Brazilian pharmaceutical industry and generic drugs policy: Impacts on structure and innovation and recent developments

• Published in: Science & public policy Vol. 41; no. 2; pp. 245 - 256
• Main Authors: Caliari, Thiago, Ruiz, Ricardo Machado
• Format: Journal Article
• Language: English
• Published: Oxford University Press 01.04.2014
• Subjects: Appropriations and expenditures; Brazil; Brazilians; Business; Drug policy; Drugs; Health expenditure; Health policy; Industrial policy; Innovation; Market share; Markets; Pharmaceutical industry; Prices; Public health; innovation; Brazil; pharmaceutical industry; generic drugs
• ISSN: 0302-3427; 1471-5430
• DOI: 10.1093/scipol/sct053

When generic drugs were introduced into the Brazilian market, the main aim was to decrease prices and minimize public health expenditure. However, in addition to this effect, this policy brought about unintended changes to the industrial structure. In this paper, we evaluate the unplanned impacts from the introduction of generic drugs, particularly with respect to the business scale and innovation. Our main results show a large increase in market share in favor of domestic companies, but just a small increase in R&D expenditure and innovation within those companies. Such an increase in the business scale represented a window of opportunity for national firms, but the recent mergers and acquisitions by foreign firms have challenged their position. The weak competitiveness of domestic firms stems from their poor technological capabilities, which are an outcome of a successful 'demand pull' industrial policy without the support of a 'technological' industrial policy.