BMI View: Continued focus on foreign investment along with the expansion of telemedicine and governmental action to improve medical access will keep Brazil and appealing destination for drugmakers and healthcare companies in coming years, particularly as the healthcare market remains an outperformer in the country . This appeal, however, will remain limited in the short to medium term as Brazil's troubled economy begins to negatively impact other industries including the healthcare and pharmaceutical industry which are beginning to experience budget cuts and revenue decreases.
Headline Expenditure Projections
Pharmaceuticals: BRL62bn (USD26bn) in 2014 to BRL66bn (USD21bn) in 2015; +6.4% in local currency terms and -19.5% in US dollar terms. Forecast in has been maintained from Q 3 15 .
Healthcare: BRL501bn (USD213bn) in 2014 to BRL538bn (USD173bn) in 2015; +7.4% in local currency terms and -18.7% in US dollar terms . Forecast in local currency has been revised downward from Q115 due to historic data.
Brazil scores 57.5 in BMI's Pharmaceutical and Healthcare Risk/Reward Index (RRI), making it the fourth-most attractive pharmaceutical market in the Americas this quarter. We highlight that Brazil will continue to be the most important market for multinationals in Latin America. Its position has been very well reflected in this quarter's RRI scores, primarily a result of the country's consistent economic growth and the government's commitment to promoting local industry.
Key Trends And Developments
In August, the Brazilian Senate proposed reforms to the legal framework of the country's health sector, including evaluating the possibility of prohibiting injunctions that favour costly or experimental procedures not approved by the Sistema Unico de Saude.
In August, Brazilian President Dilma Rousseff has renewed her commitment to providing adequate healthcare services across the country during the second anniversary of the 'More Doctors' programme,
In August, Interfarma announced that recent budget cuts have reduced the public healthcare budget in Brazil by 12%.
In July, Interfarma noted that over the next 15 years, spending by private health companies will almost triple in Brazil from approximately USD106bn to USD283bn annually. According to projections by the Institute of Supplementary Health Studies (IESS), the cause for such a steep rise over a short period of time is the change in demographics.
In June, Brazil's Association of Pharmaceutical Industry Research (Interfarma) called for more flexibility when it comes to the approval of research and the registration of drugs in the country. The move is aimed at making the sector more competitive globally and increase citizens' access to drugs.
BMI Economic View
A deteriorating labour market will keep household spending in Brazil under severe pressure in the months ahead. This is in line with our view that weakness in the consumer sector will be a significant driver of a 1.7% contraction in real GDP this year. Inflationary pressures remain high as Brazil's economy continues to tumble downward. The Central Bank of Brazil has stated it would end its rate hikes, though economic tension will remain.
BMI Political View
Brazilian President Dilma Rousseff will remain in office over the coming quarters, despite public calls for her impeachment and signs that legislators from within her ruling coalition are looking to oust the president. Civil unrest will continue to hamper the country's appeal and rumours of political discord between the president and vice president continue.