Private Healthcare Under Exchange Rate Pressure

The exchange rate, particularly the fluctuation of the U.S. dollar, has a significant impact on the private healthcare market in Brazil. As one of the largest and most important sectors in the country, the healthcare system is deeply interconnected with global markets, especially in terms of imported medical supplies, pharmaceutical products, and equipment. Consequently, any changes in the exchange rate can affect the cost of these inputs and ultimately influence the pricing of private health plans.

In 2024 the Brazilian real has experienced 22% depreciation against the U.S. dollar. This devaluation has resulted in higher costs for imported medical products. According to data from the Brazilian Association of Health Plans (ABRAMGE), around 60% of the medicines and medical devices used in private healthcare can be indexed to USD, and a stronger dollar increases the cost of these goods significantly. A 27% rise in the value of the dollar (from R$4,85 to R$6,15) lead to an increase in the costs faced by private healthcare providers in Brazil, which then gets passed on to consumers in the form of higher premiums.

Pharmaceuticals represent one of the most significant components of the healthcare market. A large portion of the medicines consumed in Brazil is imported, especially those related to specialized treatments like oncology, immunology, and rare diseases. For example, in 2022, Brazil's Ministry of Health reported that nearly 30% of the drugs used for treating cancer were imported.

Country has faced challenges with inflation in recent years, and the dollar's appreciation exacerbates these challenges. For example, in 2024, the inflation rate in Brazil FOR healthcare (VCMH – Varia??o dos custos medicos e hospitalares) was recorded at 15.1%, according to IESS (www.iess.org.br).

In conclusion, fluctuations in the exchange rate, have a profound impact on the private health insurance market in Brazil. The increased costs of medical supplies, pharmaceuticals, and international collaborations create upward pressure on premiums and may limit access to private healthcare.

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