Brazil is the second major producer of medical technology among emerging countries, behind only of China. According to a survey made by the World Health Organization (WHO), Brazilian industry has moved US$ 2.6 billions last year in this sector. The country is in a better position compared to Mexico, India, and Turkey that occupy third to fifth place in the ranking.
The document first published by WHO last September in Geneva indicates a major participation of emerging countries into the medical technology market. Together, the 20 emerging countries major producers in the sector responded for 10% of the worldwide sales – equivalent to US$ 21.5 million. China, Brazil, Mexico, India and Turkey moved 60% of such amount.
“In Brazil, the sector of health equipments is growing more than 7% per year since 2003 and forecasted to attain higher indexes. If by one side with such increase of revenue in the country there is a major demand for health services, on the other hand, investments of the Brazilian government in the health industry innovation and development is even higher”, asserts the Science, Technology and Strategic Inputs Secretary of the Health Ministry, Reinaldo Guimarães. According to Mr. Guimarães, Brazilian government has started to see the health industry as a strategic sector, and it has created specific policies to the area. The Industrial Health Complex is one of the axles of the More Health Program – the PAC [Growth Acceleration Program] of the sector – exclusively dedicated to the strengthening of the national industry.
From 2003 up to March, 2010, the country invested more than US$ 3.6 billions in infrastructure, research and technology in the health sector. These are resources from the federal government, BNDES [Brazilian Economic and Social Development Bank] and research fomentation agencies.
Between 2003 and 2007, it was applied more than us$ 28 millions in the medical equipment area in innovation projects and to create new laboratories for product certification. These investments have medium and long term impact on the increase of the medication access to the general population, in strengthening the national industry, and in the Brazilian technological innovation.
The Health Ministry was also managing the narrowing of the relationship between Brazil and other countries in the areas of health and general business. Between 2007 and 2010, it was accomplished international commercial missions to India, England, and China. At the end of September, the Health Ministry, José Gomes Temporão participated in Washington, USA in a meeting between Americas on public health and a seminar that gathered representatives from the North-American and Brazilian health complexes.
Despite the evolution, the country still keeps a shortage of around US$ 9 billions of the trade balance in the health sector – according to 2009 data. Further to the dependant trade balance, production is concentrated in multinational companies installed in the country.
The first results from investments draw a scenario that allows having an optimistic look into the sector. According to Reinaldo Guimarães, Brazil is changing its positioning in the market, starting to make a bet in more technologically competitive products. “Today, we have a commercial surplus in the dental sector; we are deemed reference”, he commented.
The WHO survey has shown that the medical equipment industry is still concentrated in the developed countries. United States is at the top of the list, with sales amounting US$ 91.3 billion in 2009, equivalent to 40.7% of the whole market. Next, it comes Japan and Germany, which responded by 10.1% and 8.1% of the total 2009 sales, respectively. With sales around US$ 6.1 billion in 2009, China is the only emerging country on the list of the ten major markets in the world. It appears in the 7th place, ahead of countries like Spain and Canada.
According to WHO, medical technologies market is growing around 6% each year. In 2008, the total sales were of US$ 210 billions – two times the 2001 amount. The sector employs one million people.
Support to Brazilian Entrepreneurs
Brazilian entrepreneurs count on the support of several associations, entities and agencies that stimulate offering courses, programs and supporting services to entrepreneurs from the whole country.
Entities connected to the Government:
• FINEP – Funding for Studies and Projects
It aims to promote economical and social development in Brazil by means of the public promotion to science, technology, and innovation for companies, universities, technological institutes, and other public or private institutions.
• INPI - National Institute of Industrial PropertyThis agency is responsible by trade mark registration, patent granting, protocol for technology transfer contract and entrepreneur franchising, helping entrepreneurs to change intellectual property in a competitive differential.
• Inmetro – National Institute of Metrology, Standardization, and Industrial Quality
It actuates in the strengthening of national companies by means of mechanisms destined to improve products and services. Inmetro checks and inspects the industry and retailing commerce the fulfillment of measurement instruments and products that must have compulsory certification.
• SUFRAMA –Manaus Free Zone Superintendence
It manages the Import Tax (II) and Tax on Industrialized Products (IPI) exemption for industrial projects from the Industrial Pole of Manaus (PIM). Also, it is responsible to manage the development of that region under the point of view of the sustainable use of natural resources, reducing the Amazon cost, enlarging production of goods and services and investing in the local workers development.
• ABDI – Brazilian Agency to the Industrial Development
This is an entity connected to the Ministry of Development, Foreign Industry and
Commerce and it has as mission promoting the execution of the Brazilian industrial policy.
• Supporting Service to Micro and Small Companies (Sebrae)
It is the main national agency to promote new entrepreneur actions, supporting the opening and expansion of small business, acting on every sector of the economy: industries, services and agro-business.
Civil entities:
• Association to the Real Estate and Tourism Development of the Brazilian Northeast (ADTI Nordeste)ADIT is an entity that drives Brazilian entrepreneurs, gathering touristic and real estate investments to the Northeast region helping and orienting in safe and profitable business transactions.
• National Confederation of the Industry (CNI)
It actuates to assure the active participation of the industrial community in formulating public policies that propitiate a healthy environment towards business development, subsidizing the decision taking for entrepreneurs and setting strategic partnerships.
Support to Exportation
Entrepreneurs who intend to commercialize products and services with other countries can count on agencies and organizations which render support and guidance to the Brazilian exporter.
• Brazilian Export and Investment Promotion Agency (Apex)
It is an agency linked to the Ministry of Development, Foreign Industry and Commerce. It promotes the exportation of Brazilian products and divulges Brazil’s attracting factors to foreign investors. The agency organizes actions to the commercial promotion, such as prospective and commercial missions in big international fairs, besides of elaborating studies of commercial and competitive intelligence. It also assures support to the foreign investor during the whole process in Brazil.
• Endeavor Entrepreneurship Institute
It promotes entrepreneurism in developing countries. With headquarters in New York, it seeks to stimulate the entrepreneur mentality by means of courses, workshops, and lectures, and it is supported by partners and entrepreneurs from every country it is present in.
• Brazilian Association of Foreign Trade (AEB)
This is an association that gathers exporter and importer companies of goods and services, as well as supporting activities to the foreign trade. It studies subjects related to the Brazilian foreign trade, proposing solutions to their problems.
• Exporter Portal
The Exporter Portal offers basic information on foreign trade, allowing the consultation of main terms, mechanisms, laws, events, and activities that connect the Brazilian market to the whole world.
Development of our industry in coming years
According to information published in the Magazine Valor Especial November 5, 2009 issue) these are the perspectives for some segments of the Brazilian industry in the coming years:
Electro electronic
Important to the national production, the electro electronic industry has a strong investment demand to follow the country’s growth. According to a study published by Abinee – Brazilian Association of the Electric Electronic Industry, entity that represents the electric and electronic sectors all over Brazil, the generalized impacts that the electric and electronic sectors propitiate to the economy were potentized by the high growth speed experienced between 2006 and 2008, when the revenue of the sector was expanded at the annual average rate of 9% - thus allowing invoicing to attain a 4.3% GDB – Gross Domestic Product rate in 2008 of US$ 1.8 trillions.
That growth propitiates big opportunities in several segments of the electro electronic industry, such as Digital TV, microelectronic devices applied to industries, in which Brazil count on competitive vantages, semiconductors and components, equipments and software for telecommunications, banking automation, distance education and medical-hospital equipments industry, among others.
Operators
Since telecommunications were privatized even years ago, there is a strong demand in the sector. In the coming years, the arena will be commanded by the broad band infrastructure evolution. Fixed and mobile telephone operators are reinforcing their budgets, having in mind the high speed connectivity race. According to the Brazilian Association of Infrastructure and Base Industry (Abdib), it will be necessary annual investments of US$ 12 millions for the next five years to cope with the bottleneck of the broad band.
According to Abinee, the communication industry is one of the most promising. The entity forecasts an annual growth rate of 10% for the next decade, mainly because the present equipments will be replaced by devices with new technologies.
Informatics
One of the areas that aggregate more innovation has quite favorable perspectives. In 2008, the segment responded by a major slice of the Brazilian market of electro electronic (total of 28.2%) with business around US$ 21 billions, an 11% increase compared to 2007. Telecommunications was in the second place (17.1%), with US$ 12.7 billion invoicing, 21% more than last year. The perspective of the growing computerization of companies, actions from Government to the digital inclusion among the population, increase in the power consumption rate and improvement of the distribution of revenue bring a wide range of opportunities to that industry.
Industrial automation
This is a segment that from 2004 to 2008 experienced a growth with average variation of 10% per year, and with favorable perspectives for the next ten years. In 2008, the industrial automation revenue attained US$ 19.6 billions, a 15% increase over the previous year, stimulated by investments in infrastructure and assets. The development of new solutions in informatics will reinforce the trend of an increase in the automation of industrial sectors, attracted by public investments in infrastructure, as well as the demand for residential automation that follows the civil construction growth.
Electricity
The electric sector is plenty of quite favorable perspectives in equipments to generate, transmit and distribute electrical power (GTD). Forecasts indicate an average growth of 10% per year in the consumption of GTD equipments between 2010 and 2015, and 8% per year in the five next years after that, following the Brazilian energetic expansion, that besides equipments for hydroelectric mills, it will have a demand for machinery to thermal, eolic, biomass gasification and solar power mills.
Medical-hospital
Another attractive area is the health industry, to which Government has set privileged programs, one of them directly linked to the medical-hospital equipments industry with digital technology. The medical-hospital industry has doubled its growth in the last eight years, with a US$ 3.74 million invoicing in 2007. With approximately 450 companies, the sector exported US$ 425 millions along those years, 14% more compared to 2006.
Gathered in five areas, equipments comprise implants and medical-hospital consumption items to the dental, laboratorial, radiology, and image diagnosis areas. Some of them are part of the set of products included in the sector of Information and Communication Technologies (TIC), and they receive the benefits of the Informatics Legislation, such as: digital instruments and devices to the medical-hospital use, respiratory devices for reanimation and X Ray units based on digital techniques.
With the aging of the general population, the needs of the health sector will continue growing. In Brazil, life expectation is already 73 years old.
(Source: Valor Especial Magazine – 05/11/2009)
The growth of the Brazilian medical-hospital industry
The Brazilian medical-hospital industry has already a competitive international presence. According to Franco Pallamolla, President of Abimo – Brazilian Association for the Medical, Dental, Hospital and Laboratorial Equipments Industry, the entity that gathers 463 companies actuating in the sector, “the increasing curve of exportations, certifications and the high level of controls implanted by ABNT, ANVISA and the Health Ministry are quality indicators of the inputs and equipments developed in Brazil”.
“Today, 70% of companies operating in the sector export to about 180 countries of the five continents. Able to supply 90% of a hospital’s demand in the present patterns, the chain generates more than 100 thousand direct and indirect employments in the country. For the entity, the good performance of the national industry is associated to investments in research and development, innovation, and expansion of the manufacturing pole”.
“The sector recorded an invoicing close to US$ billions in 2008, almost 5% above what was attained in 2007. Exportations in the sector amounted US$ 581 millions, representing 14.5% of the invoicing. Forecasts for the 2009-2010 biennium are also promising”.
Source: http://www.usinagem-brasil.com.br
With MP495, medical industry forecasts a reduction in the trade balance shortage
The signature of the Provisory Measure No. 495 incentivizing the purchase of national goods and services by the public sector was enthusiastically received among the Brazilian medical-hospital and dental industry last July. For ABIMO, the MP outlines an essential action to reduce importations in that segment, which has recorded in 2009 a US$ 2.2 billion shortage in the trade balance, data opposed to the productive capability of that industry, which is able to attend 90% of the present hospital’s equipment demands.
According to Pallamolla, today’s scenery is a reflection of two difficulties the industry faces when competing with foreign products: the high fiscal burden aggregated to the manufacturing activity, and legislation which is not favorable to the acquisition of Brazilian items. “National companies cope with the Cost Brazil, rules and more demanding certifications and a more expensive labor. Furthermore, they cope with laws that are favorable to buy imported goods, such as the similarity concept, in which foreign items that do not have national similar are not taxed”, he explains.
The optimism of the medical-hospital and dental industry also considers the growth perspectives to the country, that must surpass 5%, and the estimate increase in exportations that must reach US$ 650 millions this year, thus surpassing in 17% the 2009 balance”. “Importations show that there is an internal demand and the country has space to grow. The incentive to purchase Brazilian products by government is fundamental to assure the sustainable development of the Health Industrial Complex. Due to this, we wait in a very positive mood the approval of that measure by the Congress”, believes ABIMO’s president, Franco Pallamolla.
That MP promotes several alterations in the bid legislation (8666/1994): incentives to innovation and to the scientific and technological research (10973/2004), and the law that sets the relationship between federal universities, scientific and technological research institutions, and supporting foundations (10973/2004). Primarily, it sets preferences when buying assets and services produced or rendered by companies which invest in research and development in the country.
In bid processes, that measure foresees the creation of preference margins to national items approved by the Brazilian technical rules to be defined by the Federal Executive Power and limited up to 25% above the price of foreign similar. The calculation of such amount by groups of products and services will be defined based on the generation of employment and revenue, in the tax collection and the level of development and technological innovation performed in the country.
Another differential is provided to micro and small companies of technological basis. The measure seeks the execution of institutional developing projects to research activities created in the Scientific and Technological Institutions (ICT) environment. The MP is waiting for the Congress’ approval.