UNCOVERING OPPORTUNITIES IN THE BIOTECH SECTOR - BRAZIL

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1 UNCOVERING OPPORTUNITIES IN THE BIOTECH SECTOR - BRAZIL INTRODUCTION BY INNOVATION CENTRE DENMARK IN SAO PAULO

2 BRAZILIAN BIOTECHNOLOGY SECTOR The Ministry of Science, Technology and Innovation (MCTI) considers biotechnology strategic for research, development and innovation within: Estimative 2030 HEALTH ENERGY ENVIRONMENT AGRICULTURE 80% of new medicines 35% of chemical products 50% of the primary sector's production, totalling 2.7% of countries linked to OECD s GPD Source: Fiesp, 2015

3 BRAZILIAN HEALTH SECTOR Ranks as the fourth most attractive market in the Americas region, to commercialize a medical device The largest economy and medical device market in Latin America Health sector The Ministry of Health estimates that the sector is a market of approximately BRL160 billions/year and employees around 20 million people The sector grew 8.6 % in 2012 alone. Various new hospital projects are on the way in the largest cities.

4 RESEARCH IN BIOTECHNOLOGY Universities and research centres are central for the development of new technologies within the biotechnology sector in Brazil 734 research groups primarily concentrated in São Paulo and Minas Source: FREIRE, 2014 pg. 126 Gerais states

5 RESEARCH IN BIOTECHNOLOGY BY AREA Area Agrarian Sciences Source: FREIRE, 2014 pg. 105 Total number of enrolments and professors in graduation programmes within areas related to biotechnology Enrolments Professors São Paulo Other states Brazil São Paulo Other states Brazil Abs % Abs % Abs Abs % Abs % Abs Agronomy Veterinary Medicine Animal Husbandry Biology General Biology Biochemistry, biophysics, Pharmaceutical Sciences Genetics Imunology, microbiology, parasitology Health Medicine I: cardiovascular, cancer, dermatology, nephrology Medicine II: allergy, Immunology, pathologic anatomy, clinical pathology, infectious/parasitic diseases, haematology, rheumatology Food Sciences and technology Engineering Biomedical engeneering Biotechnology Total Total of enrolments in master and PhD programmes and Professors in areas relates to biotechnology 18 % of enrolments and 18% of professors are in health programmes

6 BIOTECHNOLOGY COMPANIES BY COUNTRY AND IN SÃO PAULO STATE 2013 Source: FREIRE, 2014 page 68 Source: OCDE, 2013

7 BIOTECHNOLOGY COMPANIES Brazil: 314 companies Of the 27 States in Brazil, 14 have biotechnology companies Primarily concentrated in most developed regions - specially in Source: FREIRE, 2014 page 67 São Paulo state

8 BIOTECHNOLOGY COMPANIES Biotech companies in Brazil percentage by state 2011/2013 Primarily concentrated in São Paulo (18%), Belo Horizonte, Minas Gerais state capital, (13%), Rio de Janeiro (12%) and Porto Alegre, Rio Grande do Sul capital, (5%) The strength of São Paulo and Minas Gerais states is also observed by the presence of several companies in other cities besides their capital: Campinas (4%) and Ribeirão Preto (4%) in SP; Viçosa (3%) and Uberlândia (2%) in MG Biotech companies in Brazil by city Source: FREIRE, 2014 page 66 Primarily concentrate in São Paulo (48%), Minas Gerais (21%), Rio de Janeiro (10%) and Rio Grande do Sul (7%) states Source: BRBIOTEC Brasil / Cebrap, Brazil Biotech Map 2011.

9 BIOTECHNOLOGY COMPANIES PROFILE Recent foundation Low Revenue Companies founded Micro and small sized companies High level of education

10 BIOTECHNOLOGY COMPANIES BY AREA OF ACTIVITY The majority of activities are concentrated on human health Human Health Primarily dedicated to the development of new medications (small molecules and biological), diagnostics, vaccines, cell therapy, regenerative medicine and tissue engineering, advanced method for assisted reproduction, genetic and molecular testing, etc.

11 HUMAN HEALTH BIOTECHNOLOGY COMPANIES IN BRAZIL BY CITY, 2011 Almost half of human health companies are located in São Paulo (41 companies), one fifth in Minas Gerais (19 companies), and 16% in Rio de Janeiro (15 companies) Health companies in Brazil by city Source: BRBIOTEC Brazil / CEBRAP, Brazil Biotech Map 2011 Source: BRBIOTEC Brazil / CEBRAP, Brazil Biotech Map 2011.

12 EQUIPMENT AND CONSUMABLES SUPPLIERS Biotech equipment and consumables are essential for every Brazilian The Brazilian market offers particularly attractive sales opportunities for the following products: laboratory and public institution to develop its Biotechnology projects, products and services. - Biotech instrumentation - Instruments for the life sciences and medical research - In vitro diagnostic kits - Laboratory equipment - Laboratory testing services for agricultural diagnostics - Molecular biology reagents - Reagents for life sciences research - Scientific instruments - Tests for early detection of cancer, heart disease, fertility, infectious diseases - Drugs

13 BEST SALES PROSPECTS Imports are not only important for the development of the sector, but crucial The top prospects for exporters seeking to sell to Brazilian buyers in the Biotechnology sector include the following: for its existence Imports 86% of the Brazilian biotech companies are highly dependent on imports of products and services 77 % of the companies import especially reagents 65% import equipment Source: Brazilian Association of Biotechnology (BRBIOTEC) - Animal diagnostic kits - Eco toxicity and mutagenicity tests - Diagnostics of mycotoxins, endotoxins, bio corrosion of microprocessors - Identification of transgenic - Immunological tests - Instruments for the life sciences and medical research - Laboratory equipment - Molecular biology reagents - Molecular diagnostics - Rapid tests for a variety of diseases including HIV, Bird Flu, etc. - Rapid tests of animal health and reproduction - Reagents for life sciences research - Selective ions - Self-tests for home care sector - Tests for the evaluation of food quality - Turbidimeter used for quantitative analyses - Pollution bio-indicators

14 FINANCING Reimbursable funds: loans and financing - Public: (BNDES) National Social and Economic Development Bank, (FINEP) Brazilian Innovation Agency - Private: Commercial Banks Non-reimbursable funds: grants and donations - Public: FINEP, State Research Support Foundations, CNPq Scientific and Technological Development Council - Private: non-profit organizations Financing 85% of companies use federal or state resources Lack of venture capital industry: only 12% use this financial resource Internally-generated funds: capital from shareholders and retained earnings on the company s activities Investors: venture capital and private equity - Public: BNDESPar, CRIATEC - Private: seed capital fund, private investors Corporate partnerships: funds from cooperative agreements between companies Public resources are fundamental Private resources: potential to grow!

15 REGULATORY PROCESS - ANVISA The National Health Surveillance Agency (ANVISA) is designated as an autonomous agency operating under a special regime. This means that ANVISA is an independently administered, financially-autonomous regulatory agency, with security of tenure for its directors during the period of their mandates. The Agency is managed by a Collegiate Board of Directors, comprised of five members. ANVISA is linked to the Ministry of Health under a management contract.

16 INTELLECTUAL PROPERTY (IP) Intellectual Property rights are a fundamental mechanism in fostering technological innovation, as patents represent an important element of added value The National Industrial Property Institute (INPI) is the Brazilian institution responsible to regulate, and for analysing and judging patent applications Even though Brazil has signed the principal agreements that deal with IP rights, there are three obstacles often mentioned by entrepreneurs: IP in Biotechnology Brazil s participation in the international repository of biotechnological patents is small, only (0.45%), despite the fact that it is growing rapidly. In 2014, 73% percent of all licensed patents in Brazil have been originated by Brazilian Universities and Research Centres, 13% by Foreign Companies, 7% by Foreign Universities and Research Centres, and another 7% by Brazilian Companies. - Long patent approval period - Restrictive patentability criteria - Access to biodiversity In 2011, the Federal Attorney General s Office (AGU) restricted the patentability analysis exclusively to INPI. This should speed up pharmaceutical patent approval process in Brazil

17 STIMULATING THE HEALTH NATIONAL INDUSTRY The Federal Government purchase products produced in Brazil paying 25% more in order to reduce the R$ 10 billion deficit on the trade balance of human health products and to encourage the biosimilar technical apprenticeship. It has been stimulating the private sector and reinforcing the public sector Low innovative capacity in of the health industry of health (pharmaceutical and hospital equipment) and a lack of relations with the national science base High dependence on public financing and the low innovative capacity of biotechnology health companies, challenges: - Expand the production with the scientific and technologic base beyond vaccines production in public laboratories - Reduce the high commercial deficit - Improve the governmental purchasing power as a strategy to stimulate technological development and innovation Health Industrial Complex Deficit from US$ 3 billion (2003) to US$ 10 billions (2011), half in pharma/chemical medicines and inputs, 23% equipment, 17% blood derivatives and 10% reagents, vaccine and serum

18 CHALLENGES FACED BY BIOTECHNOLOGY COMPANIES - Develop specific researches - Acquire machines and equipment - Develop technical expertise and commercial skills - Obtain financing - Dealing with regulatory obstacles - Face patenting process - Transferring technology

19 CHALLENGES FACED BY HEALTH BIOTECHNOLOGY COMPANIES - Lack of qualified labour: low percentage of population with higher education degree - Infrastructure: Biotechnology within the health sector is less mature when compared to financial conditions of governmental agencies in other sectors - Regulatory Environment: ANVISA is as strict as European and North American health regulatory agencies Intellectual property: long period for processing and INPI s big backlog (8-10 years)

20 PARTNERING TO OVERCOME CHALLENGES Bigger national and international companies offer: - Regulatory process expertise - Intellectual propriety expertise - Market expertise - Financial resources - Structure to commercialize Small companies offer: - New scientific knowledge - Development of specific technologies Universities and Research Centres offer: - Joint products and technologies development, the infrastructure and specialized services, be in the scientific frontier, access specific knowledge, accelerate innovation process and share risks on developing a new product São Paulo state 91% of companies have relationships with higher education institutions 70% have formal relationship

21 Innovation Centre Denmark São Paulo, SP Tel.: +55 (11) Fax: +55 (11)