The rise of a national biopharmaceutical industry in Brazil:

Consolidation, Trends and Challenges.

Non-profit association of eleven brazilian pharmaceutical companies focused on

innovation and development of new products through international standards andhigh-quality research.

GRUPO FARMABRASIL

Upgrading theManagement and Pro-innovation Legal Framework

Increasing accessto medicines

through increasingNational supply

I N N O V A T I O N

GRUPO FARMA BRASIL STRATEGIC GOALS

Consolidation of the National Pharmaceutical

Industry based on the existing portfolio and new Products.

Rise and consolidation of a Brazilian Pharmaceutical Industry

31 3439

13

15

18

2012 2013 2014

Brazilian Pharmaceutical Market (R$ billions)

Non-Retail

Varejo

(31%)

(31%)

(69%)(69%)

50

56

44

(30%)

(70%)

*9%

Source: PMB March 2014, NRC March 2014; (PMB – PPP and NRC – bidding price).

*Growth rate used: CAGR.

Retail and non-retail market

BRAZILIAN PHARMACEUTICAL MARKET

Retail

GLOBAL RANKING

Change in ranking over 5 years Source: IMS World Review 2014

Rank 2008 Index

1 United States 100

2 Japan 27

3 China 14

4 France 13

5 Germany 8

6 Italy 7

7 Canada 7

8 UK 7

9 Spain 5

10 Brazil 4

11 Mexico 4

12 Australia 3

13 Russia 3

14 South Korea 3

15 Turkey 3

16 India 3

17 Greece 2

18 Netherlands 2

19 Poland 2

20 Belgium 2

4

2

1

1

12

1

8

1

4

4

2

4

Rank 2018 Index

1 United States 100

2 China 45

3 Japan 29

4 Brazil 13

5 Germany 10

6 France 8

7 Italy 7

8 UK 7

9 Canada 7

10 Russia 7

11 India 6

12 Spain 5

13 Mexico 4

14 South Korea 4

15 Australia 4

16 Venezuela 4

17 Turkey 3

18 Poland 2

19 Saudi Arabia 2

20 Argentina 2

2

1

1

1

1

2

1

1

1

1

2

1

Rank 2013 Index

1 United States 100

2 China 29

3 Japan 29

4 Germany 13

5 France 11

6 Brazil 9

7 Italy 8

8 UK 7

9 Canada 7

10 Spain 6

11 Russia 6

12 India 5

13 Mexico 4

14 Australia 4

15 South Korea 4

16 Turkey 3

17 Venezuela 2

18 Poland 2

19 Argentina 2

20 Belgium 2

1

1

1

1

4

2

1

2

4

2

4

1

1

4

1

8

1

24.0427.00

28.50 29.0831.82

0.00

5.00

10.00

15.00

20.00

25.00

30.00

35.00

2007 2008 2009 2010 2011

Billions

Source: IBGE – Annual Survey of Industry from 2007 to 2011

P.S.: 2011 is the last data publicly available.

Growth (CAGR)

5,77%

BRAZILIAN PHARMACEUTICAL INDUSTRIAL PRODUCTION

GROSS VALUE OF PRODUCTION

Creation, maintenance and expansion of supporting policies

BUILDING AN INDUSTRY

Creation ofAnvisa

GenericDrug Law

Patent Law

36% of national

production of medicines

53% of national

production of genericdrugs

The share of brazilian companies in the ranking of thetop tem corporations went from 4,7% in 1998 to25,11% in 2013, growing nearly 435%.

15 years

New level of the brazilian industry

BRAZILIAN RETAIL RANKING

Market Share in Brazilian Retail Market

CorporationMarket Share

CorporationMarket Share

1998 2013

Novartis 6,30% GRUP SANOFI 9,18%

Roche 5.5% EMS CORP 7,81%Bristol Meyers Squibb 5.4% HYPERMARCAS 7,50%

Hoechst Marion Roussel 5.2% ACHÉ 5,66%

ACHÉ 4.7% NOVARTIS CORP 5,36%

Janssen Cilag 3.7% PFIZER CORP 4,55%

Boehringer lng. 3.7% EUROFARMA 4,14%Glaxo Wellcome 3.5% BAYER CORP. 3,61%

Scheding Plough 3.2% GLAXOSMITHKLINE 3,16%

Eli Lilly 3,00% TAKEDA PHARMA CORP 3,13%

Demais empresas 55.5% Demais empresas 45,90%

Source: Callegari (2000) for 1998 and IMS Health for 2013

* Data considering PPP.

Reference, similar and generic drugs, fitoterapeutical and biological medicines,

biossimilars, and API.Portfolio:

40 thousand direct jobs and around 150 thousand indirect jobs

Jobs:

R$ 6 billion in the last 5 yearsInvestment in new factories and new

facilities:

Bionovis, Orygen Biotecnologia, Cristália Biotec, Libbs Biotec (factory 2014-2016: R$ 2 billion)

and Hebron Biotec

Investment in Biotechnology:

GRUPO FARMABRASIL TODAY

0.79%

2.39%

6.00%

0.40%0.72%

1.11% 1.27%1.01%

1.39%

0.00%

1.00%

2.00%

3.00%

4.00%

5.00%

6.00%

7.00%

Brazil Pharmachemicaland

pharmaceuticalproducts

GrupoFarmabrasil

Mining andquarrying

Manufacturingindustry

Chemicals Computerequipment and

peripherals

Machinery,appliances and

electricalequipment

Cars, buses andtrucks

% of net income invested in R&D

Source: IBGE, Diretoria de Pesquisas, Coordenação de Indústria, Pesquisa de Inovação Tecnológica 2011.

GRUPO FARMABRASIL

PINTEC (2011): 458 companies from

pharmaceuticalsector

Clinical Trials in progress by one associate of Grupo FarmaBrasil

Source: Libbs

GRUPO FARMABRASIL

95 3691010

1804

3815

6056

2008 2009 2010 2011 2012 2013

Number of patients involved in clinical trials sponsored by Libbs

Expansion to American Continent

FOUNDATIONS FOR THE FUTURE

Eurofarma Colômbia/Fábrica MSD

Eurofarma Peru

Eurofarma Chile

Cristália/IMA

Eurofarma Argentina

Eurofarma Uruguai

Hebron USA

Brace Farma (EMS)

*Biolab has begun its internationalization to USA.

Hebron Del Peru

Eurofarma Bolívia

Eurofarma Centro-América

Exports from Grupo FarmaBrasil to the World

FOUNDATIONS FOR THE FUTURE

New Path and Trends

Growth (CAGR)

9,08%

Biotechnology Conventional

Source: EvaluatePharma World Preview 2014

0

200

400

600

800

1000

1200

490 533 573 581 593 624 600 589 606 632 660 690 717 746 774

79 94 108 116127 141

152165

181 197215 233

252272 291

Conventional Biotechnology

Growth of Biologic market

GLOBAL PHARMACEUTICAL MARKET IN US$ BILLIONS

Forecast to 2020: US$ 291

billion (27% share in total

sales).

Growth (CAGR)

3,09%

Biotechnology

New Path

New Skills

Manufacturing Plants

(biologics)

Biosimilars

New Biologics

Synthetic drugs

Continued path

Accumulated experience

and skills New Molecules

2013

Incremental Innovation

Certified GMP manufacturing

facility

Generic Drugs

2003

Paths drawn by BNDES

VISION OF THE FUTURE OF BRAZILIAN PHARMACEUTIRCAL INDUSTRY

Source: Pedro Palmeira/BNDES

Source: IBGE – Annual Survey of Industry; Sistema Alice (MDIC).

The population ageing stimulates the rise of the demand in the

health sector in Brazil

Changes in the epidemiological

profile

Prevalence of chronicand neurodegenerative

diseases

Increase in the per capita

HealthcareSpending

Demographic changes: new opportunities

POPULATION AGEING

Population Aging in Brazil

Fonte: IBGE

Healthcare Spending by Age Group (US$/Capita)

Fonte: IBGE

Years

>80 Years

70–79 Years

60–69 Years

50–59 Years

40–49 Years

30–39 Years

20–29 Years

10–19 Years

0–9 Years

25 15 5 5 15 25 15 5 5 15 25

Men Women Men Women

Life Expectation will Increase to 72 years (2006) to 76 years (2020)

Expanding access to medicines will increase procurement ofbiotech medicines.

Units X R$ sales

PUBLIC PROCUREMENTWITH BIOTECHNOLOGY DRUGS

3.70%

96.30%

Units

Biopharmaceuticals Pharmaceuticals

31.97%

68.03%

Reais(R$)

Biopharmaceuticals Pharmaceuticals

Public Procurement of medicines - Ministry of Health: 2010

LIBBS BIOTECNOLOGIA

BIONOVIS

HEBRONBIOTECNOLOGIA

CRISTÁLIABIOTECNOLOGIA

ORYGEN BIOTECNOLOGIA

Response of brazilian industry to national health needs

GRUPO FARMABRASIL AND THE BIOTECHNOLOGY

PRODUCTIVE DEVELOPMENT PARTNERSHIPS (PDPS)

GRUPO FARMABRASIL IN THE PDP PROGRAM

36 Partnerships for developing and

producing Biologic Drugs

25 biologic drugs including second

and third-generation biologic drugs

Currently procurement of these drugs

is around R$ 1,8 billion

Savings of R$ 225

millions/year

cancer

rheumatoid arthritis

diabetes

surgical tissue adhesive

growth hormone

allergy vaccine

Source: Brazilian Ministry of Health

Deficit reduction on trade balance of US$

900 millions

PRODUCTIVE DEVELOPMENT PARTNERSHIPS (PDPS)

GRUPO FARMABRASIL IN THE PDP PROGRAM

Data of june/2014

0 5 10 15 20 25 30 35 40

Outras Empresas

Aché

Cristália

Bionovis

Orygen

Libbs

Eurofarma

EMS

Supera

PDPs – Biologic and Synthetic Drugs (GFB)

Synthetics Biologics

* Baxter, Biocad, Biocen, Biomm, Blanver, Apotex, Bristol, Boehringer, Chemo, Chron Epigen, GSK,

Ideen, IGL Group, Indar, Laborvida, Injerflex, Lupim, Lifemed, Microbiológica, MSD, Novartis, NPA, NT

Pharma, Pfizer, PharmaPraxis, Roche, Sanofi, UCB Pharma.

PRODUCTIVE DEVELOPMENT PARTNERSHIPS (PDPS)

GRUPO FARMABRASIL IN THE PDP PROGRAM

58%

42%

Partneships

Grupo FarmaBrasil Other partners

Data of june/2014

Challenges

TRAINNING HUMAN RESOURCES

CHALLENGES TO BIOTECH DEVELOPMENT IN BRAZIL

Need of training future biotech factory

operators;

Human Resources are scarce in some

intermediate stages of the drug

development process, such as preclinical

studies, scaling up and manufacturing pilot

batches;

Need of adapting biotechnology graduation

programs to meet industrial needs.

PUBLIC HEALTH EXPENDITURE

CHALLENGES TO BIOTECH DEVELOPMENT IN BRAZIL

Public Health Expenditure/PublicHealth Expenditure in Brazil*

Populations/Brazilianpopulation (2011)

USA 10,87 1,58Switzerland 9,96 0,04

France 6,24 0,33Germany 6,12 0,40Ireland 6,09 0,02Japan 5,03 0,64

United Kingdom 4,98 0,32Spain 3,81 0,24

South Korea 1,84 0,25Brazil 1,00 1,00Russia 0,76 0,72China 0,24 6,80

Some countries have 40% of Brazilian population but spend sixtimes more than what Brazil spends.

Source: World Bank

* Average of 2004 to 2012.

PUBLIC HEALTH EXPENDITURE

CHALLENGES TO BIOTECH DEVELOPMENT IN BRAZIL

0

1

2

3

4

5

2003 2004 2005 2006 2007 2008 2009 2010 2011 2012

Health Expenditure GDP (R$ Trillion)

7% 7,1% 8,2% 8,5% 8,5% 8,3% 8,8% 9% 8,9% 9%

Growth rate 14,44%

Public Health Expenditure x GDP (Brail)

IMPROVING REGULATION FOR BIOTECH DRUGS

CHALLENGES TO BIOTECH DEVELOPMENT IN BRAZIL

Open the opportunity for the companies to discuss their Plans for developing

biotech drugs with the regulatory agency, ANVISA, assuring more legal and

regulatory certainty to the undergoing investments.

Regulate “Good manufacturing practices (GMP)”, specifically to biological

drugs.

Elaborate Guidelines for Registration and Post registration of biological

drugs.

ACCESS AND BENEFIT SHARING IN BIODIVERSITY

CHALLENGES TO BIOTECH DEVELOPMENT IN BRAZIL

Brasil – highest biodiversity

Efforts of conservation and sustainable use

Opportunity (innovation and income generation)

Manufacture fitoterapeutical

drugs

ACCESS AND BENEFIT SHARING IN BIODIVERSITY

CHALLENGES TO BIOTECH DEVELOPMENT IN BRAZIL

Reviewing the legal framework for ABS (Access and Benefit Sharing)

Priorities

Have better knowledge about biodiversity in order to protect it

Incentivate research, develpment and Innovation (access)

Enhance Traditional Knowledge

Promote bioindustry and productivity of manufacture sector

System debureaucratization

Make benefit sharing effective

Focus on biopiracy

Reginaldo ArcuriExecutive President

Adriana Diaferia Executive Vice President

+55 61 3224-2003

contato@grupofarmabrasil.com.br

SBS, Quadra 02, Bloco E, nº 12, 15º andar, Salas nº 1501 e 1502,

Edifício Prime Business Convenience, CEP 70.070-120 - Brasília/DF

THANK YOU