The world’s eighth largest economy, Brazil is forecasted to grow 5.5% this year, according to the International Monetary Fund, making for a quick rebound following a 0.2% decline in 2009. The country’s economic status has been ascendant for many years, driven by exports, foreign direct investment (FDI) and domestic consumption. In particular, Brazil has prospered from its strong position in a number of growing industries, including agriculture, mining and energy. These factors and others have positioned the country for future growth and investments. The country’s economic gains and legislative reforms have also strengthened its science and technology (S&T) infrastructure and increased its R&D investments. However, Brazil’s R&D potential has yet to be fully realized due in part to insufficient industrial R&D and weaknesses in the educational system. However, steady gains are being made, demonstrating the country’s commitment to S&T. Many major lab instrument and product companies have a long established presence in Brazil. IBO spoke with three companies about their Brazilian operations. Their experiences illustrate the opportunities and challenges the country presents.

Brazilian S&T expenditures increased 17.5% in 2008 to BRL 41.2 billion ($22.4 billion = BRL 1.84 = $1), which was 1.43% of GDP, according to the Ministry of Science and Technology (MCT). Under the Action Plan in Science, Technology and Innovation for National Development, the government pledged investments of $27 billion between 2007 to 2010 based around four main goals: the expansion and integration of the country’s science and technology system; the support of business innovation; increased R&D in 12 strategic areas; and the promotion of S&T for social development.

The country’s most recent investment plan is focused on infrastructure. This spring, Brazil’s president Luiz Inácio Lula da Silva announced a second stage of the Growth Acceleration Program (PAC 2). PAC 2 would allocate $872.3 billion to infrastructure investments, of which $526.0 billion would be spent from 2011 to 2014. The project consists of initiatives focused on: improving the quality of life in urban areas ($31.3 billion); making state services more available in poor regions ($12.6 billion); building housing ($152.5 billion); providing wider access to water and electricity ($16.6 billion); improving the transportation network ($57.3 billion); and securing reliable energy sources ($255.3 billion).

One lab product company with experience in the country is Eppendorf AG, a provider of life science consumables and equipment. Eppendorf opened its first Brazilian office in São Paulo in 1999. “The unit is responsible for brand marketing, as well as technical and application support for all Eppendorf products. Sales are realized through local distributors,” said Joern Peplow, vice president of Corporate Communications at Eppendorf. The company’s primary end-markets in Brazil are basic life science research and molecular diagnostics. Brazil’s interest in the life sciences is evidenced by Thomson Reuters’s figures that Brazil accounted for 18.4% of tropical medicine publications in the Web of Science database from 2003 to 2007 and 12.4% of parasitology papers.

Mr. Peplow also told IBO that “applied research on biofuel is becoming more and more important.” Brazil is a leading biofuel producer, accounting for 36% of the world’s production in 2008, or 28.2 billion liters, according to the Renewable Energy Policy Network for the 21st Century. Brazil’s Central Bank estimates that of the $3.5 billion in FDI in oil products and biofuel production between January 2007 and June 2009, 90% went to the ethanol industry.

Mr. Peplow told IBO that Brazil is a fast-growing nation, but its research activities are constrained. “The most important research is basic research in most areas. Unfortunately, this research is not as strongly connected with manufacturing as in other countries,” he commented. The MCT’s 2008 data showed 54% of S&T expenditures were by federal and state governments and 46% were by business, which included state companies. Indicative of foreign companies’ reservations about investing in Brazil, it was ranked 56th out of 133 countries in the World Economic Forum’s 2009–2010 Global Competitiveness Index.

Asked about changes in the country’s life science research market in the last five years, Mr. Peplow told IBO: “An increasing number of researchers is needed to cover both the expanding demand in education, as well as fundamental and applied research to the nation’s benefit. The country is still very busy coping with this demand.” The number of S&T personnel in Brazil was 397,720 in 2008, 60% of which were defined as full-time workers, according to the Ibero-America and Inter-American Network on Science and Technology Indicators (RICYT).

Thermo Fisher Scientific’s presence in Brazil dates back to the early 1980s, but continues to grow. “During the last 15 years, Thermo Fisher has steadily increased its presence by hiring local employees to work with its customers and manage a closer link between these end-users and our manufacturing facilities,” stated Greg J. Herrema, senior vice president and president of Analytical Instruments at Thermo. “In the last two years alone, Thermo Fisher has accelerated activities in Brazil with the opening of a direct sales office in São Paulo to support its growth opportunities in process instruments, microbiology and biopharma logistics services.” IMS estimated that Brazil’s drug market grew 20% in 2008 and that next year it will become the world’s eighth largest pharmaceutical market.

Thermo serves a wide range of end-markets in the country. Mr. Herrema singled out natural resources and life sciences as two that are growing rapidly. Discussing the natural resources sector, he stated it consisted of “businesses involved in the processing of Brazil’s vast natural resources, driven by the high demand globally for these products (iron ore, steel and cement) and a steady flow of investment from both foreign and domestic private investors.” FDI in Brazil grew 29.0% in 2008 to $45 billion, before dropping 42.2% last year due to the recession. This year, the Central Bank forecasts FDI of $38 billion.

Mr. Herrema also noted that Thermo has benefited from Brazil’s efforts to extend scientific development regionally, as well as its investments in new lab technologies. “Today, many state-of-the-art labs are being created, with innovative technologies that enable them to compete favorably with the best labs in the world,” he said. Thermo’s future efforts in the market will include investments in application, technical and support personnel, and the development of customer relationships. “Finally, our plans include more local fabrication and assembly of select products,” he added.

Bruker has an over 30-year history in Brazil, according to Haydar Kustu, marketing manager at Bruker. “We are a key player in academic and high-end R&D markets for analytical instrumentations in Brazil,” he said. “While we have seen steady government funding and increase demands for our products in research areas, we also experience a growing trend for our products in the chemical, pharmaceutical and food industries, as well as in the metals, automotive and semiconductor industries.”

Chart: Science and Technology Personnel, Brazil

2006 2007 2008

348,865 373,221 397,720