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SAO PAULO, Brazil — Competition and consolidation within the Brazilian market has heated up in recent years, prompting Empreendimentos Pague Menos SA, Brazil’s second-biggest drug store company, to step up its growth strategy and eye potential mergers and acquisitions. When asked about future expansion plans during a recent interview with Bloomberg, CEO Francisco Deusmar de Queiros said he would consider such U.S. partners as CVS Caremark and Walgreens.
“We’ve been approached by some companies, but we would only do it with a strategic partner,” Queiros reportedly told Bloomberg during an interview at Bloomberg’s Sao Paulo office without naming any prospects. “The right partner has yet to appear -— the right partner that enchants us to go to the ball and dance.”
Queiros reportedly told Bloomberg that Pague Menos’s need for funding to expand would sway him to consider potential tie-ups with U.S. companies.
In emailed responses sent to Bloomberg, neither CVS Caremark nor Walgreens commented on the speculation.
“We continue to see Brazil as a very attractive market for us, but as a matter of policy we do not comment on market rumors,” Carolyn Castel, CVS’ VP of corporate communications, told Bloomberg via e-mail.
Walgreen is “positioned for international expansion” with partnerships outside the United States. and otherwise has no specific plans now, Michael Polzin, Walgreens spokesman told Bloomberg in an e-mail response to questions.
As previously reported by Drug Store News, CVS Caremark earlier this year spread its wings beyond the U.S. borders in a measured fashion with the acquisition of privately held Brazilian drug store chain Onofre. At the time, Onofre operated 44 stores and was the eighth largest drug store chain in Brazil.
Brazil is an attractive market where health care and pharmacy are expected to grow double-digits for the next decade. From 1996 to 2012, pharma sales in Brazil have grown at an approximately 12.5% CAGR; focusing on the period from 2008 to 2012, this rate accelerates to approximately 13.5%. Pharmaceutical sales for the period 2008 to 2012 have a growth rate of: Medicine sales up 13.5%; generics up 25%; and branded products up 11.1%, noted Citi Research analyst Deborah Weinswig in a research note earlier this year.