Brazil’s Antitrust Authority releases market study on medicines manufactured for human use

The end of June 2025 saw Brazil’s Antitrust Authority (CADE) release the twenty-second edition of its market studies (Cadernos do CADE) series. The study’s main goal was to demonstrate the authority’s methods for reviewing merger control and investigations of anticompetitive behavior in the market for manufacturing medicinal products for human use, covering a period from 1994 to April 2025.

The study has compiled and organized relevant aspects of CADE’s activity to provide a comprehensive view of the authority’s approach to merger control and potential anticompetitive behavior in this sector, highlighting the main interpretations and practices the authority has established over the years. For agents in the sector, the study serves as a useful guide as to what should be expected from CADE when it analyzes M&A transactions or potential anticompetitive behavior.

CADE’s merger control activity

CADE analyzed 326 merger filings related to the pharmaceutical sector between 1994 and April 2025. Of these, the vast majority (90%) were cleared without restrictions, while 4% were cleared with restrictions, 3% were dismissed, and another 3% were not reviewed by the authority (as they did not meet the mandatory filing thresholds). These numbers show that the authority’s decisions have been predominantly favorable to economic agents, with only sparing interventions on an exceptional basis. Moreover, they indicate a relatively predictable regulatory environment favorable to business.

The authority has also refined its stance on certain fundamental merger control issues in relation to the sector, including how it defines relevant markets and the particularities of competitive dynamics, among other strategic topics considered in its analysis. The Anatomical Therapeutic Chemical (ATC) classification, whether a prescription is required, and the therapeutic indication have been set as parameters for defining relevant product markets, with the relevant geographic market generally considered to be national in scope.

When reviewing mergers in the sector, CADE considers factors such as brand loyalty, product differentiation (for example, in terms of galenic form and mode of delivery), and the role of generic drugs. Barriers to entry may be regulatory, technological, or reputational, and vary depending on the drug category under review. As for potential competition – the competitive pressure stemming from innovation and R&D activity – CADE has established that only drugs in advanced clinical trials (phase 3) are able to exert effective competitive pressure and therefore constitute potential competition.

These consolidated views serve as useful guidelines for drafting and submitting merger filings to CADE (including the filing form itself), helping companies anticipate any questions from the authority and creating a more efficient review process. The authority also highlighted the main vertical integrations observed in mergers involving the pharmaceutical industry, such as those between the production and sale of active pharmaceutical ingredients (APIs), the manufacture of gelatin capsules and drugs, and the different drug manufacturing and distribution segments.

Despite conducting a broad review of CADE’s merger control activity, the study failed to address the issue of associative contracts in the pharmaceutical industry. Precedents and lines of analysis from CADE in cases of cooperation between economic agents (such as associative agreements for joint marketing, development, or distribution efforts) were not considered. This is a significant omission, as it inhibits companies from understanding the authority’s approach to cooperation among economic agents in this market – an increasingly key and recurring topic.

CADE’s investigations into anticompetitive behavior

The study’s main contribution in this regard lies in its compilation of investigations of anticompetitive behavior in the pharmaceutical market since 1994. According to the study, 16 investigations into potential anticompetitive conduct were concluded between 1994 and April 2025, of which only seven identified infringements. Of these seven, four involved cartel cases, two involved bid-rigging cartels, and one involved sham litigation. While sham litigation was the main form of conduct investigated in the pharmaceutical sector (44% of the total cases investigated), notably, it accounted for only a small percentage of the cases that ultimately resulted in convictions.

Emerging issues

The study demonstrates that CADE remains attentive to recent developments within the pharmaceutical industry, especially with respect to innovative technologies such as artificial intelligence, the blockchain, and additive manufacturing. These innovations are significantly transforming drug development and production processes, and represent challenges CADE will need to address in future competition reviews.

For more information on this topic, please contact Mattos Filho’s Antitrust and Life Sciences & Healthcare practice areas.