International Biopharmaceutical Association Publication

South America: Biopharmaceutical Industry Overview

Durreshahwar Faiz (M.B.B.S)

CRA Student

KRIGER RESEARCH CENTER INC.

Abstract:

Biotechnology is typically associated with the centres of learning and firms in industrialized countries but usually not with institutions in developing countries of South America. Those nations are however, becoming active in this field and are increasingly using recombinant methods to produce new and innovative health products for their populations. Here we will examine health biotechnology development in South Americas

Developing countries, we will compare the major characteristics of their health biotechnology sectors and highlight factors that have shaped their development in order to understand better ,

What main factors and conditions can promote health biotechnology innovation in South American countries?

New Listings: For biopharmas of South America

Anabiotec, location: Belgium
Anabiotec is a full GMP compliant, a GLP certified and ISO 17025 (Beltest) accredited laboratory. It is specialized in stability studies, (stability rooms according ICH guidelines available), method va... more

MD Biosciences (Israel) Ltd, location: Israel
MD Biosciences is a globally active pharma biotech services company. We provide the right solutions, prepared from proven services and products, to help our clients succeed in reaching their goals in ... more

Dominion Pharmakine, location: Spain
DPK is a Spanish company devoted to the generation and supply of new products and technologies for cancer metastasis research at both clinical and preclinical levels. We offer an accurate biological te... more

CreaCell, location: France
CreaCell is a drug discovery company specialized in mammalian cell engineering services. Our two cores services are cell based assays development and cell culture. Laboratory facilities are located at ... more

Cerebricon Ltd., location: Finland
Preclinical proof of concept studies in animal models of CNS disease. Fully integrated in vitro and in vivo laboratories provide quick onset and high quality studies in Stroke, Parkinson's, Alzheimer'... more

Takesun do Brasil Ind. Com e Exp. Ltda., location: Brazil
Manufacturer of phyto pharmaceutical products, immune system products, RF 1000 extract, Camu camu, Graviola, Agaricus blazei murill. Third labeling and production, water extracts, capsuled products, d... more

INTRODUCTON;

This paper summarizes the results of our global pharmaceutical industry analysis in South American world and is intended to increase awareness of the general public.

The paper has the following major goals:

To analyze the current situation, major challenges and the prospects of the pharmaceutical industry of South America.

To identify major players of the South Americas pharmaceutical industry and make a comparative analysis of their business practices and financial results .The pharmaceutical industry showed high sales growth rates in the recent past, and a number of factors suggest that this trend will continue in the future.

Although countries of South America at the moment have a small portion of world pharmaceutical sales, these countries also have a significant potential for the pharmaceutical industry in the future. Fast growing economies in Asia, South America and Central & Eastern Europe suggest an increasing solvency of population and make these markets more and more attractive for “Big Pharma” companies. Further reforms of legislation systems in the countries of these regions, especially regarding patent protection issues, will inevitably result in growing pharmaceutical sales.

The fast-growing markets for pharmaceutical products in Latin America are worth over US$28 billion at retail prices. What opportunities do they present for manufacturers now

and in the future?
The seven Latin American markets covered by this new service represent a market of 427 million people with a GDP of US$1.8 trillion in 2005. After China they are the fastest growing markets, expected to grow at an annual rate of 10% between 2005 and 2010 and

reaching a market value of over US$45 billion at retail prices by 2010. Venezuela, Mexico, Chile and Argentina are registering the highest growths, whereas Brazil,

Colombia and Peru will grow more moderately.

Health reforms expanding the markets

Overall, healthcare reforms are encouraging institutional drug expenditure. In Argentina, the REMEDIAR programme is improving the access to essential medicines for 15 million Argentinians in the poverty line while in Colombia; the first national pharmaceutical policy was published in December 2003. In Peru, new recommendations on drug prices and access were issued in April 2005 and in Chile, a new national pharmaceutical policy

was presented in April 2004.

Intellectual property rights & the rise of generics

The domestic pharmaceutical industry - often engaged in the production of copycat drugs, branded or unbranded – is alarmed at the trend to recognizing patents and intellectual property protection. They claim it might threaten access to affordable medicines. However, the Latin American Federation for the Pharmaceutical Industry, FIFARMA, recognizes that further patent enforcement will not affect public health but producers of copycats. The generics sector is expected to grow faster than the research based sector, with major foreign producers of generics arriving in Mexico and Argentina.

Regulatory expansion and harmonization

Encouraged by foreign producers, the region is slowly starting to harmonies key drug regulation. Good Manufacturing Practices are not yet 100% applicable in the region, which has restricted pharmaceutical exports to other South or Central American countries. This is the first step towards ensuring the quality of drugs, but safety and efficacy issues remain. Drug bioequivalence, for instance, has been enforced only in Mexico while Chile will start bioequivalence tests on 16 selected active ingredients between 2005 and 2010. Generic substitution is widely promoted yet no quality standards

are enforced in full in some countries.

This updated report provides:

- 5 year forecasts to 2010
- Market outlook
- Pharmacy and hospital sales
- The use of generics
- Intellectual property developments
- Domestic production
- Imports and exports

Some Latin American countries, such as Mexico, Brazil, Argentina and Venezuela also show much faster sales growth rate than average worldwide. Therefore, developing countries contain a significant potential for further expansion of pharmaceutical industry in the future.

Rapid growth, high unmet clinical needs and increasing regulation are changing the face of Latin American pharmaceuticals. What are the opportunities and challenges for companies and investors wanting to develop or enter this growing market?

5-Year market forecast to 2010 IS;

Analysis of trends

Intellectual property protection
GMP/bioequivalence progress
Health provision and plans
Domestic production and review of leading companies

Answering important questions about the future of drugs in Latin America

What effect is the move to better GMP and bioequivalence having on the market now, and what impact might it have on domestic companies in the future?
Patents and intellectual property have risen to the top of the industry's agenda, but is there political will to enforce compliance?
What role are ambitious Indian manufacturers taking in the region and what is their on going impact likely to be?

The generic sector in Latin America.

In 2005, the generic sector in Latin America was valued at US$1.7 billion, which represented a 26.9% increase over the 2004 figure of US$1.3 billion. Regional generic expenditure per capita stood at US$3.8. Venezuela had the highest expenditure per capita at US$8.0, followed by Argentina at US$5.8.

Brazil-based Fabrima is a packaging OEM that serves the pharmaceutical, cosmetic, and food industries, if you can analyze drug pipelines and pharmaceutical potentials there is much exposure to emerging markets in South America or Asia.

Countries such as Australia , Denmark , Brazil and Mexico . Keith Macgregor said: “... Their pursuit of developing the latest technological, pharmaceutical and scientific breakthroughs makes a significant contribution.

Many pharmaceutical companies have their manufacturing bases in Brazil and quite a few have their regional headquarters here," explains John Anderson of Rio de Janeiro’s Pro-Cardiac Hospital, who previously headed up GlaxoSmithKline’s Brazilian operations. "It serves as a useful base for operating in the Southern Cone area of Latin America particularly within the Marcos trading bloc"

What makes Brazil of interest is that, despite its obvious attractions, pharmaceutical companies have found it difficult to operate in both in terms of sales and R&D. Brazil has often been described as an emerging healthcare market, but this terminology can understate the need to have a sophisticated strategy in order to benefit from the opportunities that exist. As Mr. Anderson highlights, patience is the key to the Brazilian market: "In the 1970s a number of U.S. companies became disheartened when they did not see an immediate return and left the market. It was a decision they regretted, particularly as it cost them a lot of money to re-establish themselves in Brazil. A long-term strategy combined with a careful evaluation of the economic and political climate is necessary for success to re-establish themselves in Brazil and the rest of Latin America."

In general terms the Brazilian pharmaceutical market has a potentially large consumer base as the population is growing and aging rapidly (see Figure 1). For example, between 1970 and 1991, the Brazilian population grew from 93.1 million to 146.8 million—an increase of nearly 58%2. However (or resultantly), Brazil has been described as a country that exhibits some of the most profound social inequalities to be found across the world. According to figures from the UK's Department for International Development Health Resource Centre, across Brazil there is a 63.4% degree of income inequality,

Top 10 Pharmaceutical exports destinations were Canada, the Netherlands, Switzerland, Ireland, Mexico, and Austria. Indiana’s Pharmaceutical export profile is very similar to the nation’s Japanese imports from Africa showed huge percentage growth, as did China’s imports from Central & South America and Africa.

Founded in 2002 by Rail Bozo, MD, the company has approximately 25 clinical associates offering extensive CRO and biopharmaceutical industry experience in Phase II-IV clinical development, with significant therapeutic strengths in cardiovascular, oncology, central nervous system, endocrinology, infectious disease and pain/inflammation. Upon completion of the acquisition, Bozo will assume the role of Medical Director, Latin America and Country Manager for Argentina and Chile. Mariagabriela Alterio, M.S., and Alcione Braga will serve as country managers for the new operations in Colombia and Brazil, respectively .Global markets for pharmaceuticals and bio-medical products and services are becoming increasingly integrated. Trade barriers are coming down around the world, due to multilateral agreements under the World Trade Organization, minilateral agreements such as NAFTA in North America and Mercosul in South America, and bilateral agreements such as U.S. free trade agreements with Jordan, Bahrain, and Morocco. These industry sectors are highly-regulated markets, however, for reasons of product efficacy, safety, and the political economy of public health, so markets remain fragmented by differing regulatory policies and price controls and likely will remain so for awhile.

Nevertheless, the global trend is toward market integration through import liberalization and price de-regulation for reasons of the political economy of the global trading system and of the political economy of international public health. Trade diplomats want market efficiencies and comparative advantages to determine international trade flows in pharmaceuticals; public health advocates want the best achievable access to pharmaceuticals through out the world. Thus, business best practices in Jordan, as elsewhere, over the long-term will articulate and build organizational capacities around international business strategies (Bartlett and Ghoshal, 1998 and subsequent editions; Dunning, 1993 and subsequent editions).

The South American trade group Mercosur led by Brazil has ... agreed to cooperate on information technology and pharmaceuticals, two areas of strength for India.

Science & Technology Overview Of South America

Brazil is the fifth largest country in the world, with a GDP of US$ 558bn (2004) and over 170 million inhabitants. Its major industries/ economic activities are agribusiness (soya, meat, fruit, vegetables), iron ore and minerals, iron and steel, oil and derivatives, food processing, wood products, footwear and textiles, automotive, aerospace, petrochemicals, financial services, electronics.

Brazil is the UK's most important trading partner in Latin America. Around 90% of UK exports to Brazil are manufactured goods. Top exports include organic chemicals, pharmaceutical products, power generation machinery and equipment, professional scientific instruments and apparatus, electrical machinery and road vehicles. Brazil's main exports to the UK are meat and meat preparations, foodstuffs for animals, pulp and paper, footwear, cork and wood manufactures, tobacco and tobacco products, power generation machinery, vegetables and fruit.

The Amazon basin holds 20% of the world's fresh water supply. Brazil has the world's largest rain forest and one of the highest levels of biodiversity in the world. It is home to approximately 15% of the total number of world species described to date. However, incidences of environmental degradation remain high. Brazil is the 5th largest global emitter of CO2, mainly due to deforestation, as over 80% of Brazil's electricity is generated from large-scale hydropower plants.

During the last 20 years, Brazilian scientific research output has had one of the fastest growth rates world-wide. From 1981 to 2000, the number of scientific publications produced by scientists resident in Brazil went from 0.44% to 1.44% of the ISI base. The country has the most qualified scientific community in Latin America. From 1990 to 2001, the number of PhDs grew annually at a rate of 16.1%. Brazil's main scientific partner is the US. From 1980 to 2000, 40% of all papers that resulted from international collaboration had US co-authors. France came second with 13%, followed closely by the UK, with 11%, Brazil currently dedicates 1% of its GNP to ST&I, that corresponds to about R$ 12 billion (approximately £3 billion), while the S&T Ministry's budget for 2005 was of R$ 4, 5 billion (just over £1 billion). Most of the relevant R&D is undertaken at federal and state universities and institutions. The companies with the best S&I track record are State-owned enterprises, such as Petrobras.

Brazil occupies a middle rank among the group of nations trying to place knowledge at the centre of economic and social development. Taking its investment in R&D divided by its GNP, Brazil, with 0.87% in 1999 comes close to other intermediate countries such as Spain and Hungary. However, the expenditure structure by origin of resources further reveals the gap between Brazil and developed countries. In the former, where S&I are less developed, the government meets approximately 65% of the expenditure, as opposed to the latter, where the business sector accounts for 50% or more of the national effort on R&D.

Information Technology, Electronics and Commuications

Life Sciences

Performance Engineering and Materials

Environmental and Sustainable Energy Technologies

Statistics

Pharmaceutical and life sciences companies are among the most analyzed and evaluated organizations in business today. Each company's financials, strategy and plans are scrutinized and compared to both current and historical benchmarks. In recent years, profitability has been lagging as many companies have been unable to sustain the robust growth that was once a hallmark of the industry. Considering the broader picture, analysts expect that the existing "blockbuster model" will be viable for the foreseeable future, but over time they suggest that a new approach will be needed to successfully address the difficult challenges ahead. The challenges are well known and include declining profitability, thinning pipelines, growing generic competition, and skyrocketing operating and marketing costs.

In the future, the approach that companies pursue will depend in large measure upon their individual goals. Whether they choose an innovation-based model built on the promise of personalized medicine or instead focus on an alternative operating structure such as the virtual organization, inevitably companies will need to decide how to satisfy contending stakeholder demands while pursuing sustainable growth in a competitive market.

Pharmaceuticals industry challenges;

The Outlook for Pharmaceuticals in Latin America to 2010: Catching the Wave of Growth?
Espicom Business Intelligence Ltd

The fast-growing markets for pharmaceutical products in Latin America are worth over US$28 billion at retail prices. What opportunities do they present for manufacturers now and in the future?

The seven Latin American markets covered by this new service represent a market of 427 million people with a GDP of US$1.8 trillion in 2005. After China they are the fastest growing markets, expected to grow at an annual rate of 10% between 2005 and 2010 and reaching a market value of over US$45 billion at retail prices by 2010.

Venezuela,Mexico, Chile and Argentina are registering the highest growths, whereas Brazil, Colombia and Peru will grow more moderately.

Conclusion

In general, the bulk of health innovation in the world is focused on the lucrative markets of the industrialized countries. Limited efforts are aimed at developing countries’ health needs. With rampant health problems in developing nations and massive health inequities in the world, it should ultimately be the goal of health biotechnology sectors in developing countries to develop new and innovative health products for their own populations rather than to focus solely on the markets in richer countries. It is encouraging when we observe successes in this respect and see developing countries that have built up impressive capacity to address health needs in this field as is the case of Brazil and Cuba. Still, health biotechnology is a risky field and it is difficult to predict how these countries will fare in the future. They will face stiff competition from industrialized countries that have actively promoted the biotechnology field for many years.

They will also face competition from other developing countries active in this field such as India. It remains to be seen what approach is going to be successful in the long run to follow product led or science led development. In any event these two countries have much to learn from each other and to teach other countries in the region and around the world. Stronger south to south collaboration between countries such as Brazil and Cuba is a promising strategy that can strengthen the rhythm of biotechnology created for and by developing countries.

Acknowledgements

Grant support: The Canadian Program on Genomics and Global Health is primarily supported by Genome Canada through the Ontario Genomics Institute, and the Ontario Research and Development Challenge Fund. Matching partners are listed at www.geneticsethics.net.

ASD is supported by the McLaughlin Centre for Molecular Medicine. PAS is supported by a Canadian Institutes of Health Research Distinguished Investigator award.

References

Cortright, Joseph and Heike Mayer. "Signs of Life: The Growth of Biotechnology Centers in the U.S." The Brookings Institution, June 2002.

[focuses on biopharmaceuticals]

Devol,Ross et al. "America's Biotech and Life Science Clusters: San Diego's Position and Economic Contributions" The Milken Institute, June 2004.

Devol,Ross et al. "The Greater Philadelphia Life Sciences Cluster: An Economic and Comparative Assessment" The Milken Institute, June 2005.

GDIS - Biotechnology Clusters

"Health Biotechnology Innovation in Developing Countries" Canadian Program on Genomic and Global Health at the University of Toronto Joint Centre for Bioethics, Nature Biotechnology 22 (12s): December 2004.

OECD: The Bioeconomy to 2030: Designing a Policy Agenda, an Organisation for Economic Co-operation and Development (OECD) Scoping Paper, March 2006.

Websites

BioSpectrum India, Global Bioclusters

Biotechnology Industry Organization - BIO US

Canadian Biotechnology Clusters Strategis - Industry Canada

9/24/2006European Biotechnology Science, 2004.

Biotech Clusters Department of Trade & Industry, United Kingdom

BioLondon

Seebio [South East England]

BioRegions in Germany

BioCon Valley

BioTechnikum Greifswald