Industry Growth Slowdown in Brazil

Pharmaceutical Executive

The Brazilian economy is being impacted by internal and external factors, and forecast figures are being quickly revised downwards. Market research released by Brazil’s Central Bank revised average analysts’ projections for economic growth in 2014 down to 0.70% from 0.90% four weeks earlier(1).

The Brazilian economy is being impacted by internal and external factors, and forecast figures are being quickly revised downwards. Market research released by Brazil’s Central Bank revised average analysts’ projections for economic growth in 2014 down to 0.70% from 0.90% four weeks earlier(1). In June 2014, the Hong Kong Trade Development Council (HKTDC) stated that the local economy was projected to grow by 1.8% in 2014. Projection figures keep slipping on a weekly basis(2).

The HKTDC research identifies moderation in local industrial production and a slower inflow of foreign capital as reasons for Brazil’s economic boom cooling off after recording growth levels of 7.5% in 2010.

The research shows, however, that because there are signs of worldwide economic recovery and sustained commodity demand, the economy could see growth of approximately 2.1% in 2015, “as the world economy improves”(2).

After hosting the World Cup in 2014, the country’s presidential election in October 2014, and the planning of the Summer Olympics in 2016, the economic situation has become unstable, unpredictable, and uncomfortable for companies, consumers, and investors. These players all await political, social, and economical clarification to go forward with start-ups, investments, and acquisitions, including the pharmaceutical sector.

Reasons to be cheerful
Analysts believe the sector will continue its growth pattern, however, because of the country’s strong domestic demand and large foreign reserves, as well as wide potential for growth as the Brazilian population ages and becomes wealthier.

Specialist Rodrigo Leifert, intelligence analyst at São Paulo-based consulting company Tendências Consultoria Integrada, expects pharmaceutical production to grow approximately 3.8% in 2014, and to maintain a similar growth pattern for the next five years, considering Brazil’s Statistics and Geography Institute (IBGE) projections for the sector.

The sector will continue its growth pattern, however, because of Brazil’s strong domestic demand and large foreign reserves…

Renato Tamarozzi, executive director of the Brazilian Association of Pharmaceutical Commerce (ABCFARMA), is optimistic for the future of retail sales. Tamarozzi told PharmTech that he expects retails sales of pharmaceutical products to grow approximately 12% in 2014 and believes the two-digit pattern should continue for the next five years. He says Brazil’s growth potential in terms of retail sales could lie in the poorer areas of the country, as these needy areas tend to grow faster than the richer southeast where access to pharmaceutical drugs is easier and the competition is fierce.

Public figures from Visiongain’s Brazilian Pharmaceutical Market Report predicts that the country’s pharma market would reach $41.3 billion in 2017, with fast expansion, and by 2024 will be contributing strongly to world medical revenues(3).

References
1.  Brazil Central Bank, Market Report (Aug. 25, 2014).
2.  HKTDC, HKTDC Emerging Markets Research (June 11, 2014).
3.  Visiongain, Brazilian Pharmaceutical Market Report (Nov. 21, 2013).

About the Author
Hellen Berger is a business correspondent based in São Paulo, Brazil.

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