Laboratories advocate fair price to invest in Brazil

Jornal Valor Econômico | 04/02/2019
In the last few months, two multinational companies, Eli Lilly and Roche, announced the end of medicine production in Brazil, as part of the global reorganization of their industrial operations and portfolio. On the other hand, the local pharmaceutical industry has engaged in conversations with the federal government to seek rules that stimulate new projects and speed up investments.

Between 2016 and 2018, laboratories with national capital announced inputs of at least R$ 3.4 billions in productive capacity and product development expansion, and there is room for more. "This is an industry that can develop quickly, and grew by two digits per year in the last decades, but needs a friendlier business environment", says the executive president of Grupo FarmaBrasil, Reginaldo Braga Arcuri. Together, eleven pharmaceutical companies answered for 26% of the Brazilian pharmaceutical market in 2018, with R$ 16.6 billions in sales, and are responsible for R$ 3.4 billions in inputs announced in three years and compiled by FarmaBrasil.

The moment, according to Arcuri, is favorable for debating the policy for the sector, especially because the pleas are aligned with the liberal speech of the new government Regardless of the difficulties, large national laboratories assumed the risk and are investing in innovation with their own resources. "The industry does not want protection or subsidies", he states. Clear rules and prices appropriate to the innovation, adds scientific director and partner of Biolab, Dante Alario Junior, shall stimulate national projects that are today in the field of ideas, or that are available in the international market and enter the country as imported products.

Biolab itself is negotiating with an American multinational company to transfer new production technology to the country, but the execution of the project depends on the price that shall be established by Câmara de Regulação do Mercado de Medicamentos (CMED, Medicine Market Regulation Chamber). In 2017, a research and development center was opened in Canada, with an investment of R$ 140 millions, and the company announced investments of R$ 450 millions in a new factory in Pouso Alegre (MG). However, if incremental innovation is not compensated in the country, there is a risk that Biolab shall produce some medications in Canada and then export them to Brazil, recognizes Alario. The termination of local production by foreign laboratories - a trend that became stronger as of 2010 - opens space in the domestic market that should not be filled with importations, says Arcuri. FarmaBrasil shows that, in the last year, the trade deficit of medications grew by 13%, reaching approximately US$ 6 billions, the highest in at least two decades.

A lot is said regarding Brazil's dependency in respect to imported active ingredients, but the trade balance is affected by ready medications. Although the importation of Active Pharmaceutical Ingredients (APIs) has grown by 25% per year, up to US$ 2.1 billions, foreign purchase of medications achieved approximately US$ 7 billions, increasing by 9.7%, driven by biologicals and other high-complexity medications.

The goal of the industry, considers Arcuri, is not to prevent importations, but to allow local laboratories to increase exportations and participate in the global market. With more than 300 associated companies, Sindicato da Indústria de Produtos Farmacêuticos (Sindusfarma, Pharmaceutical Product Industry Union) is concerned about the factories closing in Brazil. "The large Brazilian pharmaceutical industries do not follow that path, because they do not count on scale production abroad. What we see now is the same as what happened with pharmachemicals [APIs] some decades ago", says the entity executive president, Nelson Mussolini.

According to Arcuri, the main focus of the policy advocated by the industry at the moment is incremental innovation pricing, which brings additional gains to the exiting molecules - such as the use of nanotechnology to increase or ease product absorption. The investment in nanotechnology in this case, exemplifies the executive, is not compensated by the current price rule. Consequently, the industry is discouraged to proceed with new projects. "Without innovation, there is no exportation. And the pharmaceutical companies play a global game", he adds. The assessment of the sector is that, up till now, the local industry has played a supporting role in the global pharmaceutical market, although it possesses the basis - technical knowledge and scale, among other factors - to assume the leading role. "We are in the border of biosimilar medicinal products.

The bottleneck is the incremental innovation price rule", emphasizes Alario. After the first stage, which was the transference of technology to produce biosimilar medicinal products in the country, some laboratories are still venturing to develop even more complex and innovative medications.
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