Read the Conversation
EF: In a transformative year with numerous developments in Brazil, what are FarmaBrasil's key strategic priorities in 2024?
RA: This year, we are dealing with two common and complex issues not specific to individual companies but rather overarching challenges for the industry. These issues are:
- The ongoing Congress debate on implementing tax reform in Brazil is a crucial issue for the pharmaceutical industry and the healthcare sector. Last December, the Constitution's changes were approved, setting the stage for this significant debate. Yesterday, I dedicated five hours to the Chamber of Deputies to discuss the outcome of the IVA implementation in the Brazilian system. This constitutional amendment has the potential to significantly impact the industry, as it allows medicines to be taxed at a reduced rate of either 60% or 100% of the standard rate. The proposal sent by the Executive Branch to Congress includes three lists: one for medications subject to full tax, another for medications eligible for a 60% discount, and a third for medications exempt from taxes. Our goal is to advocate for all medications to receive a 60% discount and for drugs used in the treatment of rare diseases, oncology, and other high-cost conditions to have a tax reduction rate of 100%. This is a critical issue that demands a strong and persistent advocacy effort.
- The most pressing issue we face currently is ANVISA’s backlog. ANVISA, the regulatory body for the pharmaceutical industry, is currently in a staffing crisis. The number of people working there diminishes every year due to retirements and staff turnover, and the government is not filling in enough of the vacant positions. Last year, the new government initiated a public management action to fill 40 positions through a public competition with training included. However, this process takes time, and the backlog for evaluating and approving product registrations is growing, impacting the firms awaiting approval. As an entity representing many firms in the sector, we are constantly addressing this issue, engaging in dialogue with various government departments. ANVISA manages about 20 or 30% of the Brazilian GDP; we have repeatedly expressed that delays are detrimental to the sector’s evolution and economic development. The lack of qualified personnel to evaluate the pharma dossiers, dossiers for the food industry, or agrochemicals for the agricultural sector exacerbates the situation. We are not seeing solutions on a short-term basis, but the government will have to address this critical subject to ensure the industry's growth.
We have complex times ahead, adjusting to the new regulation and seeing how the regulation and the control organs work. This will determine the country's legal security and is critical for the next decade and the time it takes for the new projects to be completed with the necessary technological transference. No interruptions must be generated by the control organs, which we call the Union Court of Accounts - Tribunal de Cuentas de la Union (TCU). On the other hand, many firms are still investing heavily, amplifying their production lines for the private market. Eurofarma, for example, has a greenfield investment in Mina Gerais of 500 million dollars, and many others are also making big investments in the country. The sector has huge dynamism, amplifying and deepening their investments, delving into the development of radical molecules, a double route of preparation to increase its presence in Brazilian markets and, in some cases, investments abroad, in Latin America, Europe, and even with projections for Africa and the Middle East. It is very good to have longer-term plans; with all the complications Brazil has, they have surpassed themselves, looking beyond and guaranteeing an increase in the composition of our associates in the pharmaceutical industry in Brazil, with a growing participation in the country’s GDP.
FarmaBrasil has been actively participating in the government program of PDPs (Partnerships for Product Development) since its inception. The first phase of this program included monoclonal antibodies. On June 18th, the Ministry of Health will hold a meeting to disclose which molecules will be offered to the private sector and laboratories for a new round of PDP projects. We eagerly await this announcement and are fully prepared to contribute to these new projects and further strengthen the industry.
EF: Will NIB (Nova Indústria Brasil) be effective? How will companies capitalize on the changes?
RA: Since January 2023, we have asked the government to sit down with us to discuss these matters and take the necessary measures to build toward goals together. There is still discussion about different proposals, but we are still not building together. Unless this changes, the ambitious industrial policy proposal which aims to increase production to 70% of the SUS consumption will be impossible. Collaboration with the private sector is an absolute necessity because 70% of the medicine consumption in Brazil has always belonged to the private industry. Public laboratories cannot meet the current demand, let alone what they are predicting for the future. We have positive examples, such as PDPs, collaborations, and the construction of solutions between the public and private sectors.
The government has told us that after June 18th, they will organize specific working committees to discuss and make joint decisions, establish responsible work schedules, etc. I hope it will happen; we are already close to this government's mid-term, politically speaking, so it must be done as soon as possible as the last year of a government is more involved in elections than in constructing for the future. We cannot afford any more missed opportunities; we have presented very detailed proposals to the government and await their answer with hope, especially as our companies have committed to continuing to invest in the country. The potential is huge; we all agree that SUS (Sistema Unico de Saúde) is vital to the country, but to achieve a change together, we must understand exactly what is being planned.
My main complaint is the lack of a space to discuss the issue clearly, and for the benefit of all. For example, we must know how many and what type of molecules we can produce, how much investment is needed, whether ANVISA will meet our requirements and deadlines, etc. The government has made many changes, including modifying tender bidding rules and contract forms, articulating various federal budgets, and coordinating with the private sector. We can continue working independently, without the government, with limited results, but working together with a common objective would strengthen and benefit both sides. NIB is a good proposition, and we believe it holds great potential for positive change if carried out correctly.
EF: Do you have any final comments on 2024 and how it will be remembered in Brazil?
RA: 2024 results will greatly depend on the June 18th meeting with government authorities. Soon after that meeting, there will probably be a plenary session for the members of the CNDI, during which the general measures for implementing NIB will emerge. On January 22nd, 2024, there was a meeting for NIB’s formal launch. The president wasn’t satisfied with how the goals were presented, asking for more concrete objectives and goals, and the government has taken the time to do this.
This month, two important points will be decided: first, we will have the concrete measures for the Health Mission (PDPs and PDIE), and second, the NIB Plenary Session, where a plan will be presented. FarmaBrasil companies have adhered closely to the NIB's current concrete measures, which include 500,000 million Reais for financing the BNDES and reduced interest rates for investment in innovation. The first to take advantage of these innovation loans were FarmaBrasil companies. NIB opens a huge opportunity for development and innovation, and we are ready for the PDPs, prepared to use the mechanisms the Health Ministry offers, such as the PDIL, the development program for local investment, covering technology, and offering competitive offers. We hope to find ways to work together, which is in all our interests. We look forward to the benefits of investing, interacting, and having tough protection measures. We can move forward in Brazil, but only if we work together, which is possible. We could even have a series of concrete solutions this very month.
