COVID-19 and the Brazilian Pharma Supply Chain

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The editorial team at Panorama Farmaceutico explain how the COVID-19 pandemic and global trade flow stoppages are impacting the manufacture and supply of medicines within Brazil.*

 

The COVID-19 pandemic has again brought to the fore Brazil’s need to reduce its dependence on active pharmaceutical ingredients (APIs) from abroad. Brazil imports 95 percent of raw materials for the manufacture of medicines and, with an escalation in freight prices and a rise in the dollar, the Brazilian pharmaceutical industry is beginning to feel the impact on production costs.

According to the Pharmaceutical Products Industry Union (Sindusfarma), the Brazilian pharmaceutical industry is facing the dual challenge of trying to contain the coronavirus pandemic while dealing with enormous cost pressures.

“The rise in the dollar has made importing APIs more expensive and also increased logistics costs, due to the reduction in air traffic, with the consequent increase in freight costs. In addition, it caused significant increases in the prices of raw materials, inputs and finished products from the laboratories,” says Nelson Mussolini, executive president of Sindusfarma.

According to data from the Ministry of Economy, in 2019, goods exported and imported by air to and from Brazil totalled USD 45.6 billion. Pharmaceutical products transported by air totalled USD 6.4 billion in the same time period.

For Mussolini, what exacerbates the situation even more is the freeze in the annual readjustment of drug prices for 60 days. This government decision prevented the pharmaceutical industry from restoring part of the cost increases prior to the pandemic. This fact has raised concerns among executives of the large pharmaceutical retailers who fear a shortage of drugs amid the peak of the pandemic if the readjustment is postponed. The Pharmaceutical Panorama highlighted the matter on May 18th.

According to the Retail Trade Unions of Pharmaceutical Products of Bahia (Sincofarba) and Espírito Santo (Sincofaes), medicines for the treatment of hypertension and hyperthyroidism are already in short supply in some pharmacies. These include losartan, omerzartan, valsartan, all aimed at treating high blood pressure.

 

Import Bottlenecks

For the Brazilian Association of Logistic Operators (ABOL), the crisis of the new coronavirus opened the bottleneck found in the import of raw materials for the production of medicines produced in Brazil. “It is estimated that the Brazilian pharmaceutical industry has faced difficulties in importing at least 31 tons of inputs used in the production of 23 medicines, including some that are being tested by national scientific authorities,” evaluates CEO Cesar Meireles.

The problems arise from the increase in world demand for these inputs and barriers imposed by producing countries. The main bottleneck currently involves India, which has restricted the export of at least 26 inputs and has also reduced industrial production due to restrictions on the movement of people to try to contain COVID-19.

Another obstacle encountered by logistics operators is the increase in air freight, due to the reduction in flights by airlines. “Most cargoes started to be operated as emergency shipments and the practice of suspending the payment of indemnities in case of non-performance of services was established. This new situation has demanded that agile logistics operators find, in other modes of transport, the option of displacement,” adds Meireles.

 

* This is a translation of an article originally published May 25th 2020 in Panorama Famaceutico here (Portuguese).

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