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Brazil Report

Generics on the Go
D espite the tradiiinnal consumer
preference tor branded and
branded generics products, and
iliL- key role pliiyed by doctors as mnrkei
use in earlier years but not of laie. "The
government should advertise more to the
public as to make them understand gener-
ics are cheaper and as efficient as branded
iiiUekeepers, the non-branded generics products." Finotii notes.
sector remain.s the market's iksiest-grow-
ing segment. The generics sector's share of According to Carlos Alexandre Geyer,
the Brazilian market reached 10.26% in president of Aianac, Brazil's oldest state-
the 12 months ending May 2006. with owned phannaceutical company, and a
annually adjusted growth estimated at strong supporter of '"similares." drug
31.3%. The güveniment has launched a counterfeiting and falsification had
number of high-profile initiatives to pro- become serious issues by the end of the
mote off-patent, bioequivalent medicines 1990s, resulting in the establishment of the
in recent years-not all of which have been Odinir Finotti Federal Parliamentary Investiij;ui\i'
successful, largely due to the continued Committee. The
presence of so-called 'similar' medicines by CMED, However, due to market com- committee has had a
(non-equivaleni copies of local origin). petition, generics price reductions are in two-fold effect: on
fact higher-43'3f- on average and reaching the one hand, it has
The Hegemony of "Similares'* 70-80'ii- in some cases. Such price reduc- helped to identify
tions have been an important driver for and solve these criti-
Indeed, despite government efforts and the consumer purchases; it's estimated that cal problems and on
growth of the generics segment, sales of generics were responsible for saving the other hand, it
similares still lop those of branded drugs US 1.3bn for Brazilian consumers over the helped draft a gener-
and branded generics "Similares" sales last five years. A noteworthy achievement, ics legislation .
represent almost 90% of the total market especially considering how most of the
lor locally manufactured drugs. country's low income population doesn't "Nevertheless, the Carlos Alexandre
Meanwhile, the branded market witnessed receive any reimbursements for medicine path chosen by the
negative growth in 2002 but has experi- purchases. Generics have started to impact government was a wrong one. It decided
enced slow growth over the last few years. access to medicines in Brazil, especially in to discourage the use of copy medicines
(similares) in order to promote generics."
Geyer notes. "Hence, the strong Brazilian
campaign for generics created a discom-
Brazil's generic market is exceptionally fort about copies." In Geyer's view, there
poncentrated with 80% of the market is no future in Brazil for small and medi-
um-si/ed companies that produce non-
dominated by only four players. branded generics: "The Brazilian scale is
very big and demands big companies. The
only way for smaller companies to sur-
vive would be to consolidate a brand. The
Branded pharmaceuticals continue to ben- the treatment of chronic diseases. Market same phenomenon occurs in sophisticated
efit from being the first choice of medical data show that the total sales for sub- nuukels where smaller companies look
professionals but in recent years generics stances such as atenolol, metformin and for busines.s niches.
manufacturers' targeting of pharmacies has sinvastatin-for hypertension, diabetes, and
affected branded phannaceuticLiI sales to cholesterol control-have increased up to Generics: the Players
some extent. Similares manufacturers lSO'i'r over a four-year period.
claim that generics manufacturers use Brazil's generics market is exceptionally
unfair competition policies that are hurting "The generics business is a very exciting concentrated, with 10 companies account-
ihe similares industry. one," says Odinir Finotti, president of Pro ing tor 9^7c of the market, .^.nd 80*"^^ of the
Genéricos. "1 Just regret that the market is dominated by only four players:
Brazilian law requires generics prices to Government is not doing enough work lo EMS. Euroiarnia, Medley, and Ache
be at 35% lower than reference drug promote it." He says that the government Biosintetica.
piices, and the prices must be preapproved had done good work in promoting generics EMS, generics pioneer. The distinction


Brazil Report
between generics and branded medicines
is of no real conseqtience to EMS, Brazil's
number-one phannaceutical company. "1
believe (hat there are no issues in acting in
bt>th segments because we have bioequiv-
alence, which proves that we produce sale
and quality drugs.

Generics are very new in Brazil. At the

beginning, it was dilTicult lo position
generics because there were a meaningful
number of doctors that didn't want to pre-
scribe generics. Today, resistance to pre-
scribid*; generic^ has diminished but, still,
branded generics or similares medicines
arc I'iir much stronger than generics." .says
Telma Salles, international affairs manag-
er of EMS. Although generics have helped
EMS achieve it.s position in Ihe market-
place, their branded products have been
highly successful as well.
President Lula da Silva (left) visiting EMS' plant in May 2007
The choice of generics. if il helped achiev-
ing Ihis out.'^tiuiding progression of EMS. developed countries such as the US and month,s before the patent expired since we
was not ihe only key for its .success, EMS Gemiany. We are able to demonstrate that had an agreement wiih Abbott, and this
is indeed increasing in both segments. One our products are safe iind efficient." launch was an absolute success and helped
of the highlights of EMS's brand portfolio us achieve fantastic results."
is its line oí branded producís from the Medley, a reliable partner. One company
Sigma Pharma lab. which ranks sixth in thai may be able to challenge EMS's mar- The company has just secured a comarkci-
doctor preferences; in all. EMS öfters a ket dominance is Medley. Medley has ing agreement with Bayer lo launch
portfolio of l,5fK) medicines that are very jumped from 28 in 2()()() to third place in Vivanza. highlighting its status as a reli-
popular among doctors. able partner for MNCs. Yamamoto
explains: "Even though we are in the
Moreover, the company is considered the generics business, we ;ibsolutely respect
leading pioneer of the generics market; patents. In our we believe that we do
EMSs state-of-the-art R&D center a very good job at comarketing innovative
employs approximately 200 scientists who products, and. at the same time, we can
ait? constantly working on drug develop- also perform very well in the generics seg-
ment and allow EMS to launch five new ment. Being in both businesses shouldn't
products per month. "We bet on our posi- be a conflict. Large pharma companies
tion of pioneers in the generics segment. like Sandoz arc recognizing that there is
As you know, in thegcneric segment, lo be room for both products in the same house,
the tirsi in is essL'nii:il for success," says and Ihat is exactly what we are doing
Salles. here."
Thelma Salles
In 2(K)7. President Lula de Silva inaugu- While Medley is currently focusing on the
rated EMS'.s new facility: EMS invested 2006, has grown an average 25 to 30 per- Brazilian market, it also seeks to penetrate
U$5() million in the facility. "This new cent annually, and has beaten production olher Lalin American markets. For exam-
extension gives us the possibility to con- records in the generics sector "We have a ple, ihe company exports its products to
siderably increase our production capacity. very good production capacity, an excel- Mexico, where some are licensed to local
As the market grows and EMS continues lent portfolio and sales team. All these fac- partners who market them there?; Medley
its healthy performance, we will have the tors put together make us a successful is following ihe same strategy in Peru.
production capacity to supply the national cotiipany," notes Jairo Yamatnoto. CEO of Regarding ils future development.
demands and other markets," Salles says. Medley. "A.s for our last year's perform- YamamoU) emphasizes the company's core
The technology we use to manufacture our ance, we had very good results thanks to values: "In our industry, it is very impor-
products is exactly the same thai is used in Sibutramine. We launched ihis product six tant to build a go(xl image because we are


Brazil Report
looking ufier Ihe for the same indication. Billi says. "We see you will certainly lag behind. Our position
hejilth of the peo- generics as a necessity. Our company is to emphasize developing products with
ple. We want to needs to be present in the generics seg- aggregated value, and we want to offer dif-
grow but at the ment and do all the necessary efforts to be ferentiated products."
same time, we want competitive. Nevertheless it is very impor-
to be sustainable. tant for us lo be present in the branded Biolab is curretitly the leader in 'sitnilares'
Being sustainable generics segment. Our principal focus it to for cardiology, with more than l.l percent
sLimmarize.s our market our branded products to doctors."* market share; ha.s strong and sustainable
iiuitto 'Proudly performance in the OBGYN area, ranking
Cleiton Marques Medley"". Determined to continue forging ahead. sixth in Brazil in this market segment and
Eurttfarma is also building a new industri- operates one of the most modem ptant.s in
t>un>farma started al complex in Sao Paulo that is expected to the pharmaceutical industry today.
ill 1*172 by produc- be one of the most modem facilities of its
ing drugs tor both kind in Latin America. Billi believes the Ache Biosintetica. Number-three ranking
local and niultina- new state-of-the-art facility will enable the Ache holds the distinction of having the
• ^^ ^^^^^ tional companies. company to have both a production and only lOO-percetit-made-in-Bra/il drug
P I ^ H j ^ ^ ^ H I Ttien. it bought a export hub within Brazil. Atid to further product. Achelan. which is made out of
^^^^^^^H small lab and start- their research capabilities. Eurofamia has herbal ingredients. Ache, like Biolab. is
! partnered with Biulab tu establish a new more focused on similares than generics:
ed U) produce and
sell drugs. company. Incremciitha, "We had three however, the company bought Biosintetica
Maurizio Bllli According to main objectives: join our capacities to in 2002 to enhance its generics business.
Maurizio Billi. president of Eurofamia: develop new products, divide costs, and in "The success story of the company has
"The generics law was very beneficial for the future get stronger." Biili explains. been built through acquisitions. Now ihat
local producers like us because it forced we are going listed, we are planning to buy
ihc companies to improve the quality stan- Grupo Castro Marques (Biolab). more companies here in Brazil and really
dards. It made us leam how to develop Cleiton de Castro Marques, CEO of consolidate our success in the country,"
t]iKiiiU' products. Moreover, the Brazilian Biolab bas this take on his company's part- explains Jose Ricardo, president of Ache.
generics law is very rigorous, therefore the nership with Eurofamia: "This deal was a In Ache's case, consolidation effttrts do not
companies that wanted to succeed in this great idea because, with this company exclude intemaiional expansion through
segment had to force themselves to Incrementha. we are fully focused on con- partnerships. Ache now ranks number one
upgrade and get equipped io make gener- stant research and developinent.This focus company in Mercosur (an economic com-
ics. This was a big learning step." has given results, and over the one-year munity that includes Bta/il, Argentina.
period of time since its establishment, we Paraguay and Uruguay), "We have just
have already registered three pnxlucts to partnered with Mexican Silanes for R&D
The company has moved forward: Today
undergo clinical trials and we are looking synergies. We also have as a partner the
it is in both market segments, generics and
forward to their approval in the near biggest company in Argentina and one in
branded, producing both types of products
future. From 2008 Venezuela. We will soon try to enter the
onwards, we will European and the US markets, always
be able to launch through partners." he adds.
around 15 prod-
UNITS ucts per year, Germany's Merck may be the only multi-
05/2005 05/2006 05/2007 always improv- national to date to have succeeded in
ing," Marques Brazil's competitive generics field. In
Generic Market 135,855.862 170,961,819 212.109.452 believes innova- 2002. the company decided to introduce
tion is the key to its generics portfolio in Brazil, which
Market Share 10,12 % 12,23 % 14,45 % success: "We proved to be a good decision. "We are very
believe R&D is a pleased at our results because today we
must to keep our rank seven anumg Ihe ttvenill industry, and
DOLLARS growing pace the most important thing is that we man-
05/2005 05/2006 05/2007 because if you aged to position ourselves in the generics
are not able to market despite the fact the four main play-
Generic Market 527.166.173 851.274.798 1.220.919,710 invest in R&D ers are national. Our seventh position is
and offer the mar- not bad at all in a market where national
Market Share 8,13 % 9,54 % 1 1 .60 "n ket pniducts with players are getting very strong." notes
aggregated value. Gerd Bauer, president of Merck Brazil.
Source IMS Meatm