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April 18, 2016
Despite Brazil’s recent failure at galvanising its economy following the World Cup, its pharmaceutical industry has been for the most part optimistic. However with the Brazilian economy being impacted both externally and internally, it remains to be seen if the pharmaceutical market is growing steadily or if it is in fact beginning to show signs of instability. The revised forecast figures that now show Brazil’s economy is shrinking are continuing to slip on a weekly basis causing concerns over the stability of its growing pharma industry.
Having enjoyed growth levels of up to 7.5% in 2010, Brazil’s economic boom is beginning to show worrying signs of cooling off. With a moderation in local industrial production and lower levels of foreign investment taking place in Brazil, the commodity boom period looks set to be ending. Brazil’s economic situation has become unstable and unpredictable for companies, consumers and investors due to the 2014 World Cup, the country’s presidential elections last month and the planning of the 2016 Summer Olympics. All of Brazil’s sectors including the pharmaceutical sector have had to wait for political, social and economical clarification before receiving investment or moving forward with start-ups and acquisitions. However, there may be a light at the end of the tunnel thanks to signs of worldwide economic recovery ultimately resulting in a growth of commodity demands. Many analysts believe that the pharmaceutical sector will continue its growth pattern due to Brazil’s strong domestic demand and large foreign reserves. The pharma industry does also have the potential for growth as a result of an aging Brazilian population and a growing middle-class.
The growth of the pharmaceutical industry in Brazil is very much reliant on the expansion of the country’s middle class and whether this wealth is sustained as the population ages. This is vital to its development as it will create a greater demand for both pharmaceutical products and services. Although Brazil’s pharmaceutical sector might not end 2014 as strongly as previous years, it should maintain its current steady growth rate of approximately 3.8% for at least the next 5 years. One of the main reasons why the pharmaceutical industry has slowed down this year is because during the World Cup there were fewer working days resulting in lower rates of production of pharmaceuticals. Following the presidential elections last month, many of the pharmaceutical projects will be resumed once the political definitions have been unveiled and could lead to a growth in the sector towards the end of the year. The industry’s growth is also expected to be sustained over the next 5 years due to the continued increase in access and globalisation of health information made available for both patients and doctors. Interestingly, Brazil’s pharmaceutical retail growth may lie in the famous ‘favelas‘ and poorer areas of the country as these areas tend to grow faster than the richer regions where there is easier access to pharmaceutical drugs and fiercer competition.
To date, Brazil is the sixth largest pharmaceuticals sales market in the world and it is expected to continue to move up the ladder in the next couple of years. With population growth and the possibility of economic stability, Brazil’s pharma market, helped by import tariffs on pharma products which in turn aid the local industry could produce a stable and robust market. Patients, healthcare providers and pharma companies in Brazil look set to benefit from Brazil’s progress with its increase in population being the biggest driver. The wealthier south-eastern region of Brazil will more than likely see a growth in demand for generic-drugs in the future. This is a result of an improvement in the standard of living and wealth in the area which will ultimately aid the overall Brazilian pharma market revenues.
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