Deep Transformation of the Brazilian Pharmaceutical Market 2000-2020

Deep Transformation of the Brazilian Pharmaceutical Market 2000-2020

Major differences between local and multinational companies´strategies are a key driver to understand the past dynamics and perspectives for the future.



by Eric Larue and Fred Donier                                                                                        November 2020


Brazil has long been perceived as an unpredictable country, moving forward and backward at the same velocity, able to recover quickly and to drop the same way. At the opposite, the pharmaceutical sector has shown, for several decades, to be highly resilient to such pendular movements. Despite crises, local currency successive devaluations, changing regulatory environment and more recently the impact of COVID-19, the 210 million Brazilian people have maintained their level of both drug and well-being products purchase at the pharmacy. Pharma sector has grown 11% yearly in values for the last 5 years and is expected to grow, according to IQVIA Senior Vice President Sydney Clark, between 8,5 and 10% in 2020. At July 2020 YTD, Brazilian retail market grew 12,7%, slightly below previous years, but outstanding when comparing to whole economy during the same period.

Resilience of pharmaceutical sector and robust growth these last years has offset the deep transformation that has occurred over the last 20 years, with the emergence of big local players that have definitively shadowed domination of multinational companies and also transformed the key drivers of growth and put new elements in place that may define all the future will be. This paper aims at making an analysis of the past and present changes to better understand how and where market will go during the forthcoming years.


3 key moments that transformed the Brazilian pharmaceutical market since 1999

The last 20 years of healthcare market in Brazil were impacted by 3 key moments:

  • The first one was the effective implementation of the Generics Law on February 1999 during the 2nd government of President Fernando Henrique Cardoso, authorizing any laboratory to produce and market any off patent molecules as long as respecting the new rules of bio availability and bio equivalence patterns versus product of reference. Behind the generics law, the wish of the federal government has been to develop national champions and to make it happen, providing fiscal incentives and access to credit leading in 2000 to the foundations of the emblematic Anápolis industrial cluster in Goiás State close to Brasilia Federal district. As a result, four local companies entered the top 15 pharmaceutical companies in 2005 versus only one 5 years earlier.

Table 1: Emergence of national companies into top 15, illustration of pharma market metamorphosis in 20 years

Obs: Takeda Brazilian affiliate is part of Hypera Group since March 2020

  • The 2nd key moment appears with the emergence of the base of the pyramid consumers, when C and D social class people (with up to 5 minimum wages revenues) see in the years 2005-10 the level of income growing fueled by public policies to reduce inequalities. The economy growth has been also boosted by the demographic bonus where reduction of fertility rates and life expectancy increase bring millions of new adult consumers to the market. At the pharmaceutical standpoint, accessible local brands (Branded Generics and Bio-similar) turn to be the first choice of these emerging new consumers making the multinational companies adapt their business models becoming more local and closer to consumer´s needs. This is the case of French MNC´s Sanofi that integrate local generic lab Medley in 2009, North American Companies Pfizer Inc. that acquires in 2010, 40% of national generic producer Teuto or Takeda acquiring in 2012, regional company of similar brands Multilab. Meanwhile big local companies continue to grow at robust double digits, at that time, one can think that MNC`s had found a decisive way to stay in the game…


  • … Not for so long. 5 years later, beginning of slowdown of Brazilian economy in 2015-16 and global reshaping strategies of big MNC´s -with global decisions to focus on small volumes/high value segments such as biotech and rare diseases- underlines the third key moment of the local pharmaceutical market: the definitive consolidation of big local players and the withdrawal of MNC´s of pure local business. Recent acquisition of participation in local business or local companies by MNC`s are being divested, some other MNC´s decide to sell their facilities to local players and eventually to adopt a flexible external manufacturing strategy. Best illustration of such movement is the announcement made by Roche -present for more than 70 decades in Brazil- to sell its factory of Rio de Janeiro despite important investments done in 2015. It seems then, that both type of players has found their space: local companies focused on big volumes market meanwhile MNC´s focused on niche innovative and valuable new segments. But story is not exactly as easy as it could be, and this is the next part of our analysis…


Local players reaching technology and Innovation and… becoming also MNC´s

Integration of local business into MNC´s during the previous decade have been a source for local companies to move to better practices, to benchmark innovation R&D processes from MNC´s and above all to make them perceived that they could run simultaneously high volumes business and high value business. Local companies did not only bought facilities deserted by MNC´s, but they have also looked to ways to reach technology and innovation. Under the moto that union create strength, the first Brazilian company of biotech (Bionovis) is created by 4 local players in 2012: EMS, Aché, Hypera and União Quimica. This new joint venture is fueled by BRL 500 mi investments with the purpose to develop and market biological innovation of high complexity and guarantee that Brazil can produce locally such alternatives rather than import. On top of that, Bionovis is supported by both international and public strategic partnerships, such as Merck Serono and Janssen-Cylag and BioManguinhos/Fiocruz center of development, respectively.

Bionovis company, first Brazilian initiative focused on R&D and commercialization of high-quality complex biopharmaceuticals.


Innovation is also the target of medium local companies that started strategic movement of alliances such as Biolab, a mid-tier local company of generics that invested USD 45 mi to build a new R&D laboratory in Canada in 2017 to speed up innovation. A strong culture of innovation and agility in approving research and new products, which already leave Canada with automatic registration in countries that are part of the British Community, took Biolab there, according to its CEO Cleiton Marques. In addition, Biolab has developed strategic alliance with University of São Paulo to develop a new galenic platform for its star antiemetic product Vonau®, already market leader in Brazil and being successfully deployed in other Latin American countries. In November 2017, Aché inaugurated the NILE laboratory – Nanotechnology Innovation Laboratory Enterprise at the Guarulhos plant, in partnership with the company Ferring Pharmaceuticals. Unique model in Brazil aimed at research and development of new technological platforms based on Nanotechnology, which can be applied in medicines, cosmetics, and nutritional products. Aché has been betting on both incremental and radical innovation with the purpose to launch in Brazil but also expand its innovative products to other markets

Aché NILE laboratory, BRL 7,0 mi invested in R&D equipment to boost radical innovation


Finally, and clearly how such mutation can be observed, EMS that used to be 20 years ago a pure generics and branded generics company, just announced the launch of Bexai®, the first anti-inflammatory product with nanoparticles in Brazil, created under the North American concept The Science of Less, which means “minimum and maximum effectiveness” of the medication. In other word, a genuine breakthrough into anti-inflammatory domestic offer associating more safety and more efficacy even in prolonged use. For the 2021-2023 triennium, EMS expects to reach 60% to 70% of innovative launches in the Prescription portfolio. To reach this level, the company will continue to contribute to clinical studies. There are more than 50 new products in different stages of development, which will reach the market in the next 2 to 5 years. Amazing!


What´s next?

So, at the end of the day, some key questions must be raised: will local companies able to keep up driving hybrid strategies based on high volume mature products and radical innovation on the long run? Agility of local players have shown to be quite effective to catch up innovation level but playing in all the segments requires high level of marketing and sales force investments. Innovation on the other side needs sustainability and high investments levels, that can negatively affect P&L. On the other side of the table, how MNC´s companies will react to face this new threat in their innovation niches? Traditionally slower in their decisions process making, they dispose of more investments resources to support robust R&D on the long term. In addition, R&D teams are spread worldwide, enabling optimization of synergies.

In parallel we observe the acceleration of new trends during the pandemic that will impact the basis of the industry landscape, such as:

  • The massive adoption of telemedicine, after regulatory changes from Anvisa
  • The deepening of the digital transformation expanding e-commerce, remote detailing, supply chains digitization, etc.
  • In view of the dependence on raw materials imported from China and India, and increasing related costs due to the BRL devaluation, 10 local players under the umbrella of ALANAC (National Pharmaceutical Industry Association) have designed an initiative with the federal government to return to produce in Brazil key active ingredients, that used to be a practice in the 80´s.

To conclude, these last years has shown, on the one hand, strong capacity of mutation of local players that have, in some extend, overcome the best optimistic predictions. On the other hand, Headquarters Centric business model of MNC’s based on top down innovation and heavy investments in R&D has demonstrated that it is still working well when smartly put in practice. What will be the winning model?

Not easy to say but regardless of who will be the winner, one thing is quite clear: which such high level of competition in Brazil, both patient and physicians will be strongly beneficiated! Forthcoming years of pharmaceutical market predict to be quite exciting. To be followed!


Eric Larue is a Crescendo Senior Consultant, expert in healthcare industry –

Fred Donier is Founder and Ceo of Crescendo – 

  • Michel Durand-Mura
    Posted at 12:50h, 12 November Reply

    Excellent overview. Food for thought.

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