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Big Pharmas and API suppliers eyeing Brazilian Government deals says EMS

By Gareth MacDonald+

16-Oct-2014
Last updated on 16-Oct-2014 at 17:17 GMT2014-10-16T17:17:47Z

PDPs attracting Big Pharma in Brazil says Jose Piccolotto, head of business development at Brazil's largest drugmaker EMS
PDPs attracting Big Pharma in Brazil says Jose Piccolotto, head of business development at Brazil's largest drugmaker EMS

Government contracts guaranteeing market share in Brazil are starting to attract innovators like Roche, Novartis and Sanofi and may see API suppliers get long-term work according to a spokesman for Sao Bernardo do Campo-based drugmaker, EMS.

‘Productive development partnerships’ (PDP) are exclusive, five-year supply deals under which the Brazilian Ministry of Health (MoH) agrees to only buy a particular drug from a single contracted supplier for a fixed sum of 10% below the reference price.

The idea is that the contracts allow Brazil to control its public healthcare spending and build local manufacturing because, when the deals run out, contracted firms must transfer the production knowhow to Government-funded labs.

Initially, the PDPs attracted bids from generic companies keen on securing market exclusivity. However, more recently the deals have started to attract Big Pharma firms according to Jose Piccolotto, head of business development for Brazil's largest drugmaker EMS.

He told delegates at CPhI in Paris last week that: “In the beginning, no innovators or multinational companies were willing to do it. Now they have changed their minds” adding that “the Government does not buy from anyone else and you gain 100% of the market.

So now we see Roche, Novartis, Sanofi they are all going for these PDP.”

Piccolotto cited the asthma drug salbutamol as an example, explaining that the Brazilian market is worth $150m, 70% of which is bought from a single firm by the Government under a PDP.

In addition to exclusivity, there are also speed-to-market advantages according to Piccolotto who said: “If you file this PDP there is a fast track for the registration because the Government’s intention is to start the five year period as soon as possible.”

Tech transfer?

Theoretically, firms that seek PDP deals must share their manufacturing secrets with the government, although the lack of local options means API makers are likely to be kept on as suppliers after the contracts expire.

However, whether this happens in practice is difficult to predict according to Piccolotto, who suggested that the Government may be forced to renew the deals rather than take on production itself.

The current situation is that the national labs don’t have the structure to receive the products, so now the government is trying to pass the administration of these labs on to private companies” he said

EMS, for example, has been contracted to run two national labs for 15 years in exchange for a percentage of product sales.

Market entry

PDPs are a new way of entering the market without being in the market. So if you have one product that is not in the market you have the opportunity to grab 100% of the market without a single sales rep” Piccolotto said.

However, while the deals potentially offer 100% of the market, the do not allow companies to bypass some of the requirements of entry that are particular to the Brazilian market, specifically the rule that they have a local quality assurance laboratory.

To be able to file a marketing authorisation you need to at least have a quality control lab in Brazil, unlike in Europe where you only need pharmacovigilance capabilities with a European address.”

Most multinational firms that seek PDP contracts in Brazil partner with local companies according to Piccolotto who said usually overseas manufacturers supply either supply the partner or direct to the Government.

To apply for a PDP you must prepare a project and file it and the MoH will evaluate it. Usually they prefer local company involvement, because one of the ideas is to develop local companies and prompt them to innovate, not just produce generics.”

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