All eyes on pharma in Brazil

While the becalmed economies of developed countries struggle to register any growth, the emerging markets are riding an unprecedented economic wave, with a collective compound growth rate between 2011 and 2015 estimated by many analysts at around 15 per cent. The Wall Street Journal quotes IMS Health predicting that drug sales in emerging markets will grow by $157bn over the next five years, reaching at least $345bn or about a third of global drug spending.

Although predictions that the Brazilian economy would overtake the UK to become the sixth largest in the world in 2012 ultimately proved premature, Brazilmania is alive and well in the boardroom. Emerging markets remain a hot topic for executives and shareholders, with many large pharma companies citing success in Brazil as a critical factor for their long-term growth strategies.

It is no surprise that all eyes are on Brazil. While the international media focuses on the build-up to the 2014 World Cup and 2016 Olympics, the business world is more interested in the country’s large population and growing economy. As Brazilians grow richer, they are also becoming healthier, and demand for healthcare and innovative medicines is rising.

Yet, as with many emerging markets, entering the market – or expanding an existing presence – presents a range of challenges.

Brazil’s systems can be more bureaucratic than most developed markets, making it difficult to navigate a complex regulatory landscape. Licensing bodies are struggling to keep up with demand as more companies arrive, resulting in delays in product registration and market entry. The Government does, however, offer incentives for products that have part of the manufacturing process carried out in Brazil.

Route to market
There is a clear pathway for companies to get their products licensed in Brazil, yet each step brings a multitude of unique challenges. The first step for new entrants is to establish a ‘legal entity’, a company recognised by the Brazilian Ministry of Finance (Ministério da Fazenda) and granted a CNPJ identification number (Cadastro Nacional de Pessoas Jurídicas).

Once established, companies must seek authorisation from the Ministry of Health, itself a two-step process. Firstly, they must obtain an operating licence (Licença de Funcionamento) from the relevant health authority, which is usually state or city based; for example COVISA covers the São Paulo area. This licence is only granted to companies that meet certain criteria, including a quality control lab and warehousing facility. Companies can then seek an operating authorisation (Autorização de Funcionamento) from the National Health Surveillance Agency (Anvisa). The process of establishing a presence in the country commonly takes 18-24 months, after which the company can start the process of applying for market authorisation (MA) for their products. However, regulatory submissions routinely take an additional 18-24 months to be processed, a period that is reportedly lengthening due to staff shortages at the Agency.

At a glance

In addition, the process by which companies gain a product price is less than fully transparent. Anvisa requires companies to submit pricing information on both comparable products already on the market and the price set in other countries. It also takes the unusual step of requesting information on the cost of producing the drug. Finally, companies must gain GMP certification for their manufacturing facilities from Anvisa as there are no bilateral agreements with overseas agencies such as the FDA. It is worth noting that there are examples of companies being forced to cease production when an Anvisa inspection found issues with their manufacturing facilities overseas.

Once an MA has been gained and a price set, companies must deal with a complex marketplace. In Brazil 75 per cent of drugs are reimbursed by the healthcare system and the remainder are paid for out of pocket by patients. Clearly, this presents challenges in terms of getting a product on the reimbursed ‘essential drug’ list. The Government will pay for specialised, new and expensive drugs but companies have to submit an HTA dossier complete with pharmacoeconomic analyses similar to those required by NICE.

However, as healthcare spending swells, it is only a matter of time before the government seeks to rein in costs, and when this happens private providers and insurers will become more important stakeholders for pharmaceutical companies. This in turn will affect decisions around pricing being set at an affordable level for those paying out of pocket.

Pressure on costs is also driving the value agenda. Brazil is behind the curve when it comes to patient-centred programmes designed to capture real-life patient data but it is catching up fast. Many international companies with existing patient-centric approaches in their core markets are now looking to implement them in Brazil. The Government is already showing an increased willingness to collaborate with companies in public private partnerships to access innovative health technologies, and several multinational pharmaceutical companies are adopting this approach as the market evolves.

Finally, the geography and demographics of Brazil also present challenges for market access. While urban centres such as São Paolo and Rio de Janeiro are densely populated, with a high concentration of healthcare professionals in easy reach, much of the country is more sparsely populated. Many of these challenges can be tackled through multichannel approaches such as telephone or edetailing, but this requires a good level of infrastructure, which is not consistent across the country.

Choosing the right partner
With its own characteristics and challenges, accessing the Brazilian healthcare market clearly needs a bespoke approach. While the majority of the top multinational pharma companies have started to establish a presence here, many medium and small companies are on the outside looking in, weighing their options before deciding on a way forward. They are looking for options that will allow them to enter the market more quickly. Yet they recognise that market knowledge and experience will be vital in order to navigate such a complex, highly regulated and fragmented healthcare landscape.

Some will build an affiliate from the ground up, while others will seek to partner, whether with big pharma, a local player or a global provider. Clearly, there are pros and cons to each approach. Establishing an affiliate allows a company to retain full control over its products and operating procedures but the investment required to create a legal entity and the infrastructure to operate it is considerable. Partnering with big pharma minimises operational risks but, in addition to reduced control over sales, marketing and other processes, royalties rather than sales will diminish sales profitability.

Venturing into the local market with a domestic partner, another option, may lower the financial risks but such a partnership raises significant questions around compliance and quality. Given recent headlines surrounding compliance violations and Brazil featuring on Transparency International’s Corruption Perceptions Index, the Supreme Court has started to clamp down on corruption in the country. It is clear that, as with other countries, the implications of any unsanctioned or irregular practices may reach all the way back to company HQ.

The last option for companies looking to enter the market in Brazil is to build a relationship with an established service partner such as Quintiles. This allows them to adopt a regional or global approach, build on local market knowledge and harness existing local relationships. Furthermore, it also gives a company far more flexibility for the future; should they decide further down the line that they want to work the market themselves, then the entire operation can be transferred back to their control with a minimum of fuss.

Global standards
Global service partners are attractive because they can guarantee the same standards of quality and compliance as in existing markets. Code of conduct and ethical standards are included in Quintiles’ initial sales force training and all its staff are trained on core compliance programmes.

Partnering with an established global service partner like Quintiles enables companies to tap into the efficiencies of its global scale. For example, at the heart of Quintiles are 650 MDs, hundreds of PhDs and thousands of clinical educators and medical representatives able to provide unmatched scientific, therapeutic and prescribing expertise. There is also a network of over 27,000 professionals in more than 80 countries who can be redirected on a moment’s notice.

In fact, Quintiles has already used its unique blend of commercial expertise and global clinical presence to build commercial organisations in key emerging markets, not just Brazil. With operations and ready-made relationships with key opinion leaders in more than 60 countries worldwide, and a focus on quality and compliance borne from its clinical and commercial heritage, Quintiles offers a full market entry solution covering the entire spectrum of activities from gaining regulatory approval to market access, including pricing and reimbursement, and a full sales and marketing model.

This article was originally published in the PME supplement Pharma and BRIC