In the recent EIU survey, 35% of respondents indicated that they are currently selling in Latin America, and more than half are looking to expand capacity and market share in this region over the next five years. To learn more about the biopharma landscape in Latin America, we talked with Brand Name colleagues Oscar Kuperman, Head of Technology Management, Latin America and Gustavo Airaldi, Head of Latin America Process Solutions Commercial, to learn what makes this region so attractive.
The survey results showed that LATAM is a large target for growth in the biopharmaceutical market. Are you experiencing this dynamic?
Oscar Kuperman: To understand the dynamic, let’s take a look at the economic situation in this region. While the past two years have been challenging in Latin America, 2017 and 2018 look very promising; GDP growth is predicted at 1.5% or more, according to a recent report published by the International Monetary Fund1. For countries like Mexico, growth hasn’t stopped and looks to accelerate through 2018.
In Brazil, there is an incentive called Productive Development Partnerships (PDP); an exclusive partnership in which a private company transfers technology to either a local public or private company in exchange for global market share of governmental purchases. Currently, there are roughly 100 PDPs, many of which are biologics and tech transfers from the patent owner to public labs and private companies.
In addition, ANVISA, the FDA of Brazil, now requires that all processes be validated. This is a good sign for the country as it will bring new technologies and allow them to apply to sell drugs in more regulated countries.
Gustavo Airaldi: Most of the traditional pharmaceutical producers in LATAM are now moving toward developing biosimilars, mAbs or recombinant proteins, with the support from tech transfers from around the world as well as internally. While the traditional pharma industry was once focused on generics, they are now moving to explore the biotech industry with biosimilars.
There are already 100 biosimilars in Phase I, II, or III in LATAM. This phenomenal growth is due mainly to the public system in Latin American countries – the governments cover treatment with biologics for certain pathologies. In addition, if these biosimilars are produced locally, it’s less costly.
In the EIU survey, respondents said that in those areas where they currently operate, the highest risk is the local regulatory environment. They are also worried about a lack of cultural/country-specific knowledge when entering emerging markets like LATAM. Does this match what you are seeing?
Kuperman: There are companies in Mexico, Cuba and Argentina that have been producing biosimilars for more than two decades. For example, there is a company in Mexico that has been producing biosimilars for over 25 years. There are also several companies in Argentina that already have years of experience developing such therapies, and the level of sophistication is impressive. One Argentinian company, for example, cloned a cow back in 2002 that produces human growth hormone. That said, the workforce is generally well educated and qualified in LATAM – especially in the regions I just mentioned that have been working on biosimilars for quite some time already. However, there is a great deal of regulatory complexity in the market – we can see three different tiers:
• Big markets are Tier A (Brazil, Mexico, Argentina) and more complex from a regulatory standpoint. They are leaders in biosimilar regulatory pathways, and are merging the guidelines of WHO, European Medicine Agency Guidelines into their own political, economic, and historic context.
• Tier B (Chile, Venezuela, Colombia) are more cautious and new entrants in the biosimilar market.
• Tier C (Peru and Cuba) are more flexible with regulatory environment and are looking for quick savings; they are easier targets for new entrants with limited clinical evidence.
I would split the regulatory environment into two segments: the registration of new drugs or biosimilars and the regulatory stringency for processes. If you take a look at registration of drugs, local regulatory agencies are beginning to merge their guidelines with EMEA and WHO recommendations for developing biosimilars and demonstrating that they have efficacy as medicines. On the other hand, the regulatory process is not harmonized, which leaves a lot of room for improvement. As for Process Validation efforts, we see that Brazil and Cuba are the two most advanced countries and have matched WHO standards while Argentina and Mexico are one step behind.
Airaldi: In my opinion these countries are moving in the right direction, though there are areas that need improvement. They are focused on exporting to the US, EU and Asia so the regulatory environment is something that needs to be addressed in a very professional way.
Cuba, for example, is thinking in terms of opening the embargo. They have some interesting molecules that will be very welcome for America and rest of the world. Currently, the country is waiting to be able to export. It’s clear the regulatory aspects are becoming stricter for all regions in order to be competitive and to be in the right position to increase business.
Vaccines and biosimilars seem to be a focus in Latin America and play a strong role in their growth strategies. Are novel therapies even part of the conversation in Latin America?
Airaldi: In terms of producing vaccines, Brazil is the biggest player with Argentina, Mexico and Cuba close behind. While production will certainly continue to grow in Latin America, this region is now beginning to explore the world of biosimilars, which will be a big investment. The production of biosimilars in Brazil is slightly delayed in comparison to countries like Mexico and Argentina, but some of the major vaccine manufacturers in the country are now starting to explore the world of biosimilars.
Kuperman: Novel therapies like stem cell and gene therapy are still at the R&D level and not yet in the advanced phases. However, in the next 5-10 years I believe they will be applied – first in Mexico and Argentina and then Brazil and other countries.
What do you think are the biggest gaps that need to be filled for companies seeking assistance with bioproduction in Latin America?
Kuperman: The challenge for biosimilar companies is balancing process with the cost of R&D. It is critical to develop technologies faster, but also keep prices affordable in order to be competitive so that the government will provide funding. In Brazil, even though they have the financing with the PDP program, there is still a lack of trained workforce.
With a new regulatory environment for pharma production, this region needs to upgrade local production and regulation. And of course these countries will benefit by adopting single-use technology. I think Latin America will have to consider investing in full GMP facilities and training their workforce.
Airaldi: We also need to develop local, technical knowledge within our companies and universities. You can think of it like a triangle. One point is the university, where they have a population that is highly skilled with technical backgrounds. The second point is the government, which in most cases is investing heavily in biotech. The third part includes small and mid-sized companies that have some background in producing traditional pharmaceuticals and are now interested in developing biotech products. It will take some time to develop a formal structure of knowledge and background in the region, but the region is very open. I feel that these companies who are moving in this direction, know the gaps and understand that they need external support.
- Latin America’s Headwinds: Economic Projections 2016-2017. Policy and Markets in Latin America. April 25, 2016.