Generics Sector Grows by 21% During H1 in Brazil

Brazil has witnessed considerable growth in the generic sector in the first half, achieving 20.95% growth in terms of units compared to the same period of 2011. In relation to the first quarter of 2012, generics grew by 10.29%, and in June 2012 generics growth was set at 18.98% year-on-year (y/y). According to Investimentos e Noticias, the Brazilian drug sector overall, including branded drugs, grew by 7.89% in the first half of 2012 compared to the same period last year. According to the Brazilian generic wholesaler association Abradilan, the sales volume of generic drugs in the country grew by 21% in the first half. Abradilan distributes drugs in 82% of cities across the country, and represents wholesalers in 77% of the 71,000 pharmacies across the country, distributing drugs in 82% of pharmacies in the south-eastern region, 74% in the north-eastern region, 84% in the centre east, and 33% in the north of the country.

Outlook and Implications

The increase in sales experienced by the Brazilian generics sector is in line with the overall growth experienced by the pharmaceutical market in the country and is a consequence of the strong generics-boosting policy of President Dilma Rousseff, including that of the implementation of the social pharmacy network, Aqui Tem Farmacia Popular. This has lead to a strengthening of the domestic industry and encouraging domestic production of drugs taking advantage of the many branded products that are going off patent. In the first five months of 2012 the generics sector in Brazil experienced growth of 34% y/y (see Brazil: 29 June 2012: Brazil's Generics Sales Rise by 34% in First Five Months).

Brazil's generic industry is booming and becoming a sustainable option for one of the top pharmaceutical markets in Latin America. Brazil has a long history of generics implementation, starting in 1991 when the first law to introduce copies of branded drugs defined by their active pharmaceutical ingredient was proposed. But it was only in 1999 that generics were actually introduced into the country under former president Henrique Cardoso's government through a law authorising the commercialisation of generic drugs across the country. IHS Global Insight expects the surge in generic sales to continue, which will lower the growth in value-based drug sales and health spending going forward.

Generics are now growing at twice the market rate in the country, and are considered a sustainable alternative in Brazil as they provide an important solution to the health needs of the low-to-middle classes, being 52–85% cheaper than their branded counterparts (source: Pro Genericos).The generics sector in Brazil is constantly gaining more importance and Brazil is quickly becoming one of the top generics markets in Latin America. A total of 17,000 generic products are registered in Brazil, representing 25% of total pharmaceutical sales in the country (see Brazil: 9 May 2012: Generic Sector Holds 25% of Market in Brazil). According to Pro Genericos, the average price of generics in the country is 50% lower than branded drugs, creating savings of up to 22 billion real (USD10.8 billion) over the last 12 years.

The Brazilian generic industry is forecast to flourish in the short-to-medium term, placing itself as one of the strongest generics markets in the Americas, followed by Mexico. The sector is further boosted by the fact that the country is getting ready to produce new-generation generics, i.e. generics of products whose patents are expiring this year, for example Pfizer (United States)'s antipsychotic Geodon (ziprasidone) and immunosuppressor, Sirolimus (rapamycin).