market and a weak dollar have helped local players invest and get mainly imported active pharmaceutical ingredients (APIs) more cheaply. Whatever the structural problems facing the market, improving intellectual property (IP) conditions and major government investment in modernising the sector are encouraging sustained investment on levels unmatched in other Latin American countries.

Contents

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Chapter 1 - Executive Summary

Brazil Pharmaceuticals & Healthcare Industry SWOT

Brazil Political SWOT

Brazil Economic SWOT

Brazil Business Environment SWOT

Chapter 2 - Brazil: Business Environment Ranking

Business Environment Ranking

Economics - Long-Term Risk

Politics - Long-Term Risk

Regulatory Barriers

Domestic Sector Threat

Market Growth Potential

Market Size Ranking

Chapter 3 - Market Summary

Chapter 4 - Regulatory Regime

Intellectual Property

Regulator Interference

Data Protection

Compulsory Licensing

Patenting Environment

Pricing & Reimbursement Issues

Other Regulatory Issues

Unit Dose Dispensing

Subsidies On Generics

Tax Burden On Pharmaceuticals

Chapter 5 - Industry Developments

Healthcare Sector

Domestic Pharmaceuticals Industry

State-Owned Manufacturing Sector

PROFARMA Initiative

Generics Sector

Table - Key Investments by Indian Firms in Brazil

Multinational Research-Based Sector

Table: Allocated FDI In Brazilian Pharmaceuticals Sector, 2005-2007

Chapter 6 - Industry Forecast Scenario

Overall Market Forecast

Table: Drug Market Trends, 2004-2010

Key Growth Factors - Industry

Table: Health Expenditure Trends, 2004-2010

Key Growth Factors - Macroeconomic

Table: Economic Activity - Historical Data And Forecasts

Prescription Market Forecast

Table: Prescription Drug Market Trends 2004-2010

OTC Market Forecast

Table: Market Forecast

Regulatory Overview

Advertising

OTC Sector: Competitive Landscape

Key Growth Factors

Table: OTC Market Trends 2004-2010

Generics Market Forecast

Recent Developments

Table: Brazil: Retail Price Differentials On Key Off-Patent Compounds

Competitive Landscape

Outlook

Table: Generics And Branded Market Forecasts, 2004-2010

Export/Import Forecasts

Table: Sectoral Trade Forecasts 2004-2010

Other Healthcare Data Forecasts

Table: Socio-Demographic Forecasts 2004-2010

Key Risks To BMI's Forecast Scenario

Chapter 7 - Competitive Landscape

Leading Products

Table: Brazil - Leading 10 Compounds In 2005

Manufacturers

Table: Market Share, 2005 (%)

Distribution

Table: Profarma: Brazil's distribution leader

Retail Market

Recent Market Performance

Chapter 8 - Company Monitor

Profiles: Leading Multinational Companies

Sanofi-Aventis

Pfizer

Merck & Co

Novartis

GlaxoSmithKline (GSK)

Roche

Altana Pharma

Merck KGaA

Novo Nordisk

Chapter 9 - Profiles: Indigenous Manufacturing Sector

Aché / Biosintética

EMS Sigma

Eurofarma

Medley

Chapter 10 - Latin America: Regional Market Overview

Chapter 11 - BMI Forecast Modelling

How We Generate Our Industry Forecasts

Technical Process

Pharmaceutical Industry

Sources

Chapter 12 - Appendix: Regional Demographic Data

Wages (ave per annum), US$

Population

Household Spending Per Capita, US$

Private Consumption Per Capita, US$ PPP

Market Size, GDP, US$bn

Chapter 13 - Country Snapshot: Brazil Demographic Data

Section 1: Population

Table: Demographic Indicators (2005)

Table: Rural/Urban Breakdown

Section 2: Education & Healthcare

Table: Education

Table: Healthcare: Vital Statistics

Table: Healthcare: Expenditure

Section 3: Labour Market And Spending Power

Table: Employment Indicators

Table: Consumption And Stratification

Table: Wages Per Year

Competitive Landscape for Latin America Pharmaceuticals and Healthcare: Sample of Companies Ranked

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Cross-border analysis of regulatory systems comparing the patenting environment, summarising regional pricing and reimbursement factors and monitoring the growth of the Pharmaceuticals sector across the region. Company SWOTs cover leading multinational and national drug companies operating in each market.

Network of Latin American Pharmaceuticals & Healthcare Sources

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BMI's Latin American Pharmaceuticals & Healthcare Reports are based on an extensive network of multilateral organisations, government departments, pharmaceuticals industry associations, chambers of commerce and company reports. Information sources include: