Market Monitor chemicals Brazil 2019

Market Monitor

  • Brazil
  • Chemicals/Pharma

16th July 2019

The Brazilian agrichemicals sector remains very susceptible to sudden changes in climate conditions, market prices and exchange rate fluctuations.


2019 brazil chem 1



  • Despite a sluggish recovery of the Brazilian economy, both chemicals and pharmaceuticals businesses are expected to improve their results and margins further this year. However, the level of competition in both the chemicals and pharmaceuticals sectors is high and industry consolidation is ongoing - in particular among medium-sized and large players.
  • Value added in the pharmaceuticals subsector grew by more than 7% in 2018 and is expected to increase about 3% in 2019. The segment remains robust, despite the downside risk of less public health spending due to austerity policies. Demand for innovative medicines/specialised drugs will continue to grow, driven by urbanisation and an ageing population, which will provide pharmaceutical businesses with good revenue-generating opportunities. Demand for healthcare services, medicines and elderly care will increase further in the mid- and long-term. Larger drugstore chains continue to expand and to open new stores, increasingly offering over-the counter (OTC) products like cosmetics and selling natural healthy foods.
  • Apart from a few large players, most Brazilian chemicals and pharmaceuticals businesses are still highly leveraged, which is also the result of previous expansion activities before the recession started in late 2014. While being highly dependent on bank financing, financial institutions are generally willing to provide loans to chemicals and pharmaceutical businesses, as business opportunities for distributors and investors are good.
  • Payments take up to 120 days in the chemicals sector and average 90 days in the pharmaceuticals industry, with payment behaviour influenced by consumer spending capacity and public sector spending behaviour. Payment experience has been good over the past two years, and we expect chemicals/pharmaceuticals insolvencies to decrease by about 5% in 2019.
  • Our underwriting stance on the pharmaceuticals sector is generally open, as the main market players have rebounded. The market mainly consists of resilient distributors and retailers. However, we are more cautious with players depending on sales to public bodies, as austerity measures could lead to further curbs in public health spending.
  • Our underwriting stance on the chemicals sector is neutral. Chemicals has been affected by lower demand from China, but the 2019 outlook is more promising. The agrichemicals sector remains susceptible to sudden changes in important exogenous factors like climate, market prices and exchange rate fluctuations. In the basic chemicals subsector most raw materials have to be imported, and production costs are exposed to exchange rate volatility and the looming threat of trade restrictions. Petrochemicals performance could be impacted by increased oil price volatility, e.g. triggered by the current US-Iran conflict.


Related documents


Each publication available on or from our websites, such as, but not limited to webpages, reports, articles, publications, tips and helpful content, trading briefs, infographics, videos (each a “Publication”) is provided for information purposes only and is not intended as a recommen¬dation or advice as to particular transactions, investments or strategies in any way to any reader. Readers must make their own independent decisions, commercial or otherwise, regarding the information provided. While we have made every attempt to ensure that the information contained in any Publication has been obtained from reliable sources, Atradius is not responsible for any errors or omissions, or for the results obtained from the use of this information. All information in any Publication is provided ’as is’, with no guarantee of completeness, accuracy, timeliness or of the results obtained from its use, and without warranty of any kind, express or implied. In no event will Atradius, its related partnerships or corporations, or the partners, agents or employees thereof, be liable to you or anyone else for any decision made or action taken in reliance on the information in any Publication, or for any loss of opportunity, loss of profit, loss of production, loss of business or indirect losses, special or similar damages of any kind, even if advised of the possibility of such losses or damages.