Brazil is one of the most attractive countries in Latin America for multinational pharmaceutical companies. Pharmaceutical market growth stepped up a gear in 2008, registering an increase of 9.5% year-on-year (y-o-y). Sales, including hospitals and other public and private institutions, reached BRL30.8bn (US$16.7bn), showing resilience to the economic downturn and reinforcing Brazil's position as a rapidly expanding and attractive market - one that remains the tenth largest globally. Over the next five years, BMI forecasts that sales of pharmaceuticals will increase from US$16.7bn to US$28.2bn, representing a compound annual growth rate (CAGR) of 11.0%. In BMI's Pharmaceuticals & Healthcare Business Environment Rankings for Q209, Brazil places fourth in the Americas region. Despite large market size and high growth rates and low generic penetration, a small pensionable population and weak intellectual property scores will limit progression up the table over the medium term. Brazil's use of compulsory licensing to not only to save cost, but also boost production, remains a major risk to multinationals. In early 2009 state-owned pharmaceutical company Farmanguinhos began producing efavirenz, following the National Health Surveillance Agency (ANVISA)'s approval. The Ministry of Health received its first order of 2.1mn tablets on February 16 2009, with a total order for 15mn over the course of the year. By 2010, the target for production is 30mn, which will cover total demand of the population, essentially eliminating the need for imports of the drug. Efavirenz is used by 85,000 of the 185,000 people in Brazil's AIDS programme. BMI questions whether producing a generic version of a patented drug, which could be procured cheaper elsewhere, essentially undermines the fundamentals of the original compulsory licence - to save money. Despite their relatively low penetration, generics continue to capture market share in Brazil. Sales of generic drugs rose 33% in 2008, while, in volume terms, the number of units sold rose 18.9% to 277.1mn. Despite an evident reluctance to use, we believe that prevailing economic conditions should help further develop the market over the course of 2009. Despite certain market constraints, innovative companies are still performing strongly. AstraZeneca's sales in Brazil grew at double that of the retail pharmaceutical market in 2008, placing the drugmaker in ninth position, with a market share of 3.3%. Meanwhile, Switzerland-
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