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Valor Econômico newpaper: Guerbet will export contrast media manufactured in Brazil

28.11.2017 23:41

Newspaper Valor Econômico, 22th of November - 2017 ӏ By Stella Fontes, São Paulo ӏ Two years ago, the French group evaluated closing the operation in the country


Guerbet will export contrast media manufactured in Brazil

A pioneer in the global market for contrast media for imaging tests, the French centenary Guerbet was close to closing operations in Brazil in 2015. Two years later and under new management, the Brazilian subsidiary, the first outside France, underwent extensive restructuring, will start exports to Europe and should return to profitable in 2018.

The turnaround of the local operation, which has accumulated losses in the last five years, began to be drawn in late 2015 when the French company bought the global business of contrast media and injection systems from competitor Mallinckrodt for € 250 million.

In consolidated terms, Guerbet nearly doubled in size after the acquisition, with net sales of €776 million last year. In Brazil, it gained power to deal with giants of this industry, including General Electric (GE) and Bayer, in a market increasingly crowded and concentrated because of the consolidation of the big competitors.

Starting from the acquisition and the perception that the health market in the country still offers significant growth potential, the French company decided to keep the branch. He then hired executive Roberto Godoy to carry out a restructuring process, completed almost two months ago.

With a degree in Computer Science, Godoy has passed through companies such as Siemens, Abbott and GE itself. According to the executive, who took over the general direction of the branch in December last year, the strong exchange rate devaluation and the failure to pass on price inflation have made the Brazilian operation in short supply.

One of the first initiatives was to invest around RS 3 million in reform and modernization of the factory installed in the west of Rio, increasing capacity by 30%. It is the only unit in the country focused on the processing of imported raw material (chemical compounds) and container of means of contrasts.

The investment also prepared the unit for an inspection by the European Union's regulatory agency, which granted five months ago the license to export for that market - which will happen from January. As a matter of fact, virtually all production is geared to domestic demand. In addition, with the expansion of capacity, the factory will be able to locally produce Mallin-ckrodt's portfolio and expand its service to the Latin American market.

"We reviewed processes and also invested in people," says Godoy. Guerbet has 200 employees in the country. With the installation of a training center for Latin American clients, the company will reinforce the services offered. "The goal is to help the client get better diagnoses."

The economic crisis, which slowed the growth of the national pharmaceutical market, did not affect the market for contrasts, according to the executive. Although the number of health plan beneficiaries has fallen, there is traditionally greater demand for examinations in periods of job instability, through the risk of dismissal, which has mitigated the initial impact. "We will close 2017 in zero-zero and in 2018 we will return to the positive terrain," he says.

Worldwide, Guerbet has nine industrial units, including Brazil, which is the only one in Latin America. Nowadays, about 90% of business in the country are in the private market. But the idea is to expand presence also in the public market. The global market for contrast agents moves around €6.1 billion a year. The largest market is in the Americas, with 46% of businesses, followed by Europe with 27%, and Asia with 22%.