Brazil is in the midst of a transition from imitator to innovator in health-related products, according to the most comprehensive analysis to date of barriers and opportunities facing that country's health biotech industry.
In the third study of its kind, the McLaughlin-Rotman Centre for Global Health (MRC), says South America's largest and most populous country has the scientific and market capacity to emerge as a major global player. It is held back, however, by a number of important challenges including regulatory barriers, limited access to private equity and a general lack of coordination and collaboration among stakeholders. MRC's previous studies focused on India and China.
Says study co-author Peter A. Singer, MD, Interim Director of the MRC, based at the University Health Network and the University of Toronto: "One thing is clear: when you think of biotechnology, its no longer just San Francisco, Boston, London and Tokyo. It's also Hyderabad, Shanghai, and Sao Paulo. While in the emerging economies it is still in it's adolescence, biotechnology is no longer the sole hegemony of the rich world. Biotechnology innovation is becoming globalized."
"Unlike most developing nations, what is holding back Brazil has little to do with the level of scientific expertise," adds Dr. Singer. "In fact, its science is world class. It is unfortunate that a set of relatively smaller challenges continues to slow down the country's transition to becoming a significant global innovator in health biotechnology."
The study says the fact that several of Brazil's small and medium-sized enterprises (SMEs) have succeeded in making innovative products is a testament to the country's strength in health sciences and to its entrepreneurs' creativity and astute management.
Published June 6 by Nature Biotechnology, the paper is based on case studies of 19 diverse Brazilian-owned private health biotech companies and four public institutes.
Having now analyzed biotech industry trends in Brazil, India and China, MRC says some common patterns and differences are evident. (A fourth study in the series, for release later this year, focuses on South Africa).
"Although each country faces a different set of challenges we are seeing a clear trend," says study co-author and MRC researcher Sarah E. Frew. "Countries such as China and India are emerging as major global players in health biotechnology, with the expertise and resources to produce new drugs and vaccines at a fraction of the costs of the big pharmaceutical companies. There is little reason to think that Brazil cannot do the same provided it deals with a few key remaining challenges."
While biotech entrepreneurs in China, India and Brazil employ some of the same core business models and strategies, there are also significant differences stimulated by firms' attempts to adapt to local conditions.
One common feature among health biotech enterprises in all three countries is a heavy reliance on a hybrid business model, where revenues from early activities – typically generics and modification of existing technologies as well as services – are reinvested in innovative products.
One difference is that, while Indian firms are among the world's leading vaccine manufacturers and supply the country's national immunization program, in Brazil this activity is primarily the domain of public institutes.
Also, in addition to their large domestic markets, Indian and Chinese companies also have a greater focus on exports than their Brazilian counterparts.
Rahim Rezaie, a co-author of the Brazilian study, states that: "Brazil faces a dilemma – how to reap the economic benefits of a robust private sector while finding affordable and sustainable solutions to local health needs. If the country can strike an effective balance between its public and private sectors, it could not only maximize health and economic benefits to Brazilians but also provide a compelling model for health biotech in other developing countries."
Neglected diseases and other business opportunities
Most companies interviewed report growing focus on innovative diagnostics or drug products. A number have a particular focus on developing and marketing affordable, easy to use products which address neglected diseases and other local health needs.
"What you call a neglected disease, I call a business opportunity," says Fernando Kreutz, president of Porto Alegre based FK Biotecnologia. The company produces monoclonal antibodies for various diagnostic tests while other firms such as Katal Biotecnológica, based in Belo Horizonte, and Labtest Diagnóstica, of Lagoa Santa, produce diagnostic kits suitable for small laboratories and rural settings in Brazil, a market usually neglected by large companies.
Katal is responding to Brazil's approximately 140.000 annual cases of tuberculosis by developing a $25 TB test to replace the current $150 version. It also supplies the public health system with an innovative test for screening the 25 million Brazilian men over 45 at risk of prostate cancer and has developed a test for Chagas disease that can be read by widely available equipment, removing the requirement for expensive laboratory machinery.
MRC investigators also found many private companies developing innovative therapeutics. Aché Laboratories is marketing the topical anti-inflammatory Acheflan, a natural product extracted from the Cordia curassavica plant, while Pele Nova Biotecnologia's BIOCURE is a natural latex membrane derived from the plant Havea brasiliensis for the treatment of skin lesions.
Silvestre Laboratories, of Rio de Janeiro, is marketing several drugs that have resulted from significant in-house R&D, including a treatment for burns and other skin lesions.
Notable products in the pipeline of various companies include:several monoclonal antibodies for cancer treatment (Recepta Biopharma, of São Paulo);
fetal, neonatal and adult stem cell therapies for cardiac disease, type I diabetes and neonatal hypoxia (Cryopraxis, Rio de Janeiro).
Barriers to development
Major challenges include:
A patent regime in desperate need of reform
The Brazilian patent office can take over seven years to process patent applications for drug candidates. Brazilian law prohibits patenting some important biotechnologies, such as recombinant versions of proteins found in nature. Some companies are also concerned that once a pharmaceutical product has been approved by the patent office, ANVISA (the national regulatory agency that approves health products, among other activities) can withhold approval on grounds such as eventual public access issues.
The main regulatory roadblock highlighted by both public and private sector interviewees is the lack of practical experience in product development and manufacturing on the part of ANVISA regulators. Other commonly cited stumbling blocks include long delays in the ethics approval process for clinical trials as well as biosafety and biodiversity regulations.
Although Brazil has been successful in raising the overall level of biotech expertise, there is evidence of a disconnect between the output of existing training programs and the actual needs of the health biotech sector. Lack of sufficiently specialized and targeted training programs and the "academic model" of university preparation are limiting the supply of appropriately-trained personnel. An additional challenge for private industry, especially SMEs, is their inability to match or exceed the incentive system in place for careers in the public sector.
Recommendations for Brazil
The government of Brazil has been proactive by making legislative changes and increasing public financing for innovative activities. However, these recent moves are unlikely to be sufficient on their own.
The MRC study says basic building blocks for an innovative health biotech sector are largely in place in Brazil. Recommendations to accelerate development and commercialization of innovative health products in the country include:
Improve the performance and transparency of government institutions involved in health product development, regulation, ethics review and intellectual property (IP) assessment and approval;
Promote and support the filing of patents outside Brazil and develop policies that encourage partnerships between Brazilian and off-shore collaborators based on the formation of international IP assets;
Administer biosafety and biodiversity laws in ways that encourage use of Brazilian resources for product discovery and creation while still preserving the knowledge rights of the indigenous population;
Identify crucial gaps in health product development infrastructure and stimulate the creation of facilities to provide required services;
Modify or remove policies that levy taxes or otherwise penalize companies that must out-source portions of their development programs to off-shore vendors;
Help build a culture of innovation by stimulating dialogue among regulators, policy makers, academics and the private sector to raise awareness and seek resolution of issues that hamper health product development;
Clarify the domain within which the public-sector will operate so as to allow the private sector to better target their investments;
Substantially increase R&D commitment to private firms to ensure they are viable employment destinations for academic researchers;
Build stronger linkages between firms to strengthen industry associations, identify challenges and pursue solutions;
Identify human resource requirements in specific disciplines and technical specialties and create and/or adapt training programs to meet the identified needs;
Stimulate the creation and expansion of academic and executive programs in entrepreneurial training specifically for the biotech sector;
Use public procurement mechanisms to support innovative startup firms.
Next steps in the MRC program
The MRC will continue to study health biotechnology companies in the developing world, and expand its focus to include Africa.
The next phase of MRC's Emerging Economies Program will involve continued research into commercialization of innovative health biotechnology products and services and its application in emerging markets.
Programme activities will follow two distinct tracks, each with its own research and commercialization phase:
1. Accelerate development of health products and services for improved global health by identifying better, cheaper and faster ways to produce health products including vaccines, drugs and diagnostics to improve global health. The research focus will examine how the innovative and productive capacity of emerging economy firms can be harnessed to strengthen health biotechnology development. Commercialization will involve linking innovative firms in emerging economies with the global health community, including other firms in developed and developing countries, investors, donors and product development partnerships.
2. Encouraging North-South entreprenurial collaboration in the health biotechnology sector to the benefit of all.
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