Active ingredients 
Figure 3: Total number of foreign-owned active pharmaceutical ingredient (API) manufacturing sites and number of API manufacturing
sites belonging to major multinational pharmaceutical companies in Brazil, Russia, India, and China.
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Brazil. Brazil is not known globally for its API manufacturing industry. The facilities there tend to be relatively small and most
of them belong to Brazilian companies. However, a handful of regulated market players have set up API- manufacturing facilities
in Brazil to take advantage of the country's low-cost manufacturing base, proximity to vast patient populations in North and
South America, and its patent regime, which is more favorable to API manufacturers than that of Europe (see Figure 3).
It is worth noting that several multinational pharmaceutical companies have an API-manufacturing presence in Brazil, among
them Novartis, which has an API- manufacturing site in Resende, Riõ de Janeiro, where it manufactures valsartan for its global
supply chain. At least two Italian API manufacturers based in Milan, Italfarmaco and ACS Dobfar, have set up a manufacturing presence in
Brazil. When announcing the acquisition of the Brazilian manufacturing site from GlaxoSmithKline (London) in 2000, Italfarmaco
explained that it set up the facility to more effectively service the North American generics market, something that had been
challenging to do from Italy because of the restrictive supplementary protection certifications (SPC) regime. In most EU countries,
SPCs have provided innovators with up to five years of additional market exclusivity after the expiry of relevant patents.
However, in Italy, Certificato Complementare di Protezione could offer up to 18 years of additional protection. Given the relatively small number of local API manufacturers, a considerable finished-dose manufacturing base (both for domestic
use and export), and low import taxes, it is no surprise that Brazilian finished-dose manufacturers import a significant amount
of APIs. Despite the fact that the rules in Brazil have become more stringent over time, many Brazilian finished-dose manufacturers
still focus more on cost than quality. As a result, most API imports come from India and China and other low-cost countries.
However, as the Brazilian generics environment becomes increasingly quality minded, opportunities for players from countries
such as Italy and Spain should improve. Russia. These days, there is very little API manufacturing taking place in Russia, and there is little local expertise available in
the area of manufacturing APIs. Most API facilities based in Russia are locally owned, and we do not foresee major foreign
investment in API manufacturing occurring in the near future. As the number of local finished-dose manufacturers is increasing, so is the demand for APIs. Unfortunately for regulated-market
API manufacturers, as in Brazil, the focus in Russia is on cost rather than quality, and many local dose companies are relying
on offshore distributors. In cases where material comes directly from manufacturers, the material tends to come from low-cost
countries such as India and China. At this point, we do not see many opportunities for regulated-market API manufacturers to sell their APIs to Russia, unless
they already own finished-dose manufacturers in the country and sell the APIs to their own subsidiaries.
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