The Home Country Institutional Environment as an Internationalization Driver for the Large Brazilian Pharmaceutical Companies

Abstract

This study analyses the internationalization characteristics of Large Brazilian Pharmaceutical Companies. It contributes to the international business and evolutionary literature by showing how the home country institutional environment affects the firms’ internationalization at a country- and industry-level. The methodology is a multiple case study with eight companies, exploring their competitive advantages, strategies, and obstacles to international expansion. Findings reveal that home country institutional environment constraints pushed companies to build capabilities to survive and compete in the domestic market, which served as advantages when going international. Companies’ internationalization is driven by the exploitation and exploration of assets and capabilities.

Keywords:

• Brazil
• emerging markets multinational enterprise
• home country institutional environment
• internationalization drivers
• pharmaceutical industry

JEL CLASSIFICATION CODES:

• F23
• L65
• O32

Correction Statement

This article has been corrected with minor changes. These changes do not impact the academic content of the article.

Notes

1 It only includes Brazilian residents-owned companies. It does not include foreign-owned companies based in Brazil.

2 Firms classified in division 21 of CNAE. CNAE’s structure is based on the International Standard Industrial Classification of All Economic Activities (ISIC) of the United Nations Industrial Development Organization (UNIDO). The manufacture of pharmaceuticals is classified in section C, division 21 of ISIC, Rev.4.

3 Exchange rate (31/12/2018): 1.00 US dollar = 3.87 Brazilian Real.

4 According to the Brazilian Development Bank (BNDES, 2018) classification.

5 Revenue from two of the sample companies is omitted for confidentiality reasons.

6 It does not comprise revenue from two of the sample companies because of confidentiality reasons.

7 Apex-Brazil is an entity governed by private law with a council formed by public bodies, created in 2003. The Agency promotes Brazilian products and services abroad through prospective and commercial missions, business roundtables, support for the participation of Brazilian companies in international fairs and developing sector-specific programs, among other functions. Abiquifi, founded in 1983, is a class association of the pharmaceutical sector that brings together pharmaceutical companies and producers of pharmaceutical raw materials (e.g. API). The Association undertakes actions aimed at developing the Brazilian pharmaceutical sector, such as the internationalisation project ‘Brazilian Pharma Solutions’, renamed in 2018 ‘Brazilian Pharma & Health’, in partnership with Apex-Brazil.

8 In 2016, Anvisa became a member of the International Conference on Harmonization of Technical Requirements for Registration of Pharmaceuticals for Human Use (ICH), formed by the world's leading regulatory authorities, such as the FDA, EMA and Japan's Pharmaceuticals and Medical Devices Agency (PMDA). As a participant in the ICH working groups, Anvisa had 5 years (2016–2021) to adapt, within ICH’s guides—Pharmacovigilance, Clinical Research, implementation of the Common Technical Document (CTD) and the Medical Terminology Dictionary (MedDRA) vocabulary. Consequently, Anvisa needs to standardize its manuals according to the regulatory agencies of those countries (ANVISA, 2016).

Additional information

Funding

This work was supported by the Coordination for the Improvement of Higher Education Personnel (CAPES) (Grant number 001), and the Ministry of Health through the National Council for Scientific and Technological Development (CNPq), as a partial result of the Project “Reflection of Brazilian Health Industrial and Technological Policies for Local Production and Supply of the Unified Health System (SUS)” (Grant number 41/2013).