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Brazil focus: not just another BRIC in the wall

Published on 28/04/14 at 08:28am
Brazil image

Population: 198.7 million (2012)

Government: Federal presidential republic

Leader: President Dilma Rousseff of the centre-left Workers’ Party

Gross Domestic Product: $2.3 trillion (2012)

Currency: Real (R$)

Healthcare spend: $193 billion (2010)

Industry: Largest pharmaceutical market in Latin American; sixth largest in the world

Lobby group: The Brazilian Research-Based Pharmaceutical Manufacturers’ Association (INTERFARMA), representing over 50 firms

Companies: Around 540 pharmaceutical companies operate in Brazil (2013).

Top therapeutic classes in the retail market (2009):

Analgesics and anaesthetics

Hormonal contraceptives for systemic use

Anti-inflammatories and antirheumatics

Antidepressants

Anti-ulcer treatments

Cholesterol and triglyceride regulatory preparations

Angiotensin II antagonists, combinations

Muscle relaxants, centrally acting agents

E Carbamide products

Angiotensin II antagonists, plain.

Top five firms in the Brazilian retail market (market share)

1. EMS Pharma* (6.7%)

2. Sanofi (6%)

3. Ache* (5.7%)

4. Medley* (5.2%)

5. Eurofarma* (4.2%)

Top five firms in the Brazilian non-retail market (market share)

1. Roche (11.8%)

2. Novartis (9.7%)

3. AstraZeneca (7.5%)

4. Cristália* (6.1%)

5. Bergamo* (5.9%) 

Top five generics manufacturers in the Brazilian retail market (market share)

1. Medley* (29%)

2. EMS* (26.1%)

3. Ache* (8.2%)

4. Eurofarma* (8%)

5. Sandoz* (5.5%)

From the first kick of a football at the FIFA World Cup this summer, to the curtain call of 2016’s Olympic Games in Rio - Brazil is to be under the global spotlight as the upcoming host country to some of the world’s biggest sporting events of the decade.

For pharma’s major players, however, the country has been on the radar for a very long time. Firms such as Pfizer and Boehringer Ingelheim have had a presence there since the 1950s, and Sanofi, Novartis and Roche employ thousands at various Brazilian sites.

The country’s identity as a major emerging power was solidified in 2001 when British economist Jim O’Neill included it in his BRIC acronym - with Russia, India and China describing the top global economies to watch. 

These four countries now represent the top two tiers of ‘pharmerging’ markets - i.e., regions of high pharmaceutical growth - as described by IMS Health. 

However, the sheen appears to have worn off from BRIC lately somewhat - not only has O’Neill backed MINT (Mexico, Indonesia, Nigeria and Turkey) as the next big thing, but many firms are less enthusiastic about BRIC than they were a decade ago.

Allegations of corruption and reports of problematic bureaucracy in China have scared off some companies, including Actavis, that announced in January it was pulling out of the country altogether because “it is not a business friendly environment”.

Over in India, generics manufacturer Ranbaxy has had its products banned in the US due to quality concerns, and the government’s approach to granting patent extensions is far less favourable to pharma business than in the West.

The latter trend has led to firms such as Gilead taking the unusual step of prematurely allowing treatments to be released as cheaper generics. But on the other side of the world, Brazil has largely avoided controversy and retained its appeal due to consistent growth, a rapidly expanding middle class, and a proactive approach to regulation and health technology assessment (HTA). 

In 2012 Brazil became the world’s sixth biggest economy, overtaking the UK in the process. It also stands as the sixth biggest pharmaceutical market in the world, and was worth nearly $30 billion in 2011 when it enjoyed double-digit growth.

IMS Health suggests this figure could reach $50 billion by 2017, driven by an increase in demand, the entrance of more premium-priced treatments to the market, and the government’s continued endeavours to improve public healthcare.

And between 2000 and 2010, an estimated 40 million Brazilians joined the middle class - a significant factor in the country’s rise through the pharma market rankings. With more wealth comes more money to spend on conditions such as diabetes and Alzheimer’s disease. 

According to a report by OSEC (now Switzerland Global Enterprise), the Brazilian economy was one of the least affected by last decade’s global downturn and one of the first to resume growth. The economy slowed down in the second half of 2013, in part as a result of efforts to curb inflation but is expected to bounce back in 2014. 

Healthcare and HTA in Brazil

The provision of public healthcare is a central tenet of the Brazilian Constitution: Article 196 declares that “health is a right of all and a duty of the State”, making the government legally responsible for providing services to its citizens free of charge. 

The aspirations of this constitutional article are admirable - but in practice, its effective implementation has been restricted since day one by limited resources and the sheer size of the country. 

Brazil has a population of almost 200 million people spread across a region twice as big as the European Union. The country is split into 27 states and over 5,500 cities, with health councils at national, state and city levels. 

The national health service is known as the Unified Health System (SUS), and a 2011 report in the Economist magazine described its funding as “an inadequate hotchpotch, part-state, part-federal, [which] varies wildly from place to place.”

This disparity in funding has had a knock-on effect on standards - with a gulf opening up between rural and urban regions. Combined with the expansion of the middle classes, this inconsistent system has led many to take out private health insurance. Around 25% of Brazilians are covered in this way, accounting for 60% of total healthcare spending in the country. 

The establishment of SUS in 1989 required considerably more rigorous HTA processes in Brazil than those which were already in place. Several agencies have served that purpose since then, the most recent of which - the National Commission of Incorporation of Technologies (CONITEC) - was established in late 2011. 

Consultancy firm Xcenda characterises CONITEC as a significant improvement on its predecessors, describing it as ‘much more transparent and fast’.

NICE International, the non-profit spin-off of UK pricing watchdog the National Institute for Health and Care Excellence, began operating as an advisory body to the Brazilian government in 2009 - and its counsel has had a clear influence on the country’s national HTA strategy.

Key considerations taken into account by decision-makers at CONITEC include safety, efficacy, cost-effectiveness and budget impact. Appraisals typically take up to six months to deliver, during which time the body accepts comments and feedback from patients, doctors, pharma companies and academics. 

In order to ensure applications do not drag out for long periods of time, assessments are automatically considered positive if an appraisal decision has not been made within nine months. The Ministry of Health is also compelled to make approved treatments or products publicly available within six months.

In the year leading up to February 2013, CONITEC processed 32 applications for 48 different products over 26 indications, with an approval rate of around 70%. For reference, the FDA approved 27 new drugs out of 36 applications in 2013 - constituting a similar rate of 75 per cent. 

But before a treatment reaches CONITEC, it must first secure approval by the National Health Surveillance Agency (ANVISA), and then pass through the Chamber of Pharmaceutical Product Market Regulation (CMED) which sets its maximum price.

Closing the poverty gap

Amid the fanfare surrounding the country’s economic growth, it can be easy to forget that Brazil is still a developing nation with its fair share of social problems - and although its economy is sixth in the world, it ranks at 81st in terms of GDP per capita.

The staging of the World Cup and Olympics has been a particular bone of contention for some. Together, the events are expected to cost at least $26 billion - money many believe would be better spent on social services such as health and education.

In December 2013 allegations emerged around the ‘social cleansing’ of inhabitants to Rio’s favelas (aka slums) who claimed they were being driven out to make way for development work related to the events. 

The following month, thousands of protesters took to the streets of one of its biggest cities, Sao Paolo, chanting: “There will be no World Cup” in the latest of many demonstrations.

Indeed the BBC reports that in 2013 alone, more than a million people took part in various demonstrations across the country. Poverty remains a significant problem in Brazil. 

In 2011, more than 16 million people - around 10% of the population - lived in ‘extreme poverty’ (defined by the Brazilian government as getting by on the equivalent of $30 per month or less). 

Reducing this figure has been a top priority of president Dilma Rousseff’s administration. Official data suggest she has made remarkable progress since she was first elected in 2010, bringing the number of people living in extreme poverty down to around 2.2 million through an ambitious social welfare system called ‘Brazil Without Misery’. 

Generics

Considering Brazil’s finances, it is no surprise that generics are a growing niche, currently accounting for about 20% of sales. According to analysis from eyeforpharma, one in every six pharma companies registered in the country last year produced what are referred to as ‘similar medicinal products’ - a classification which includes generics. 

In 2007, 233 million units of generic drugs were sold in Brazil; in 2010, 330 million units were shifted - and that figure continues to rise annually. 

In a 2012 interview with Focus Reports, the executive president of generics industry group Pró Genéricos, Odnir Finotti, said: “For the time being, 90% of the Brazilian [retail] market is out-of-pocket, therefore all these people need to have access to affordable and trustworthy medicines, and this is what generics is all about.” 

The growth of this sector has also prompted many foreign pharma firms to seek a piece of the pie in recent years, including Pfizer, Sanofi and Daiichi Sankyo - either through acquisitions of or collaborative efforts with domestic companies. 

Finotti continued: “According to the latest data from IMS Health, by 2015, Brazil will be number three in generics. It is a quite strong reason to acquire a generics company in Brazil. If you do not produce here, or control the columns that keep generics standing, you are not in the game.”

Looking further ahead, consultancy firm McKinsey warns against focussing exclusively on generics - and proposes that opportunities are emerging in branded medicines. A 2012 report by the company suggests that “global pharma companies are missing a significant opportunity to make profits serving a big part of the country’s middle class - 120 million strong and growing fast”.

However, demand for generics will almost certainly continue to rise in future, and IMS Health characterises this sector as a key growth factor in the expansion of the Brazilian pharma market.

Key disease areas

The Brazilian government has a good track record of tackling infectious diseases in the last two and a half decades. As part of the roll-out of universal healthcare, successful plans have been implemented to control conditions such as cholera, Chagas disease and diarrhoea.

Similarly, vaccination coverage has spread, slashing incidence of devastating illnesses including polio and tetanus. However, as a paper published in medical journal The Lancet in 2011 suggests, there are still a number of diseases that warrant urgent attention. For instance, the most serious forms of dengue fever are six times more prevalent in Brazil now than they were in the early 1990s. 

Between January and November 2013, 1.5 million new cases of infection were reported in the country. While no vaccine currently exists for the condition, six candidates are in development worldwide, and the Brazilian Ministry of Health is working with the United Nations-affiliated Pan American Health Organisation to study and monitor infection.

Parasitic disease visceral leishmaniasis (VL) is another poorly controlled condition in Brazil. Treatment options are limited and patients can die as little as two years after infection. Brazil is among the top six countries for new cases of VL worldwide and its increasing presence in urban areas is a source of concern. 

The Lancet paper’s authors conclude that efforts in Brazil “must go towards identification of new treatments (eg., for leishmaniasis) new vaccines (eg., for dengue) and more effective ways to deliver specific care”. 

They add: “In Brazil, biomedical and epidemiological research is thriving, as is public health research into infectious diseases...the fast growth in medical research must be sustained.”

Following global trends, cardiovascular disease (33%) and cancers (16%) are the most common cause of death in Brazil, according to the World Health Organization. Another health concern that mirrors developments around the world is the rising level of obesity. 

A government study released in 2012 found that between 2006 and 2011, the percentage of overweight Brazilians jumped from 42.7% to 48.5%; obesity rose from 11% to 15.8% in the same period. For reference, the UK’s obesity rate in 2011 was around 25%, while the overweight statistic was 37 per cent.

An attractive prospect

Despite shortcomings in the implementation of its ambitious universal healthcare programme, civil unrest surrounding the staging of the World Cup and Olympics, and the lingering spectre of poverty, Brazil has come on in leaps and bounds in the last number of decades - both as an emerging global power and an attractive pharma market. 

Furthermore, it has retained its allure while counterparts in the BRIC bloc have courted controversy and driven away investment by foreign firms.

By taking a proactive approach to the development of effective HTA mechanisms, tackling deprivation and fostering the growth of its middle classes, recent governments have made Brazil an attractive country for foreign investors - who have duly come knocking. 

Challenges remain, not least of all in smoothing out the regional disparities that exist in healthcare provision - but with a pharma market that continues to expand rapidly, Brazil remains a promising prospect.

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