Breaking through asphalt

The private sector takes the lead in biomedical innovation in Brazil
Breaking through asphalt

Authors: Denise Golgher, a human health/biotechnology consultant in Brazil (; Rodrigues R; Olmos M; and Castro AC.

For quite some time headlines have not shown the most flattering side of Brazil. The newsreader has had a daily reminder of the worst economic/political crisis to hit this country of more than 208 million1 people. In the midst of what seems like a never-ending crisis, it is refreshing to observe a bright side. No effort is needed to sense the growth of an unprecedented entrepreneurial environment: a plethora of initiatives aimed at stimulating startups and innovation is spreading2. Innovation, startups, incubators, accelerators, investors, and seed money, alongside digital technology, artificial intelligence, fintechs and innovation for human health are now part of the conversation. And the private sector is pushing the businesses forward. This is good news.

About the human health sector in Brazil

The health care sector in Brazil corresponds to 9.1% of the PIB, the equivalent of $179.9 billion (as of June 2018). It is the 6th largest pharmaceutical market in the world and number 1 in Latin America, with 43% of total sales3. The forecast is for growth. According to IBGE1, the country has now 25.1 million people older than 60 years, corresponding to 12% of the population. This number will jump to 22.4% in 2040 and 28% in 2050, when 13.4 million people will be more than 80 years of age. The fast pace of aging, a growing middle class and a high incidence of chronic diseases make the country attractive for businesses related to health care.

Brazil is the largest Private Equity/Venture Capital (PE/VC) market in the region, in terms of volume invested: $279 million, representing 56% of the total investment in Latin America. The number of transactions broke a record in 2016 (data collection began in 19934) and according to a report from the Brazilian Association of Private Equity & Venture Capital’s (ABVCAP)5, this number will probably expand during the years of 2018-2020. Among national PE/VC investors, 80% plan to continue or increase their investments, while 38% of international firms intend to increase investments, with the healthcare sector considered one of the most attractive targets. In 2017, seven investments and four divestments in the sector raised $780 million, plus an undisclosed value of six additional investments6. Two cases were from big medical diagnostic laboratories; Hermes Pardini went public in 2017, raising $236 million, while Fleury pulled in $349 million via a follow on offering. 

Human health innovation

Genomics and digital health fueled an engine that was nonexistent 5-7 years ago. Molecular diagnostic tests (genetics and genomics) applied to oncology are a major focus, but not the only one. The other two big chunks of this market are innate genetic and infectious diseases, estimated at $269 million and growing7. The compound annual growth rate between 2010 and 2015 was approximately 17%. Even more impressive was the growth of next-generation sequencing-based tests. After commercial introduction in 2012 and their coverage three years later by ANS (Agência Nacional de Saúde Suplementar, the agency that regulates the private healthcare plans), the market grew 100% per year8 The company Illumina reported a very strong growth in Brazil, with progress in oncology being particularly remarkable8.

Molecular diagnostic tests are performed by small specialized laboratories, medium-sized and big laboratories such as DASA, Hermes Pardini and Fleury. Hand in hand with the commercial interest of selling these high-value tests to hospitals and patients is the interest in innovation. Many of the smaller laboratories/companies have attracted the attention of VC funds and corporations, which seized the opportunity to invest in health care ventures that were not as risky, expensive and time consuming as the development of new drugs (See Table 1). Acquisitions of smaller laboratories were made by Hermes Pardini and DASA. Three laboratories, Biocod, Progenética and DLE were bought by Hermes Pardini, while DASA acquired SalomãoZoppi, a medium-sized laboratory with an excellent reputation for molecular diagnostics of cancer. 

Table 1) Small dedicated genomics companies and business transactions.

In addition to the acquisitions, DASA launched GeneOne, its genomics brand, and partnered with Cubo Itaú, a center for entrepreneurship, founded by Itaú Bank and the VC firm Redpoint Ventures. Hermes Pardini set up an innovation center on its own premises and established collaboration with the Biominas Foundation, a non-profit institution dedicated to developing businesses in life sciences. Meanwhile, Fleury, a laboratory with a longer track record in research and development, recently opened a space at InovaBra Habitat (an innovation hub set up by the Bradesco Bank) and established several important collaborations. A collaboration between Fleury, Barretos Cancer Hospital, the Federal University of Maranhão and the startup ONKOS (gene-expression profiling of tumors) resulted in a diagnostic test that is currently being offered to cancer patients9.

The keenness to innovate is not limited to the big diagnostic laboratories or by national borders. Both Fleury and Sabin (the fifth biggest laboratory in the country) have made investments in Israel10. Some of the national pharmaceutical companies are also investing in startups abroad and sponsoring entrepreneurial incubators and accelerators in the country: EMS invests in foreign startups through Brace Pharma (USA) and Libbs became a sponsor of, the incubator from the Albert Einstein hospital. Private hospitals have definitely become a driving force for an innovative biomedical ecosystem. 

Albert Einstein, a philanthropic hospital from São Paulo, is doing extraordinary work to stimulate the creation and growth of new companies and has rapidly established itself as a hub for innovation. It already had a very active innovation center when its incubator,, was inaugurated in 2017. Associated companies (26 in the portfolio) have access to an infrastructure and entrepreneurial environment that is very special for startups, some of which receive seed investment11. Two other hospitals in São Paulo have their own initiatives. Sírio-Libanês is starting an innovation center in 2018, in addition to their past partnerships to stimulate the creation and growth of new enterprises with the Consulting Company Everis (they promote an annual prize for entrepreneurs/startups) and Endeavor Brazil. The hospital A.C. Camargo Cancer Center is also establishing innovative and promising alliances. It is undergoing joint research with the diagnostic laboratory Fleury to discover novel biomarkers and develop cancer diagnostics. In collaboration with ITA (the Technological Institute of Aeronautics), talented engineers are addressing joint research projects focused on cancer. A multidisciplinary team under the coordination of Dr. Kenneth Gollob is working closely with the clinical staff of the hospital, with the goal of not only advancing immunology research, but also developing innovation for immuno-oncology (See Figure 1). This teaching hospital has world-class laboratory facilities and is a pioneer in Brazil with a program dedicated to this competitive field.  

Figure 1. Dr. Kenneth Gollob, coordinator of a multidisciplinary research group at the A.C. Camargo Cancer Center. His team works on the identification of novel biomarkers to advance basic research and generate innovation in partnership with the diagnostic industry.

While the State of São Paulo concentrates much of what goes on in Brazil, there are important initiatives in other States. For example, Instituto D’Or de Pesquisa e Ensino (IDOR), located in Rio de Janeiro and part of the biggest network of private hospitals in the country (Rede D’Or) has started its own innovation hub, Open D’Or. A group born in Belo Horizonte, Oncoclínicas, divestee from the venture capital firm FIR Capital, grew rapidly since its creation in 2010. Now managed by Goldman Sachs, it counts 60 clinics spread in 11 States dedicated to cancer care and just announced an investment of $50 million in cancer research12.

The shaping of a biomedical innovative ecosystem

A biomedical innovative ecosystem, centered on private hospitals/clinics and stimulated by the diagnostic industry, is growing. Figure 2 shows a graph with the number of startups dedicated to biomedical innovation founded and the number of venture capital investments made in these companies (from 1994 to 2017). In addition, the proportion of the companies that have benefited from one or more incubator/accelerator programs is indicated. The peak years were 2015 and 2016 for company creation, while the highest number of venture capital deals were made during the years of 2016 and 2017. The economic crisis, which started in 2014, has not inhibited or halted the creation of startups and/or venture capital investments.

Figure 2. A growing number of companies dedicated to biomedical innovation are being created in Brazil. The graph shows in the y axis the number of companies created (orange columns) from 1994 to 2017 and the number of these companies benefitting from an entrepreneurial program (incubator/accelerator) is superimposed in blue. The third axis shows the number of venture capital investments made during the same years. Number of investments made in each year (green diamonds) and the growing trend for venture capital investment (green line).

Although some incubators and entrepreneurial programs were created several years ago by governmental institutions, most of the incubator/accelerators dedicated to human health are more recent. Importantly, they count on private, more sophisticated and well connected national and international networks. These incubator/accelerators provide a wide range of support, such as mentorship from successful founders/managers or CEOs, contact with investors, contact with international entrepreneurial programs, contact with the industry, seed money and, critically, cohabitation of expertise from digital technology, big data, and clinical/medical professionals, providing a rich environment.

Many are betting on a flourishing growth of this biomedical ecosystem. The hope being that some of the startups dedicated to biomedical innovation will achieve unicorn status following the success of the Brazilian company 99, a ride-sharing initiative acquired by Didi and Pagseguro, a payment processor that raised $2.27 billion in its IPO in New York (NYSE). With the expansion of the private sector’s involvement in biomedical innovation, it is a real possibility. Interestingly, in addition to the research investments made by private hospitals, private initiatives have entered a realm that was almost exclusively State-sponsored. In 2016, private investors founded Serrapilheira, a foundation created to promote excellent basic science projects, and in 2018, the first private research center in the country, BiotechTown, was inaugurated.

Concluding remarks

An ecosystem where hospitals take center stage and the diagnostic industry are anchor companies can be promising. Although hospitals are always thought of as an important part of innovative clusters, there is very little literature on the role of hospitals as outputs for innovation13. There are more studies on the crucial contribution of the medical community for the development of novel technologies14, especially, medical devices15-17 as co-developers15, generators of user innovation17, inventors in patents18 (according to Ali A and Gittelman M, inventions by teams composed of MDs have a higher rate of licensing) and as leaders in projects that solve unmet medical needs. As a matter of fact, some of the successful cases in biomedical research in Brazil were created and developed by MDs19. This trend is likely to continue, the Albert Einstein hospital recently reported the development of novel products, that might be the basis for the creation of three startups20.

Brazil is home to sophisticated medical and scientific communities21, and associating this with digital/genomics expertise can lead to the formation of very capable multidisciplinary teams to solve unmet medical needs. The initiative coordinated by A.C. Camargo Cancer Center, for example, with its program focusing on novel biomarkers (See Figure 1), connected to the diagnostic laboratory Fleury, which is in turn part of a digital technology entrepreneurial center, may be just the right melting pot for the generation of novel diagnostics for the early detection of cancer or the stratification of patients that can benefit from immunotherapy.

Despite the scarce and inconsistent resources for science and research at governmental universities/research institutions, there is an embedded understanding by the public sector of the importance of innovation for economic development. In fact, the Brazilian Development Bank (BNDES) and the Brazilian company for research and innovation (FINEP) are major investors in venture capital funds dedicated to technology-based businesses. The hospitals quoted above, born from initiatives from MDs and/or private associations/individuals, are now philanthropic institutions conducting successful public-private partnerships. State-sponsored institutions are the basis from which bigger projects led by private entrepreneurs start. Private foundations that are connected to federal universities, are a good example. Fundepar, a venture fund created by Fundep  (linked to the Universidade Federal de Minas Gerais) was conceived after the success of an original program to support the writing of business plans for projects from UFMG. Fundepar is an investment fund with its own portfolio of companies and is certainly betting on the future of startups, as it is a co-investor in the recently inaugurated BiotechTown. Another foundation, Certi, located at the campus of the Universidade Federal de Santa Catarina (Florianópolis), has been active since 1984, and also spun off a venture capital company, CVentures.

As our biomedical ecosystem unfolds, it is important to think about how to make the most out of our entrepreneurial efforts and fight for policies that can accelerate the buildup of our “bigger picture." SUS, with its more than 100 million patients, is a potential source of patients and data, both valuable assets to the advancement and refinement of new technologies. According to the ministry of health, the better management of SUS could save $591 million/year; this is a promising area for digital technologies, telemedicine, and artificial intelligence3


1. IBGE, access on 16.06.2018.

2. Maruyama, F.M. et al. CEBRAP36, 51-78 (2017).

3. Presentation Brazil Investment forum 30th May 2018 Ministry of Health

4. LAVCA, Latin American Private Equity & Venture Capital Association.

5. 2018 Associação Brasileira de Private Equity & Venture Capital ABVCAP Inside PE/VC in Brazil

6. 2017 Associação Brasileira de Private Equity & Venture Capital ABVCAP Perspectiva dos investidores sobre PE/VC no Brasil.

7. Personal communication, José Eduardo Levi, Molecular biology consultant at DASA.

8. For the company Illumina, progress in oncology has been particularly impressive in Latin America and Brazil leads the business in the region., access on 16.06.2018.

9., access on 16.06.2018.

10. Qure



13. Gulbrandsen, M. et al. Research Policy 45, 1493-1498 (2016).

14. Thune T. & Mina A. Research Policy 45, 1545-1557 (2016).

15. Nelson R.R. et al. Research Policy 40, 1339-1344 (2011).

16. Morlacchi, P. & Nelson R.R. Research Policy 40, 511-525 (2011);

17. Smith S.W. & Skefas A. Medical Care 51:461-467 (2013).

18. Ali A. & Gittelman M. Research Policy 45, 1499-1511 (2016)

19. Biobrás was a joint venture between Professor Marcos dos Mares Guia, who developed the technology to produce recombinant insulin, and a venture capitalist. Founded in 1971, it went public in 1980 and was acquired by Novo Nordisk in 2002. Ferrara Ophthalmics, a company created in 1999 by Dr Paulo Ferrara, developed the Ferrara rings, which are exported to several countries for the treatment of patients with keratoconus. A partnership with the University of Valladolid (IOBA) gave rise to Ferrara & Hijos, a company located at the Biotechnical Park of Boecillo (Spain). The hospital Biocor, specialized in cardiovascular diseases, with the objective to create a safe and effective device at lower costs, developed a porcine cardiac valve. The technology was bought by St Jude Medical (now Abbott).


21. Torres-Freire, C. et al. Journal of Commercial Biotechnology 21, 20-30 (2015).


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