BRAZILIAN HEALTH CARE SECTOR BRINGS OPPORTUNITIES FOR WASHINGTON STATE COMPANIES

brasil_saudeWalter Benadof*

The doors have finally opened for foreign investment into the healthcare sector of Brazil. After a long period of protection, the Brazilian Congress finally approved a law allowing foreign investment in Brazilian hospitals.

This event was an important milestone in response to large investment demands in the Brazilian private health care industry where foreign investments had already been permitted in the pharmaceutical, health diagnosis and health insurance plan sectors.
There are many reasons why Brazil is a very important player in health. The country has the 6th largest economy in the world with more than 150 million middle class people. Its GDP is close to 3 trillion dollars, or the equivalent of California, Oregon and Washington combined.

 

Brazil is the largest market for medical equipment in Latin America, with the general healthcare industry making up around 8.6% of the GDP. Also, Brazilian medical product revenues have shown a 15%-20% increase per year with the United States accounting for 30% of the import market for these products.

 

On the other hand, Brazil is recognized as one of the main hubs for inexpensive plastic surgery, having the 3rd largest market, behind the United States and China. The cosmetic sector alone represents $49 billion, the 2nd largest market in the world.Overall, the market size for pharmaceuticals represents $27 billion. The US total market for medical equipment in Brazil should continue to expand 10% through 2015.

 

According to a Datafolha, an important survey company in the country, having a healthcare system that functions properly is the third most important priority for Brazilians,  following behind home ownership and quality education. For 77% of those who answered the survey, the values with which this private sector operates are discouraging.The public healthcare system, or SUS, is perceived as too time consuming and lacks quality equipment and doctors in some regions of the country.

 

Subsequently, from January 2004 to January 2014 there has been a 57% increase in the number of people that use some kind of private health care service: this number increased from 32 million to 50 million. This also reflects that the majority of the Brazilian population is now advancing to the middle class.  Currently Brazil has the second-largest private insurance market by population in the world (after the United States).

 

Leaders in the industry have seen a shift in investor behavior towards this sector in Brazil. Since the recent initiative by the Senate to open up the healthcare industry last year of  and the recent disparity in the exchange rate that makes investments more attractive, I have seen a lot of inquiries from local health care companies looking for business opportunities in Brazil.
These considerations were mentioned recently during the symposium promoted by the U.S. Department of Commerce’s Seattle U.S. Export Assistance Center here in Seattle that I took part in. Mr. Jefferson Oliveira, a Commercial Specialist responsible for health care and medical devices was a key speaker at the “Doing Business in Brazil:  A Spotlight on Healthcare and Medical Equipment” program organized by the Washington State District Export Council, highlighted the excellent opportunities Washington State companies could explore down there.
Brazil has the largest market for medical equipment in all of Latin America.  However, the United States is 10-15 years ahead in terms of R&D and overall technological prowess in the medical equipment industry.  This means that companies in the United States looking to move their technologies to Brazil will already be far ahead of the competition and will have the benefit of having a currency exchange rate beneficial to American investors that has not  been seen since 2005.

 

Of the more than 6,800 hospitals in Brazil, 69% of them are private, with only 38% of the hospital beds available under Sistema Único de Saúde, otherwise known as SUS.  From the portions of the GDP contributed by the health industry, 54% of it is derived from investments made by the private sector.
Foreign investment in Brazil’s hospitals is likely to accelerate the professionalization of hospital management practices across the country, with significant improvements in the cost efficiency and overall quality of care. The best current prospects for investment are in the home care products, disposables, high tech equipment, orthopedics, as well as implants, cardio and in vitro.
Of course no opportunity comes without its challenges, especially when it comes to investing in a country with a whole different set of cultural norms but the possible rewards are insurmountable at this time.

 

*Mercosul Ventures CEO

Winning WSU Team Heading to Manaus

 

Greetings from Washington State University!

 

Thank you, first of all, for assisting us with our visa dilemma.  Abbi is EXCELLENT, and will do all she can to ensure that we obtain our visas for our upcoming visit to Brazil.  I have had the privilege of coordinating WSU’s Global Case Competition for the past 4 years.  It is a wonderfully engaging completion that allows students from all majors, graduate and undergraduate students, and domestic and international students to interact on small intentionally diverse teams to create innovative solutions to complex global issues.

 

The students traveling to Brazil in November represent the winning team for the 2015 competition!  Their solutions to the problem of plastic waste in Manaus, Brazil took first place.

 

Our time in Brazil will enable the students to see first hand the extent of the problem and to evaluate the extent to which their solutions are viable.  We will be vising schools, recycling centers, and participating in trash collection efforts with those who do this work for a livelihood.

 

Please don’t hesitate to let me know if you would like more information.  If you want to know more about pervious competitions, please go to https://ip.wsu.edu/on-campus/overview-schedule/

 

Take care, and as we say at WSU GO COUGS!

 

-Christine Kay

Brazilian Mayor Joins IRBC in Seattle

 

The International Regions Benchmarking Consortium is a network of sophisticated city-centered metropolitan regions that find it mutually beneficial to compare and learn from each other through data sharing, in-depth research on issues of common interest, and face-to-face interactions among member region representatives. Every other year a conference is held in one of the member regions on a mutually agreed upon theme with each region bringing a small delegation to the conference. This year the conference is taking place in Seattle from September 16 – 18 held around the theme of cities and how technology is impacting them. In recent years startup companies such as Ubber, Lyft, and Airbnb have all changed the way citizens of cities all across the globe function. During non-conference years, the key staff in each region gather to plan IRBC activities and prepare for the next year’s conference. This year we are honored to host the mayor of Belo Horizonte, Marcio Araújo de Lacerda, at this conference. The conference will serve as a great way for Belo Horizonte to become up-to-date in the IRBC. All the member regions that comprise the IRBC are excited to have Belo Horizonte join the Consortium. The IRBC is one of the few metropolitan region organizations that includes Asia, European and North American participation and they are excited to have South America represented this year in Seattle.

 

Investing In Brazil

NEW YORK via – (TheStreet) — Some big investors are looking to buy assets on the cheap in Brazil because the stock market is down 25% off its highs in 2011 and Brazil’s currency, the real, at its lowest level versus the U.S. dollar since 2005.

Among investors taking an interest is John Tsui, managing principal of Peninsula House. Tsui cited both Brazil and Spain as places where he is especially interested in investing at the moment due to plunging asset prices.

Brazil

That’s not surprising to Scott Bok, CEO of investment bank Greenhill & Co. (GHL) , which entered Brazil a year ago with the opening of an office in São Paolo.

“The smart money is going to look and say ‘everything is marked down,’ and if I’m a U.S. dollar investor or an investor with any other currency and I’m looking to expand in Brazil it’s a pretty interesting time to do it,” Bok said.

Among factors contributing to Brazil’s weakness is an overly interventionist government and a sharp selloff in commodities, according to Peter Lannigan, head of emerging markets strategy at CRT Capital Group.

Also, as with most emerging markets countries, corruption is a major risk. On Monday, Brazil’s comptroller Jorge Hage charged with fighting corruption, resigned amid a widening bribery scandal implicating Brazilian energy giant Petrobras (PBRGet Report) and the Workers Party of recently reelected Brazilian President Dilma Rousseff.

While Lannigan doesn’t see Rousseff shifting meaningfully to a more business-friendly stance during the remainder of her time in office, the analyst still likes Brazilian equities and currencies in the long term. However, Lannigan sees dollar-denominated Brazilian debt as too pricey on a risk-adjusted basis, in concert with other dollar-denominated sovereign and corporate debt generally.

The performance of Brazil’s stock market, Bovespa, is weighted heavily toward commodities. Just two companies –Petrobras and mining concern Vale (VALE) — comprise 17% of the Bovespa index by market cap.

The iShares MSCI Brazil (EWZ) , an exchange-traded fund, is more heavily weighed toward the financial sector. It was down 3.25% in late trading Monday. Not as bad as U.S.-listed shares of Vale (down 3.70%) or Petrobras (down 6.18%), but hardly what one could consider decoupled from the energy sector.

Investors interested in looking further at Brazil while steering clear of energy may want to look at other U.S.-listed Brazilian stocks.

Unlike many other countries that are net exporters of commodities, Brazil’s economy is well-diversified as a result of postwar policies encouraging such diversification, according to CRT’s Lannigan. Lannigan says American Depositary Receipts of Brazilian companies generally track closely with how the shares trade on the Bovespa.