Brasilian market - entry strategies for Italian Pharma Companies

TrustPartners Confidential Brasilian market: proposed entry strategy for Italian pharma Companies October 2011Strategic Partners Group 1 Proprietary & Confidential TrustPartners

OBJECTIVES Document purpose is to describe and analyze the opportunity for an Italian pharmaceutical Company to enter the Brazilian market, through : • A quick introduction of the potential Brazilian Partner, who can support the Italian Company to enter in the market, in terms of organization, business managed and proper assets • An overview of possible strategies to entry the Brazilian market and the constraints due to the local market and legislation • The proposed approach and the support that TrustPartners together with Strategic Partners Group (SPG), an international strategic consulting firm, can offer during the agreement process and after Strategic Partners Group 2 Proprietary & Confidential TrustPartners

INDEX  Our Brazilian Partner  Brazilian market entry opportunity  Proposed approach  Next steps Strategic Partners Group 3 Proprietary & Confidential TrustPartners

BRAZILIAN PARTNER: COMPANY PROFILE (1/2) Description • Our Brazilian Partner is a company specialized in the Brazilian healthcare market Main information and focused on trade import/export activities • Its management has more than 20 years experience in healthcare and food distribution in Brazil and Latam, working for multinational firms located in Brazil / Latin America • Our Brazilian Partner’s offices are located in the Sao Paulo state, the most important region of Brazil (in terms of population, income pro-capita and business) • The Company has the ANVISA certification to import and distribute healthcare products in the Brazilian market • It can currently distributes pharmaceutical products in the most important pharmacies in the Sao Paulo state (which accounts for 40% of the pharmacy market in Brazil) • Our Brazilian Partner has its own warehouse close to Sao Paulo city that can be expanded Proper assets on needsSource: Analysis TrustPartners based on Brazilian Partner web site and other sources Strategic Partners Group 4 Proprietary & Confidential TrustPartners

BRAZILIAN PARTNER: COMPANY PROFILE (2/2) Description Agreements and • Currently, their existing product portfolio is mainly composed of medical devices product portfolio articles • Many advanced discussions with other international firms will probably integrate the portfolio with: • Medical instruments and Diagnosis tools • Vitamins and food supplements • Plastics disposables and laboratory supplies • Oral electrolyte products Business model • Transport activities around Brazil are committed through sub-contracts arrangements, to dedicated local firms adopted • Our Brazilian Partner has also good relationships with relevant stakeholders in the pharmaceutical industry in Brazil, such as: • The ANVISA, the national certification boureau that control and allows companies to sell their products in Brazil • Several Pharmacy chains, that access Brazilian Partner to the healthcare final marketSource: Analysis TrustPartners based on Brazilian Partner web site and other sources Strategic Partners Group 5 Proprietary & Confidential TrustPartners

BRAZILIAN PARTNER: KEY ASSETS Description • Direct coverage of Sao Paulo market, that represent about Brazilian market know how 40% of the Brazilian overall healthcare market • Possible wider coverage through sub-contracts arrangements Experience in registration • Direct access to registration process due to the strong process relationship with local stakeholders (ANVISA) Strong relationship with • Coverage of the main distribution channels (pharmacies, physicians and wholesalers) local stakeholders Brazilian Partner key assets • Warehouse located in the most important region of Brazil, Proper assets and compliant to the local requirements Immediate availability to • Availability of all requirements needed to start commercial start business and distribution activities • High flexibility in adopting business model proposed by the Flexibility Clients Strategic Partners Group 6 Proprietary & Confidential TrustPartners

INDEX  Our Brazilian Partner  Brazilian market entry opportunity  Local market key points  Market entry strategies  Proposed approach  Next steps Strategic Partners Group 7 Proprietary & Confidential TrustPartners

PHARMACEUTICAL MARKET IN BRAZIL: KEY POINTS • In the last years the Brasilian government has pointed out several actions to get better the pharmaceutical and healthcare market (and improve its image worldwide), through: • Incentives and benefits for manufacturing and/or R&D plants located in Brazil • Public sanitary service enlargement to a wider share of population • Awareness campaigns to the population, based on the most relevant therapeutic areas • Market barriers are still high, due to an heavy taxation and relevant risks of patent protected molecular liberalization, in case of “national emergencies” • No patented products cover a low market share (even if grew up over years) Population: of about 18-20% 190 million Pharmaceutical market value • Distribution channel is highly concentrated among few Operators (the first 2010: 23Billion$ four cover about 60% of the national market): usually they require a fee of 5- Growth rate 2010-2015: 10% based on the total revenues 20-25% • Big pharmacies have a relevant market share in the national retail market; their network controls big part of the most developed regions, in particular in the south-east of Brazil Strategic Partners Group 8 Proprietary & Confidential TrustPartners

THE ANVISA CERTIFICATION PROCESS 6 months 12 months 18-24 months• Cosmetics• Nutraceuticals• Food supplements• Healthcare• Medical devices• Pharmaceutical products Products portfolio has to be defined evaluating the time to market Strategic Partners Group 9 Proprietary & Confidential TrustPartners

INDEX  Our Brazilian Partner  Brazilian market entry opportunity  Local market key points  Market entry strategies  Proposed approach  Next steps Strategic Partners Group 10 Proprietary & Confidential TrustPartners

POSSIBLE ENTRY STRATEGY IN BRAZIL Description Pros and cons • Actions focused to direct create new • Control upon the activities local organization or manage / • Know-how acquisition Own Subsidiary acquire local companies • High costs and risks • Registration issues with ANVISA • Entry Company goals are achieved • Low control upon the Own brand managed through the strategic support of activitiesPossible entry strategy other local pharma Partners by local Partner • No know-how acquisition • These companies sustain Italian • Low costs and investments Company’s activities with investments, know-how and their own resources • Entry Company product portfolio is • Low costs and risks directly managed by local • Short time to market Private label Partnerships with distributors / importers • Low control and interaction with the final market Strategic Partners Group 11 Proprietary & Confidential TrustPartners

ENTRY STRATEGY IN BRAZIL: POSSIBLE APPROACH Italian Company involvement Own subsidiary High • The Italian Company may decide to gradually increase its involvement in theMedium Own brand managed by local Partner Brazilian market based on commercial results or key product strategy management Low Private label Time Products management outsourced Company internal management Strategic Partners Group 12 Proprietary & Confidential TrustPartners

ENTRY STRATEGY IN BRAZIL: KEY FACTOR Description Partner support • Selection of the products based on the time • Regulatory information Time to market to market needed • Registration process may be realized using • Registration process Registration own brand or a private label • Discussion about the availability of the • Co-investing Investments Partner to co-invest in some business area • Evaluation of the market characteristics and • Know-how of the local Local market coverage identification of the areas to be covered market • Supporting local Partner in defining local • Know-how of the local Sales force strategy strategies and tactical decisions market Strategic Partners Group 13 Proprietary & Confidential TrustPartners

IMPLEMENTATION ROAD MAP Long term activity Deal guidelines Negotiation Project set up management Activities • Product portfolio • Support in negotiation • Documentation • Relationship and flow identification based on activities preparing for ANVISA management between the analysis of the • Definition of the licensing process the two involved ANVISA requirements agreement terms & • Development of a parties and the existing conditions control and Brazilian Partner communication system portfolio • Agreement closing between the two parties • Customer targeting and • Know-how handover market analysis and training for the local • Typology and modality sales force of investments • Start up of the marketing activities, for entry Italian Company, versus Opinion leader, Final Clients and Physicians Strategic Partners Group 15 Proprietary & Confidential TrustPartners

IMPLEMENTATION ROAD MAP: PROJECT GUIDELINES Long term activity Deal guidelines Negotiation Project set up management Activities 1. Products “in scope”: • Organization of meetings with our Brazilian Partner • Company’s products classification on the basis of ANVISA criteria • Time to market definition for the different products • Portfolio products identification 2. Market analysis: • Identification of the main regional cluster • Customer Targeting and distribution channels (pharmacies, hospitals and private clinics, stores, …) 3. Commercial agreements between the two parties: • Analysis of current entry Company partnerships for Import/Export activities to find possible solution to be used • Negotiation, with the Partner, about the best commercial solution (with minimum stock, selling on consignment, …) and the product selling price Strategic Partners Group 16 Proprietary & Confidential TrustPartners

IMPLEMENTATION ROAD MAP: NEGOTIATION Long term activity Deal guidelines Negotiation Project set up management Activities 1. Support in negotiation activities 2. Definition of the agreement Terms & Condition: • Legal arguments • Commercial conditions • Products price and margins 3. Documentation development support 4. Agreement closing Strategic Partners Group 17 Proprietary & Confidential TrustPartners

IMPLEMENTATION ROAD MAP: ACTIVITIES SET UP Long term activity Deal guidelines Negotiation Project set up management Activities 1. Legal and regulatory aspects verify: • Analysis of local requirements and constraint for the product distribution • Road map definition • Proper documents development 2. Control activities set up: • Identification of the key phases of the process • Development of a communication and control system 3. Marketing and know-how activities regarding the product: • Organization of training activities, for the Sales force, about the product portfolio • Selection of a list of Opinion leader, medics and other relevant stakeholder, to provide marketing activities Strategic Partners Group 18 Proprietary & Confidential TrustPartners

NEXT STEPS • To verify Company interest in the opportunity • To identify the most effective entry strategy • To organize a first meeting with our Brazilian Partner Strategic Partners Group 20 Proprietary & Confidential TrustPartners

Brasilian market - entry strategies for Italian Pharma Companies

by TrustPartners on Oct 21, 2011

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Brasilian market - entry strategies for Italian Pharma Companies — Presentation Transcript