Institutional changes and their impacts on the Brazilian Pharmaceutical Industry : Is there an Innovation System on the way ?

The Brazilian legislation did not recognize pharmaceutical patents for products and processes up until 1996, an exemption which started in 1945 for products and 1969, for processes. In this period, the domestic companies freely reproduced medicines developed by large companies from abroad and commercialized them in the local market with their own trademarks. They applied considerable efforts and resources in marketing, aiming to consolidate their brands next to the medical class, but they did not had to face the costs of research and development (R&D). This strategy guaranteed a considerable profitability for the domestic laboratories, but it was made impracticable by the new institutional landmark that emerged after the regulation of the Patents Law (“Lei de Propriedade Intelectual” – number 9.279 of 05/14/1996) and the Generic Medicines Law (“Lei do Medicamento Genérico” – number 9.787 of 02/10/1999). This article illustrates, through analysis based on information obtained from secondary sources, interviews and a Panel of Specialists, how the new competitive environment forced the companies to adopt a new strategic position, in which innovation gained importance.