AmerisourceBergen to invest $100M in Brazilian drug-distribution firm

AmerisourceBergen, a pharmaceutical wholesaler. (George Widman / AP)
AmerisourceBergen, a pharmaceutical wholesaler. (George Widman / AP)
Posted: March 26, 2014

Pharmaceuticals wholesaler AmerisourceBergen resumed its expansion into foreign markets Monday, saying it will invest about $100 million for a minority stake in a leading distributor in Brazil, Profarma Distribuidora de Produtos FarmacĂȘuticos S.A.

AmerisourceBergen, headquartered in Valley Forge, is the second largest distributor of prescription medicine in the United States, as measured by revenue. Brazil is the world's fifth most populous country, with about 200 million people, so there is opportunity, but also immense challenges.

"We are very excited to partner with Profarma as we continue to expand our reach into growing international markets," AmerisourceBergen's chief executive officer, Steven H. Collis, said in a statement. "With its long-term macroeconomic growth outlook, favorable demographics, and increasing access to health-care services and specialty pharmaceuticals, the Brazilian market affords us a tremendous opportunity to expand our international offerings.

"Profarma's success in the wholesale distribution, chain and independent retail, and specialty markets, combined with our expertise in specialty distribution and manufacturer services, provides a compelling opportunity to shape the delivery of health care in Brazil."

AmerisourceBergen is following other U.S.-based drug and medical-device companies hoping to capitalize on growing health-care demand in emerging markets. Jose Almeida, CEO of device-maker Covidien, said in a recent PricewaterhouseCoopers report that 15 percent of his company's sales come from emerging markets.

But not all products and services translate into profits in every new locale. Although some argue that high-quality health care should be available in every country and that such services should be delivered at cost on humanitarian grounds, shareholders of for-profit companies expect returns on investments.

In its 2013 annual report filed with the Securities and Exchange Commission, drugmaker Pfizer wrote, "In several Latin American markets, Pfizer continues to face revenue pressures due to government policies aimed at health-cost containment," and mentioned pricing reforms in Brazil.

One paragraph later, Pfizer mentioned its challenges with a market closer to home: "In Canada, introductory 'non-excessive' prices and price increases are controlled" by a federal agency, but provinces also are making efforts to pay less for drugs.

AmerisourceBergen sold its Canadian core-pharmaceuticals subsidiary in 2013 at a loss of $143 million, according to an SEC filing, but kept the specialty-pharma business.

Besides new Brazilian concerns about drug costs, AmerisourceBergen faces other challenges there, such as the condition of roads in the interior and between major cities. Delivering specialty medicine is easier, cheaper, and likely more profitable, with established transportation networks.

In the AmerisourceBergen statement on the joint venture, Profarma CEO Sammy Birmarcker said he hoped his company and his country would benefit from access to new medicines, equipment, services, and practices that currently do not exist in Brazil.

"We hope the country will soon be able to benefit from the technological advances that are already available to the specialty pharmaceutical distribution industry in more evolved markets abroad," Birmarcker said.


dsell@phillynews.com

215-854-4506 @phillypharma

www.inquirer.com/phillypharma

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