Drugs covering the Reference Medicines and Similar Branded Medicines to which is required a medical prescription for sale.

New drugs launched by laboratories after major investments in research and development, comprehensive testing and approval procedures from the relevant government agencies. These are drugs used as a parameter for bioequivalence and bioavailability tests for the approval of the Generic Drugs. These products, when launched, are protected by a patent, whose term can vary by the category of the invention and the country’s laws. In Brazil, this term is up to 20 years.

Drugs containing the same or the same active ingredients and the same concentration, dosage form, route of administration, doses and therapeutic indication of the respective Reference Drugs, which can differ only in characteristics related to the size and shape of the product, expiration date, packaging, labeling, excipients and vehicles (intravenous, tablet, capsule, suppository, etc.). Similar Brand Drugs are also identified by the trademark and, the Generic Drugs can only be produced and traded after expiration or waiver of patent protection of the respective Reference Drug. Similar Brand Drugs goes through pharmaceutical equivalence and bioavailability tests required by the Ministry of Health, without, however, going through the bioequivalence test.

Drugs that are identical or bioequivalent to the respective Brand Drugs in the form of dosage, efficacy, safety, power, quality, performance characteristics and intended use, developed after the expiration, waiver or breach of the patent of the Brand Drugs on which they are based, and using formulas of Brand Drugs. Therefore, a medical prescription is also required for the sale of this type of drug. The difference is in the name, the brand and the form of disclosure. Generic Drugs are not protected by patent.

Drugs, whose sale is free without requiring the presentation of a medical prescription, are used to relieve a medical condition. This group includes drugs for treating acute conditions easy to be self-diagnosed, such as antacids, cough, pain, and cold medicines. In 2018, the Brazilian drug market reached a compound annual growth rate of gross sales and services revenue (CAGR) of approximately 14.6% between 2008 and 2018.

According to the Brazilian Institute of Geography and Statistics, or IBGE, the expenditure with drugs strongly varies by the level of family income, which shows the existence of strong low demand for the lower income population.

According to IPC Maps, which measures the potential for Brazilian consumption, an increase in the population’s potential for urban consumption has been observed recently, especially in Income Class C consumption. In 2015, this class was attributed a percentage of 33,7% of the total urban consumption potential in Brazil and in 2019, this percentage increased to 37.5%, as shown in the graph below:

Drug consumption varies by age. This consumption standard, in conjunction with the expected growth of the population over 60 years old, should cause the Brazilian pharmaceutical market to increase its level in the coming years. In 2000, according to IBGE – Brazilian Institute of Geography and Statistics, the number of people older than 60 years old was 12.9 million, increasing to approximately 26.3 million in 2010. IBGE expects this number will jump to 29.2 million in 2020, to 41.5 million in 2030, and to 73.5 million in 2060, which corresponds to an average compound annual growth rate of 3.5% for the next 20 years. It is expected that the demographic representativeness of this portion of the population, which was 10% in 2010, will jump to 33.7% in 2060, as the chart below.

Population evolution by age group

The Generic Drugs were introduced in Brazil at the end of 1999. Since the beginning of their sales, they have been showing high growth. According to data of IQVIA, the sales of generic drugs reached BRL 28.0 billion in 2018, a growth of 9.0% in sales carried out in 2017 totaling BRL 25.6 billion. The amount, audited by IQVIA, does not take into account the discounts of more than 50% offered by the industry to the retailer and is based on the price records made by the laboratories at the Brazilian Drug Market Regulation Chamber (CMED). The following chart illustrates the evolution of the participation growth concerning the Generic Drugs in the total drug market.

Evolution of the generic drugs (% growth)

Among the factors that cause the Generic Drug market to be in an expansion time, the competitive price of these drugs stands out when compared to the brand drugs and the expiration of patents for top-selling drugs in the near future. According to the Brazilian applicable laws, the prices of the Generic Drugs should be at least 35% lower than the Reference Drugs clearly due to lower research and development costs, which make them very competitive and, in practice, the discounts offered are higher than the mininum reference value.

The lifestyle adopted by the population in large cities in Brazil and in the world has contributed to the degradation of the individuals’ health. This urban population breathes polluted air, eats inappropriately, has a sedentary lifestyle and suffers from the effects of stress, which contributes to diseases such as diabetes, high cholesterol, hypertension, respiratory diseases, depression, among others. Additionally, physicians and the general population are becoming increasingly aware of the benefits resulting from the prevention, detection and early control of these and other pathologies. Treatments have started increasingly earlier by taking medications, contributing to health and well-being and leveraging the growth of the pharmaceutical market, especially among the non-elderly population.