Brazilian Medical Industry Overview

Rebeca Duran

Staff Writer
The Brazil Business

Updated

21 June 2013

In Brazil, the Medical Industry has huge growth potential although it is still currently dependent on imports. The Brazilian government has created several financing programs in order to overcome internal obstacles. This article will present an overview of the healthcare sector in the country.

According to Carlos Goulart, Brazil has the potential to become a regional export base in Latin America for the health sector. There is also great prospect for Brazil to become a center of global competency in some specific product areas, capable of increased growth for advanced technology and value added products. Goulart is the Executive President of ABIMED, which is the Brazilian Association of Industry and High Technology of Equipment – healthcare products and supplies.

Carlos Goulart made this statement during the 2013 Hospital Convention and the 2013 Hospital Forum, the two largest and most important healthcare events in Latin America. The words of the executive president of ABIMED are true. Brazil has the possibility of being a huge producer in the medical industry due to the large internal consumption potential.

Emerging Countries: the five largest producers of medical technologies

In 2010, the Word Health Organization, WHO, published a study of the world’s largest producers of medical devices. Among the emerging markets, Brazil was the second largest producer:

1. China – 6.1 billion USD
2. Brazil – 2.6 billion USD
3. Mexico – 1.8 billion USD
4. India – 1.6 billion USD
5. Turkey – 1.1 billion USD
   

According to the study, the top 30 medical device manufacturing emerging markets were responsible for 10%, 21.5 billion USD, of global medical device production. China, Brazil, Mexico, India and Turkey dominated the results, comprising 60% of the 21.5 billion USD figure.

Imported vs. Exported Products

The University Fundação Getúlio Vargas recently published a study revealing that Brazil´s trade deficit of medical products has been steadily growing. Between 2007 and 2012, the deficit increased from 1.7 billion USD to 3.7 billion USD.

The study was commissioned by the Associação Brasileira da Indústria de Equipamentos Médicos, Odontológicos, Hospitalares e de Laboratórios, also known as ABIMO, the Brazilian Association of the Industry of Medical, Dentist, Hospital and Laboratories Equipment.  ABIMO´s main objective for the study is to monitor import and export activity in the medical sector in Brazil.

Paulo Fraccaro, the executive president of ABIMO, proclaimed that importation is takes up more than half of the market. He pointed out that there is cause for concern regarding Brazil´s enlarged trade deficit in 2012 resulting from the 5.5% decrease in exports and the 4.7% increase in imports of medical devices.

Tax Relief for Imported Products

It is interesting to note that even with internal market demand growing, exports are still falling.  The reason is because public, philanthropic, and charity-care hospitals – responsible for approximately 65% of the domestic demand – do not purchase Brazilian medical products. Instead, they tend to import tax-exempt products.

Robson Gonçalves, responsible for the study, remarked that importation is stealing a piece of the market. The battle between Brazilian products and imported products is unfair. The medical device sector cannot live of specific measures that do not resolve the increasing of imports and the decreasing of exports.

Brazilian Financing Programs

The president of BNDES, Luciano Coutinho, announced two initiatives to develop the Brazilian Medical Industry and the health sector – Profarma III and Inova Saúde – in April of 2013.

Profarma III

Profarma III is a renovation of the Programa de Apoio ao Desenvolvimento do Complexo Industrial de Saúde, also known as Profarma, the support program for the development of the healthcare industrial complex. The “new” Profarma, budgeted at 5 billion BRL, will be effect until 2017. The program aims to emphasize the development and production of biotechnological products, support R&D and innovation in the medical industry supply chain.

BNDES Profarma has already approved 88 operations that will require 1.9 Billion in financing. The amount will be appropriated as follows:

• 46% - 856 million BRL  for production financing
• 31% - 582 million BRL for innovation promotion
• 18% - 347 million BRL for restructuring companies
• 5% - 100 million BRL for exportation promotion

Inova Saúde

Inova Saúde is the second program planned. The aim is to strengthen the Brazilian medical industry by promoting the development and the production of new equipment, medical devices, and technologies in order to meet the internal market demands.

Inova Saúde´s budget is 600 million BRL divided into three segments:

• 275 million BRL will be financed by BNDES
• 275 million BRL will be granted by Finep, which is the Financial Fund of Studies and Projects
• 50 million BRL will be provided by the Ministry of Health

The Concentration of the Medical Industry in Brazil

Production of the medical industry is concentrated in São Paulo where 45% of all the Brazilian manufacturers are located. Out of the 2620 companies that were analyzed by RAIS – a government organization that collects social data in Brazil – 1187 are located in the state of São Paulo. The second state with the highest manufacturer concentration is Minas Gerais, where 267 companies are located

Number of medical product maintenance companies per state