Brazilian Drug Industry to Invest US$300mn in 2005

Brazilian drugmakers' federation Febrafarma expects the local industry to invest some US$313.8mn this year, two-thirds of which is likely to be earmarked for upgrades to production technology. A study carried out by the association indicates that rather than boosting output, local drugmakers are more likely to invest in developing new product lines.

Although there is no comparable data for previous years, Febrafarma values last year's investment spending at roughly US$200mn, implying that modernisation costs are likely to rise sharply this year, in the wake of sustained sales rises over the past 12 months. Further, the body estimates that this year's spending will see the sharpest rise since 1993, bringing investment since that time to US$2bn.

However, Febrafarma's study, which consulted approximately 100 domestic and foreign producers representing some 70% of the local market, notes that only roughly US$35mn will be spent on R&D in 2005. This amount is slightly lower than this year's projected marketing expenses, and the fact that much of the total will be used to support new indications for existing therapies highlights the underdeveloped nature of the country's research sector.

Further, the data mainly point to a recovery in the drug sector in 2004 after seven years of declining sales. The 2004 pharmaceutical sales of BRL19.9bn (US$6.7bn) are still below 1997 levels, although the sector is currently outperforming productivity in all other segments of Brazil's industrial sector. Nonetheless, it remains to be seen whether the recovery will prove sustainable, and bring about the modernisation the industry requires to compete effectively against sophisticated imports.