Impact of the coronavirus on the pharmaceutical industry
On Friday afternoon (17), Itaú BBA held a live session with the CEOs of Biolab and Blau to discuss the impacts of the coronavirus on the sector, as well as the future of the Brazilian pharmaceutical industry.
The paralysis of the Chinese supply chain has affected several segments. This is because a large part of the inputs come from China, an important manufacturer of raw materials.
Supplies
According to Biolab's CEO, Cleiton de Castro Marques, the pharmaceutical sector works with very long production cycles. The process can have cycles of up to 180 days, from the entry of products into the import process, analysis, quarantines, among others. This avoided a major initial impact on the manufacture of medicines in Brazil, due to the lockdown in China.
"What really worried me was when the US suspended flights to China." Because the industry needs the "trunk" of the plane, without the trunk there is no cargo. "The sector depends on India and China," said Marques.
In addition, India gets its supplies from China to make its products. So this drop in production ended up affecting India and then the pharmaceutical companies in the country as they closed down.
Marques recalls that due to the cycles and the stocks they have in the channels, the population will hardly feel this impact, adding that the situation has almost normalized. "India is already shipping goods". And right now, the sector is only dealing with one-off situations, which will be resolved in the medium term.
In the view of Marcelo Hahn, Blau's CEO, as China is a major producer of basic and intermediate materials, the impact that happened in China affected the whole world, including India.
At first, Blau had difficulties with Indian manufacturers because they weren't receiving these intermediate inputs from China. For Hahn, India's closure is more worrying than the Chinese.
Marcelo Hahn agrees with Marques, because as the production cycle is long, the impact on the sector has been minimized.
Sales
According to Blau's CEO, the company has seen strong growth in demand for some medicines, especially those used to treat the coronavirus. Hospital support medicines have also performed very well.
Other products linked to retail and dermatology, on the other hand, recorded big losses in sales.
For Hahn, the biggest doubt revolves around the hospitals' finances because of the lower revenue generated by surgeries. But on the other hand, revenue from the ICU area has been increasing.
As a result, the pharmaceutical industry must keep a close eye on the financial health of hospital chains. The executive stressed that the company is not increasing its credit to clients.
Future
Marques believes that industrial policies need to be reviewed. "The whole world has woken up and said that this is essential and we can't depend on India and China."
The pharmaceutical industry should be revalued, with an incentive program for the chemical sector.
Blau's CEO added that there was a need to review the country's lengthy regulatory procedures and the need for more investment in healthcare, which lags far behind developed countries.
Hahn hopes that after the coronavirus, the country will provide better conditions for entrepreneurs to invest in the pharmaceutical industry."Everything here is very long-term," he said.
The pharmaceutical industry is going to change, the path is not yet clear. But important changes are coming, Marques concluded.