The BRIC Countries: Opportunities for Regulated Market Players - Pharmaceutical Technology

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The BRIC Countries: Opportunities for Regulated Market Players
The author outlines the opportunities and challenges for manufacturers aiming to enter the BRIC-country markets.

Pharmaceutical Technology

Active ingredients

Figure 3: Total number of foreign-owned active pharmaceutical ingredient (API) manufacturing sites and number of API manufacturing sites belonging to major multinational pharmaceutical companies in Brazil, Russia, India, and China.
Brazil. Brazil is not known globally for its API manufacturing industry. The facilities there tend to be relatively small and most of them belong to Brazilian companies. However, a handful of regulated market players have set up API- manufacturing facilities in Brazil to take advantage of the country's low-cost manufacturing base, proximity to vast patient populations in North and South America, and its patent regime, which is more favorable to API manufacturers than that of Europe (see Figure 3).

It is worth noting that several multinational pharmaceutical companies have an API-manufacturing presence in Brazil, among them Novartis, which has an API- manufacturing site in Resende, Riõ de Janeiro, where it manufactures valsartan for its global supply chain.

At least two Italian API manufacturers based in Milan, Italfarmaco and ACS Dobfar, have set up a manufacturing presence in Brazil. When announcing the acquisition of the Brazilian manufacturing site from GlaxoSmithKline (London) in 2000, Italfarmaco explained that it set up the facility to more effectively service the North American generics market, something that had been challenging to do from Italy because of the restrictive supplementary protection certifications (SPC) regime. In most EU countries, SPCs have provided innovators with up to five years of additional market exclusivity after the expiry of relevant patents. However, in Italy, Certificato Complementare di Protezione could offer up to 18 years of additional protection.

Given the relatively small number of local API manufacturers, a considerable finished-dose manufacturing base (both for domestic use and export), and low import taxes, it is no surprise that Brazilian finished-dose manufacturers import a significant amount of APIs. Despite the fact that the rules in Brazil have become more stringent over time, many Brazilian finished-dose manufacturers still focus more on cost than quality. As a result, most API imports come from India and China and other low-cost countries. However, as the Brazilian generics environment becomes increasingly quality minded, opportunities for players from countries such as Italy and Spain should improve.

Russia. These days, there is very little API manufacturing taking place in Russia, and there is little local expertise available in the area of manufacturing APIs. Most API facilities based in Russia are locally owned, and we do not foresee major foreign investment in API manufacturing occurring in the near future.

As the number of local finished-dose manufacturers is increasing, so is the demand for APIs. Unfortunately for regulated-market API manufacturers, as in Brazil, the focus in Russia is on cost rather than quality, and many local dose companies are relying on offshore distributors. In cases where material comes directly from manufacturers, the material tends to come from low-cost countries such as India and China.

At this point, we do not see many opportunities for regulated-market API manufacturers to sell their APIs to Russia, unless they already own finished-dose manufacturers in the country and sell the APIs to their own subsidiaries.


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