The Healthcare Industrial Complex in Brazil: Challenges and solutions for the future

/ Online Transmission - Zoom

The Brazilian healthcare system has been brutally affected by problems in the medical, hospital, and pharmaceutical supply chain — even regarding active pharmaceutical ingredient (APIs), which are essential for producing vaccines and other products — but trying to produce all the products, build the equipment, arrange supplies, and produce medicines internally is not the answer to the weaknesses exposed by the pandemic. The way forward is, rather, having a larger insertion of Brazilian companies into global production chains, a better internal and external coordination in research and development and investment in innovation.

Those were the main takeaways of the “The Healthcare Industrial Complex in Brazil: Challenges that the pandemic has brought to light and solutions for the future” webinar, welcoming four professionals from the field, with extensive experience in the public and private sectors, as guest speakers. According to them, Brazil must act as a coordinator and facilitator and guarantee resources for basic and applied scientific research and technological development.

“Since the beginning of the pandemic, the supply and demand clash in the pharmaceutical area has constantly been expanding and changing. We had a 1,000% increase in the production of some medications, which required a lot of maneuvering to obtain the necessary inputs from various sources. If we only depended on Brazilian suppliers, we would hardly have made it. The answer to this problem lies in more global insertion, not less.”
Martha Novelli Penna
, Vice President of Strategy and Innovation at Eurofarma.

“The urgency of deciphering the novel coronavirus's genome and developing a vaccine called for an unprecedented collaboration between research centers, large pharmaceutical companies, start-ups, and governments of different countries. Without sacrificing safety, we were successful in conducting research and clinical trials in less than a year and having the responsible agencies simultaneously accelerate the analysis and approval processes for immunizations. It was a revolution in the new product development model and a learning experience that will bring future benefits.”
Marco Aurelio Krieger
, Vice President of Production and Innovation at FioCruz.

“Globalization is a reality in the research, development, and production of new vaccines and medications. To be a part of this process, we need to strengthen our innovation ecosystem, which is still in its infancy. We have human and financial resources, good universities, and companies. For example, the government can be more proactive in using tools made available via the Innovation Act (encomenda tecnológica), which, as far as I know, are rarely used in the healthcare sector.”
José Fernando Perez
, CEO of Recepta Biopharma.

“In Brazil, there is a lack of structured communication on long-term public policies between the federal government, state governments, universities, research centers, and the private sector. We also need to connect ourselves with what is happening globally in supply chains and in research and technological innovation. Communication with these global chains is weak.”
Maurício Mendonça
, Sanofi’s Director of Institutional Relations in Brazil.

      ‘In search of the best technology for innovating' 

“It's delusional to imagine that a large national plant will supply the pharmaceutical industry with all the pharmaceutical chemicals, bottles, caps, and other inputs we need to deliver the final product to the Brazilian consumer. The global supply chain starts in China or India and passes through Italy or other countries until it reaches factories in Brazil. This chain changes all the time, and our challenge is to constantly seek new partners and better suppliers,” explained Martha Novelli Penna, who holds a Medical Degree from the Federal University of Rio de Janeiro (UFRJ). Eurofarma is a multinational pharmaceutical company with 100% Brazilian capital and a catalog of almost 300 products.

Martha believes there is room for Brazil to innovate in the healthcare sector and become more globally relevant, “I disagree with the idea that this market is concentrated in just a few countries. On the contrary, many countries today are strong in innovation, such as Ireland, Canada, South Korea, Israel, and, of course, China. We have good universities and institutes, competent scientists, capitalized companies, start-ups, everything that is necessary for intense and profitable exchanges with the rest of the world.”

Insertion, however, depends on good partnerships. The speaker cited the agreement between Pfizer, a multinational pharmaceutical company based in New York, and BioNtech, a German biotechnology start-up created in 2008 by a couple of German university students of Turkish descent, as an example of a successful partnership involving players from different countries, which resulted in the discovery of the first Covid-19 vaccine authorized for emergency use in the UK and U.S. in early December 2020. In January 2021, French company Sanofi, one of the world's largest pharmaceutical drugs manufacturers, announced it would manufacture 125 million doses of the Pfizer/BioNTech vaccine.

“The beauty of the globalized world in which we live is that we can seek out the best technology no matter where it is and work swiftly and collaboratively, with every one delivering the best they have,” concluded the speaker.

Physicist José Fernando Perez cited his own company's example, Recepta Bio, founded in 2006 by Brazilian businessmen in partnership with the Ludwig Cancer Research Institute: “We are in the final stages of developing an immunobiological drug for cervical cancer treatment. We did this in collaboration with the Swiss company 4-Antibody, which US-based Agenus, our current partner, purchased. Nobody innovates on their own.” 

Geneticist Marco Aurelio Krieger, the author of several scientific publications and a holder of six patents, highlighted the importance of FioCruz’s agreement with the University of Oxford and pharmaceutical company AstraZeneca to produce 110 million doses of their COVID-19 vaccine in Brazil.  Announced on July 31, 2020, the agreement provides for the transfer of technology to the institution, which is linked to the Ministry of Health and headquartered in Rio, to produce the vaccine entirely in Brazil, without relying on imported inputs (APIs). There was a delay in the domestic production schedule, but it should pick up in the second half of the year and into 2022.

“It is increasingly clear that international partnerships are the way to face the great challenges posed by new epidemics with the necessary maneuvering. The system must be open and cooperative; it cannot be closed,” defended the vice president of Healthcare Production and Innovation at FioCruz.

       'Orders under the Innovation Act sent to Brazilian companies’

Perez defended Brazilian government officials being bolder in the use of technological orders, provided for in the New Legal Framework for Science, Technology, and Innovation (Law No. 13243/2016), under the Innovation Act. According to the São Paulo Research Foundation's (FAPESP) former scientific director, Operation Warp Speed – a public-private partnership initiated by the United States government to facilitate and accelerate the development, manufacture, and distribution of COVID-19 vaccines, therapeutics, and diagnostics – is “an example of the importance of federal government support at the heart of economic liberalism.”

“The U.S. allocated resources to the vaccine projects of Pfizer, Moderna, Janssen, and Oxford/AstraZeneca in return for a purchase guarantee. That was done even during the government of denialist Donald Trump. The result is that today, the country has enough doses to vaccinate its entire population. Germany, another capitalist power, also invested in start-up BioNTech, a partner of Pfizer,” he said.

According to Perez, the so-called ‘science business’ – defined by him as businesses linked to scientific innovation – is highly complex and poses a significant challenge to investors, “First, the investment is greater than in areas where science has already been established. Second, it takes time to devise a product. Finally, new-drug development is highly uncertain. For example, when you are going to design an airplane, you know that the airplane is going to fly if you have good engineering. If it’s going to sell, that's another problem. In the healthcare sector, you can have the best scientists, but you will only find out whether the plane flies or not after the 3rd clinical trial phase or even after the drug has already been approved. Understanding the complexity of innovation in healthcare is vital.” 

“Brazil is a large market. We have the Brazilian Unified Health System (SUS). We have the government's purchasing power, but we can still take the tram to innovation. First of all, there must be good science, without which nothing can be done. That means investing heavily in basic and applied research and supporting start-ups and companies. We have resources, such as tax waivers, which can be directed towards specific objectives, selected intelligently and focused,” defended Perez. 

“The Brazilian government could be more proactive and use the Technological Orders to support innovation in the country. And not just for vaccines. For everything. And you have to do this with Brazilian companies. Why not? We can still take that tram, but the authorities are lacking the courage to pick up the pen and sign the contracts. The U.S. government did just that. Learning lessons from what was done during the pandemic in other countries is vital,” he stated. 

        'The knowledge frontier moves quickly'

According to economist Maurício Mendonça, who worked at the Ministry of Science and Technology (1999-2002) and the Institute of Applied Economic Research (IPEA) (2003-2004), Brazil “has already missed some important trams, like the API production tram, but it is not damned to go by foot and can still ride the innovation wave that is swelling globally.”  

“The knowledge frontier is moving faster than we can keep up. We have internal abilities, but the connection with global chains is weak and, if we do not think about long-term public policies, we may lose the tram again in areas such as biotechnology, gene therapy, and nanotechnology, for example,” said the Institutional Relations Director of Sanofi in Brazil.

According to Mendonça, the Brazilian market is large in terms of population size, but not in terms of per capita income and public financing. “The generic drug policy (implemented in Brazil in 1999) guaranteed the population access to essential drugs with fewer resources. But we must also think of ways to expand access to high-cost drugs,” he concluded.

Otávio Dias is a journalist specializing in politics and international affairs. A former correspondent for Folha in London and editor of the website, he is currently the content editor at Fundação FHC.

Portuguese to English translation by Melissa Harkin & Todd Harkin (Harkin Translations)

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