Portugal: Riding the Wave of Economic Reform - Pharmaceutical Executive


Portugal: Riding the Wave of Economic Reform

Pharmaceutical Executive

Very Profitable Generic Companies

Such an astonishing growth rate has naturally caused some side effects and a very unique profile for generics in the Portuguese market. The speed of the development left behind several Portuguese companies that were unfamiliar with the generic business model. "In other countries, the local players are the main generic players, which did not happen in Portugal because they did not have time to prepare themselves. In three months, the market was open. At the same time, as the generic market is a market of volume and the Portuguese market is a very small one, several companies decided not to enter it and compete with international players," states Gomes Esteves. Of the 1,300 possible INNs (International Nonproprietary Names), only 10% are in the Portuguese market - naturally the most expensive ones. That explains why generic companies in Portugal are so profitable. But the situation is about to change. "We cannot underestimate that multinationals have decreased their prices considerably to compete with generic products. It is a normal market reaction. Consequently the generics growth in the future will be mostly related to the expired patents released in the market," stresses IMS Health's Carlos Mocho. Furthermore, the government's tendency to focus on price controls rather than directly encouraging generic usage might be a hurdle for the sector's development.

Another very particular feature of the Portuguese generic market is the large number of companies involved. The number of generic companies in Portugal (a country of 10 million people) has risen from nine in 2002 to more than 50 in 2004. The trend toward more INNs, combined with downward pricing pressure from the government and increasing foreign competition, should promote a strong movement toward market consolidation, concentrating 80% to 85% of the market among five or six players.

Generic Usage Still Lagging Behind

Alonso Aventim
"I still foresee the growth of generics outpacing the general market," says Antonio Alonso Aventin, director of Alter. "However, it will not be the same as the growth shown over the past three years." Based on Alter's previous experience in the Spanish market, where it launched its generic line in 1997, this family company's success in Portugal has encouraged its owners to seek additional opportunities in France and Italy. "Alter has exactly the same ambitions for these two countries as when we designed the strategy for generics in Spain in 1997 and in Portugal in 2001," says Alonso Aventin. "In addition to that, Alter is also very wellregarded in Panama and Guatemala, with the Nutribem brand, and we have started to commercialize generic drugs. I am very confident that the new expansion phase will be very successful." Although Alter has been in Portugal for 55 years, it was really the last five that brought outstanding results. "In regards to Alter Portugal, practically 95% of the company's growth was due to the generics market," he continues. "We are one of the business groups which took a leading role in developing this market in the country. In 2001, Portugal was responsible for 10% of the group's revenues; today, the figure represents 30% of the group's US$273 million turnover." Such achievements led the Spanish Business Club to name Alter the best Spanish company in Portugal for three years in a row, from 2004 to 2006.

Generic usage in Portugal is, however, still lagging considerably behind that of Germany, the United Kingdom, Italy and France. As the 10% subvention was withdrawn before generics represented 20% of the market many are questioning whether the Portuguese generic market will continue developing with such intensity without the governmental support. On top of that, the market still needs some time before it sees a generic company rank among the pharmaceutical top five. The truth is, there is major room for development before generics reach the 30% market penetration mark. Portugal is headed in the right direction, but the road is long and accidents can happen, so watch for signs.


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