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Global Business Update Pharmaceutical Market Access In Brazil W By Davide Zaganelli ith expectations to reach 30 percent of the nearly $1.2 trillion U.S. global spend and 50 to 70 percent of the $70 billion annual U.S. growth forecasted in the pharmaceutical sector by 2016, it is clear why emerging markets are considered the new frontier. They are the new hope for a pharmaceutical industry that is seeking new strategies and partnerships to balance the stagnation in more mature markets. Today's emerging markets — quickly growing, increasingly competitive, and culturally, socially, and economically diverse — defy a uniform approach and instead call for local business planning based on a comprehensive and global perspective. For this reason, international pharmaceutical companies must be willing to implement marketspecific strategies and local thinking within their global business strategy. Nevertheless, evolving political stances, increasing international competition, and rising local manufacturers are toughening market-access environments and creating new, and sometimes unexpected, risks for drug makers. Brazil is one of many examples showing how quickly business conditions for drug makers are changing and how important it is to identify, evaluate, and foresee such changes as early as possible to improve and consolidate market positioning. This article provides an overview of the latest trends regarding pharmaceutical taxation, strategic partnerships, and generics promotion. LATEST REFORMS AND NEW CHALLENGES With over $220 billion of healthcare expenditure, a strong economic growth, and drug prices adjusted annually 56 LifeScienceLeader.com (2.7 to 6.31 percent increase estimated in 2013), Brazil is destined to become the third-largest pharmaceutical market by 2020 after the U.S. and China. Despite its strong economic growth, Brazil faces increasing pressure to control healthcare expenditures and, at the same time, promote innovation and improve access to healthcare. Pursuing this difficult task, decision makers are discussing several initiatives, some of them already converted into law, which will reshape the pharmaceutical market in the following years. In a context of increasing competition and stricter regulatory hurdles, Brazil will become a much more challenging business environment. DECREASING TAXATIONS ON PHARMACEUTICALS Even though international companies operating in the Brazilian healthcare market are approximately 20 percent of the total healthcare manufacturers based in Brazil, they represent 75 percent of market share. Decreasing taxation on medicines for human use is seen as an effective way to promote and incentivise over 550 laboratories that represent the internal pharmaceutical sector. Two different measures adopted in the last six months October 2013 confirm this strategy: On Nov. 28, 2012, the Brazilian Committee on Constitution, Justice, and Citizenship approved a replacement bill proposing a constitutional amendment that would prohibit the collection of taxes on medicines for human use. Import taxes, however, will remain in place as it was recognized that "the import tax serves as an instrument of government economic policy, which should continue providing the flexibility to maneuver its rates and the need to protect the domestic market from indiscriminate entry of foreign products." More recently, on March 13, 2013, a taxdeferral measure was officially published to suspend goods-circulation taxes in the state of São Paulo for domestic products and imported pharmaceutical ingredients or intermediate drug products purchased by the Foundation of Popular Medicines (Fundação para o Remédio Popular). The Foundation is linked to the São Paulo department of health and is responsible for developing, producing, and distributing pharmaceutical products in Brazil. This rule is valid for imported generic or biosimilars not yet available in the country. SEEKING NEW PARTNERSHIPS Brazil recognized that the development of technology in healthcare is necessary