BRIC nations medical device industry outlook: Brazil (Part 2 of 2)
Brazil finances its healthcare expenditure as per the following graph.
Around 50% of the country’s expenditure is publicly financed, 25% is financed via private insurance, and 30% is individually paid. Public financing and private insurance have been trending upward, while self-paying insurance has been decreasing. Brazil increased its private insurance utilization by 3% between 2003 and 2010, to 22%, with more than 75% the Unifed Health System of Brazil. Healthcare offered via the public sector is reputed to be inefficient, driving up demand for private insurance. Accordingly, the richest 15% make up 40% of healthcare expenditures. On average, private consumption is responsible for 85% of medical device utilization, a plus for the industry.
The upward trends of the healthcare market show that Brazil is positive for the medical device industry, suggesting rapid increases in demand as more and more people can afford the devices and pay accordingly.
ANVISA, the Agência Nacional de Vigilância Sanitária, is the regulatory body that controls medical device imports. It has established its own regulatory standards as well, creating a proprietary quality inspections test even more stringent than international standards. Proposals have been suggested for the organization to approach a tier-testing approach, making testing less stringent for lower-tech products versus higher-tech products.
The device registration process takes around ten months in the country and registration is valid for five years. The cost of registration ranges from $1,000 to $12,000.
Procedure volume in Brazil is growing exponentially, following lawsuits by patients demanding coverage for more and more complex procedures.
Very recently, Brazil began monitoring procedure volume in select areas. Utilization rates are as follows.
- Total hip replacement rate—around 28 per every 100,000 people (one-fifth of the U.S. utilization rate)
- Knee replacement rate—even smaller, at 11 per every 100,000 people (one-twentieth of the U.S. utilization rate)
Expect these rates to increase as courts look to adjust the high-tech healthcare rights of all citizens in the near future.
The healthcare system in Brazil is gradually improving and becoming more accessible. As this occurs, the demand for medical devices is supposed to grow dramatically. Resource constraints for public financing exist, but look for private buyers to supply a large amount of demand for high-quality devices. Procedure volume rates in comparison to the United States show significant room for improvement, and they should rise, driving up demand. Risks for healthcare expenditure and reimbursement lie heavily in the country’s poorly performing currency. The real reached a 4.5-year low as the United States pulled back on its quantitative easing policy. Weaker currency reduces the purchasing power of hospitals and states, reducing demand.
Browse this series on Market Realist:
- Health Care Industry