Chiesi aims to double capacity in Brazil by 2020

By 2020, Italian laboratory Chiesi plans to double the size of its Brazilian operation, which last year had net revenue of R$215 million. To achieve this target, in addition to relying on organic growth, the pharmaceutical group is considering acquisitions, partnerships and licensing or other attractive opportunities for inorganic growth. "We are looking at assets. There are several fronts, but we do not have anything on the table yet," told Valor Chiesi’s general manager in the country, José Fernando Almeida.

The laboratory is investing R$21 million from its own funds to expand and upgrade its Santana do Parnaíba plant in São Paulo, which now has production capacity of 13 million units (boxes) per year of liquid and solid medicines, and aerosols. In this first stage of expansion, whose works are slated to start in the next six months, at least 4 million units of installed capacity will be added, focusing on the liquid line.

Mr. Almeida said the strategy of the pharmaceutical, which has factories in Brazil, France and Italy, is to transform the Brazilian unit into an export hub of asthma drug Clenil, given the global demand for the medicine.

"We will be the world’s leading provider of Clenil to Chiesi," he said. After the expansion, the laboratory’s exports from Brazil, now destined only to the UK and Italy, will reach 26 countries in Europe, Africa and Asia. Last year, 25% of local production was shipped. By 2020, this share is expected to rise to 40%.

The largest share of exports will increase the hedge of the Brazilian operations against the real’s devaluation. Today, about 95% of pharmaceutical ingredients are imported and laboratories have suffered significant pressure from the stronger dollar. With the ongoing investment, the company expects a “large volume” exported already in early 2017.

"But we will also grow in domestic sales," the executive said. The two main segments in which the pharmaceutical operates are respiratory and neonatal, but the plans by 2020 include increasing the portfolio of OTC drugs (non-prescription) and in the institutional area (hospitals). In addition, in two years, Chiesi intends to enter the market of rare diseases with the launch of new drugs. "We are already talking with Anvisa [Brazilian Health Surveillance Agency] about one of these medications," Mr. Almeida said.

Founded 80 years ago, Chiesi has been operating in the Brazilian market for nearly 40 years. The first subsidiary of the pharmaceutical company outside of Italy, the local operation is now the seventh largest in terms of revenues. By 2020, however, the company’s target is to reach the fourth or fifth place.

Globally, the Italian lab had revenues of €1.3 billion in 2014, up 8.4% from the previous year, while the EBITDA totaled €363 million, or 27.1 % of net revenue. Investments in research and development totaled €237 million, but the company destined another €89 million for the purchase all of Chiesi USA.

The Brazilian operation, Mr. Almeida says, is under the command of the emerging countries unit. Along with Russia and Turkey, the executive thinks Brazil currently poses the biggest challenges for the group. For 2015, the lab expects to grow 12% in Brazil, in line with the IMS Health forecast. "This challenging phase will pass. One must be able to seize the moment when the scenario improves,” he pondered.

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