Read the Conversation
Conversation highlights:
- Total market size: ~$10 billion annually, with a current structure heavily import-dependent.
- Limited local manufacturing despite the market size.
- Brazilian industrial policy is balancing innovation attraction with domestic protection.
- Geopolitical risks affecting multinational investment decisions, and how Brazil can remain competitive.
- Alternative investment strategies beyond manufacturing (R&D centers, innovation labs).
- Interoperability initiatives and data consolidation projects
- Startup ecosystem integration, 27 companies visited last month for development agreements.
EF: How is Brazil's industrial health complex policy affecting the medical device market?
FS: The industrial health complex policy is creating significant market shifts through government procurement preferences and substantial credit lines for local production. We're seeing preference margins of 20 to 30% for companies that manufacture in Brazil, which is substantial for this type of market. Given that the Brazilian market is fundamentally import-based for both finished products and components for local assembly, this generates tremendous attention from the industry already established in Brazil. The policy aims to protect the national capital and attract new production lines, but the implementation creates considerable uncertainty for companies evaluating their market strategies.
EF: What is ABIMED's position on Brazil's artificial intelligence regulation for healthcare?
FS: Our sector has been working with artificial intelligence for many years, since the mid-1990s in medical devices, later migrating to wearables like smartwatches. We had strong engagement with the Senate during the original legislation development and are now working intensively with the Chamber of Deputies. Initially, everything related to healthcare was proposed as high-risk under the AI framework. If that had proceeded, healthcare would have been completely blocked. We conducted significant work on two fronts: internally through our association and externally with the Health Coalition Institute, where Prof. Giovanni Cerri serves as Chairman. We contracted a study with the Getúlio Vargas Foundation to develop an acceptable proposal for the health sector with specific responsibilities, rather than blanket high-risk classification. We managed to change the original Senate text, though it has since been modified again. With upcoming elections in Brazil, approval is unlikely before year-end, but having the Ministry of Health working alongside us is crucial given its stronger institutional position to address potentially harmful variations.
EF: What are ABIMED's three main priorities leading to 2030?
FS: The tax structure remains our top priority. Although tax reform is underway, we believe we still need to revisit it and focus on how this will impact the medical devices sector and ultimately patients. The second priority is clearly artificial intelligence regulation, which is key for our entire sector. The third focus is the industrial health complex policy. These three themes have equal priority and require our constant participation in discussions and policy development.
Beyond these immediate priorities, we launched a project last year that looks beyond 2030: the Permanent Health Observatory 2050. We're developing this in partnership with FIA, the Administration Institute Foundation of the University of São Paulo, using long-term scenario methodology. The observatory will generate proposals and monitor health advancement in the country through scenario-based analysis with comparative benchmarking across various global regions and countries, including OECD, European Union, United States, Japan, Mexico, and Colombia. We're incorporating approximately 39 internationally recognized indicators from the WHO and the World Economic Forum. This substantial work will change how health information reaches the population in the coming years, ensuring not only health sector managers but also patients have a clear understanding of progress in both public and private healthcare.
The observatory represents a significant movement we decided to undertake. We're still in the beginning stages, and this is quite innovative for our entire region, not only Brazil. We believe it can significantly impact public policy and regulatory discussions regionally. We're excited about this project.
EF: How can international companies maintain a strong presence in Brazil beyond manufacturing?
FS: We've been discussing this extensively with our associates, most of whom are importers distributing in Brazil. We're showing them the significant opportunities available. However, companies want to invest in countries where long-term security is guaranteed. While Brazil represents a large internal market, when considering all factors long-term, there's still a need to work towards better stability for better planning of investments.
Brazil is part of BRICS, and large companies evaluate geopolitical risks when supporting new investments. In the last five years, for every ten companies deciding to invest in Latin America, only one chose Brazil; the rest opted for Mexico, Colombia, Costa Rica, and others. For a country of our size and export potential, losing new investments to other Latin American countries is problematic.
EF: Are there alternative models for international investment beyond manufacturing plants?
FS: Actually, we developed a strong partnership with the University of São Paulo through their Institute of Technological Research (IPT), which has an established startup ecosystem. We signed a cooperation agreement enabling our associate companies, mostly importers, to develop technology here in Brazil with the university. This initiative just started and received excellent acceptance from our associates. Last month, 27 companies visited IPT seeking agreements or development cooperation. We also established similar arrangements with SENAI CIMATEC in Bahia to facilitate this approach. We're trying to overcome production plant restrictions through innovation and new technology development.
EF: As we wrap up, how has Chinese technology evolution affected the competitive landscape?
FS: Chinese technology has undergone tremendous evolution in recent years. We've observed equipment from various Chinese manufacturers, and we now have Chinese associates. We started last year with one, now have two, and two more are joining. It's important to have them in our environment for competitive aspects. They've improved significantly. Some imaging equipment is now comparable to established brands. They achieved this improvement in a very short period. Competition won't be solely about pricing but cost-benefit analysis, because they're delivering comparable quality.
