Brazil offers drugmakers an opportunity to off-set slowing sales growth in more developed countries but "local market problems need to be resolved before the full potential can be realised".

That is the view of Datamonitor which notes that the retail pharmaceutical market in Brazil was valued at $12.6 billion last year, "having grown by an attractive 14.3% between 2008 and 2009". Mark Hollis, healthcare analyst at the group, claimed that "Brazil’s many advantages will be tempting to big pharma" as government initiatives and the Unified Health System (SUS) have improved access to healthcare "for the steadily expanding population".

He claims that the country has weathered the global economic downturn well "and the burgeoning middle class are increasingly opting for branded drugs". R&D and manufacturing in Brazil has also flourished, thanks to the National Economic and Social Development Bank’s (BNDES) Profarma initiative, Mr Hollis claims.

However, the government is still under pressure to reduce costs "and it is expected that the state’s federal budget for pharmaceutical expenditure may be cut this year", he adds. Rather than forfeit extended treatment coverage, the Brazilian government plans to "reduce the over-consumption of expensive drugs, focusing on preventive care, and incentivising generics in an effort to ensure sustainability of the national health system".

Datamonitor goes on to say that generic manufacturers will also benefit from the government’s aims to eliminate similares (non-bioequivalent copies of medicines) by 2014, though "these remain the most popular type of drug in Brazil, despite new similares having been prevented from entering the market since 2003". The report adds that intellectual property protection in Brazil "remains the most problematic area for branded pharma". The  problems include the slow speed of patent reviews, conflict between the two agencies involved in granting pharma patents (INPI and ANVISA) insufficient trademark protection, and patent backlogs.

Mr Hollis concludes by saying that "given the issues regarding IP in Brazil, the optimum strategy for international players to enter the market is through acquisition of a domestic generics player". This strategy was reflected by Sanofi-Aventis’s recent purchase of Brazil’s second largest domestic drug manufacturer Medley and the France-based giant is now the largest pharmaceutical company by sales in the country.