Report from Brazil March 2012

In the past decade, a few million Brazilians out of the country's 200-million population have stepped out of poverty due to the growing economic stability. During the same period, the government allowed generic drugs to enter the domestic market, including through public-health systems, and streamlined regulatory registration of generic drugs.

(JEREMY WOODHOUSE/DIGITAL VISION/GETTY IMAGES)

Similar to many markets, generic drugs in Brazil are produced and sold for an average of 50% less than brand-name drugs. These lower prices, along with the opening of the market, have greatly boosted the generic-drug sector in Brazil, with an average annual growth rate of 30% over the past 10 years, according to Odnir Finotti, executive president of the Brazilian Generic Drugs Industry Association, Pró Genéricos, based in São Paulo.

With innovator-drug patents increasingly reaching expiry, additional generic products have entered the Brazilian market in the past two years. These include generic versions of atorvastatin, rosuvastatin, sildenafil, quetiapin, and valsartan, which now represent around 15% of the sector's income, according to Pró Genéricos. These popular generic drugs are used to treat illnesses such as high cholesterol, erectile dysfunction, pulmonary arterial hypertension, bipolar disorders, high blood pressure, and congestive heart failure.

As a result, the country's generic-drug market grew by 32.2% in terms of sales volume between 2010 and 2011 alone, reaching R$8.7 billion (approximately US $5.05 billion), according Pró Genéricos. The country sold 581 million units of generic drugs in 2011 compared with 439 million units sold the previous year.

Additional innovator patents are expected to expire by 2017, including Pfizer's antipsychotic drug ziprasidone and sirolim, an immunosuppressive drug produced by Wyeth used in organ transplants.

Comparative growth

According to Pró Genericos' industry data, most generic-drug markets around the world have reached around 60% of the market share in terms of units sold. In the US, that share is approximately 74%.

"If we add total domestic sales of generics plus the sales of biosimilar drugs, [these products] would hold around 60% of the country's market share in terms of units sold," says Finotti.

In Brazil, "biosimilar" drugs are those sold under the brand name for which the drug's patent has expired, but which have not had bioequivalence tests done. Such drugs in the country are not considered interchangeable and therefore are not labeled as generics.

Pró Genericos' expects generic-drug sales alone to reach 35% of the domestic market share in terms of units by 2015. According to IMS Health, the generic-drug market in Brazil has reached 20.5% of share in financial terms considering the sector's income in Reais.

"We still have a long way to go before considering our generic drug market consolidated," adds Finotti. "We are just starting."

To gain market strength, larger domestic or global pharmaceutical companies, most installed in Brazil, have been eying smaller generic-drug laboratories for acquisitions and to promote mergers. At the same time, they have had to reduce costs in areas such as research, management, and sales, says a pharma analyst and economist.

According to the analyst, brand-name drugs have lost market share to generic drugs in the last years, forcing larger laboratories to cut costs and find alternatives as their margins drop.

Future opportunities lie in generic versions of non-controlled drugs as well as medications that treat coughs and colds, says the São Paulo-based analyst.

Hellen Berger is a freelance writer based in São Paulo.