Growth Remains Positive For Multinationals In Q413

BMI View: The Brazilian pharmaceutical market is essential for multinationals seeking to generate significant revenue growth in Latin America. Collaboration with the Brazilian government has become an integral part of many major drugmakers' strategic outlook. Drug pricing pressure, generic competition, protectionist policies, weaker economic growth, currency devaluations and rising political risks will continue to put downward pressure on regional pharmaceutical market growth. Nevertheless, demand for advanced medicines from the steadily expanding middle class and increasing healthcare coverage by public sectors in the region will continue to provide revenue-generating opportunities for innovative pharmaceutical companies.

Sanofi

In Q413, Sanofi generated sales revenue of EUR825mn (US$1.135bn) in Latin America, up by 10.1% from Q412. In Brazil, sales grew by 6.8% to EUR337mn (464mn), driven by the performance of the generic segment (+23.6%) and its subsidiary Genzyme (+66.7%), despite lower vaccine sales. Full-year sales in Brazil reached EUR1.111bn (US$1.528bn), down by 18.2%. The company believes that the fourth quarter results show that Sanofi has significantly improved sales in Brazil and addressed issues in the country. Sanofi also registered losses of EUR54mn (US$74.3mn) and EUR35mn (US$48.1mn) due to negative currency impacts from the Brazilian real and Venezuelan bolivar respectively.

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Sanofi's Latin American Performance (EURmn)

BMI View: The Brazilian pharmaceutical market is essential for multinationals seeking to generate significant revenue growth in Latin America. Collaboration with the Brazilian government has become an integral part of many major drugmakers' strategic outlook. Drug pricing pressure, generic competition, protectionist policies, weaker economic growth, currency devaluations and rising political risks will continue to put downward pressure on regional pharmaceutical market growth. Nevertheless, demand for advanced medicines from the steadily expanding middle class and increasing healthcare coverage by public sectors in the region will continue to provide revenue-generating opportunities for innovative pharmaceutical companies.

Sanofi

In Q413, Sanofi generated sales revenue of EUR825mn (US$1.135bn) in Latin America, up by 10.1% from Q412. In Brazil, sales grew by 6.8% to EUR337mn (464mn), driven by the performance of the generic segment (+23.6%) and its subsidiary Genzyme (+66.7%), despite lower vaccine sales. Full-year sales in Brazil reached EUR1.111bn (US$1.528bn), down by 18.2%. The company believes that the fourth quarter results show that Sanofi has significantly improved sales in Brazil and addressed issues in the country. Sanofi also registered losses of EUR54mn (US$74.3mn) and EUR35mn (US$48.1mn) due to negative currency impacts from the Brazilian real and Venezuelan bolivar respectively.

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Sanofi's Latin American Performance (EURmn)

Merck

In Q413, Merck's revenues generated in Latin America reached US$667mn, accounting for 6.8% of its total sales. This was a 10.5% decline compared with Q412 results. The company reported strong sales of Gardasil (HPV vaccine) in Brazil, which benefited from the start of the national immunisation program.

Year-On-Year Sales Decline In Q413
Merck's Latin American Performance (US$mn)

Roche

Roche continued to generate strong sales in Latin America from both the private and public sectors in FY2013. The pharmaceutical division increased by 8% (in CER) to CHF2,537mn (US$2,858mn), which was driven by Avastin (bevacizumab), Herceptin (trastuzumab) and Actemra (tocilizumab), despite 'pricing pressure and political uncertainties'. In FY2013, sales in Brazil increased to CHF921mn (US$1,037mn), up by 9% (CER). Avastin sales growth in Latin America was higher than the 30% average international region growth rate, due to its increased use as a treatment for colorectal and ovarian cancer in Brazil. Meanwhile, sales in Mexico's sales declined by 4% (CER) to CHF401mn (US$451mn).

Growth in Brazil resulted from the inclusion of several key products into reimbursement under public healthcare provision. Sales declined in Mexico due to market approval delays and public sector purchases, as well as the withdrawal of a mature product. The diagnostic division generated 13% growth at CER in FY2013 to CHF774mn (US$871mn). Professional diagnostics sales in the smaller Latin America region also grew by 17%. Roche plans to bring highly innovative products to emerging markets through innovative access programs to penetrate both the private and public sector.

GlaxoSmithKline

In Q413 GlaxoSmithKline generated sales of GBP650mn (US$1,084mn) in Latin America, up by 6%, with strong tender deliveries, particularly of Synflorix (pneumococcal vaccine) in Brazil.

Takeda

In Latin America, Takeda's reported nine month net sales for 2013 increased from JPY45.9bn (US$450mn) in FY2012 to JPY58.8mn(US$576mn), up by +28%.

Strong Growth In Q413
Takeda's Latin America Performance (JPYmn)

Baxter

In Q413, Baxter capitalised on its innovative partnership with Hemobras in Brazil with the commencement of shipments to enhance access to Baxter's recombinant factor VIII therapy for the treatment of haemophilia. Over 2,000 patients (20% of the total) in Brazil have switched to using the product, generating around US$70mn in incremental sales in FY2013 (previously, sales in Brazil were less than US$20mn). Baxter will be the exclusive provider of Brazil's recombinant factor VIII treatment over a 10-year period while it works on a technology transfer to support the development of local manufacturing capabilities. The company expects peak annual sales related to this partnership to be material and approach US$200mn by 2017.

Pfizer

The company will continue to target Brazil and Mexico as key emerging markets.

Johnson & Johnson

In Q413, the company reported lower sales of Remicade (infliximab) in Latin America due to pricing pressure and the timing of shipments.

Novo Nordisk

The company believes that its large insulin-filling facility in Brazil has given it a Brazilian cost base to offset some of the income from the local market. It reported strong sales of Victoza (liraglutide [rDNA origin]) in Brazil and Argentina. Novo Nordisk also noted the negative impacts of the Argentine peso and Brazilian real depreciations against Danish kroner in Q413.

Eli Lilly

The company has expanded to countries in Latin America that traditionally it had no presence in.

Daiichi Sankyo

The company reported strong sales growth in Brazil and Venezuela.

Abbott

Brazil, as one of Abbott's key emerging markets, generated strong growth in Q413. Its laboratory diagnostics division reported double-digit growth in the country.

Novartis

In Q413, Novartis reported strong performance in Latin America, with +1% growth (+14% calculated at CER). Latin American currency effects had a negative impact on Novartis's Q413 results. Retail generics and biosimilars generated 12% growth in Latin America. Gleevec (imatinib) faced generic competition in Brazil.

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