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Rio Grande do Sul Development Agency

Development and Investment Department

DOING BUSINESS IN RIO GRANDE DO SUL - BRAZIL Health, Industry and Services The Pharmaceutical Environment in Rio Grande do Sul: challenges and opportunities London, May 2012


Rio Grande do Sul (RS) - Brazil Pharmaceutical Companies


Porto Alegre HealthCare Cluster Hospitals

To view the video, please click the link:

http://youtu.be/MfodAdRR7dc Time: 3 min


Advanced Health Care and Pharmaceutical Sectorial Program Objective

• Consolidate actions plans aiming to strengthen the competitiveness of this strategic sector of Rio Grande do Sul’s economy, promoting social and economic development in the State.


Possibilities • Advanced Health Care and Pharmaceutical Industry as a government priority • Porto Alegre has a qualified healthcare cluster • Rio Grande do Sul has stablished a close cooperation between Technology Parks, Research Centers, Hospitals and Advanced Health Care and Pharmaceutical Industry • Consistent industrial tradition, supply chain and skilled labor • Professional training programs

• Production base for other regions and countries • Focus on quality of life and sustainability • Right time for planning and implementing new business in Brazil and Rio Grande do Sul


Thank you! AGDI – Rio Grande do Sul Development Agency Luciana França – Board Advisor Phone: +55 51 3288 1013 E-mail: luciana-franca@agdi.rs.gov.br


DOING BUSINESS IN RIO GRANDE DO SUL - BRAZIL

Health, Industry and Sevices The Pharmaceutical Environment in Rio Grande do Sul: challenges and opportunities Challenges and opportunities on the private sector AndrĂŠ Lautert, Chief Financial Officer, Multilab Ltda.

May/2012


The Pharmaceutical Environment in Rio Grande do Sul: challenges and opportunities Challenges and opportunities on the private sector

• • • • •

Global market Brazilian market Rio Grande do Sul Challenges Opportunities


CAGR 3-6% CAGR 6.2%

Global spending increase on medicines is expected to slower its pace in the next few years compared to the last 5 years


Market share of “Pharmerging countries� (17 high growth countries in witch Brazil is included) will grow from 12% in 2005 to 28% in 2015


Growth from the Pharmerging countries will represent 66% of total industry growth.


Brazil, the 2nd Pharmerging market is expected to increase from US$ 22.9 mm in 2010 to US$ 39.7 mm in 2015 – CAGR 11.6%

Brazil worldwide market share will increase from 2.67% in 2010 to 3.73% in 2015


Brazil is expected to be the 6th biggest market for pharmaceutical products by 2015, representing 12% of US market by then (compared to 10th position and 5% of US market in 2005) Ranking based on spending in constant US$ at 4Q 2010 exchange rates Index in each year based on ration of country spending to U.S. Sales (in constant US$) in the year


Brazilian Market Amounts in R$ mm – 12 months ended as of March each year 13.0 B US$

26.3 B US$

Total Market CAGR 16.6%

50.000 45.000 40.000 35.000 30.000 25.000 20.000 15.000 10.000

5.000 -

2008 Source: IMS Health

2009

2010

2011

2012


Brazilian Market Amounts in R$ mm – 12 months ended as of March each year

40.000

CAGR 13.7%

35.000 30.000 25.000 20.000 15.000

CAGR 32.2%

10.000 5.000 -

2008

2009

Brand market

2010

2011

2012

Generic market

Source: IMS Health

Generic market share raised from 12.7% in 2008 to 21.1% in 2012


Brazilian Market Key Growth Drivers: Increase in purchase power Entry of a huge contingent of new customers trough increase in purchase power of low income population (nowadays 15% of the population purchase 50% of the medicines)

Increase in life expectancy Brazilian population over 65 years old is expected to grow 4,1% per year during 2009 – 2014, while total population less than 1,2% per year

Increase of preventive consumption Medical trend of prescribing medicines in prevention of certain diseases (i.e. Metformin and Simvastatin)

Increase of OTC consumption Concern on health and beauty together with better education of the average citizen will increase consumption of OTC products

Increase of Governmental purchases Governmental policy towards improving access of low income population to medicines


Brazilian Market Potential Per capita consumption – in USD per year (base 2008 – manufactory prices) 700 600 500 400 300 200 100 USA

Source: IMS Health

Japan

Canada

France

Germany

Spain

Italy

United Kingdom

Brazil

Brazil has a huge potential for per capita consumption increase, compared to other countries.


Rio Grande do Sul

• Most european state in Brazil (culture and weather) • Skilled workforce • Healthcare industry tradition • Close to neighbour countries of the Mercosul free trade area • 6.6% of Brazilian GDP • 5.7% of Brazilian population • Tax benefit


Investing in Brazil – Challenges •

Urgency •

Complexity • • •

New ventures arriving in Brazil to capitalize on fast growth

Consumption culture Regulation Business dynamic

Need for adaptability and customization


Investing in Brazil – Opportunities •

Licensing contracts with local producers • • • •

Joint ventures • •

Branded products Specialty products (extended release, transdermal, etc.) Generics Other special biotec products (Vaccines, peptides, mononuclear antiboby, diagnostic products, enzymes, etc)

Development Production and marketing

Production equipments


About Multilab


About Multilab Located 70Km from Porto Alegre city, capitol of Rio Grande do Sul state (the southern and most european state in Brazil) 220 thousand m2 (2.153 thousand ft2) total area

17 thousand m2 (183 thousand ft2) constructed area +- 700 employees Capacity of 3 Billion tablet/capsules per year Revenues +- US$ 80 MM / year


About Multilab

Source: IMS Health

Multilab is one of the fastest growing pharmaceutical industries in Brazil, jumping from the 68th position in 2006 to 17th in 2012


About Multilab

To view the video, please click the link: http://youtu.be/zFagXDogNRk Time: 2 min


Contact: AndrĂŠ Lautert CFO Multilab andre.lautert@multilab.com.br alautert@yahoo.com.br +55 51 9602 0994 + 55 51 3230 4068


DOING BUSINESS IN RIO GRANDE DO SUL – BRAZIL London, 8th May 2012

Pharmaceutical Industry Challenges and Opportunities on the Public Sector

Paulo Mayorga LAFERGS

Operários – Tarsila do Amaral


LAFERGS Pharmaceutical Laboratory of Rio Grande do Sul

FEPPS Organization Chart

Public Laboratory

Industrial area of FEPPS (Public Institution related to Research and Production in Health)

Able to produce solid, liquids and semi-solid medicines

Near future: Diagnostic products


PUBLIC PHARMACEUTICAL LABS IN BRAZIL

1 2, 3 4 5

6 7

15,16 17

18

1- NUPLAM/RN 2- LAFEPE/PE 3- HEMOBRÁS/PE 4- LIFAL/AL 5- BAHIAFARMA/BA 6- IQUEGO/GO 7- FUNED/MG 8- FAP/RJ 9- BIO-MANGUINHOS/RJ 10- FAR-MANGUINHOS/RJ 11- LFM/RJ 12- IVB/RJ 13- LQFEX/RJ 14- LQFA/RJ 15- BUTANTAN/SP 16- FURP/SP 17- TECPAR/PR 18 – LAFERGS/RS

8,9,10,11,12,13,14

Market regulation and Priority Programmes (E.g. PA, AIDS, neglected diseases)


THE BRAZILIAN UNIVERSAL HEALTH CARE SYSTEM General informations Our system in 2011

 145 million assisted users  2 million professionals  3.2 billion ambulatory procedures  495 million medical consultations  23 thousand transplant procedures

 11 million hospital admissions  425 million laboratory tests

 216 thousand establishments  public medicines distribution


PRESSURE IN HEALTH SYSTEM Population aging and the epidemiological profile change

IBGE

Proportional mortality in Brazil: 1930-2010 Other diseases Cardiovascular External causes Neoplasia Infectious and parasitic diseases

(PESS/NEPP/UNICAMP)


INVESTMENT IN PUBLIC HEALTH SERVICES

Expenses in public health services (R$), 2002 - 2010 160

138,3

140

125,1 112

120

96,7

100

87,3 77,1

80 60

66,4 47,5

Billion R$

54,3

40 20 0

2002

2003

2004

2005

2006

2007

2008

2009

2010

MS/FNS

2010 £ 43 billion 4% of GDP (Gross Domestic Product)


PHARMACEUTICAL MARKET PROGNOSIS “Pharmerging” markets contribution

Contributions to global market growth (2009 – 2013)

IMS Health, Market Prognosis (2009)


PHARMACEUTICAL DEMANDS Evolution of the public medicines market

Expenses in Medicines by the Brazilian Government (R$), 2003 - 2011

12

10,79

Billion R$

10

8,96

8 6,37 6 4

11,37

4,02

4,40

7,01

5,10

2,81

2 0 2003

2004

2005

2006

2007

2008

2009

2010

2011

DECIIS/SCTIE/MS

ÂŁ 3,5 billion U$ 6,3 billion)


PHARMACEUTICAL DEMANDS Public purchases of medicines

Purchases 2011

DECIIS/SCTIE/MS


PHARMACEUTICAL DEMANDS Specialized medicines – The highest cost group


CURRENT ECONOMIC SCENARIO Foreign trade deficit of the health sector

Foreign Trade of Health Sector (2007 – 2011) 15,00

Billion US$

10,00

11,66

11,85

9,00

9,00

1,47

1,80

1,86

2,31

2,43

2007

2008

2009

2010

2011

-7,21

-7,14 -9,35

-9,42

7,18

5,00 0,00

2012

-5,00 -5,70 -10,00

£ 5,3 billion

-15,00 EXPORT GIS/ENSP/FIOCRUZ (2011)

IMPORT

FOREIGN TRADE BALANCE


HEALTH SECTOR CHALLENGES

R&D and Inovation Challenges

1 6

2

5

3

4 MDIC/MF/ABDI

1 3 5

Local blood production (8 - 9 factors, albumine and globulines)

Production of equipment and materials for use in health

Production of medicines and chemical synthesis of drugs

2 4 6

Vaccine development to National Program of immunization

Reagents and devices for Diagnostics by using biotechnology

Biotechnological products for health


PHARMACEUTICAL CHALLENGE

IMPROVE THE CURRENT MEDICINES PRODUCTION

GOALS: 

Stimulate the local production of high cost or high social impact products

Stimulate the development of new medicines

Expand the population access to the medicines


THE OPORTUNITIES Development strategies Development Strategies

Industrial Policy

Public Production

Strengthening industrial policy

Consolidation of public pharmaceutical labs

Use the purchase power of the government

DECIIS/SCTIE/MS

Purchase Power


THE OPORTUNITIES Industrial Policy and Strategic Sectors Development Strategies

  

Industrial Policy

Purchase Power

Public Production

Strategic actions in order to build competitiveness

Available resources for all stages of the innovation cycle Shared goals with the private sector

Health industrial complex

Information and communication technologies

Nuclear energy

Nanotechnology

Biotechnology

Defense industrial complex

MDIC/MF/ABDI


THE OPORTUNITIES Investment in Public Labs (2000 – 2015) Industrial Policy

Development Strategies

Purchase Power

Public Production

300

250

Billion R$

200

150

100

50

0 2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

DECIIS/SCTIE/MS

2000 - 2011

2012

2012 - 2015

R$ 512 million (£ 160 million)

R$ 250 million (£ 78,1 million)

R$ 1 billion (£ 312,5 million)


THE OPORTUNITIES Optimization of the public purchases Development Strategies

Industrial Policy

Public Production

Partnerships for production (With technology transfer)

Technological orders (Linked to specific demands)

Legal support (Resolutions of the Ministry of Health)

Purchase Power


PARTNERSHIPS OPORTUNITIES FOR PRODUCTION

Development Strategies

Industrial Policy

Public Lab

HOW DOES IT WORK?

 Executive project

 Local development

Purchase Power

Public Production

Private Lab

 5-years of partnership

Government

 Government ensures purchase  Technology transfer to the public lab  After technology transfer: provision of the active ingredient


DECIIS/SCTIE/MS


IN CONCLUSION Why is LAFERGS here? WE ARE LOOKING FOR:  Potential  Specific

partners

products of interest:

Neglected diseases

Specialized medicines

Oncology

Transdermal systems

Aerosols

MAB

Peptides

Diagnostic products


CONTACT

THANK YOU VERY MUCH AND YOU ARE WELCOME TO JOIN US IN PORTO ALEGRE!

paulo-mayorga@fepps.rs.gov.br


Pharmaceutical Industry