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Brazilian pharmaceutical industry and generic drugs policy: Impacts on structure and innovation and recent developments

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  • Thiago Caliari
  • Ricardo Machado Ruiz

Abstract

When generic drugs were introduced into the Brazilian market, the main aim was to decrease prices and minimize public health expenditure. However, in addition to this effect, this policy brought about unintended changes to the industrial structure. In this paper, we evaluate the unplanned impacts from the introduction of generic drugs, particularly with respect to the business scale and innovation. Our main results show a large increase in market share in favor of domestic companies, but just a small increase in R&D expenditure and innovation within those companies. Such an increase in the business scale represented a window of opportunity for national firms, but the recent mergers and acquisitions by foreign firms have challenged their position. The weak competitiveness of domestic firms stems from their poor technological capabilities, which are an outcome of a successful ‘demand pull’ industrial policy without the support of a ‘technological’ industrial policy.

Suggested Citation

  • Thiago Caliari & Ricardo Machado Ruiz, 2014. "Brazilian pharmaceutical industry and generic drugs policy: Impacts on structure and innovation and recent developments," Science and Public Policy, Oxford University Press, vol. 41(2), pages 245-256.
    • Handle: RePEc:oup:scippl:v:41:y:2014:i:2:p:245-256.
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    File URL: http://hdl.handle.net/10.1093/scipol/sct053
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