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Merck & Co forms joint venture in Brazil

Supera Farma Laboratorios boosts US pharma firm’s position in emerging market

Merck & Co has boosted its position in the fast-growing Brazilian pharmaceutical market with the signing of a joint venture agreement with local drugmaker Supera Farma Laboratorios.

Once the deal goes through later this year, Merck will own 51 per cent of the JV, with Supera - set up and co-owned by Brazilian pharma companies Cristalia and Eurofarma - taking the remaining 49 per cent.

The new company will start operations with a portfolio of around 30 innovative and branded generic drugs from Merck, Cristalia and Eurofarma in Brazil, which will be sold by a dedicated salesforce that will operate independently of the three parent companies.

"This venture is an important step forward in our strategy to grow our business in key markets and improve global access to our medicines and vaccines," said Merck CEO Kenneth Frazier.

Merck will provide a portfolio of innovative products to the JV, and these will benefit from access to the domestic distribution networks developed by Cristalia and Eurofarma in the Brazilian market.

The venture will be managed by a joint board and leadership team consisting of members of senior management from the three companies.

Brazil is the largest healthcare market in Latin America and the eighth-largest in the world by size. It was estimated to be worth over $25bn in 2011, up around 22 per cent from $21bn in 2010, according to figures supplied by Business Monitor International.

The main driver for growth has been the increasing levels of disposable income in the Brazilian population, although inflationary and spending pressures have encouraged Brazil's government to implement a number of measures to try to reduce its healthcare bill in recent years

This includes the promotion of generic substitution.

Despite these efforts, patient and physician mistrust has subdued growth in generic medicines and this has helped keep pharmaceutical market growth buoyant, according to BMI. In 2001 generic penetration of the market was around 20 per cent.

Find out more about the Brazilian healthcare market in our Country Report: Brazil.

16th February 2012

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