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EF: Can you elaborate on Eurofarma’s current footprint and impact in your region? What are your priorities for positioning Eurofarma and Brazilian pharmaceuticals on the global map?
WL: The Brazilian pharmaceutical market is intriguing and has grown rapidly in recent years. According to the latest report from the Chamber of Medicines (CMED) in Brazil, the market size reached around R$ 131 billion in 2022, translating to almost $25 billion US dollars. If we include food supplements and cosmetics in this figure, it's a market worth approximately US$ 30 billion, and it has been consistently experiencing double-digit growth.
In Brazil, most medicines are paid for by patients out of pocket, emphasizing the importance of affordable and quality medications, a key mission of our company. While some medicines are provided free by the government, many must be purchased from pharmacies. Even though price control regulations exist that maintain the cost for products or molecules at a minimum, pharmaceutical companies continue to thrive in the country.
Over the past two decades, Brazil initiated a program for generic medicines. This initiative sparked a revolution in the pharmaceutical industry, with several Brazilian companies experiencing significant growth. Many of these companies heavily invested in manufacturing facilities, and today, Brazilian companies dominate the local manufacturing scene. In this context, Eurofarma, a 100% Brazilian company founded over 50 years ago, has become the first multinational pharmaceutical company of entirely Brazilian origin. It operates in 22 countries, primarily in Latin America, and has a presence in the United States and Africa. Eurofarma boasts around 11,000 employees, a diverse range of over 1,700 products, and multiple manufacturing facilities across Brazil, Uruguay, Chile, Argentina, Colombia, Guatemala, and Peru. Notably, Eurofarma's acquisition of Genfar in Colombia marked a significant milestone in its expansion, and this operation has been ongoing for the last few weeks.
Our company's commitment to innovation is integral to our identity. We have transitioned from generics to incremental innovation, partnered for progress, and now prioritize radical innovations, with over 600 dedicated scientists driving these projects.
EF: What should be Brazil’s central pillars for a sustainable pharmaceutical industry?
WL: Two key pillars in the Brazilian pharmaceutical industry stand out: maximizing local production and fostering innovation. Approximately 70% of our market in Brazil comprises generics and brand generics, accounting for 70% in volume but significantly less in revenue, roughly one-third. This is because generics and brand generics tend to be more cost-effective.
EF: What's the primary focus in your portfolio and its impact across different regions? Are there upcoming launches that you're particularly excited about?
WL: At Eurofarma, our mission is to produce affordable yet highly effective medicines, which has led us to become one of the leading companies in generics, possibly ranking second in the country. Generics and branded generics are crucial in Brazil's mostly out-of-pocket market, where doctor prescriptions strongly influence product choices. Branded generics, locally referred to as 'similars,' are our specialty, making Eurofarma the leading company in prescriptions across Brazil.
Due to high market demand, our R&D primarily focuses on generics and branded generics. Still, we maintain a diverse pipeline with around 400 products for incremental and health innovation and nearly 2,000 proprietary molecules for radical innovation. We allocate about 8% of our net sales to R&D, striking a balance between these critical areas, and resulting in exciting advancements and outcomes across all segments.
EF: What is your view on the future of innovation in Brazil? And how is Eurofarma actively pushing innovation in the country?
WL: Brazil holds a prominent position for innovation in Latin America. However, the country still faces regulatory challenges that hinder the development of innovative products. We need to mature our regulations to accommodate diverse technological and scientific advances. Recent initiatives from Anvisa and the Ministry of Health aim to foster innovation in drug development, signaling a positive shift in the regulatory environment.
The proposals by the government promise a more innovative future for Brazil. One point of the government’s agenda involves expanding pharmaceutical manufacturing capabilities, particularly for vaccines. This aligns with our company's interests and presents exciting opportunities. In the coming months and years, Brazilian public research institutes like Fiocruz will continue collaborating with private entities, further fostering innovation.
We, as Eurofarma, invest in innovation through our resources and partnerships with global companies. Additionally, we support startup initiatives in Brazil, where some of the best universities in the region are actively involved. Cooperation with these universities and small companies enhances our innovation landscape.
EF: What is your perspective on upcoming AI, data, and technology? How is Eurofarma leveraging digital transformation to drive progress and enhance your position as a company?
WL: Several of our digital information initiatives began a few years back, and today, we're fully immersed in the digital revolution. We are reshaping the way we view innovation by modernizing our databases with a tech-savvy approach. This sets us apart in the pharmaceutical industry, which traditionally focuses solely on developing new medicines. Our teams are wholeheartedly committed to digital innovation, offering us an alternative avenue to foster innovation across our business and within society, extending beyond pharmaceutical products alone.
EF: Beyond the delivery of pharmaceuticals, how is Eurofarma engaging with communities to improve health and contribute to societal progress?
WL: Our dedication to ESG principles is fundamental to our company's values. We have taken several steps towards being environmentally responsible, such as waste treatment, water reuse, and a move towards 100% clean metrics in Brazil. Our energy usage is sustainable, with about 80% of our fuel for our cars coming from ethanol. Additionally, our transportation fleet predominantly uses electric vehicles, showcasing our dedication to environmental sustainability and carbon neutrality.
Regarding social responsibility, we run the Eurofarma Institute, supporting youth in various ways. This includes educational assistance for students in underprivileged communities, impacting over 10,000 students annually. We also offer professional nursing courses and donate substantial amounts of medicine. Last year, we invested over R$ 17 million in social initiatives, underlining our commitment to making a positive social impact.
As for governance, we proudly hold an AAA rating by Fitch and engage in strategic acquisitions. We emphasize transparency and accountability through statutory committees, an independent Advisory Board, and a confidential communication channel for employees to voice concerns.
EF: If you were to build a healthcare startup in Brazil yourself? What problem would you aim to solve?
WL: I have two ideas. Firstly, in a country like Brazil, where most patients pay for medicines out of pocket due to the lack of reimbursement, a startup could focus on making drugs more affordable and accessible. One approach could be to bridge the regional medicine access gap through improved logistics. Secondly, healthcare innovation is highly desired in Brazil, but our regulatory landscape and institutions can be challenging for entrepreneurs looking to develop new products. Hence, an intriguing startup could aim to assist innovators in navigating this complex regulatory environment, making it easier for them to introduce novel healthcare solutions.
At Eurofarma, we have established the EurON initiative, a dedicated digital innovation area, where we actively engage with startups. We invest directly in them and promote open innovation programs, encouraging their participation in our projects. This support extends beyond our internal efforts, fostering innovation in the broader ecosystem. EurON blends digital transformation and innovation by integrating marketing data, medical data, and patient needs. This initiative has yielded positive results, making it an exciting and fruitful venture.
EF: Celebrating your 10th anniversary at Eurofarma next year, what achievement are you most proud of during the past decade?
WL: I am a medical doctor, and when I transitioned into the pharmaceutical industry, Eurofarma became my home. During my time at this company, I have witnessed Eurofarma's tremendous growth in sales and turnover and its overall presence, which today positions our organization among the top three pharmaceutical companies in Brazil and Latin America.
We have become a strong presence in all ESG aspects, with substantial investments in innovation. We are constructing a massive pharmaceutical facility in Montes Claros, Minas Gerais, with an impressive project that will support our growth in the following years.
Eurofarma now operates in 22 countries across Latin America, and the United States, and has begun its journey in Africa. These accomplishments give us numerous reasons to celebrate. Moreover, the recent publication of Anvisa's Innovation Policy is a positive sign, indicating a growing focus on innovation in the regulatory landscape. It is an exciting time for the company and the industry.
