Portugal: Riding the Wave of Economic Reform - Pharmaceutical Executive

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Portugal: Riding the Wave of Economic Reform


Pharmaceutical Executive


The industry has certainly identified the potential of the OTC market and does not want to miss the party. One good example is NeoFarmaceutica, which is part of the German Madaus Group and has been a presence in the Portuguese market since the 1950s. Says Jose Verissimo, NeoFarmaceutica's general manager, "After the OTC market liberalization, the market is experiencing an amazing growth. NeoFarmaceutica is the second company in the OTC market after Novartis, enjoying a leading position in several therapeutic classes."

The major driver of the company's growth has been Ben-u-ron, the highest-selling product in the Portuguese pharmaceutical market, at more than 10 million units. In 2005, the product moved to prescription status, and yet the company remained the market leader in OTCs. "Ben-u-ron is a case study. It is not a very easy success story," says Verissimo. "The product has been promoted for a long period of time, and to remain at the top demands a continuous marketing effort. The secret, I would say, would be the combination of heavy exposure in different fields, such as pediatrics, orthopedic and rheumatology. Consequently, such a mix created the success that the product has been experiencing for a while."

The company's successes in the OTC market have spurred its management to enter new fields of business this year. "The strategy involves entering new areas such as the psychiatric and asthma business, in addition to capitalizing on our core areas of pain and cardiovascular," concludes Verissimo.

The 100% Portuguese company KTB SA is following the same track. The company has invested in OTC products that have performed very well in the US or UK markets but are completely unknown to Portugal.

Importing Success Stories

Importing the success stories was not exactly easy at first. "The product that really positioned KTB on the market was a vitamin supplement for children in a form of a gum. I remember the first meeting I had with the pharmaceutical wholesaler - he said I was mad and I would never get the product off the ground. Fortunately he was wrong," says owner and manager Paula Soares, a native of South Africa. The efforts are paying off; KTB is expecting a sales increase of close to 30% in 2007, building on the momentum created by the OTC business. "Every month there are two or three new OTC sales points. This is just the beginning. The aim is to sell OTCs in every supermarket of the country. Furthermore, the new stores sell more types of products that a traditional pharmacy would not sell, because people go in, they look at the product, the box, they can read it and decide for themselves. In a traditional pharmacy, most of the products are behind the counter and the pharmacist would only recommend what he knows," she notes. High levels of growth have allowed Soares to think bigger. "Within the next two years, KTB will be consolidating its portfolio. We are expanding into the medical devices market."

The Race for R&D


AMGEN's team on the beach
One of the weaknesses of the Portuguese pharmaceutical industry is the difficulty of applying innovation; while the world's top research and development countries' international investment ratios are around 14%, Portugal rarely reaches 3%. The country's R&D expenditure in terms of its GDP is one-third of the OECD's (Organisation for Economic Co-operation and Development) average. Nevertheless, 8% of the country's R&D is funded by the pharmaceutical industry. Moreover, Portugal has eight well-established research units and thousands of PhDs in biomedics, molecular research and similar fields.

The Massachusetts Institute of Technology (MIT) and the Portuguese Ministry of Science, Technology and Higher Education have recently announced a long-term collaboration to significantly expand research and education in engineering and management in many of Portugal's leading universities. The focus on health mostly involves the areas of biomedical devices and technologies, along with strategic decision-making in biomedical business.


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