Market Opportunities – Catheters
The world market
Brazil is the second major producer of medical devices among emerging countries, behind China. According to a survey by the World Health Organization (WHO), Brazilian Industry has achieved US$ 2.6 billion last year in this sector. The country is in a leading position compared to Mexico, India, and Turkey that occupy third to fifth place.
The global catheter market amounted to US$14.5 billion in 2008, and was projected to increase to nearly US$18 billion in 2009. It is expected to reach US$32.1 billion in 2014, for a 5-year compound annual growth rate (CAGR) of 12.3%. The market’s cardiovascular segment is the largest with sales of $6 billion in 2008. This is projected to increase to US$7.1 billion in 2009, and to rise at a CAGR of 10.2% to US$11.6 billion in 2014.
The Brazilian Market
The vascular delivery (vascular access) device market in Brazil is valued at nearly US$ 59 million, driven by the increased access to healthcare provided to low- and middle-income families in Brazil, the vascular access device market is estimated to reach over US $100 million by 2019.
Recent growth is primarily due to the increasing size and age of the Brazilian population, also the increased access to medical devices and procedures as their overall economy strengthens. The vascular access device market in Brazil includes peripherally inserted central catheters (PICCs), central venous catheters (CVCs), implantable ports, port or Huber needles, dialysis catheters, and syringes and needles. The PICC, dialysis catheter, and total conventional implantable port market are the fastest-growing, however overall growth is being influenced by imposing government policies and import tariffs.
General Health Sector Considerations
The total market in Brazil is divided between manufacturers, whose products are reimbursed by the National Insurance, Sistema Unico de Saude (SUS) and those insured privately. Thus the market is split between public and private healthcare systems. Both of the public and private markets receive financial assistance from the government. The Brazilian government has been steadily increasing the budget devoted to the healthcare sector, but these increased expenditures have not kept up with demand, limiting the overall market growth. There is a wide price gap between the two sectors where average selling prices (ASP) in the SUS system are much lower than prices in the private sector. Prices are stable in the public market since they are standardized so that all competitors are confined to the same price. However, ASPs have been moderately declining in the private market as competitors undercut one another. Thus the overall ASPs will continue to decline at a moderate rate over the next few years.
The Brazilian government has also expanded mandatory coverage policies while imposing limitations on how much the price of existing policies can be increased. These actions have caused service providers to raise the price of new policies in an attempt to recoup costs. Due to the increased price of these new policies, it is expected that people will migrate from private plans to public plans. This migration places financial stress on the market and will limit future growth.
Import duties
The imports of catheters into Brazil (HS code: 901839 Needles, catheters, cannula and the like) bear an import tariff of 16%.
Compliance
Exporters to Brazil need to ensure they are operating an ISO 13485-compliant system.
All medical equipment intended for sale in Brazil must be registered with ANVISA (the Brazilian National Health Surveillance Agency). An in-country partner is recommended to assist in registering the device in the ANVISA medical database.
Moreover, all electrically powered medical equipment intended for sale in Brazil must obtain an INMETRO certification from an authorized in-country Certification Body.
This registration process can take up to two years.
In 2012, the average length of time from filing to approval was three months to two years. Those products coming from other countries that are also part of MERCOSUR, the Latin American free trade agreement, have a more streamlined registration process and are approved more quickly.
List of supplying markets for a product imported by Brazil
HS code: 901839 Needles, catheters, cannula and the like (value in $1,000)
Exporters / Imported value in 2009 / Imported value in 2010 / Imported value in 2011 / Imported value in 2012World / 167,614 / 214,469 / 243,689 / 288,376
USA / 73,916 / 98,634 / 120,751 / 139,868
Germany / 18,885 / 21,880 / 30,338 / 29,163
China / 7,415 / 8,431 / 9,094 / 13,747
Ireland / 12,811 / 16,649 / 12,578 / 12,502
Malaysia / 2,871 / 4,704 / 7,147 / 9,539
Switzerland / 5,601 / 5,984 / 7,853 / 8,339
France / 5,842 / 6,446 / 7,308 / 8,105
Japan / 3,967 / 6,534 / 4,821 / 8,024
India / 3,199 / 6,020 / 6,502 / 6,732
United Kingdom / 1,793 / 2,714 / 3,833 / 6,405
Denmark / 1,610 / 2,279 / 2,679 / 5,904
Italy / 5,718 / 6,691 / 4,568 / 5,661
Mexico / 10,316 / 9,293 / 3,164 / 5,458
Costa Rica / 17 / 523 / 1,448 / 4,804
Uruguay / 3,407 / 3,939 / 3,674 / 4,02
Source: Trade Map
Local Market Players
There are 30-40 major catheter companies in Brazil. We have met with Dabason Impex, one of the top 5 players. The large ones usually import from the USA and retail price is around USD 300-400 while the smaller companies source from China.
Despite market limitations, Teleflex/ Arrow are succeeding in the Brazilian vascular access device market with nearly a quarter of the total market share. Teleflex was the leader in the peripherally inserted central catheter (PICC) market with a majority market share. Prior to its acquisition of Arrow International in 2007, Teleflex was not involved in vascular access. Thus, Teleflex’s vascular access market share is based entirely on Arrow’s product lines. The ARROW coating technology was the first of its kind in the central venous catheter (CVC) market and has also proven to be very effective with its PICCs. Teleflex markets and distributes its diverse product portfolio in over 130 countries.
Other competitors present in the Brazilian market for vascular access devices include, (but are not limited to): C. R. Bard, Becton Dickinson, Medcomp, Joline, B. Braun Covidien, KFF S.A., Smiths Medical, Vygon, Baxter International and Fresenius Medical Care.
Rising demand for Vascular Access Dev ices in Brazil
In 2012, the majority of patients who were hospitalized in Brazil received some sort of vascular access treatment during their stay. The rise in demand for vascular access devices in Brazil is proportional to the number of people who require medical care each year. As of 2011, the Brazilian population was growing at approximately 0.9% per year, with the distribution shifting toward an older population due to declining mortality rates in the older demographic and reduced fertility rates in younger age groups. Approximately 6.7% of the total Brazilian population is aged 65 or older. Moreover, the prevalence of obesity in Brazil has been on the rise since 2006 with nearly half of the total population considered overweight. As the population ages and rates of obesity rise, the number of individuals requiring medical care will also grow, driving overall growth in the Brazilian vascular access market.
Brazil has become one of the major destinations for medical tourism with the key therapeutic areas including oncology, cardiology, orthopedics, and neurology. Some of the factors attributed to this increased growth in medical tourism include the modernization of hospitals and the improvement to Brazil’s infrastructure in the form of roads, hotels, and airports. By 2015, it is expected that medical tourism will contribute approximately US$2 billion to the Brazilian economy.
The Growth of Vascular Delivery Device Segments: PICCs, Dialysis Catheters, Implantable Ports
PICCs (peripherally inserted central catheter)
The leading and fastest-growing segment is the peripherally inserted central catheters (PICCs), which has a wide range of applications and are commonly used for delivering chemotherapy and antibiotics, as well as drawing blood. This market is underpenetrated in Brazil. Growth is driven by double digit increases in unit sales as PICCs begin to cannibalize unit sales from competing device markets such as the central venous catheter (CVCs) and peripheral intravenous catheters (PIVC). However, average selling price (ASP) decreases are also being observed in all of these markets, which is causing the market values to show limited growth or in some cases, a decline. In 2012, the total PICC market in Brazil was valued at $27.4 million, increasing from the previous year. Unit sales have been progressively increasing since 2007 and are expected to continue to increase until 2014. After 2014, unit sales will still continue to increase, but the year over year growth will start to equalize and stabilize. Antimicrobial and power-injectable PICCs are becoming more common in more established PICC markets such as the U.S. and Europe; but in Brazil they have very little market penetration. These devices tend to sell for a higher price than conventional devices. Their increased presence in the Brazilian market has the opportunity to increase average selling prices.
Brazil the 2nd largest market for dialysis catheter
Brazil is the second largest market in terms of market value in the dialysis catheter market. This market is composed of acute, conventional chronic, antimicrobial chronic and peritoneal dialysis catheter segments. Very minimal market penetration has been seen for antimicrobial chronic catheters in some select regions of Brazil. Prices for acute dialysis catheters are declining, as these devices become more of a commodity product; there is little differentiation or new products in this segment. The use of chronic hemodialysis catheters is increasing in Brazil, especially in the low-income and middle-income sectors of the population, which, through recent changes and programs instigated by the federal government, now has more access to many healthcare services, such as dialysis. Compared with the hemodialysis markets, the peritoneal dialysis catheter segment has always been a small market in terms of unit sales and market value.
Implantable Ports
Another strong segment in the Brazilian vascular device market is the total conventional implantable port market used for oncology. In 2012, approximately half of the oncology patients in Brazil were treated through the public system while the remaining 50% were treated through private insurance. The Brazilian market is a split between the public and private. The Unified Health System (SUS) in Brazil is very strong in the oncology market, where products like implantable ports are commonly used.
Conclusion
As Brazil’s economy strengthens and its population grows with an increasing need for vascular delivery devices, the PICC, dialysis catheter, and total conventional implantable port market segments in particular will expand. The vascular access device market in Brazil is relatively new and the penetration of vascular access devices is quite low. Market leaders such as Teleflex/Arrow, C. R. Bard, and Becton Dickinson are currently leading Brazil’s underpenetrated medical device markets despite the Brazilian government’s mandatory coverage policies and price limitations as well as ANVISA product registration and approval requirements. Overall, vascular delivery device sales are expected to flourish as they meet the needs of a growing population of both local citizens and tourists, fostering a thriving multimillion dollar market.
The table below summarises the various costs involved in registering a catheter in Brazil.
ANVISA’S Fee / · around US$ 4,000 for big companies; and· around US$ 300 for small one.
Distribution GMP Fee: / · around US$ 7,000.00 for big companies; and
· around US$ 400,00 for small one.
Product Register Fee: / · around US$ 13,000.00 for big companies; and
· it is Free of tax for the small one.
ANVISA Manufacturer’s GMP certification in company: / · It is the same price for all sizes of company = US$ 17,500.00 for each company abroad
Feedback from Importers of Catheters
1. Delta Medical
Delta Medical is no more in the catheter business. Currently the company sources its medical devices from Germany and USA. The director of Delta Medical mentioned that registration from ANVISA may take up to two years. The market leader in catheter business in Brazil is Boston (an American company). The taxes in Brazil are very prohibitive so that final price charged tends to be expensive; the landed cost can be as high as 72% of the FOB price. Hence importers are forced to practice a lower profit margin to make the product attractive. He mentioned that profit margin used to be 30% but is now around 12%. Even though customers have their insurance, the amount refunded is often capped and the limit has not been revised upward. To be able to encourage customers to buy their products, importers need to play on low margin, hence discouraging importers.
2. Ear Productos Hospitalers – Mr Emerson
Ear Productos Hospitalers is a medium importer of catheters based in Sao Paulo. He also imports catheters parts for assembly in Brazil. Mr Emmerson found that the catheters of Mauritius is of good quality but is not so keen to import from Mauritius. His main sourcing market is the USA and he sells mainly to hospitals. He deals in some 15,000 units per month.
3. Dabason Impex
Dabason been in the market for 60 years and has a monthly demand of 1,000 units which it sells direct to Hospitals, sub Distributors and Medical Insurance. According to Mr Flasio Rhoji Nakanishi, an executive working for Dabason Impex, regarding registration of Mauritian catheters in Brazil, there are two ways to proceed:
· Directly by the Mauritian company which will spend around US$ 20,000 for each product registered, or
· Give the documents to some specialized office that is going to open a registration process at ANVISA (charging an initial negotiable amount much less than USD 20,000.
Market potential for Natec MedicalMauritian Catheters
HS Code / FOB Price / Price CIF (+10% of FOB) / Customs Duty16% / IPI (Industrial Products Tax)
8% / PIS (Contribution to the Social Integration Program Tax)
2% / COFINS (Contribution to the Financing of Social Security Tax)
7.65% / ICMS (Merchandise Tax)
18% / Operating cost and Profit Margin
Rate / 20% / 16% / 8% / 2% / 7.65% / 18% / 100%
USD / 82 / 90 / 104.6 / 113 / 115.26 / 124.5 / 147 / 293
If we assume, that Mauritian companies will export 300 units of Catheters, then the CIF value is around 20% of the FOB price. With all the various costs involved, the landing price for a catheter with fob USD 82 will be USD 147 and with a combined operating cost and profit margin of 100% (, the retail selling price can be USD 293 which is the market price currently being practiced in Brazil (between USD 300 and USD 400 per unit). In the Operating costs, we can assume that around 15-20% would go for extra administrative costcorruption fee.