"Today is a historic day. We are showing how important it is for a country of continental dimensions such as Brazil to have its own insulin production," the minister said Tuesday.
The government will invest 430 million reais ($215 million) in the project over the next five years, mostly financed by the Brazilian Development Bank, Xinhua quoted Padilha as saying.
According to Padilha, a lab in southeastern Minas Gerais state will produce the drug.
The move is part of a government strategy to increase the country's independence on drugs and medical equipment.
Since 2001, Brazil has depended on imports to provide a regular supply of insulin to diabetics as its insulin-producing lab had been sold to a foreign buyer.
"With the insulin being produced abroad, any strategic decision of a company can lead to insecurity in the insulin supply," he said, adding it would be safer for Brazilian patients to depend on insulin domestically produced.
The minister said once operational, the new factory is expected to meet half of the needs of the 1.1 million patients, who depend exclusively on insulin distributed by the public healthcare system. Brazil has some 10 million diabetics.