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Sergio Ricardo Segovia Barbosa looks at Brazil’s growing competitiveness in the biopharma sector.
Last year, more than one thousand international biotechnology companies and related organizations convened in Philadelphia, PA for the 2019 BIO International Convention. The event was an opportunity to showcase the year’s biggest innovations, ideas, and investments poised to catapult the biotechnology industry into a digital-first future. One message that came out of the convention was that Brazil is a market to watch.
Brazil is currently the largest healthcare market in Latin America and the eighth largest in the world. The country also has the second largest pharmaceutical market among emerging countries (only behind China), with experts predicting the industry in Brazil alone to grow annually by 7.9 percent to reach more than $27 billion by 2021. Furthermore, the trend of the growing opportunities in pharma and healthcare in Brazil has also been recognized by foreign investors. In fact, the health products sub-sector saw $3.8 billion in investments in 2016 alone - a number projected to increase to $5.1 billion by 2021.
So, what is driving Brazil’s competitiveness in the biotechnology and pharmaceutical sectors? The answers are threefold: (1) The country’s significant domestic market; (2) its centralized, nation-wide healthcare system; and (3) increasing competition among local communities.
In recent years, Brazil’s continued population growth and rising life expectancy have positioned the country well for healthcare innovation-largely from necessity. Brazil is currently home to more than 200 million people, making it the sixth largest country in terms of population. Given the country’s rising taxes on pharmaceutical imports, Brazil’s healthcare companies have had to think critically about how to support its citizens through domestic healthcare production. The result? A comprehensive pharmaceutical and biotechnology infrastructure that has allowed Brazil to increase the sale and distribution of cutting-edge therapies.
Brazil’s centralized healthcare system has also played a role in advancing innovation by establishing a blended ecosystem across public and private sectors. Brazil is currently the only country in the world to have a free and universal public health system, which covers all types of consultations and treatments offered by the Brazilian National Health System (SUS). SUS operates as a central intermediary between medicine and health providers, which means that the country has been able to keep prices low and access high. Further, unlike other countries, the public and private sectors in Brazil are not mutually exclusive. Individuals are covered regardless of whether their provider has an agreement with SUS or not.
There has been a notable shift away from curative care in hospitals and toward preventative care in local communities, which has in turn created new opportunities for local businesses in the biotechnology and pharmaceutical space. This transition has fundamentally changed how Brazil views the healthcare landscape within the country-bolstering long-term job growth in suburban and rural areas. Just like any other country, the best and brightest minds in Brazil, not just in healthcare but across all industries, aren’t restricted to big hubs like São Paulo or Rio de Janeiro. On the contrary, by bringing pioneering technological advancement to new parts of the country, Brazil’s pharmaceutical and biotechnology companies have been able to stimulate long-term economic opportunity.
Granted, while the above factors certainly paint the picture of a burgeoning Brazilian market, the country still faces hurdles that will need to remain at the forefront as it continues to work to become a true global pharmaceutical leader. First and foremost, Brazil is currently encountering one of the world’s most severe patent backlog problems, with around 190,000 patent applications pending approval from the Instituto Nacional da Propriedade Industrial (INPI). Secondly, Brazil’s combined federal and state taxes can add up to 34 percent of the cost of medicines in the country - making it one of the highest tax increases on healthcare in the world. As such a large country, Brazil also faces an uphill climb delivering drugs to patients. Amid heightened infrastructural obstacles, including the unreliability of telecommunication networks, doctors in Brazil often struggle to provide aid to the most remote parts of the country.
With a consistent year-over-year growth in total market revenue and infrastructural expansion, Brazil is well on its way to becoming a powerhouse in both domestic innovation and foreign investment interest. That said, as with any emerging market, the country will need to invest time and resources in addressing vulnerabilities over the coming decade as well, if it hopes to move forward-which, with the right vision and a tangible plan of action, the country is fully capable of achieving. If BIO 2019 was any indication, we’re just beginning to scratch the surface of the Brazil’s potential, and foreign leaders and investors would be wise to take notice of the country’s healthcare, biotechnology, and pharmaceutical innovation engine.
Sergio Ricardo Segovia Barbosa is President of Apex-Brasil.