BOGOTA, Colombia – Multinational companies have stepped up their hunt for partners in Latin America as they seek to grow their businesses while promoting research in a region that has somehow fallen behind in both areas.
"I think there´s a lot of room to improve new deals, mainly in Brazil. Brazil is showing a very sustainable and good trend, not only in value but also in unities in the past years, and the expectation is this will continue to increase," said Carolina Tremel, director of business development in Latin America at Daiichi Sankyo Brasil. "On the other hand, although the government is increasing the level of investment, we are still very behind the new research, original research." For that reason, she added, "in the five upcoming years, we'll still see this licensing and co-promotion, rather than original research from Latin America."
Tremel was speaking Tuesday during Biotech Deals, Trends, and Partnering in Latin America: The Buyer's Perspective, a webcast focused on the region's potential for partnering held ahead of the BIO Latin America Conference next week in Rio de Janeiro and hosted by the Biotechnology Industry Organization (BIO) and Biominas Brasil.
The opportunity is significant. The number of traditional partnerships in the region doubled between 2009 and 2012, while the $68 billion pharmaceutical market in Latin America could grow to $110 billion by 2017. Brazil is the natural leader with plenty of foreign investment but also injections of capital from the national development bank, which expanded its investments in the life sciences sector by 275 percent between 2011 and 2013.
Multinational companies are scouring the region for more local knowledge and local projects, even though they are fully aware of the typically slow progress of research in the region.
"Usually in Brazil there´s room to improve," said Sanofi SA's Alexandre Boggio. "What we can see in Brazil is that we are growing, and we support as much as we can the local development in Brazil. The better for the country, the better for Latin America."
Sanofi has a strategic alliances group and one person dedicated to fomenting links with universities. The company also works with Biominas, a not-for-profit industry organization.
Adding more partnerships with academia is only one prong in the effort to squeeze more research out of Latin America. Biotech companies are also looking at other sectors for potential partnerships. A case in point is Sanofi's deal starting this year with food producer Nestlé to use its distribution chain to supply drug stores with Nestlé´s special products for diabetes patients.
"We are thinking of our company in a more holistic way and we are offering insulin, but also [these products] to them," Boggio said.
Local companies, for their part, are looking to multinational partners to expand their horizons, aware that the region generally lags behind.
"Regarding biotech, we are still behind many countries, but in this time frame, on the next three to five years, there are all these companies that are building their capabilities, and we are going to learn from our big pharma partners," said Thiago Mares Guia, medical and scientific manager at Bionovis SA. "Maybe in five years we will be able to start new developments not only for Brazil but for the global markets."
OPPORTUNITIES AND CHALLENGES
Foreign direct investment can not only help the sector develop, but it should also give various pharma markets a boost. "We see some companies moving to Colombia, moving to Argentina and moving to Brazil, and this creates some room for business development since we can try to create partnerships," said Sanofi´s Boggio, who does not expect any significant M&A activity in the more innovative sectors of the market.
"If you think about big acquisitions, I think that this will not be more of a trend," he said. Sanofi, for example, may be interested in biotech products that are in phase I and preclinical trials, but the company's main focus is on projects that are already in phase II.
At the other end of the spectrum, however, there could be more M&A in the offing.
"We know that branded generic and generics are the main drivers for the market´s growth in the past years and probably will remain the in the upcoming years. There are big companies acquiring companies with local branded or pure generic products, not only in Brazil, but also in emerging markets and that is a strategy to take advantage from these different segments from the market. We can still see this type of business in the future," said Daiichi Sankyo´s Tremel. "Probably we are going to see some kind of merger or acquisitions, essentially and mainly from big pharma companies that want to take advantage from the local market trends."
That renewed focus in the region does not come without its own challenges. One is increased competition.
"We can see a lot of new movements of new companies entering Latin America investing, to create their sales force to promote their products, so this is creating difficult business development," Boggio said.
Another is difficult regulatory environments in many countries in the region, not least Brazil. The development of biosimilars provides a case in point. Many companies are investing in a two-step model for the registration of biosimilars and taking their compounds to less developed markets with less developed regulations. And some countries accept them at earlier stages of development. Not Brazil.
"In Brazil we have no room for these partially developed biosimilars. Companies approach Brazil as they approach India or China. . . . In many cases we would need additional substantial development," said Mares Guia of Bionovis.
The BIO Latin America Conference will be held in Rio de Janeiro Sept. 9 to Sept. 11.