Eduardo Emrich Soares
President of the Biominas organization (State of Minas Gerais)
Latin America and Brazil are changing. Latin America is no longer just a market in which to sell, but is now becoming a place to develop and manufacture products as well. There have been huge advances in areas like agriculture, energy, healthcare and industrial biotechnology. Although the top global producer of biotechnology crops is still the United States, the second and third are Brazil and Argentina, respectively.
The wealthiest region of Brazil is the southeast, with 66% of the country’s GDP. And São Paulo alone makes up 40% of the country’s GDP. Brazil has a population of nearly 200 million inhabitants and is growing 1.1% each year. We are the sixth largest economy in the world…having overtaken the United Kingdom last December and coming up on France!
Companies devoted to the life sciences and biotechnology are found mainly in the states of São Paulo (38%) and Minas Gerais (30%). We have identified that of the 271 companies working in the life sciences, 143 are biotechnology firms. Regarding the different areas of this field, the most significant are human health (33%), agroindustry (31%) and the production of reactives (18%); followed by the environment and applications. The bioindustry in Brazil is still very young. Nearly 70% of the companies are less than five years old and see revenue under €300,000 per year.
Video workshop "Fostering internationalization (I): Brazil"
Barcelona, 17 April 2012
In order to understand what is happening in Brazil, I should mention that we have gone from a population in which 51% of the people were poor to a situation where this group makes up 25% of the total. This has changed our economy because it means that there are 50 million more people that want to buy everything, including biotechnology products, foods and drugs… In the near future, however, we will start to experience the effects of an ageing population, like in Europe and the United States. Regarding causes of mortality, we are moving from a high number of deaths from infectious disease towards a higher rate of cancer, respiratory disease and circulatory diseases. The number of cases of diabetes is also increasing.
Forecasts for growth in pharmaceutical sales in the 2009 to 2014 period in Latin America are roughly 12-15% per year. In Brazil we have two groups of pharmaceutical companies: local firms, which are highly focused on generics, and international firms, with innovative products. But local pharma firms are now starting to invest in innovation and are building their own R&D centers. A lot is changing, as multinationals also want to participate in the generics market. This is bringing about a radical shift in the situation we have seen until now. Here you can look at the list of the top 20 pharmaceutical companies in Brazil.
Although we were competing intensely with Mexico for two years, 2,700 clinical trials per year are now carried out in Brazil, nearly double those conducted in Mexico. We are also growing very quickly in this area.
Some of the most significant areas of R&D include regenerative medicine; genomics, with important investment to create a network of sequencing laboratories (the sugar cane genome is currently being sequenced in Brazil); bioinformatics; and nanotechnology, with a program to invest more than $28 millions in centers.
In 1995, Brazil represented 0.8% of all scientific publications in the world and we are now at 2.7%. The government has made a huge effort to invest in R&D (roughly 1.1% of the GDP per year). One of the most important new initiatives is the creation of the National Science and Technology Institute. We are also creating 123 new institutes, 39 of which are in health sciences.
Imports are growing and exports have held fairly steady. As a result, the deficit in the health sector alone totals $11,000 millions per year. The government is working to solve this problem. What is it doing? First of all, it is pressuring international pharmaceutical companies to manufacture their products in the country and, secondly, it is trying to establish more associations that bring together international companies, local companies and research centers. They are currently working on 20 projects, which involve new public laboratories and 17 private partners.
Although in some cases we are protectionists, we are opening ourselves up more and more and this is bringing about many opportunities to produce and introduce products to Brazil. I don’t know if I’ve explained it correctly but the message is that we are more open to everything, especially to bringing in new technologies. It is difficult to deny the population access to new drugs and new products because people know they are good.
International companies that want to come to Brazil and open a subsidiary should establish a cooperation agreement with a Brazilian firm, which then gives them access to all of the mechanisms and programs available on a state and federal level. The biggest problem is the regulatory process; we are aware of this, as is the Brazilian Health Surveillance Agency (ANVISA). They are very interested and are working on a variety of initiatives to make it easier.
In terms of public policies, the Innovation Law of 2004 required universities and research centers to establish technology transfer offices (TTO). In 2006, we had nearly 30 technology transfer offices in the country and now there are more than 150. In 2006, the FINEP, Brazilian Innovation Agency, project was started, which gives grants to help companies develop new products (before that aid was only available to research centers and universities). And in 2007, a nationwide biotechnology policy was established. At the state level, most regions have their own foundation to fund R&D. São Paulo has FAPESP, Rio de Janeiro has FAPEG and in Minas Gerais we have FAPEMIG.
In terms of venture capital, the industry is still very young. For now there is only one venture capital fund devoted to the life sciences, the Burrill fund. There are international funds in the process of coming to Brazil, like Sofinnova.
Biominas, support for international and Brazilian biotech firms
I don’t want to finish this article without first explaining what we do at Biominas. We are a private institution created by nine companies in 1990 in order to develop business in the field of biotechnology. Although we work with the state and federal governments to develop the sector, our main aim is the development of companies and of business. We now operate not only in Minas Gerais but around the country. We began our first large-scale activity in 1997, with a 3,000-square-meter incubation center for life sciences companies. Since then, we have graduated 19 companies and we have 19 more currently. We also offer consulting services to help international companies move into the Brazilian market. We have worked with Sanofi, Merck, GlaxoSmithKline, among others.
In 1999 we realized that one of the problems facing companies is access to capital. So we contacted the InterAmerican Bank and designed a program that allows us to invest roughly R$25 millions (some €10 millions) in twelve companies. It’s important to say that we lost this investment with two of the companies. For two others, Prodimol and Alvos, we sold our shares: the first for four times our initial investment and the second, for 2.5 times what we had invested. We still hold stock in two companies, Biocancer and Linhagen. Sometimes we earn money; sometimes we lose money. That’s part of the game!
Eduardo Soares is a biologist specializing in biochemistry and molecular biology with a degree from the Federal University of Minas Gerais and a postgraduate degree in Financial Administration from Fundação Dom Cabral. He has worked as CEO and has been a member of the board of numerous companies like Alvos Biotech, Linhagen, Biocancer and Prodimol. On 17 April, he participated in the workshop "Fostering internationalization (I): Brazil" organized by Biocat, in Barcelona, under the framework of the bioXclusters project.