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Actions and initiatives of the Ministry of Health to foster innovation ecosystems in Brazil

News published on: August 5, 2019

2018 was a blooming year for Brazil’s innovation and startups ecosystem. Early in January, “99”, a brazilian car share startup, was acquired by Didi, becoming the first Brazilian unicorn. After that, six others followed suit (Movile/iFood, PagSeguro, NuBank, Stone, Arco Educação and more recently, GymPass), by way of acquisition, IPO or growth in value, in areas such as fintech, logistics and education. This fertile period for high flying startups has placed the country among other technology powerhouses. With recent changes to legislation regarding Science and Technology (the new regulation mark is active for almost three years) and venture capital, 2019 holds both the challenge of living up to the expectations created after such a prolific year as 2018, and the potential to be even better, with the further maturing of the ecosystem¹. According to ABStartups, the Brazilians Startup Association², the country is home to 10.200 startups, 20% more than in 2017, and a galloping investment scenario.

One of the areas showing promising signs of growth and which will be buzzing is healthtech. Health related expenditures represented 9,1% of the Brazilian GDP in 2015, a number which is projected to climb to 11% by 2040. Moreover, Brazilian public health system, Sistema Único de Saúde (SUS), is responsible for 43% of pharmaceutical sales in South America, leading the region with a large margin over Mexico, which is responsible for 17%. In a global perspective, Brazil is expected to become the world’s fifth largest pharmaceutical market by 2020³. Those two pieces of information are a good measurement of just how relevant Brazil’s health market is and its upward trend.

Leading the way on health innovation, prominent private players in Brazil’s ecosystem have already been nurturing ways of establishing their policies. In the past decade, in addition to already active solid research and development departments, capable of improving products and services, it is becoming more and more trendy to open a direct line to the innovation ecosystems, specially startups and universities. Being via open innovation, corporate venture or other strategies, companies are increasingly adding innovations to their structures, products and services.

But what about the role of the public sector in this process? As one of the main financial driving forces in the region, the government must take action to join and facilitate this innovation revolution. More than so, it is its constitutional duty, says Thiago Rodrigues dos Santos, Director of the Department of the Industrial Complex and Innovation in Health – DECIIS, within the Secretariat of Science, Technology and Strategic Inputs (SCTIE) of the Ministry of Health (MS). He cites the articles 218 and 219 of the 1988 federal constitution as the legal framework for health innovation in Brazil, which enforces to the State an obligation to promote and encourage scientific development, research and technological training. Furthermore, the Constitutional Amendment No. 85 of 2015 amends and adds provisions in the Federal Constitution to update the treatment of Science, Technology and Innovation activities.

Apart from what is stated in the law, what has the Ministry of Health been doing to promote health innovation and entrepreneurship in Brazil? Thiago highlights the Programa para o Desenvolvimento do Complexo Industrial da Saúde (PROCIS) or Industrial Health Complex Development Program, created back in 2012. Its goal is to strengthen the technological infrastructure of Public Laboratories and Science and Technology Institutions, using an legal instrument called Partnerships for Productive Development (PDP) that aim to increase the participation of public laboratories in the production of medicines for SUS, employing the use of the State’s purchasing power.

Another important development was the inclusion, in March 2018, of the Ministry of Health as an intervener and member of the Board of Directors of EMBRAPII (Brazilian Association of Research and Industrial Innovation), which is, since 2013, one of the main programs established to support technological research institutions fostering innovation in Brazilian industry. MS sees this role as a part of the management of EMBRAPII as a key strategy to overcome one of its perceived challenges regarding innovation in Brazil, the technological risk centralization. The most usual ways of promoting innovation focus on credit and repayable financing, and are able to reduce the cost of projects, but not the technological risk inherent in the process. The absence of risk sharing mechanisms has been the main bottleneck for companies’ participation in projects linked to SUS demands, that is, the participation of companies in innovative processes linked to the public demand for new technologies and not the technological supply. The institution of Embrapii and the participation of the Ministry of Health in the management contract signed with Ministry of Science, Technology and Communications (MCTIC) aims to overcome this challenge and to reverse the logic of technological supply to the logic of technological demand. The strategic goals which should guide this partnership are, namely: (i) overcoming economic bottlenecks and the technological lag of SUS; (ii) to improve the performance of research institutions in the development of technological innovation projects with companies operating in the field of (CIS); (iii) to establish new models of operationalization, improved to the health area.

Thiago believes that regarding the new access to biodiversity law, MS participation in committees will assure correct development of the country. The participation in the committees is aimed to strengthen its representation on the agenda as well as assist in meeting the frequent demands of the Federal Public Ministry related to the attributions of Public Health. MS is a part of the Conselho de Gestão do Patrimônio Genético or Genetic Patrimony Management Council (CGEN) board, which is responsible for coordinating the elaboration and implementation of policies for the management of access to genetic heritage and associated traditional knowledge and benefit-sharing. Another MS concern that deserves attention is marine life. By being a member of both the Comissão Interministerial para os Recursos do Mar or Interministerial Commission for the Resources of the Sea (Cirm), which counts with the participation of several representatives of the executive branch for the definition of execution of the National Policy for Marine Resources (PNRM), and the committee of Marine Biotechnology or Comitê de Biotecnologia Marinha (Biomar), with the objective of promoting the study and sustainable exploitation of the biotechnological potential of marine biodiversity, aiming at the scientific, technological and economic development of the country, also linked to the attainment of the United Nations Sustainable Development Objectives, ODS 14 – Conservation and sustainable use of the oceans, seas and marine resources, by developing marine technology research and transfer capabilities.

To strengthen SUS is a very pressing matter for the MS. One way of doing that is to enhance Brazil’s national scientific and technological infrastructure. Thiago points out that among the ten largest companies active in the Brazilian market, four were born in the country and are first, third, fourth and fifth in market share. He emphasizes the actions of MS in investments for the implementation of Multi User Health Research, Development and Innovation Centers in ICT, with plants for the production of pilot lots of pharmacotechnical units (synthetic and biological) under Good Manufacturing Practices (GMP) conditions. Other than that, one can notice the efforts used with Technical Cooperation Terms to promote an environment favorable to innovation in Health with the following main purposes: i) to implement the processes of innovation and development of priority technologies; ii) to support improved regulatory strategies with transversal actions conducive to development and innovation; iii) to promote international cooperation in the production and innovation system; and iv) enable actions related to technology transfer, technological ordering and technology compensation in health. Finally, it is worth mentioning the Plan of Action of Clinical Research composed of a series of strategic actions distributed in 6 axes that aim to: (a) improve the system of ethical analysis in research involving human beings; (b) support Anvisa in improving the regulatory system for clinical research; (c) improve the country’s installed scientific capacity in clinical research; (d) promote the continuing training of human resources in clinical research; (e) improve the governance of the National Clinical Research Network (RNPC); and (f) support the translation and dissemination of knowledge in clinical research.

For 2019, strategic partnerships are an important part of the national strategy for development, strengthening and innovation within the Industrial Health Complex (CIS). The Partnerships for Productive Development (PDP) modality is one of the most effective tools aimed at consolidating the national production of strategic technologies to meet the demands of SUS, optimizing the public procurement processes of the Ministry of Health, since the internalisation of strategic product technology for SUS, the national public producers become holders of the technology, reducing the productive and technological dependencies and rationalizing the purchasing power of the State. The PDPs involves cooperation through agreement between public institutions and private entities for the development, transfer and absorption of technology, production, productive and technological capacity of the country. Currently, of the Partnerships for Productive Development (PDP) there are 93 in force, of which 81 are Synthetic and Biotechnological, 05 of Vaccines, 01 of Hemoderivative and 06 of products for health.

The regulatory framework on PDPs is under review and seeks to fill some regulatory gaps, especially regarding procedural rite and price issues. But above all, it is intended to provide more sustainability conditions for strategic projects for SUS, such as PDPs for biological products, vaccines and blood products. Regarding synthetic products, aspects related to the national production of active pharmaceutical ingredients (IFA) gain more attention and detail. Thus, the new management is in the process of evaluating the current partnerships and definition of new guidelines for maintaining those that are more strategic for SUS.

In a recent report published a year ago, Liga Ventures mapped the Brazilian Healthtech sector. They identified 263 startups which had products or services related to any of the following areas: Autism, physical and mental well-being, Business Intelligence/ Artificial Intelligence/Big Data/Analytics, Search and Schedule engines, physical spaces, blood glucose, hard sciences, Information/Training/Learning, Internet of Things, drugs and equipment marketplaces, nutrition, health insurance plans, medical records and prescriptions, prostheses, health on demand, health management systems, systems of images, reports and exams and telemedicine. The categories with the most abundant startups were Health Management Systems and Hard Sciences. São Paulo is by far the city with the most startups, followed by Belo Horizonte. The growth of this sector is clear from 2015 and 2016, the years when most startups were founded. The hope is that from now on, with the incentives from the MS, the new biodiversity access law, the new science and technology legal framework and the maturing and development of the venture capital market, this number will grow substantially.⁴

 

Cannabidiol is currently one of the featured topics that will be discussed at BIO Latin America 2019, and is also one of the most expected. Click here to explore other topics of the program and make sure to register and join the conversation!

 

  1. https://www.forbes.com/sites/angelicamarideoliveira/2019/01/23/2019-the-year-of-tech-startup-exits-in-brazil/#7a3b209875a3
  2. https://abstartups.com.br/PDF/radiografia-startups-brasileiras.pdf
  3. http://portalms.saude.gov.br/noticias/agencia-saude/43402-autoridades-debatem-investimentos-no-setor-saude
  4. https://insights.liga.ventures/healthtechs

 

 

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