Report From: Brazil

Published on: 
Pharmaceutical Technology, Pharmaceutical Technology-09-02-2009, Volume 33, Issue 9

Designated as a "pharmerging market," Brazil is revamping its pricing models.

Brazil is the eighth largest pharmaceutical market in the world with 2008 sales estimated at $19.5 billion and the number of units sold in 2008 estimated at 1.8 billion (1). By 2011, Brazil and the other "pharmerging" markets (Russia, India, China, Mexico, South Korea, and Turkey) are expected to contribute approximately 27% of the overall global pharmaceutical growth and 16% of the global market (2). Keen to take advantage of this growth, the Brazilian government has been proactive on the regulatory and entrepreneurship fronts.


Remodeling pricing

One issue at center-stage in the Brazilian pharmaceutical market is its pricing models. The government is known to purchase medical products through public biddings to get the lowest possible prices.

Now, pharmaceutical companies that participate in the bidding process will have to be qualified by Anvisa, Brazil's National Health Surveillance Agency, in a measure to ensure quality and to compensate for the large tax-load that Brazilian pharmaceutical companies have to pay in comparison with other regional markets. (The measure is expected to be passed by the end of 2009.)

In Brazil, for example, companies include taxes (about 35%) in the final price of their products, which are ultimately paid for by the consumer, according to Febrafarma, the country's pharmaceutical industry association. As a result, the consumer does not know how much of what they are paying is tax-based and how much is for the actual product. To compare, the pharmaceutical tax rate is zero in Venezuela and Mexico and approximately 21% in Argentina.


"Such a change will bring benefits to patients, who will have access to medicines of better quality, since low prices won't be the most important criteria for government's acquisitions," says Mario Caetano, director of pharmaceutical consulting at Visanco (Brasilia), a third-party pharmaceutical quality service provider. "Additionally, public companies will benefit from the change in official purchase procedures, aimed at ensuring broader guarantees for prequalified companies, working under strict quality controls."

Another pharmaceutical-product pricing issue is pending in the country's Supreme Court. The court is deciding whether guidelines should be set to allow public financing of high-cost medicines. The country's constitution states that, "Health is a right of all and a duty of the State and shall be guaranteed by means of social and economic policies aimed at reducing the risk of illness and other hazards and at the universal and equal access to actions and services for its promotion, protection and recovery" (4). Many citizens have been using this clause to sue the Ministry of Health to be granted access to medications they cannot get in public hospitals. Currently, both over-the-counter and prescription drugs are provided free of charge in public hospitals, but the type and amount of items available is more limited than what may be available in a private drugstore, where consumers must pay for the products. The government, however, claims that patients can get medications of equivalent efficacy (i.e., lower-priced generic drugs) from their doctors.

Promoting partnerships and investment

Also in front-page Brazilian pharmaceutical industry news are a torrent of new deals. In 2008, the country's commercial deficit was nearly $3.5 billion, and yet, pharmaceutical-based imports totaled $4.5 billion, or about 80% of domestic demand. Exports in 2008, meanwhile, totaled $1 billion (3). In April 2009, the government initiated nine public–private partnerships between government-run labs and private companies. The initiative aims to save $80 million per year in governmental drug purchases. Seven state-owned pharmaceutical companies will partner with 10 private firms, including Brazil's Globe and India's Lupin Pharmaceuticals, to produce 21 medicines offered by the public health system. The contracts aim to transfer the technology of and develop 24 pharmaceuticals that have reached patent expiry. They include treatments for diseases such as HIV, tuberculosis, and asthma as well as conditions related to hemophilia and cholesterol. The government's direct purchase of these medicines currently accounts for $400 million per year.

On the research and development (R&D) side, private and public companies currently invest around $14 billion per year into new products and treatment—that's less than 1% of the world's total R&D investment, according to ANPEI, the country's National Association for Research and Development of Innovative Companies. But investment is expected to increase. "Brazilians just need one opportunity to take off," said Brazilian neuroscientist Miguel Nicolelis, a leading researcher at Duke University in North Carolina, during a press event in April 2009 in Saõ Paulo.

In the past, developing countries were restricted to manufacturing products developed by the headquarters of multinational companies based in developed economies. Now, the search for lower costs has promoted a cultural change toward decentralization among multinationals. A 2008 Febrafarma poll showed that R&D investments by Brazilian companies went up 68% and by multinational firms, 11%. Between January and April 2009, foreign direct investment in Brazil's domestic market reached $366 million, as compared with $73 million during the same period in 2008, according to Febrafarma. Novartis, for example, is investing $200 million to build a new facility in the state of Pernambuco.

In addition, Cristalia, a Saõ Paulo-based laboratory, is beginning R&D activities in biotechnology. A facility under construction will consume around $25 million in investments to start production of human growth hormone and interferon in 2012. The Brazilian government spends $60 million every year to buy these drugs and until 2007, the company had 12 patents registered in Brazil and nearly 60 filed abroad.

Following this path, Pfizer (New York) plans to increase by 20% the number of researchers it employees (currently 50) in Brazil during the next two years, according to a company release.


With more investments being poured into private–public partnerships to manufacture pharmaceuticals locally and pending legislation set to improve the cost and quality of domestically manufactured products, Brazil's pharma market is indeed emerging. Overall, prospects are good for Brazilian and international companies willing to partner with the government or local research institutions to develop pharmaceutical products not only directed to Brazilian consumers but also to the global market.

Marcelo Sicoli is a consultant with Enterbrazil Consultancy in Brasilia, Brazil.


1. "Brasil e India Precisam Fortalecer Parcerias," Gazeta Mercantil, May 19, 2009.

2. IMS Health Market Prognosis, March 2008.

3. Brazilian Ministry of Foreign Trade,

4. Article 196, Brazilian Constitution, 1988.