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International Biopharmaceutical Association Publication







South America: Biopharmaceutical Industry Overview









Durreshahwar Faiz (M.B.B.S)

durrefaizrri@yahoo.com

CRA Student

KRIGER RESEARCH CENTER

INC
.


2

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 t
heir 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 biopharma
s 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, (stab
ility 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 precli
nical
levels. We

offer an accurate biological te
... more

CreaCell
, location: France

CreaCell is a drug discovery company special
ized 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,
Parkin
son's, Alzheimer'
... more

Takesun do Brasil Ind. Com e Exp. Ltda.
, location: Brazil

Manufacturer of phyto pharmaceutical product
s, immune system products, RF 1000
extract, Camu camu, Graviola, Agaricus blazei murill. Third labeling and production,
water extracts, capsuled products, d
... more






INTRODUCTON;

This pap
er summarizes the results of our global pharmaceutical industry
analysis in

South
American world and is intended to increase awareness of the general public
.


3

The paper has the following major goals:

To analyze the current situation, major challenges and th
e prospects of the
pharmaceutical ind
ustry 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 signifi
cant 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 wo
rth over
US$28 billion at retail prices. What opportunities do they present for manufacturers
now



a
nd

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 20
05. 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
t
he
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

i
n

Chile
,


a new national pharmaceutical

policy

w
as

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 enforcem
ent 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




4

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
countr
ies. 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
betw
een 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 cha
llenges for
companies and investors wanting to develop or enter this growing market?


5
-
Year market forecast to 2010
IS;


Analysis of trends

1.

Intellectual property protection

2.

GMP/bioequivalence progress

3.

Health provision and plans

4.

Domestic production and rev
iew 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?



Patent
s 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 se
ctor in Latin America
.



5

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 exposur
e 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 co
ntribution.

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 di
fficult 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 ter
ms 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
Resou
rce 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 natio
n’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 biopharmaceuti
cal 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 ph
armaceuticals
and bio
-
medical products and services are becoming

i
ncreasingly

integrated. Trade
barriers are coming down around the world, due to multilateral agreements under the

6

World Trade Organization, minilateral agreements such as NAFTA in North Ame
rica 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 econ
omy 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; pu
blic 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 stra
tegies (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

B
razil 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, vegetab
les), 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 Ame
rica. 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 vehi
cles. 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 environ
mental 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 outp
ut 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 L
atin 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

7

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 kno
wledge 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 reso
urces 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 th
e 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 an
d 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 prof
itability, 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
;



Attracting and retaining a skilled workforce




Controlling operating costs




Generic competition




Intellectual property protection




Managing regulatory compliance




Pricing pressures and shrinking margins



8



Realising tangible value from strategic alliances, jo
int ventures (JVs) and
partnering arrangements




Reputation management




Successfully developing innovative drugs and enhancing R&D productivity




Sustaining growth in global markets



The Outlook for Pharmaceutica
ls 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 manufa
cturers 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 rat
e 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.



Conclusio
n

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

r
ampant

health problems in developing nations and massive he
alth inequities
in the world, it should ultimately be the goal of health biotechnology sectors in

d
eveloping 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 coun
tries 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.


Acknowledgemen
ts

Grant support: The Canadian Program on Genomics and Global Health is primarily
supported by Genome Canada through the

Ontario Genomics Institute, and the Ontario

9

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 To
ronto 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 Organ
ization
-

BIO

US

Canadian Biotechnology Clusters

Strategis
-

Industry Canada

9/24/2006
European Bi
otechnology

Science
, 2004.

Biotech Clusters

Department of Trade & Industry, United Kingdom

BioLondon


Seebio

[South
East England]

BioRegions in Germany


BioCon Valley


BioTechnikum Greifswald


Network LifeScience Bavaria


BioRegio STERN


Biotechnology France


BioValley

[France, Switzerlan
d, Germany]

Zurich MedNet

[Switzerland]

BioAlps

[France, Switzerland]

Medicon Valley

[Denmark
-
Sweden]

ScanBalt BioRegion

[Scandinavia, Baltic states, Iceland, Poland, North Germany,
Northwestern Russia]

Cape Biotech

[South Africa]

Biotech Japan


BiotechEast

[Taiwan]

Biopolis Singapore



10

BioValley Malaysia


Bangalore Bio

[India]

Genome Valley

[India]

BioMelbourne Network


BioFirst

[New South Wales, Australia]