The OTC pharmaceutical market in Brazil
Summary
- In 2009, Brazil's OTC pharmaceutical market, also known as Medicamentos Isentos de Prescrição (MIP), reached around $4.5bn, witnessing a Y-o-Y growth of around 8%. In spite of the economic recession, the market exhibited consistent growth due to the spread of the H1N1 epidemic, which led to an increase in the sales of cold, cough and analgesic OTC products. In January 2009, the H1N1 prevalence in Brazil was reported to be 22%, by WHO.
- ANVISA, the National Health Surveillance Agency responsible for formalizing the legislations, regulating the registration of drugs, cosmetics and medical devices in Brazil, introduced a new regulation that restricted the sales of OTC products only through pharmacies as BTC products. This has resulted in the growth of registered pharmacies with in the supermarket.
- Conselho Nacional de Autorregulamentacao Publicitaria (CONAR), the Brazilian advertising regulatory body, permits the direct-to-consumer advertising of OTC products, provided the advertisement complies with guidelines such as displaying trade name, ANVISA registration number, and active ingredients of the product.
- ANVISA has also banned children and celebrities from endorsing OTC brands to avoid potential in appropriate consumption of the product.
- As the insurance system is not very strong in Brazil, most of the healthcare expenditure is out-of-pocket. The lower prices of OTC medicines than prescription, is driving consumers to consume OTC for minor ailments such as cold, cough, headache, and fever.
- The Brazilian government has also increased its surveillance of pharmacists to regulate under-the-counter (UTC) sales of prescription medicines, which is expected to increase the sales of OTC products in Brazil.
Brazil
Overview
Brazil
is the largest and most populous country in South America, with a population of
around 199 million in 2009. The country is characterized by its young
population, with only 5% aged over 65 years. In 2009, around 68% of the total
population was younger than 39 years old. Brazil's population is also extremely
diverse, with a mix of Europeans (over 50%), Africans and others. The country's
economy is the largest in Latin America and eighth-largest in the world, and is
primarily driven by domestic consumer demand rather than exports. The economy
is characterized by an unequal distribution of income, with around 30% of the
middle-aged population below the poverty line. The Brazilian government is
encouraging foreign investment to augment economic growth of the country, and
has also decreased import duties and eliminated the non-tariff barrier on
exports to improve investment opportunities in Brazil.
Healthcare
facilities in the country are facing the challenges of regional disparity,
whereby under-developed regions lack the availability of healthcare services
compared to developed areas. However, the Brazilian government is making
efforts to reduce the healthcare service gaps between developed and
under-developed regions. The government has also introduced various educational
programs to increase awareness of diseases and preventative measures.
Brazil's OTC pharmaceutical market
OTC
products in Brazil are known as medicamentos isentos de
prescrição (MIP). The Brazilian market for these
drugs reached around $4.5bn in 2009, witnessing a year-on-year growth of around
8%. In 2009, the cough, cold and allergy category led the market with a share
of around 20% by value, followed by vitamins and minerals at 18% and analgesics
at 17%. The H1N1 epidemic was one of the key reasons for the growth of the
cough, cold and allergy and analgesics categories in 2009. In January 2009, the
H1N1 prevalence in Brazil was reported to be 22%, by WHO.
Although,
the market share of traditional medicines is expected to increase in the near
term, as Brazil has rich indigenous plant resources, but due to the stringent
regulation on traditional/herbal medicines, the growth is expected to be
moderate. The ban on mass advertisement of analgesics and cold and cough OTC
products is also expected to boost the sales of traditional medicines. The
advertising ban was introduced after the H1N1 epidemic, when the
over-consumption of OTC pharmaceutical products led to hazardous effect on
consumers' health. Although the OTC market is expected to grow, the growth will
not be as strong as that seen in the prescription market due to this
advertising ban.
Sanofi-Aventis
is the leading multinational player in Brazil, having had a 9.7% market share
in 2009. Johnson & Johnson (J&J) and Abbott follow close behind. For
Sanofi-Aventis, Brazil is the second largest country in terms of its OTC sales
after France. In 2009, pharmacies/drugstores generated the largest proportion
of sales of OTC pharmaceutical products, accounting for over 90% of the total
OTC sales in the country. In 2009, Brazil's national health regulator ANVISA (Agência Nacional de Vigilância Sanitária)
introduced new regulation which restricted the sale of some OTC products to
drugstores. However, in an attempt to bypass this regulation, grocery stores
have started to establish drugstores within their premises.
Market segmentation
In
2009, the cough, cold and allergy category led the OTC pharmaceutical market
with a share of around 20% by value, followed by vitamins and minerals at 18%
and analgesics at 17%. The H1N1 epidemic has led to sales increases in the
cough, cold and allergy and analgesics categories. While the new advertising
regulation is expected to limit the sales of OTC products to a certain extent,
lower prices of OTC products will drive the market in Brazil. Leading industry
players and trade associations are also driving sales of OTC products by
educating consumers on responsible self-medication. If the regulations
regarding traditional/herbal medicines become more relaxed, the traditional
product category is expected to grow as Brazil is a rich source for indigenous
plant species.
Regulatory framework
ANVISA,
the National Health Surveillance Agency, was established in 1999 and is
responsible for regulating the registration of drugs, cosmetics and medical
devices in Brazil. ANVISA regulation states that if a drug's therapeutic group
and indications are listed in 'GITE' (an approved list of specified therapeutic
groups and indications by ANVISA) and it adheres to other norms and regulations,
it may be sold as an OTC product. Drugs which are not listed in the GITE are
sold as prescription drugs. According to Article 6 of ANVISA's guidelines, a
new drug entering the Brazilian market can also be directly registered as OTC
provided that its therapeutic groups and indications are listed in GITE and
that the drug has been selling in the US or Europe for at least five years.
Companies
are required to submit the following documents when registering a drug as OTC:
- Proof that the drug is approved by the FDA or the EMEA;
- A pharmacovigilance report;
- Proof of sales classification to confirm that the drug was marketed as OTC in the country of origin.
ANVISA
also regulates traditional medicines through Resolution 22, guidelines which
have been reformulated several times after their introduction in 1967. While
the current guidelines are listed in RDC 48/2004, additional complementary
guidelines exist named Resoluções Específicas for traditional medicines. ANVISA states that the lack of protocol
and an efficient evaluation process for traditional medicines is primarily due
to the complexity of medicinal plants and herbal medicines. As the safety and
quality registration requirements of traditional/herbal medicines are
complicated, companies prefer to register their product as being a cosmetic or
food, rather than as a herbal medicine. In 2009, the agency announced the
regulation, to be effective from February 2010, which prohibited pharmacists
from stocking non-health related products such as ice-creams, chocolates or
calling cards; however no further update on the regulation was released by
ANVISA.
The
Conselho Nacional de Autorregulamentacao
Publicitaria (CONAR) issues the advertising
guidelines for OTC products. Brazilian law permits direct-to-consumer
advertising for OTC products, but any advertisement must contain the trade
name, ANVISA registration number, and active ingredients of the product. In
2009, ANVISA amended the existing guidelines for the advertising of OTC
products in Brazil. The new guidelines forbid the use of children younger than
ten years in product advertisements and also banned their endorsement by
celebrities. Companies were also required to disclose scientific empirical
evidence to support any claims.
In
2009, ANIVSA announced the ban of all direct-to-consumer advertising and
promotion of products containing acetyl salicylic acid, analgesics and cold and
cough OTC products containing paracetamol, metamizole sodium, ibuprophen and
other combinations. This ban was primarily imposed after the H1N1 epidemic,
which drove people to consume significantly higher amounts of analgesics and
antipyretic OTC products. ANVISA is also planning to educate consumers on responsible
self-medication to avoid misuse of OTC products. The new regulation on
advertising has caught the attention of both OTC manufacturers and industry
trade associations such as the Brazilian Association of OTC Products (ABIMIP)
and the National Association of Pharmaceutical Manufacturers (ALANAC), as it is
expected to hamper the sales of OTC products in the future. The associations
are implementing strategies to educate consumers on responsible self-medication
to avoid the potential misuse of OTC products.
Growth drivers
Expanding distribution channels
In
Brazil, growth in the OTC market is anticipated to come from the expanding
distribution channels through which to sell OTC products. In Brazil, the sale
of OTC pharmaceuticals is currently restricted to pharmacies. However, to
capitalize on the growing demand for OTC products in Brazil and bypass this
legislation, some supermarkets, hypermarkets and grocery stores have opened
licensed pharmacies inside their premises. The new rules if come into force will
also prohibit pharmacists from stocking non-health related products such as
ice-creams, chocolates or calling cards. This new regulation aims to define the
role of the pharmacist as a healthcare provider.
Affordability of OTC products
Over
30% of the Brazilian population lives below the poverty line. The distribution
of income in the country is highly unequal and, like many other emerging
markets, wealth is concentrated in urban areas. Brazil's insurance system is
not very well defined and most of the healthcare expenditure is out of pocket.
The middle class population in general prefer to self-medicate common illnesses
such as coughs and colds rather than consulting a doctor. This is also
favorable as the price of OTC medicines is lower than that of prescription
medicines.
Favorable government regulations for OTC
The
global financial crisis is pressurizing the Brazilian Ministry of Health to
reduce the cost of healthcare. The government is taking corrective measures to
reduce the over-consumption of drugs while simultaneously promoting preventive
care. As part of this, the government has increased surveillance to prevent
illegal under-the-counter sales of prescription drugs. The government has also
imposed a ban on stocking non-health products in pharmacies, as well as a ban
on mass advertising of OTC analgesics and antipyretic medicines. The stocking
of only health related products is expected to result in a concentrated focus
by pharmacists on selling drugs as this will be their only source of income, the
advertising ban is expected to broaden their role as consumers will be driven
to pharmacists for medication.
