The Brazilian pharmaceutical market remains the most attractive to multinational pharmaceutical companies in Latin America. The expansion of healthcare coverage, driven by local authorities, presents significant revenue-generating opportunities for drugmakers and healthcare service providers. However, given the Brazilian government's protectionist measures in the pharmaceutical sector, we believe local drugmakers will outpace multinationals.
Headline Expenditure Projections
- Pharmaceuticals: BRL57.0bn (US$26.4bn) in 2013 to BRL61.6bn (US$26.2bn) in 2014; +8.2% in local currency terms and -0.7% in US dollars terms. Forecast revised upwards from Q114 due to changes to macroeconomic forecast.
- Healthcare: BRL438.6bn (US$203.2bn) in 2013 to BRL484.9bn (US$206.3bn) in 2014; +10.6% in local currency terms and 1.5% in US dollars. Forecast revised upwards from Q114 due to more optimistic macroeconomic forecast data.
Risk/Reward Rating: Brazil scores 60.3 in BMI's Pharmaceutical and Healthcare Risk/Reward Rating (RRR) matrix, making it the fifth-most attractive pharmaceutical market in America. We note that the weakening real against the US dollar was the key factor that has caused Brazil's to fall behind Mexico this quarter, as we assess market data in US dollar terms to allow cross country comparison in the RRR calculation.
Key Trends And Developments
- In February 2014, Brazil's Ministry of Health released a proposal recommending new clinical protocols to treat children with HIV.
- In February 2014 Brazil's Health Minister Alexandre Padilha signed a decree to incorporate 15 new tests for rare disease diagnosis in the Unified Health System (SUS).
- In January 2014, Brazil's National Economic Development Bank (BNDES) planned to invest up to BRL10bn (US$4.1bn) in the production of biopharmaceutical products by 2016.
- In January 2014, the Pharmaceutical Products Industry Union in the State of Sao Paulo (Sindusfarma) expressed the industry's concerns over the delay in the publication of the Brazilian government's medicine pricing policy - the first delay in nine years.
- In December 2013, the Brazilian Commission of Social Security and Family approved a proposal to increase the federal budget for healthcare to 18.7% of total spending by 2018. The federal healthcare expenditure will rise at the following pace: 15% in 2014, 16% in 2015, 17% in 2016, 18% in 2017, and 18.7% in 2018.
In November 2013, Brazil's National Health Surveillance Agency (ANVISA) published new regulation, Resolucao da Diretoria Colegiada (RDC) 38/2013, to enable patient access to new drugs before they are officially approved and available for purchase.
BMI Economic View: While stronger-than-expected GDP data in 2014 to date has seen us upgrade our 2013 real GDP growth forecast moderately, we believe the economic recovery is unlikely to accelerate further in 2014. Indeed, a weaker exchange rate and higher interest rates are likely to temper private consumption, while fixed investment will continue to post only a modest recovery, and fiscal pressures will keep government consumption relatively moderate. As such, we forecast real GDP growth of 2.4% in 2014, only modestly stronger than 2.3% in 2013.
BMI Political View: We maintain our view that President Dilma Rousseff remains the candidate best positioned to win Brazil's October 2014 presidential election. However, with the president likely to face significant policy challenges in the coming months and opposition candidates set to ramp up their campaigns, we see potential for the polls to tighten somewhat. A particularly tight race would also indicate increased political polarisation, making policymaking more challenging in the coming years.