Technology

Jordan King-Lacroix

May 8, 2017
8:00 am

Brazil’s MedTech Industry Could Repair its Frail Economy

Brazil has made some amazing headway in medical technology (MedTech), which is putting them in a good position to improve their GDP growth. Currently, Brazil has some of the slowest GDP growth in Latin America, with only 0.5% expected in 2017[i], putting it just ahead of the devastating -1.9% contraction Venezuela is currently suffering. This is despite the fact that, overall, Brazil the ninth largest GDP in the world, worth approximately $1.8 trillion USD[ii], and the world’s fifth most populated country, with 208 million people.

That’s a lot of bandages and saline.

Brazil is one of the most lucrative healthcare and MedTech markets in Latin America, and is considered one of the top five attractive “medical tourism” destinations in the world. That’s pretty impressive when you consider that most tourists go exclusively for the delights of Carnival.

“Medical tourism is where people travel to a foreign nation to receive medical treatment.”

Higher standards of living in the nation are leading to increased healthcare expenditure[iii]. Brazil is able to provide 95% of their own domestic market in medical supply products, and are also in demand, and fully capable, to supply to large nations like the US, China, Mexico, and Colombia. The business generates approximately 60,000 jobs, and exports brought in around $560 million USD in 2016. The profitability of the industry has attracted the attention of foreign investors, like health device companies in the US, Germany, China, and Japan.

MedTech companies in Brazil are investing in, and are encouraging, innovation in a competitive environment. Brazil has recognized that investing in technological innovation leads to significant financial gains for the country as a whole.

“Brazil has been maturing and we understand that in the present, dynamic global state of competition investing in innovation becomes our reality.” Clara Porto, ABIMO’s head of marketing and exports, explained. ABIMO is the Brazilian Medical and Dental Devices Manufacturers Association.

Staying “dynamic”, though, isn’t always easy to do. Despite this increased spending in healthcare, Brazilian health insurers have lost over two and a half million customers in the past year[iv]. This was either because the customers couldn’t pay their premiums anymore or lost their jobs and benefits. In the Brazilian employment system, employers can offer a lower wage, making up the difference with benefits, including paying large portions of their employees’ healthcare, transport, and living costs.

Many people now have to resort to using the country’s already burdened public health system, or are looking for low-cost, walk-in clinics. Due to the economic crash, the government is considering doing away with universal healthcare altogether, replacing it with a US-style system of compulsory insurance[v]. While this system may be working with varying degrees of success in the USA, the people of Brazil may not be able to afford it due to the economic downturn, as well as their lower wages.

In fact, it could be catastrophic for the 19.2 million Brazilians living on under $3.10 USD per day, as well as the growing middle class who rely on the public health system.

Only approximately 20–25%[vi] of the population can afford private healthcare, which results in better service and shorter wait times. Poorer municipalities are still facing funding problems and, as a result, some clinics are using outdated and sparse medical tools, while dealing with unsanitary conditions and overcrowded facilities. Even in the face of this, health insurers say that charging less for services “is not an option”.

“The costs are increasing and the income is decreasing,” Abramge insurance company Executive Director Antonio Carlos Abbatepaolo said. “So the profit margins are very, very tight at this moment.”

There are some projects aimed at making private healthcare more affordable in-country, but there still needs to be a radical shift in the way the public insurers are funded. Inadequate funding was originally correlated to problems in the basic health infrastructure and staff shortages[vii], but now appears to be as a result of a drop in oil revenue[viii].

Getulio Vergas Hospital, Rio de Janeiro was among one of the worst hit by the budget shortfall. Due to lack of resources, the nurses had to resort to putting boards up over the doors to prevent people from entering.

“We didn’t even have saline,” a doctor, interviewed by Al Jazeera who preferred not to be named, said.

“Saline is a basic material for hydration, for various conditions, and which is fundamental for basically every consultation. So when you don’t have saline or sutures, and an emergency comes in or someone who needs operating on, I don’t have the means to do it. It reached a point of total bankruptcy.”

Imagine if your local hospital told you, “Sorry, we’re out of room and have no bandages, just sit outside and hold this t-shirt to your wound.” There would be riots in the streets. The fact that the situation had been allowed to become that bad is indicative of a wider issue.

An emergency council was convened under President Dilma Rousseff – who gave up her seat to Michel Temer in an April 2016 impeachment process – and immediate emergency funding was approved for the hospital, but this is only putting a bandage on a festering problem. A major issue appears to be corruption and “misappropriation of funds”. Last year, prosecutors in Rio found that $12 million USD of public funds had been misappropriated through not-for-profit organization Biotech Humanas.

“What we are seeing is this amazing display of completely widespread corruption, and this is poisonous,” former central bank chief Arminio Fraga said[ix].

“At the moment there is no visibility, there is a massive lack of trust in politics, on politicians.”

This lack of trust is problematic, especially as the government attempts to pass new austerity measures, which may result in increased taxes for the population. Fraga has been “preaching the need to [cut] government expenditures” for a long time, but does not see that happening anytime soon.

Forget the Band-Aid solution, it all comes down to the numbers. The fact that Brazil went from an almost double-digit contraction in their GDP to projected positive growth is nothing short of remarkable. Couple that with their burgeoning, lucrative MedTech industry, and you have the makings of a boom. If certain factors within the Brazilian economic sphere can be curtailed, then Brazil’s healing process can begin, unshrouded by a “legacy of sadness”.

 


[i] Kenneth Rapoza for Forbes, “Brazil is the Slowpoke of Latin America”, April 17, 2017.

[ii] Business Wire, “Brazil Hospitals and Outpatient Care Centres Market Report 2017 – Research and Markets”, April 26, 2017.

[iii] Medical Plastics News, “What’s behind Brazil’s medtech success?”, March 30, 2017.

[iv] Paulo Cabral for CGTN America, “Recession hits Brazil health industry where it hurts”, April 3, 2017.

[v] International Medical Travel Journal, “Brazil to Dismantle Universal Healthcare System”, August 31, 2017.

[vi] Enrico de Vettori for Deloitte, “2015 health care outlook: Brazil”, 2014/2015.

[vii] World Health Organization, “Brazil’s march towards universal coverage”, September, 2010.

[viii] Donna Bowater and Priscilla Morales for Al Jazeera, “Brazil’s ‘broken’ healthcare system”, February 5, 2016.

[ix] Cristiane Lucchesi for Bloomberg, “Former Brazil Central Banker Says ‘Political Clouds’ Slow Growth”, April 24, 2017.

 

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