Managing Mexico - pharma industry

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Another Pharma Industry article

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Managing Mexico

[Published: 02 June 2005 Source: Chiltern International]

By Dr Faiz Kermani

Mexico's position as the leading Latin American market and the ninth-largest

consumer of pharmaceuticals worldwide has cemented its position as a key

region of growth for the pharmaceutical industry. Yet despite its size and

potential it has several characteristics that set it apart from other global

markets and so pharmaceutical companies have had to tread carefully in order

to identify opportunities (1).

Funding healthcare

Although there is a continuing demand for better healthcare from the rising

population and the government has a long-term commitment to offering a basic

level of healthcare for free to its citizens, there are concerns as to

whether this can be adequately funded (1 ). The country has been carrying

out ambitious reforms through its National HealthCare Program (El Programa

Nacional de Salud). The aim of the program is to establish a system that

will guarantee all citizens free healthcare by 2025, independent of their

ability to pay for it (2). As of 2002, government projects had extended

healthcare coverage to over 8 million low-income citizens (3).

At present, although the public health system provides services to a

majority of the population, it does not account for more than a quarter of

the total value of the market for pharmaceuticals. Therefore the success of

healthcare reforms will dictate the extent to which this market will grow

(1). Mexico's government is well aware of the cost pressures that other

health systems in industrialized nations are facing (1). Mexico was recently

appointed as one of the 32 Member Countries of the World Health Organization's

(WHO) Executive Council. During the May 2005 World Assembly for Health

meeting, Mexico's delegation participated in discussions concerning the

financing of healthcare and the utilization of resources (1).

Market complications

The Mexican market is fairly diverse with there being about 7000 different

drugs in 19,000 different presentations in Mexico (4). In 2002, US$6.83

billion worth of pharmaceutical products were sold through Mexican

pharmacies (5). The major drug classes are cardiovascular, respiratory,

gastrointestinal and analgesics (5). One of the problems for Mexico has

been in maintaining an adequate supply of medicines around the country. In

March 2004, many pharmacies across the country were described as having only

between 80% and 90% of needed supplies (5) and so the government is

attempting to devise a new distribution strategy.

For pharmaceutical manufacturers it can be difficult to establish a clear

position in the Mexican pharmaceutical market. Although in principle there

should only be markets for branded and generic products in Mexico, the

market is actually more complex, with there being up to five main types of

product (1).

Types of pharmaceutical products in Mexico

Branded patented products

Branded generics

Interchangeable Generics

Similares

Public health sector generics

A particular feature of the Mexican pharmaceutical market is the existence

of a class of generic-like drugs known as similares (4). Although these

products have the same active ingredients as original products they do not

go through the same bioavailability procedure as do formal generics.

Unfortunately, Mexican law contains ambiguous terminology and this puts

similares in the position of being neither legal nor illegal (4 ), much to

the annoyance of other pharmaceutical manufacturers. Companies that produce

similares are able to sell their products at much cheaper prices than their

mainstream competitors (1).

Pharmaceutical companies have been looking to the government to tighten

intellectual property legislation and believe it is in the country's

interests to do so (1 ). In 1991, Mexico introduced legislation in the form

of the Ley de Propiedad Industrial and revised it in 1994, to cover patents

and registered trademarks. Following these legislative improvements

international companies increased their investment in R & D and pharmaceutical

facilities (1 ). The pharmaceutical industry association AMIIF (Asociación

Mexicana de Industrias de Investigación Farmacéutica) represents many of the

multinational pharmaceutical companies in Mexico and produces publications

regarding the industry position on healthcare and business issues. It

regards an improvement in intellectual property legislation as necessary for

the growth of the pharmaceutical industry in Mexico (7 ).

Outlook

Given its proximity to the important US market, Mexico has been a region of

interest for the pharmaceutical industry for a number of years, but it is

now a major market in its own right. The business environment has attracted

most multinationals to invest in the country and it is only the

uncertainties regarding intellectual property protection that have caused

the pharmaceutical industry to proceed in a cautious fashion (1). Although

the Mexican market has great potential, most companies see an improvement in

the intellectual property environment as key to encouraging their further

involvement in the country.

References

1. Kermani F. (2005). Mexico's Pharmaceutical Potential. Chiltern

International.

2. Anon (2004).Misión, Visión y Valores. Secretaría de Salud.

3. Anon (2001). Improving outlook for Mexico's healthcare system. Latin

America Healthcare Newsletter.

4. J (2003). Mexico - Pharmaceutical Sector Update. U.S. & Foreign

commercial service and U.S. Department of State, 2004.

5. Anon (2004). The pharmaceutical industry in Mexico. KPMG. January 2004.

6. Rodríguez R (2004). Por ineficiencia, desabasto de medicamentos. 29 March

2004 edition. Boletines Fármacos.

7. Anon (2004). Asociación Mexicana de Industrias de Investigación

Farmacéutica.

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For further information on Chiltern's work, please contact Faiz Kermani

(faiz.kermani@...) or visit the Chiltern International website at

www.chiltern.com

Regards,