Brazil Report: A Bold Player Blooms - Pharmaceutical Executive


Brazil Report: A Bold Player Blooms

Pharmaceutical Executive

Otto Phillipp Braun, managing director, B.Braun
It seems like a logical question. "The answer," he says, "is because most of the Brazilian companies operate only in Brazil. The necessity today is to cover South America: treat all countries as a one. Who is in all of them? Of companies based in Latin America, only Bagó. Others may be in Argentina, Mexico, and Brazil, but Bagó is present in Chile, Ecuador, Peru, Bolivia, Paraguay, etc." Though present in oncology, cardiology, and OTC, Loaiza Sotomayor gives the example of Keflex, a former product of Eli Lilly's, which after three unsuccessful launch attempts it finally decided to sell the brand in 2005. Two years later, Bagó owned Keflex, and was told the impossible couldn't be done: increasing sales on a product with 15 other branded generic competitors; decreasing all expenses, sampling, and distributor's discount. Yet within one year Bagó was generating far more money for the product. "I don't want a big factory or a big sales force. I want a big profit," says Sotomayor. "I want to create a structure into which I can put products, and each one will contribute profit. Recently, I visited one of Brazil's largest generics companies. They were proud to have volumes in the millions and millions of units. But what's their profit? 0.01%! Bagó is a micro-company by comparison, yet earns the same amount of profit. Brazilian people tend to have overarching ambitions—'I want to be No. 1 in the world!'—while losing sight of the true goal."

B.Braun Facility
Other companies look to the government as strategic partners. As Cesar Rengifo, managing director of GlaxoSmithKline Brazil emphasizes, "GSK is always trying to follow the government agenda, and adapting the strategy toward what the Brazilian government needs and what we believe is the future, to work together to make good achievements in this direction," which may sound like a modest assessment of a longstanding government collaboration dating back 20 years, with high-profile agreements making international impact, such as a multibillion-dollar tech transfer agreement to manufacture Synflorix, a pediatric pneumococcal vaccine. Speaking about Synflorix, Rengifo notes, "that deal is probably the most visible, but GSK has similar achievements in every area. When you have an agenda of diversification, you must take advantage of all the opportunities available in the market. We didn't start at US$2.6 billion right away—we started 20 years ago with technology transfer." And he points out that the Brazilian government uses the Hib Vaccine transfer, already a reality, as a benchmark standard. What's next for GSK in this field? "Following Synflorix, GSK has moved further into R&D, and now corporate research on the Dengue vaccine is a codevelopment with Fiocruz, and we remain very optimistic on that partnership," says Rengifo. "We are in the enviable position of having a headstart on other companies which may be trying to start partnerships from scratch."

Cesar M. Rengifo, president, GSK
Such a headstart is clear when talking with Roche Brazil, which although has been in the country for over 80 years, and positioned as the No. 1 company in Latin America based on its primary care portfolio, has had to play catchup on the government side. Since 2009, Roche has repositioned itself in Brazil, restructuring, hiring, and increasing competitiveness—but, according to Adriano Treve, director president of Roche Brazil, "one key factor is that we started discussions and collaboration with the government which we did not do before. The government is an important customer for us. It's just that we had little experience to collaborate with the public sector." Talking about a rapprochement, and whether the government can move closer to industry, Treve says, "The willingness is there for sure. The question, as everywhere in the world, is about prices? There are two opposing positions: the government has no or little money to spend, and their budgets are under pressure, and we need to make sure we give access to patients to our products. If we go along our own paths we will never meet. So we need to meet somewhere in the middle so we can both achieve our goals." Now, however, "the top priority is to have a good working relationship with the government."

Adriano Treve, director and president, Roche
Rengifo can offer advice based on his experience at the head of that learning curve. As he explains, "the strategic intent of the government is quite sound. Politicians want to give more healthcare to the population, and they recognize the need to move faster and put money behind the decision, and that private industry must work side by side with the government to make it happen. Of course, GSK is always pushing innovation, but at the heart of all we do is driving access for patients to our medicines and vaccines."

Manuel Fernando Loaiza Sotomayor, president, Bagó
Addressing the ever-touchy issue of pricing, Rengifo seems nonchalant. "This has led to decisions like in antibiotics, where we decreased prices by 60% to open access to more patients," he says. "What we've found is that the volumes compensate, and now we're competing head-to-head with generics—and winning the battle with our brands. We've shown that if we make adequate moves in line with the government and the market we can win the battle," Rengifo concludes.

Loaiza Sotomayor concurs on this cooperative spirit, and offers a friendly message to those looking to enter: "I invite them to know Brazil, a large and very nice country with a high level of competition. A place where you can learn a lot of concepts and strategies that are not in any book or university. Working here is a great experience that makes you a stronger and better person. Of course, this is mainly due to the great heart of the Brazilian people. It's difficult, and often complicated, but you learn a lot. Some years here is more than a Harvard MBA!"


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