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HEALTHCARE
LIFE SCIENCES
REVIEW
&
PHARMACEUTICALS:
SHAKING UP THE SYSTEM
PAGE 21
CARVING OUT A MEDICAL
DEVICE MARKET
PAGE 56
CASE STUDY: SILANES
PAGE 70
CONVERGENCE IN ACTION:
FOCUS ON DIABETES
PAGE 82
MEXICO 2013
COFEPRIS Revamped
Mikel Arriola, the man who changed an institution and an industry PAGE 18
published in association with
2013
Nuevo
Sinaloa
Su
Sur
California
a
Baja
Coahula
Chihuahua
Sonora
UNITED STATES
Norte
California
Baja
Baja
California
Norte
UNITED STATES
Sonora
Chihuahua
Baja
California
Sur
Coahula
Sinaloa
Nuevo
Leon
Durango
Tamaulipas
Zacatecas
San Luis
Potosi
Nayarit
Yucatan
Jalisco
1 Aguascalientes
2 Guanajuato
3 Queretaro
4 Hidalgo
5 Tlaxcala
6 Mexico
7 Distrito Federal
8 Morelos
Colima
Quintana
Roo
Michoacan
Campeche
Veracruz
Puebla
Tabasco
Guerrero
BELIZE
Oaxaca
Chiapas
GUATEMALA
EL SALVADOR
EL SALVADOR
GUATEMALA
Mexico
8 Morelos
7 Distrito Federal
6 Mexico
5 Tlaxcala
4 Hidalgo
3 Queretaro
2 Guanajuato
1 Aguascalientes
Oaxaca
Chiapas
BELIZE
Guerrero
T b
Tabasco
Puebla
Co a
Colima
Veraccruz
cr
Michoacan
Campeche
Roo
Quintana
Q
uintana
Jalisco
Yucatan
Nayarit
Potosi
San
S
an Luis
s
Zacatecas
s
Durango
Tamaulipas
s
ACKNOWLEDGEMENTS
1
Healthcare & Life Sciences Review – Mexico 2013 is
brought to you by
Mexico: Healthcare & Life Sciences Review 2013
2
ACKNOWLEDGEMENTS
Focus Reports would like to thank all individuals, institutions and companies
involved in producing this report.
Special thanks go to
Rafael Gual (CANIFARMA),
Mikel Arriola (COFEPRIS),
Milton Rosario (OD Consulting Group)
Hector Valle (IMS), and
Fabiola Trigueros (Smart Scale)
who showed us their strong support and interest throughout our project.
CONTENTS
THE MEXICAN HEALTHCARE SYSTEM
3
7
The Current Situation Through the Eyes of a Patient
8
Fragmented Institutions, universal coverage?
10
Interview with Eduardo Gonzalez Pier – former finance director of IMSS
14
Medical Tourism
16
Interview with Mikel Arriola, COFEPRIS
18
PHARMACEUTICALS
21
Introduction by Rafael Gual, CANIFARMA
22
Shaking up the system
23
An outstanding example
24
Shifting landscapes shift strategies
26
Home turf
29
Unreached Potential
32
Pharma’s affair with Private labels
33
Stengthening guidelines for biosimilars
35
Interview with Fabiola Trigueros, Smart Scale
36
The legal perspective on…by Alejandro Luna, Olivares
38
Expert eye… The Mexican Public System, by José Carlos Ferreyra. President, Pharmaceutical Institute, A.C.
40
Expert eye… The Healthcare System and Regulatory Framework in Mexico
By Sandra Sánchez, President of the Mexican Association of Pharmaceutical Research Industries (AMIIF)
42
Interview with José Alberto Peña, VP & General Manager of GSK Mexico
44
Focus on orphan drugs
Interview with Markus Krenzlin, Country Manager, Shire Mexico
46
Expert eye: Optimizing pharmaceutical distribution channels
By Dominik Bacher and Reto Zoppi, director general and commercial director, BacherZoppi
48
MEDICAL DEVICES
50
Mexico’s potential for medical devices
51
A Challenging Regulatory Landscape
53
Carving Out A Medical Device Market
56
Seguro Popular Needs To Extend Its Reach
58
Made in Mexico
60
Doing Business With “Integrators”
62
Distributing health
64
INNOVATION: Creado en Mexico?
66
Case Study: Silanes
70
REINVENTING HEALTHCARE
73
Expert eye… Public Private Partnerships, by Jose Alarcon, PWC
74
Interview with Jaime Cervantes, Vitalmex
76
Looking for leaders
80
Convergence in action, a focus on diabetes
82
4
INTRODUCTION
Introduction from DHL
José F. Nava, President, DHL Supply Chain Latin America
The publication of this first edition of a Healthcare & Life Sciences Review on Mexico
in 2013 couldn’t be timelier. Mexico has blossomed in the healthcare arena and has
become an important partner for the US. I’m pleased that the Mexican healthcare
sector is having a turn in the spotlight.
Over the last decade, the Mexican government has made unprecedented efforts
to ensure universal healthcare coverage to all its citizens through Seguro Popular
– and today, the program serves as a role model for health policies around the
world. Beyond Seguro Popular, a growing middle class, and aging population have
increased healthcare expenditures and the demand for an efficient distribution
system throughout the diverse geography of the country.
In addition, Mexico has consolidated its position as a major manufacturing hub for both
pharmaceuticals and medical devices. The trade flows between Mexico and the US to
the North; and Mexico to the south with Central and South America have also grown.
All of this means opportunities and challenges for logistics in the region. DHL
Supply Chain has a keen focus on the development of the Latin American healthcare
industry, which has shown steady growth for almost a decade now. This growth is
credited to the exponential growth of the world’s emerging markets – primarily
Brazil and Mexico, where governments and manufacturers have committed to
increase market penetration and expand coverage, at a lower cost for the end
consumer. The region’s overall economic conditions and rapid recovery from global
economic crisis ensures solid opportunities for industry players in the region.
DHL Supply Chain has a strong presence in the key Latin American markets, pioneering
sophisticated and customized logistics solutions for customers with highly complex
supply chains. We develop strategic partnerships with our customers to: help them
identify opportunities for efficiencies; to help them achieve their business goals; and
to simplify their logistics through our end-to-end solutions such as hospital logistics
and secondary packaging, both recently launched and already providing great benefits
to our customers. We are pleased to share the knowledge, infrastructure and expertise
that support the impressive industry growth in Mexico and throughout Latin America.
We are delighted to support Focus Reports in the compilation of this invaluable
report on the current Healthcare and Life Science industry in Mexico. The publication
encapsulates the views of key figures across the healthcare and life sciences industry,
and provides essential opinion and analysis for those wanting to understand this quickly
evolving market. I hope it proves to be a valuable asset for your business, as well.
Sincerely,
José F. Nava, President, DHL Supply Chain Latin America
“DHL Supply Chain
has a keen focus on
the development of
the Latin American
healthcare industry,
which has shown steady
growth for almost a
decade now.”
INTRODUCTION
5
A Call for Convergence
Note from the Focus Reports team
“As Mexicans we must be prepared for a new stage of our country’s development”.
These have been the inspiring words of newly-elect President Peña Nieto, who
has promised to transform Mexico into a competitive global power. As the world’s
thirteenth largest economy, there is no question that Mexico has outgrown its status
as a low-income developing nation. Nevertheless, the country has disappointed in
the rate of its development considering that more than 40% of its citizens are still
defined as poor. With such indicators, it comes as no surprise that the country’s
provision of healthcare is still a work in progress.
For the last decade Mexico has made healthcare a priority and a right of all its
citizens. With the introduction of universal coverage in 2004, known as the Seguro
Popular, the country has been moving to increase healthcare access and improve
the quality of service. To do this, the government has vowed to augment health
expenditures from 6.4% of GDP to 10%. This is certainly a welcome move given
that currently Seguro Popular only budgets around USD$200 per patient per year.
Money alone, however, will not fix the fragmented nature of the Mexico’s current
healthcare system, which varies widely in terms of quality from state to state.
Indeed, the greatest challenge at the moment is defining an effective structure that
will efficiently incorporate all of the actors relevant to the healthcare sector. Only
once this has been achieved will true efficiencies emerge and access be enhanced.
This will be reflected in a reduction of waiting times, a decrease in overall costs
and an increase in the quality of service. Currently, there are constant reports
of mismanaged funds and insufficient resources. Greater transparency must be
created so that states and healthcare institutions become accountable for the
money they are granted by the federal government.
A predominating opinion amongst experts is that Mexico’s healthcare must be
rearranged under the scope of convergence. The idea is that the patient should
become the focal point of all actors, who must understand their role in the
healthcare ecosystem in a holistic manner. Rather than simply playing an individual
part, it is essential for all actors to understand how their contributions affect the
wider system and how they can better interact with other players to improve their
services. This includes coordinating the activities of the public, private and not-forprofit sectors with the final aim of creating an integrated system.
Publisher: Julie Avena
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Undoubtedly, convergence of wills should happen before convergence of actions.
This is why raising awareness and rallying all actors around a core objective – the
patient – is crucial. We hope this publication serves to further this effort.
Copyright Focus Reports 2013
All rights reserved. No part of this publication maybe reproduced in any form or by any means, whether electronic, mechanical or otherwise including
photocopying, recording or any information storage or retrieval system without prior written consent of Focus Reports.
While every attempt is made to ensure the accuracy of the information contained in this report, neither Focus Reports nor the authors accept any liabilities for
errors and omissions. Opinions expressed in this report are not necessarily those of the authors.
7
The Mexican
Healthcare system
8
The Current Situation Through the Eyes of a Patient
Whether it is cost, efficiency, quality or technology, what do Mexicans think of their healthcare system today?
Statistics from Deloitte 2011 Survey of Healthcare Consumers in Mexico - Key Findings, Strategic Implications
Using a typical report card scale of A, B, C, D and F,
how would you grade the health system in Mexico on the
following dimensions?
• Most Mexicans (44%) are dissatisfied with the performance
of the Mexican healthcare system.
• Primary reasons for criticizing the healthcare system’s
performance are waiting times (74%), the availability of
medications (52%), lack of patient-/consumer-orientation
(47%), limited access to services and convenience (45%),
and wellness-orientation (38%)
• 65% of consumers believe that 50% or more of healthcare
spending is wasted.
• Consumers are optimistic (69% agree) about the possibility
to simultaneously improve quality and reduce costs in the
current system of care.
• However, Mexicans are satisfied with the level of care
offered by primary care centers (83%) and hospitals (72%)
39%
Up-to-date technology
24%
Up-to-date buildings
and equipment
33%
30%
Medical innovation
(new treatments
or services)
31%
33%
Focus on wellness
rather than illness
22%
38%
Access to services
(availability and
convenience)
19%
Patient- and
consumer-centered
19%
Availability of
medication products
19%
Wait times for service
45%
47%
52%
10%
74%
• Dimensions of the Mexican healthcare system that
consumers feel positively about include up-to-date
technology (39%), modern buildings and equipment (33%),
and medical innovation (31%) O
0%
20%
40%
60%
Favorable grade (”A” or “B”)
Unfavorable grade (”D” or “F”)
Copyright © 2011 Deloitte Development LLC. All rights reserved.
Using a typical report card scale with grades A, B, C, D and F,
how would you grade the overall performance of Mexico’s
healthcare system?
100%
Overall, how satisfied are you with the quality of care you
receive from your primary care provider/received from
the hospital you used most recently?
100%
80%
15%
80%
44%
3% / 6%
60%
41%
24%
14%
20%
36
40%
20%
2221 2526
20%
1%
A
B
FAVORABLE GRADE
83% / 72%
60%
40%
0%
9
C
D
F
UNFAVORABLE GRADE
3 1 1 1 2 2 3 1 4 34
0% 1
1
2
3
4
5
6
NOT SATISFIED
25
9 10
7
8
9 10
SATISFIED
2011 Mexico
Note: Bars may not sum precisely to the totals
above due to rounding.
Source: Deloitte 2011
Primary care provider
Hospital care
Source: Deloitte 2011
Specialty Injectable
Pharmaceuticals (SIP)
Medication Management
Systems (MMS)
Driving quality transformation
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infusion technologies, backed by proven experience producing highquality products.
One of the aspects that differentiates Hospira is our combination of
pharma and device expertise and offerings. We can offer our
customers “one-stop” shopping to address the pressing needs they
face in reducing costs while improving the safety and productivity of
medication administration.
At Hospira, we are committed to delivering the highest possible
quality of products and services to our customers and ensuring that
we are in full compliance with the manufacturing standards of
regulatory agencies of markets we serve. These are the catalysts
behind our dedicated focus on operational excellence: a foundational
element of our business.
Because Mexico is an important market in Latin America, Hospira is
now expanding our offer with a strategic line of injectable generics
and a software to reduce dosage errors in IV therapies, becoming one
of the most strategic partners for health professionals.
10
FRAGMENTED INSTITUTIONS
Fragmented Institutions, universal coverage?
Mexico’s move to offer universal healthcare coverage to its population is unprecedented and has been hailed as
an example for other countries to follow.
Exactly 10 years ago Mexico realized that its public healthcare provision was
inadequate as it was based on a system of employment benefits. This left over 50
million Mexicans without healthcare coverage because they were largely employed
by the country’s widespread informal economy. The implementation of the Seguro
Popular transformed access to healthcare into a right rather than a privilege,
and today it has succeeded in registering all those who were excluded under the
original national healthcare plan, the Mexican Institute of Social Security (IMSS)
created in 1943.
More than just the social aspect of covering the whole country without leaving
anyone behind, Seguro Popular is also interesting for the pharmaceutical and
medical device industry as a whole, by massively bringing new consumers into
the market – despite the low prices. Even more interesting for the government,
if Seguro Popular currently represents huge spending to cover the most citizens
under its umbrella, it should in the long term allow savings through preventive
medicine rather than expensive treatment.
Unfortunately, the more Seguro Popular grows, the more it exaggerates the
fragmentation of the healthcare system, as it is the states that are responsible for
the implementation of the program and the management of the infrastructure.
Each state manages its network of general hospitals and a smaller group of highspecialty hospitals. To meet the huge demand of such an attracting new coverage
system, both the federal and state governments had to build their own primary care
and hospital facilities in a short amount of time but it has not been accompanied by
a similar growth in terms of human resources, making it very difficult to deliver a
quality and efficient care. This is a direct consequence of the lack of strict national
requirements and standards expectations that would encourage most hospitals to
homogenize the care provided, whether it is through IMSS, ISSSTE, PEMEX or the
National Institutes.
This disparate mosaic of so many different institutions is the main source for
varying services and quality offered at health clinics. If the GDP spending for
healthcare is still below Latin American average and far behind OECD countries,
“There is clearly
enough money for
healthcare in the
country. However the
issue is infrastructure
and the articulation
of the fragmented
elements of the system:
it is too complex and
not efficient.”
Jaime Cervantes, President of
Vitalmex,
11
IN THE SPOTLIGHT:
Dra. Mercedes Juan López Health Secretary”
Born in Mexico City, Dr. Mercedes Juan Lopez is a surgeon
specialized in Rehabilitation Medicine.
Dr. Juan López has garnered over 35 years experience
in federal, state, and academic pursuits of public health
policy and research. In her distinguished career, she has
served as Deputy Chief of Education at the Ministry of
Health General Directorate of Rehabilitation; Technical
Secretary, Health Cabinet, Republic of México Presidency;
Secretary of Health Regulation and Promotion, Ministry
of Health; Federal Deputy, LVII Legislature; Secretary,
Health Commission and the Commission on Population
and Development; Vice-coordinator, Parliamentary Faction,
PRI; Coordinator, Liaison Unit, Ministry of Health Congress;
Secretary, General Health Council; Commissioner of Health,
COFEPRIS; Member, Governing Board, National Women’s
Institute; Executive President, Board of the Mexican Health
Foundation.
As the first woman to head the Ministry of Health, she
has offered to work with care and dedication to guarantee
efficient and quality public health services, with a particular
focus on prevention.
The industry’s reactions to her nomination in December
2012 were very positive. She is perceived as competent and
committed, and her nomination was seen as “ a great news
for the industry but also for the country”.
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12
The National Health System
SERVICE PROVIDER
POPULATION SERVED
FINANCING
Institutions that provide services to an open/uninsured population
Secretariat of Health
Self-employed, unemployed,
workers in the informal economy
State Health Services
Vulnerable and marginalized
population
IMSS-Oportunidades
Federal Government
and user fees
Federal Government, State
Government and user fees
Federal Government
Institutions that provide services to a population with social security
IMSS
Workers from the private sector
of the formal economy and
IMSS workers
1.
2.
ISSSTE , SEDENA ,
4.
SEMAR , PEMEX
3.
5.
Workers from the public sector
of the formal economy
Federal Government,
employers and workers fees
Federal Government
and workers
Institutions of the private sector
Private hospitals
and clinics
Individuals with or without
social insurance and with a larger
ability to pay for health services
1. Mexican Institute of Social Security
2. Institute for State Workers Insurance and Social Services
3. Secretariat of National Defense
some state that Mexico has the resources to create a
better healthcare system, if only it was more united. Jaime
Cervantes, President of Vitalmex, a company providing
integrated healthcare services, explains that “there is
clearly enough money for healthcare in the country.
However the issue is infrastructure and the articulation of
the fragmented elements of the system: it is too complex
and not efficient.”
Echoing the views of many general managers of the industry,
Carlos Jimenez, Director General of B. Braun Aesculap
de México contends that “it is difficult to view the Mexican
healthcare market as one single entity. Indeed, the healthcare
market is Mexico is composed of 4 to 5 different segments.
There is the highest standards segment, that would be the
private sector and the “5 star hospitals”, followed by the
National Institutes at the government level, which are every
much focusing on quality. I would then classify IMSS and ISSSTE
as the third segment and finally the decentralized parts with the
Employees and employers
4. Secretariat of the Navy
5. Mexican Petroleum
Source: IMSS
“Secretarias de Salud”. Each of these different segments act
with their own mechanisms, their particular processes, using
different technologies for treatments. That is why the Mexican
market is not very clear and difficult to classify as developed or
not, given the fact that it has so many different layers.”
Roman Rosales, general manager of medical services and ER
for Mexico City, Health Department, adds that “as long as our
health institutions remain financially independent, it will be
difficult to obtain a performing healthcare system. Universal
coverage is the best solution to homogenize medical practices
in the country, provide equal services to the patients, display
high technology equipment, and insure equal professional
medical attendance to all patients.”
Indeed, the notion of a cohesive healthcare system was one
of the propositions of incoming President Peña Nieto who
included healthcare as one of his main pillars for reform.
The idea was a central part of his Pacto Por Mexico reform
proposal that rallied all political parties together under
a single cause. That cause is the assurance to transform
Mexico into a country with enviable living standards and
robust economy that is recognized globally.
Population by insurance status
Seguro
Popular,
43,518,719
(38.47%)
PEMEX,
SEDENA,
SEMAR,
Private,
1,091,321
2,006,687
(0.96%)
(1.77%)
Other public
organizations,
900,884 (0.8%)
13
IMSS,
55,705,875
(49.24%)
ISSSTE,
11,993, 354
(10.6%)
The sum of insurees may be larger than the total Mexican population
(113,122, 894 citizens) due to the overlap in insurance agencies. For instance,
individuals covered by both IMSS-Oportunidades and Seguro Popular.
Sources: Individual estimates are based on IMSS, Monthly Report to the
IMSS user population and AcceDer, December 2010; The State Workers
Institute for Insurance and Social Security (ISSSTE), Annual Statistics 2010;
System of Social Protection in Health, Report of Results 2010; Mexican
Petroleum (PEMEX); Secretariat of National Defense (SEDENA),
Secretariat of the Navy (SEMAR); and the National Institute of Statistics
and Geography (INEGI), Population and Housing Census 2010.
Gonzalez Pier, former Finance Director of IMSS, and current
President of Fundación Mexicana para la Salud (Funsalud)
concludes that “the healthcare system in Mexico is at a crossroads.
We are working on turning a system that is very fragmented
and inefficient into something that is more appropriate to the
needs of the population. There is a lot of consensus regarding
universalizing health care coverage, but we need to be more
precise on what exactly universal health care entails.”
“There are two hot topics on the core agenda: what will be
the benefits and the population groups covered. We need
to include those who are not covered yet, and provide more
interventions currently not being delivered. It will be a tough
challenge because it is difficult to deliver the same level of
care throughout the whole healthcare sector. We also need
to define and work on the new tools required to deliver this
brand new health system. Beyond defining a common view of
health care, the real challenge will lie in implementing the
system in an efficient and sustainable manner.” O
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14
INTERVIEW: EDUARDO GONZALEZ PIER
Eduardo Gonzalez Pier – former finance director of IMSS
Eduardo Gonzalez Pier, finance director of IMSS at the time of the interview, shares with Focus Reports the
challenges but also the achievements of Latin America’s largest social security institution.
IMSS is a central pillar of Mexico’s healthcare system and the largest social
security institution in Latin America. How do you assess the level of healthcare
provided by IMSS?
To evaluate the efficiency of our services, it is key to look at the amount of resources
we are granted per person. When you divide the available budget per person covered,
it comes down to about USD$ 350 per person per year, which is only slightly higher
than Seguro Popular.
Taking into account the amount of money allocated per person each year, we
provide an excellent service. We offer all levels of care, with very few restrictions.
It is difficult to find an insurance scheme that is so comprehensive with the budget
constraints we have. Furthermore, the quality of service is good considering the
infrastructure capacity we have.
In Mexico the average rate for beds is 1.5 per thousand people whereas the OECD
standard is more than 4, and at IMSS our rate is 0.8 per thousand. For Seguro
Popular the rate stands slightly below 1 bed per thousand people. This means that
IMSS and Seguro Popular’s rates are below the national average and far from the
OECD level. The reality is that there are not enough beds or hospitals in the system,
despite the government’s efforts to build more hospitals. The problem, however,
is that many times this has meant that we end up with hospitals with insufficient
doctors or trained specialists because the allocated resources are less than what
is required. Mexico has an average of 2 physicians per thousand patients, which is
much lower than the OECD average.
It is also obvious that we have a problem with a very low number of specialty doctors
and their geographical distribution. Most specialty doctors are based in urban areas
INTERVIEW: EDUARDO GONZALEZ PIER
15
“The reality is that there are not
enough beds or hospitals in the
system, despite the government’s
efforts to build more hospitals. ”
and big cities. Also, we need to find the right mix of doctors
with different specialties. For instance in a country like Mexico
with an ageing population, we need less obstetric doctors and
more oncologists, geriatricians and cardiologists. However,
I am not sure that the right motivations and communication
are there for young students to specialize in what is needed.
How does IMSS define the price of medicines it purchases?
There are two different mechanisms for the purchase of drugs
– one for single-source drugs (mainly patented products) and
another for generics.
Prices of single-source drugs are negotiated yearly under a
centralized process where prices are established based on a
combination of criteria, such as cost and efficacy of the drug
compared to therapeutic substitutes. Other variables we
account for include social and financial protection concerns.
For generics or multiple-source drugs, prices are set
competitively through a tender process.
Is IMSS integrating some elements of value based pricing in
Mexico?
There are two types of value-based pricing we take into
consideration:
Ex-ante, when the price will be set according to the health and
cost-saving benefits directly expected from that drug. Then
there is the ex-post pricing, where the final price is adjusted
later on when the actual health outcomes are evaluated and
thus the risks are shared. If gains are not delivered, whether
they are economic or health related, then it is possible to get
some sort of reimbursement and price adjustments.
At IMSS we already use the first scheme, since we purchase
some drugs in accordance to our forecast of the benefits. We
are also starting to design the contracting process for the
second type. These sort of risk-sharing arrangements are new
and complex; we are looking at best practices and experiences
elsewhere, including the UK where there has been more
experience, especially through patient access schemes.
Do you think the tender process is transparent enough? What
has been done to improve it?
It is more transparent than it used to be. IMSS has implemented
several new tendering schemes, with different price setting
criteria, new tendering technologies, and more complete
and readily available information. For the last 3 years, we
have been following a set of recommendations issued by the
OECD, which include best practices for transparency and
accountability. I believe our process has improved and the
cost savings and other results obtained so far have been part
of these new managerial efforts.
The tender process switched from a cost-per-product to a
cost-per-procedure. What has been the impact of this shift?
The net gain comes down to whether you can actually
measure the end-result or not with sufficient reliability.
When looking at the numbers associated to potential
savings from more efficient tendering practices, of course
this becomes very attractive. The challenging part, however,
is that once we move away from buying products in the
traditional way to buying procedures and services – which
are much more difficult to monitor – we might end up in a
worse scenario. It is necessary to be able to have reliable
systems to measure the necessary procedures and the
actual costs and benefits. For many medical activities it is
hard to check the end-result, so there needs to be a careful
selection of what can and cannot be contracted under
different payment schemes. O
16
MEDICAL TOURISM
The view on medical tourism
Medical tourism in Mexico has been experiencing rapid growth in recent
years, evolving from low cost dental clinics at the US border to high-tech
hospitals with international accreditation spread throughout the country.
Founded in 1886, The American British Cowdray Medical Center is a leading
not-for profit medical center in Mexico with an outstanding reputation for
patient care. Alejandro Alfonso Diaz, its managing director, gives Focus
Reports his insight on the role of medical tourism in Mexico.
What are the main trends of medical tourism in Mexico today?
First of all I do not think the term medical tourism is appropriate. Tourism is related
to vacation and enjoyment and to me receiving a treatment or having surgery should
not be related to leisure.
Mexico has been a part of this trend for many years, because people with means
in Mexico have been going to the US and sometimes Europe to receive health
treatment. Now, we are experiencing medical tourism from the other side: we see
many American or Canadian patients coming to Mexico to be treated. The motivation
is obviously different, as they come to Mexico to get more cost-effective treatments.
What is your opinion on such a growing phenomenon?
Medical Tourism should not turn care into something mechanical. We are not
an assembly line providing healthcare, and patients are not machines that
need to be repaired and can then go back to normal life. There should always
be continuous treatment when patients go back home. Surgeries and specific
procedures that people seek through medical tourism are most of the time a
small part of the treatment they need, and that is why there is a risk involved
with this phenomenon.
An example would be bariatric surgery: people with obesity problems come to
the Mexican border, get cheap surgery, but afterwards do not receive follow up
treatment. The surgery is only the first step to the bariatric treatment. So a question
remains - how are we going to ensure that the patient will have follow-up care when
he is back in his country and which physician will continue the treatment?
What is ABC Hospital’s involvement with medical tourism?
At ABC, we need to make some additional efforts to ensure that our patients will
continue to receive medical care even after surgery. Otherwise, we are omitting
quality and safety factors, and as a high-end hospital we should not compromise
our main values. That is also why we are affiliated to the Methodist Hospital in
Houston, which allows us to organize a formal follow up process in the US. O
“Medical Tourism should not turn care
into something mechanic. We are not
an assembly line providing healthcare,
and patients are not machines that
need to be repaired and can then go
back to normal life.”
Alejandro Alfonso Diaz, managing
director, The American British Cowdray
Medical Center
MEDICAL TOURISM
17
Table 1: Medical tourism prices (in selected countries)
Procedure
US
India
Thailand
Singapore
Malaysia
Mexico
Heart Bypass (CABG)
113 000
10 000
13 000
20 000
9 000
3 250
Heart Valve replacement
Cuba
150 000
9 500
11 000
13 000
9 000
18 000
Angioplasty
47 000
11 000
10 000
13 000
11 000
15 000
Hip replacement
47 000
9 000
12 000
11 000
10 000
17 300
Knee replacement
48 000
8 500
10 000
13 000
8 000
14 650
Gastric bypass
35 000
11 000
15 000
20 000
13 000
8 000
Hip resurfacing
47 000
8 250
10 000
12 000
12 500
12 500
Spinal fusion
43 000
5 550
7 000
9 000
Masectomy
17 000
7 500
9 000
12 400
Rhinoplasty
4 500
2 000
2 500
4 375
2 083
3 200
1 535
Tummy Tuck
6 400
2 500
3 500
6 250
3 903
3 000
1 831
Breast reduction
5 200
2 500
3 750
8 000
3 343
3 000
1 668
Breast implants
6 000
2 200
2 600
8 000
3 308
2 500
1 248
385
180
243
400
250
300
400
350
1 500
2 636
950
Crown
Teeth whitening
289
100
100
Dental implants
1 188
1 100
1429
15 000
7 500
*Cost of surgeries around the world. Costs given in US$.
**The price comparisons for surgery take into account hospital and doctor charges, but do not include the cost of flights and hotel bills for
the expected length of stay.
Source: Medical Tourism: Treatments, Markets and Health System Implications: A scoping review
Neil Lunt, Richard Smith, Mark Exworthy, Stephen T. Green, Daniel Horsfall and Russell Mannion, OECD, 2011.
List of Hospitals in Mexico with Joint Commission International (JCI) accreditation
Assisteo Mexico S.A. de C.V.
Program - Care Continuum
First Accredited: 16 March 2012
Christus Muguerza Alta Especialidad
Monterrey
Program - Hospital
First Accredited: 22 July 2007
Re-accredited: 27 August 2010
Accreditation Withdrawn on 27 August 2011
Clinica Cumbres Chihuahua
Chihuahua
Program - Ambulatory
First Accredited: 23 April 2008
Re-accredited: 30 August 2011
Hospital CIMA Chihuahua
Chihuahua
Program - Hospital
First Accredited: 31 August 2012
Hospital CIMA Hermosillo
Hermosillo, Sonora
Program - Hospital
First Accredited: 11 December 2008
Accreditation Expired: 10 December 2011
Voluntarily Withdrew from Accreditation
Hospital CIMA Monterrey
Monterrey, Nuevo Leon
Program - Hospital
Hospital Galenia
Cancun, Quintana Roo
Program - Hospital
First Accredited: 5 October 2012
Hospital Mexico Americano, SC
Guadalajara, Jalisco
Program - Hospital
First Accredited: 20 March 2010
Hospital San José Tec de Monterrey
Program - Hospital
Re-accredited: 18 June 2011
Voluntary Withdrawal from Accreditation
Accreditation Expiration Date: 17 June 2012
The American British Cowdray Medical
Center IAP - Observatorio Campus
Mexico City
Program - Hospital
Re-accredited: 17 December 2011
The American British Cowdray Medical
Center IAP - Santa Fe Campus
Mexico City
Program - Hospital
Source: www.jointcommissioninternational.
org , March 2013.
Hospital Y Clinica OCA, S.A. de C.V.
Program - Hospital
First Accredited: 27 September 2008
18
INTERVIEW: COFEPRIS
Interview with COFEPRIS: Mikel Arriola
Life has not been easy for Mikel Arriola since he stepped in as head of COFEPRIS. The regulatory authority’s
agenda has been daunting and overwhelming since Arriola’s entrance, but results have been impeccable. Despite
a change in government, Mikel Arriola was reappointed as the head of COFEPRIS in December 2012.
You were appointed as Federal Commissioner of COFEPRIS in March 2011. What have
been the biggest challenges you’ve faced within this time?
COFEPRIS regulates every sanitary risk related to any industry- we regulate 10%
of Mexico’s GDP, and 12% of international trade. The most important challenge
I faced when entering COFEPRIS was understanding whom I had to deal with to
make things happen.
On a more material point of view, the major challenge we first experienced was
tackling the massive backlog of sanitary registrations. Mexico had a major legal
reform in 2005 that mandated the renewal of every drug registration in the market to
ensure that we had only 2 types of medicines: generics and innovative medicines. This
reform was crucial, but the government didn’t regulate this reform in administrative
terms until 5 years later. This agency went into an administrative crisis, and when I
arrived from the Ministry of Finance, I had to deal immediately with the backlog.
The other challenge was also to determine what we wanted in terms of
pharmaceutical policy. Our pharmaceutical policy is to provide the patient – our
main object of protection – with the best alternatives in the market. The COFEPRIS
universe was unreadable and lacking priorities; we needed to set them and to reset
communication with the whole industry. One of our strategies, for example, was
to establish access to medicines for all Mexican families – so we started to issue
sanitary registrations for generic drugs.
What steps have you taken to actively change the reputation of COFEPRIS in the minds
of the Mexican public and the pharmaceutical industry?
Our goal is to generate predictability for the market, and send the right messages to
our regulated industries. By doing so, we are going to have a better set of alternatives
for the consumer, hence protecting public health. We have to assume our position as
a sanitary regulator, but also as an economic regulator, and build strong relations
with the sectors that we manage. I invest a lot of my time receiving companies of all
sizes and, I suppose, this is how the image of the institution has changed. We need
to be the best for the health of the consumer and the industry can’t survive without
a market. COFEPRIS cannot meet its objective to protect the consumer if we don’t
regulate firmly but with a commitment to both industry and consumers.
“Our goal is to generate
predictability for the
market, and send the
right messages to our
regulated industries.
By doing so, we are
going to have a better
set of alternatives for
the consumer, hence
protecting public health.”
INTERVIEW: COFEPRIS
19
Pharmaceutical Policy – a roadmap
Improve access for consumers to Health Supplies as to reduce sanitary risks
Reducing the backlog
Legal framework improvement
to eliminate barriers to entry
Deregulation and
organizational modernization
International harmonization
Issuance of sanitary
registrations
Introduction of generics into the
market
Removal of the manufacturing
plant requirement
Certification by the
Panamerican Health
Organization
Simplified liberation of vaccines
Legal reforms for the
introduction of biotechnological
drugs
Reclassification of medical
devices and creation of low risk
classification
Specialized lanes for
administrative procedures
Introduction of innovative drugs
into the market
Equivalence agreements on
medical devices and new
molecules
Specialized lanes for
pharmaceuticals and medical
devices
Recognition of foreign GMP
certificates
Authorized Third Parties
Source: COFEPRIS, 2012
We have heard many times that the Government should start to
see COFEPRIS not just as a quality controller, but as a promoter
for Mexican exports. How do you achieve this?
The Mexican pharmaceutical industry is an industry with
great quality, and is a huge asset for the economy. If we can
work with the industry to expand their opportunities to invest
internally and externally, we are making a change for our
country. We have to be creative, and build the best profile for
the Mexican industry to be able to attract more investment
and provide better opportunities. We have to create a more
flexible market, and the best tool to create this is regulation.
I want to be very aggressive in terms of gaining market share
internationally.
What do you feel have been the most significant achievements
of COFEPRIS since you have managing the organization?
We designed a very specific strategy when we first arrived
in COFEPRIS, and I think we have been quite successful in
complying and enforcing it.
Firstly, we had to reduce the backlog, and we have since then
issued 9000 registrations the first year. Secondly, we had to
improve our regulatory framework and eliminate barriers
to entry into the market, which was done by issuing 109
generic registrations, suppressing the manufacturing plant
requirement and building consensus around our regulations
on biological products and bio-similars. Thirdly, we had to build
international recognition, and we have achieved it through the
PAHO recognition which was achieved in late 2012.
My conclusion is that we have a strategy to reinforce the
Mexican market for the well-being of our patients and we are
on the right path. O
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PHARMACEUTICALS
21
Pharmaceuticals
22
PHARMACEUTICALS
FOREWORD BY RAFAEL GUAL,
director general of CANIFARMA
Since 1946 The National Chamber for the Pharmaceutical Industry
(CANIFARMA) has been working to represent and further the interests of
the Mexican pharmaceutical sector in relation to governmental authorities.
In this section, Rafael Gual, General Director of CANIFARMA, speaks about
the chambers objectives regarding sanitary regulation, research and
innovation, and economic development.
In the last three years CANIFARMA has been working tirelessly in defining a development
program for the pharmaceutical sector, which is unprecedented in terms of depth and scope.
In brief, the development program involves transforming the pharmaceutical sector into
one of the most important economic engines for Mexico, and a new route of economic
development for the country.
All essential aspects of the country’s health are touched by the pharmaceutical sector, since
we help to improve life expectancy and the quality of life of the population; we generate
knowledge through the intrinsic relationship of our business with research, innovation and
applied science; and we also impact the economy, since we create high quality jobs that
foster a virtuous circle of human capital, productivity, welfare and development.
In recent years there have been significant advances in regulatory matters in which the
concurrence, understanding and cooperation between authorities and industry have
made a notable difference, all working in favor of Mexico.
As for research, Mexico has a great potential yet to be properly exploited. The
infrastructure and human resource available in our country allows us to predict that
under favorable conditions, we can become the most important clinical research
development center for Latin America, which will bring significant technological and
economic spillover for our country.
Besides, our sector is currently the second largest productive sub-branch for
the country, as it shares more than seven percent of gross domestic product for
manufacturing sector, and generates almost four hundred thousand jobs, both direct
and indirect. We maintain our growth dynamics in both the domestic and external
markets, with a significant increase in exports, even in times of crisis.
To support all these facts, CANIFARMA recently completed the first census of the
pharmaceutical industry, which confirms and validates most of the data we already
knew, and also gives us a strong base that allows us to foresee a promising future
in terms of investment in new manufacturing facilities, clinical research, employment
generation and financial development.
With all the input and ideas provided by industry experts, we have finalized the
Development Program for the Pharmaceutical Sector, which contemplates three
progressive stages of development along the first hundred days of the new government
in office, the first four years, and the last two years for project consolidation. These
three stages are referred to three aspects; namely, the improvement of the regulatory
framework, innovation and research, and industrial policy.
Our sector has always been recognized because of its cohesion and unity, and exerted a
positive influence and important representation in the economic and political scene of
our country. We have met innumerable challenges with integrity and consistency. The
challenge now is to persevere in this spirit for the growth and benefit of our industry
and our country. O
PHARMACEUTICALS
23
Shaking up the system
Over ten years ago, the economic concept of the ‘BRIC’ countries- Brazil, Russia, India and China, was coined by
Jim O’Neill, chief economist at Goldman Sachs. Earlier this year, the very same man who declared that by 2020
Mexico would be the seventh largest economy in the world, surpassing both India and Russia. Mexico belongs to
one of four recently defined ‘growth markets’ alongside Indonesia, South Korea and Turkey. That certainly shakes
things up a little for both outside observers and active local stakeholders in the economy.
“It is not how fast
you grow, but how
consistent your growth
is over time.”
Ricardo Alvarez Tostado,
president and general director of
AstraZeneca
MACRO DATA OF THE MEXICAN
PHARMACEUTICAL INDUSTRY
(last available data, INEGI 2009, OECD
2011)
Share in GDP
1.2%
Share in Manufacturing GDP
6.9%
Health expenditures as a share
of GDP
6.1%
Health expenditures per capita
(dlls.)
934
Value of the Pharmaceutical
Market (billion dlls.)
13*
Direct Employment
Indirect Employment
78,500
330,000
SOURCE : COFEPRIS – with data from
INEGI and CANIFARMA
* Note: value estimated for 2011 using
12.42 pesos per dollar, average exhange
rate for 2011
But what does this recent categorization as a ‘growth market’ suggest for Mexico’s
pharmaceutical industry?
With an estimated value between 12 and 14 billion USD, the Mexican
pharmaceutical industry has seen some significant changes over the last four
years. The government has significantly increased public health spending and
its coverage in an effort to pull Mexico up from the bottom of the pile. According
to the latest OECD Health Data, Mexico fared 33rd out of 34 OECD countries
for total expenditure on health as a percentage of GDP. The government is also
fighting against rapidly increasing levels of chronic long-term illnesses rife in
the population, such as diabetes.
These wide-reaching changes have affected industry dynamics, and coupled with
the patent cliff, and the worldwide innovation drought, have opened up a bigger
space for generics penetration and created the perfect storm that has pushed
present multinational companies to either diversify, or to focus on niche markets.
Mexico’s solid macroeconomic policies and encouragement of foreign investment
have also increased competition in the market, pushing local companies to take
a side step on their strategies and in some cases to be more resourceful and
aggressive in retaining and increasing their share of the pie.
Last but not least, there has been an undeniable shift of power towards the point of
sale: pharmacies and supermarkets. Pharmacy giants are taking warehousing and
distribution into their own hands and private label (store brand) drugs are becoming
increasingly popular. Some say positioning a general medical service with doctors at
the point of sale has created an even bigger demand for private label medicines at the
expense of other brands. For some players in the market, it is a bitter pill to swallow.
Mexico certainly offers a lot of growth potential. One can debate whether Mexico
is still truly an emerging market, but as Ricardo Alvarez Tostado, president and
general director of AstraZeneca Mexico points out: “it is not how fast you grow, but
how consistent your growth is over time, and I genuinely believe that Mexico is very
well positioned through a rigorous monetary policy and an improving fiscal policy.
It is a democratic, free enterprise emerging market. Mexico is, and will remain, a
strategic market for any industrial interest.” O
24
PHARMACEUTICALS
An outstanding example
The Mexican pharma market has always had a historically low generics
penetration, but initiatives such as Seguro Popular are pushing firmly
towards a more generics-focused environment.
“The national companies who used to
sell to the government are now coming
to the private market because of the
price drop in the institutional sector.”
Hector Valle, general manager North
Latin America, IMS Health
First, in terms of ‘cleaning up’ the market, in February 2005 COFEPRIS amended
Article 376 of the country’s General Health Law that mandated the renewal of
every drug registration in the market. All generic pharmaceutical products were
expected to have proven bioequivalence and therapeutic efficacy by February 2010.
A much anticipated move for the industry, opening up the way for innovative and
generics companies alike. It also ensured there were only two types of medicine
available: generic and innovative.
This new registration setup was an important milestone in the organization’s history, and
more so because it helped to phase out the so called similares from the market. Similares
were legally questionable medicines without proof of bioequivalence, and incredibly
popular amongst lower income population groups. Similares caused regulatory and
safety concerns for the government and some people say that due to adverse side effects,
they had fired up suspicion in the general public about generic medicine as a whole.
The elimination of similares hand-in-hand with the increase in public healthcare using
predominantly generic medicines have essentially made generics much more accessible
to the Mexican public, both financially and psychologically.
Hector Valle, general manager for IMS Health in North Latin America, says that as
a company they run 10,000 interviews on a monthly basis with customers leaving
the point of pharmaceutical sale. This is to understand what is happening to the
end consumer.
As a testimony to the increasing levels of public understanding on generics, Valle
explains “80% of the people we interviewed said they understand generics, but
when we ask more questions to qualify their understanding, it is actually 50%.
Around 41% said that if there was a generic version of products they buy normally,
they would buy the generic. That’s a huge change, and part of it has to do with the
government putting a lot of information out, and also giving quick registrations for
generic drugs to speed up access.”
“COFEPRIS is making a great effort
to reduce the time needed to issue a
generic registration”
Dagoberto Cortes,
General Director, Hormona
Dagoberto Cortes, general director of Hormona Laboratories, points out that in the
government’s continued push to open access and reduce barriers for cheaper generic
products, they have also significantly reduced time to market. “A couple of years ago,
the average time between patent loss and generic arrival on the market was two
years. Today COFEPRIS is making a great effort to reduce the time needed to issue
a generic registration. In some cases the time to market has reduced to a couple of
months. This is very important for the authorities because it represents a lot of savings.”
PHARMACEUTICALS
25
TOP 5 REGIONS % OF PRESCRIPTIONS WRITTEN IN INN.
“While we understand Seguro Popular has a limited budget and
is required to look for the lowest possible prices, Apotex cannot
compromise on quality just to get the extra sale.”
Hector Carrillo, director general, APOTEX
14
12
10
8
6
4
2
2008
2009
2010
10,06%
Puebla
6,04%
Guadalajara
5,54%
Monterrey
4,90%
Although the generic pharmaceutical industry has expressed
its delight at such efforts, many people in the industry feel
that when price is the only basis on which to win a government
tender, quality is inevitably marginalized.
16
Source: Close – Up
19,60%
Estado de México
SOURCE : Close –UP.
% INN prescription vs Total Market
0
Ciudad de México
2011
2012
Hector Carillo, general director of Apotex Mexico, points
out that “the government continues to be a good business
for us because supplying on time is becoming increasingly
important. When it comes to timely and high quality product
delivery, they know we can do it. But we cannot supply at
their requested benchmark prices. They demand the lowest
possible pricing from the market, and while we understand
Seguro Popular has a limited budget and is required to look
for the lowest possible prices, Apotex cannot compromise on
quality just to get the extra sale.” O
26
PHARMACEUTICALS
Shifting landscapes shift strategies
Marked socio-economic differences are also playing an important role in pushing the uptake of generics, and these
issues are starting to affect multinational corporations (MNCs). MNCs are being forced to open up and diversify,
quite simply to have their fingers in as many pies where they can compete successfully. Alternatively they are
applying a more focused sales strategy to concentrate on niche markets.
Alvarez Tostado of AstraZeneca, believes that MNCs need to adjust their activities to
become competitive in both the private and public sector. “Mexico provides a uniquely
generous market structure where you have the institutional sector, the private outof-pocket segment of the market, and then you have the new up-and-coming popular
insurance systems that will cater to those who have very little access to medical care,
if they have access at all. So in that regard, I think the industry has to realign itself
to make sure that it is able to provide adequate services to the institutional sector;
provide broadened access to the out-of-pocket consumer, and obviously realign to be
competitive in the Seguro Popular concept.”
Mexico is no exception to the global trend of companies moving towards branded
generics; a successfully growing sector in a very much brand-driven Mexican
society. Bertrand Baron, general director of Sanofi Mexico, is confident that
Sanofi’s global strategy of diversification fits well with the current climate in
Mexico. “I believe that Sanofi in Mexico is a perfect example of what we are as
a diversified healthcare player because here we are playing in all the markets:
human vaccines, consumer healthcare, biotech, rare diseases, innovative
products, generics, and soon we will be in eye care.”
Sanofi acquired Mexican laboratory Kendrick in 2009, and last year bought Medley,
the Brazilian branded generics company that currently sits at #1 in Brazil and #3
in Latin America. The acquisitions are perfect examples of decisions that will allow
PHARMACEUTICALS
27
SHARE OF MARKET BY COMPANY TYPE
US
Germany France
Q LOCAL
Russia
Q Other Foreign
India
Korea
China
Brazil
Mexico
Arg.
Q Large Global (15)
Source: IMS HEALTH, MIDAS 2010. Argentina, Venezuela, Brazil,
Mexico & Korea Retail only; China hospital only
TOTAL PHARMACEUTICAL MARKET BY PRODUCT TYPE
(MAT JANUARY 2012)
Generics
Institutional
Value
(US$ M) Growth
vs. PY
14,040
2%
Original
brands
2%
Generics
2%
Branded
generics
2%
Units
(M packs) Growth
vs. PY
3.032
5%
1%
Retail
3%
Original
brands
2%
7%
-3%
Source: IMS Health analysis and estimates; CER: 13.45 USD
the company to compete in all market segments. “We believe
there is a huge market, and generics were a piece of the
market we were not tackling. Now we are doing it with good
quality brands, guaranteeing quality to both the physician
and the patient.” he continues. The first products under the
Medley brand were launched in the Mexican market just a few
months ago with high expectations. Medley is already rising
fast in the industry ranks.
Aspen Labs, the South African pharmaceutical giant and
relative newcomers to the market, started operations in
Latin America through a 50% acquisition of Strides in 2007.
They found the key to success in Mexico was through turning
an originally hospital-focused and opportunistic market
business, into a business driven primarily by promotion and
branding.
“In 2009, Aspen started to implement a structure that would
enable us to enter into the private ethical market, or the
prescription-based business. That is where we started to
build up our sales and marketing team. At the same time,
we were launching a small portfolio of locally developed
and manufactured branded generics. The combination of
the two would provide a strong platform with greater brand
recognition for future Aspen branded generics.” says Peter
“I believe that Sanofi in Mexico is a perfect example of what
we are as a diversified healthcare player because here we
are playing in all the markets: human vaccines, consumer
healthcare, biotech, rare diseases,
innovative products, generics, and soon we will be in eye care.”
Bertrand Baron, general director of Sanofi Mexico
Erlbacher, COO of Aspen Labs, Spanish Latin America. This
turnaround strategy to harness the Mexican market trends
was proven successful as Erlbacher goes on to explain.
“Since then, Aspen Labs has performed incredibly well: we
have delivered significant growth, more than tripling our
turnover in the last three years.”
Other MNCs did not turn around to join in the generic
playground, but fought back by taking it a step further from
a localization point of view. They are making tailor-made
solutions from their current portfolio, or using their innovative
pipelines to target niche biotechnology sectors.
Tim Daveler, vice president and general director of MSD
in Mexico explains that they “have a unique development
laboratory here in Mexico [the Mexican Product Development
Laboratory] that is not commonly seen in other companies,
especially not multinational companies. We use this
development laboratory to expand the lifecycle management
for our products in order to meet the needs of Mexicans.
Many of our products that are on the shelves in Mexico have
come from our development laboratory, in order to meet the
market needs here in Mexico.”
Similarly, Karel Fucikovsky, general director in Mexico & Central
28
PHARMACEUTICALS
“Many of our products that are on the
shelves in Mexico have come from
our development laboratory, in order
to meet the market needs here in
Mexico.”
“We have delivered significant growth,
more than tripling our turnover in the
last three years.”
Maria del Pilar Serrania, director
general, Pharma Data Mexico
Peter Erlbacher, COO of Aspen Labs,
Spanish Latin America
Timothy Daveler, VP and general
manager, MSD Mexico
America for the French company Pierre Fabre Medicament,
believes a specialty focus will bring reward. “The rules of the
market will keep changing. International companies will start
to focus on higher specialty drugs, and a company like Pierre
Fabre Medicament that is very focused on products and medical
specialties, will be able to deliver growth.”
Medical education and awareness has traditionally been
quite challenging in Mexico, leading some companies to put
resources into education in order for the market to open up.
Angel Sosa, general director in Mexico of human protein
specialists Octapharma, explains that “it is not easy to show
the government authorities the savings to be made in giving
patients the treatments that they require, but it is possible,
and it is also the key to further developing immune deficiency
treatment in Mexico.”
Octapharma takes an active role in promoting this, he says.
“We participate in both government and scientific meetings in
which authorities, physicians and patients discuss awareness
issues openly… and in the field of immune deficiencies, we
have been working very closely with a patient organization by
sponsoring a road trip across the country that transmits the
key focal signs of the diseases to local physicians.”
Here to stay
“We are clearly flying onto the radar; Mexico is a priority
market and Pierre Fabre Medicament is here in Mexico
to stay”, remarks Karel Fucikovsky. Despite the range of
necessary strategy shifts deployed by many multinationals to
stay present on the undulating Mexican landscape, it seems
there is so much potential to be realized that it is duly worth
the effort. In some cases, it has catapulted Mexico onto the
priority list for investment and resource assignment- in some
cases assigning Mexico as their Latin American headquarters.
Norbert Oppitz, senior vice president for Nycomed, A Takeda
Company, in Latin America points out, “Today, Brazil is the
most important economy, but in a regional context Mexico will
be the most important player for decades to come. Mexico
today is much more consolidated than many of the other so
called truly emerging markets, it is a more industrialized and
modern society than many people realize. Things are moving
here, and one of the most dangerous things we can do as a
multinational company is not to understand it.” O
PHARMACEUTICALS
Home turf
29
On the inside, looking out
If multinational companies are looking in, then you could say that Mexican
companies have been looking out to send their products elsewhere. IMS figures
show that local companies in Mexico have introduced more products to the market
than multinationals in the last 10 years. In 2011 for example, national companies
launched a total of 657 SKUs (stock-keeping units, or unique products) in Mexico,
compared to 492 SKUs from multinational companies. In the last two years national
companies have either maintained or increased promotional investment in order to
gain market share. They are also finding it more tempting to look across the border
and export their products- both North and South of Mexico- to increase revenue,
despite the challenges faced along the way.
This could possibly be explained by turning back the clock for a second. Guy Jean
Savoir, general director of Carnot Laboratories recalls that “in 2008 you could find a
market that was extremely healthy and a feeling that both price and unit increases
would continue to be prevalent; everything was easy.”
That was the point when things started to change. Savoir points out that Mexico
has three main, large sources of capital: oil, tourism, and remittance (this is the
income from Mexicans working in the United States).When the global economic
crisis hit the world that year, all three income sources dropped significantly.
Remittance dropped due to changes in U.S. migratory policy, the oil price dropped
after being high for so long, and tourism was sent packing after both swine flu, and
the spiraling war on drugs. Purchasing power reduced dramatically at the same
time when COFEPRIS was implementing bioequivalency regulations that suddenly
enabled the public to access cheap, trusted generics. Generics didn’t stop growing,
foreign competition also joined the crowd, and prices dropped even more.
“Multinational companies might want
to come and find out what we are doing,
and to take our products into markets
where we are not capable of going by
ourselves.”
Guy Jean Savoir,
General Director, Carnot
Some companies had foreseen these market changes and preferred to look outwards
and export sooner, rather than later. Guillermo Funes Rodriguez, CEO of innovative
Mexican company Silanes comments that “due to the fact that our major market
was Mexico, we had to make a change ourselves. The only way was to diversify
our products, and go into Latin America, the United States and Europe to build
up strategic alliances. We are now growing in those markets and we are currently
developing new products in our European research and development facilities.”
Silanes as a company puts 10% of sales back into research and development.
Although Mexico is still their principal market, they have also been manufacturing
their own products in Brazil after forming a strategic alliance with Ache Labs, the
Brazilian pharmaceutical company.
Socorro España Lomeli, executive director of ANAFAM believes, “When a company
30
PHARMACEUTICALS
“We have worked for many years in promoting our vision of
the company which is based on quality and trust through our
services and our products.”
Alfredo Rimoch, general director, Liomont
wants to export, they are often blocked by bureaucratic
red tape and regulations which makes it impossible. It is
mainly the administrative processes that pose a problem,
not the quality. This has been a big hurdle for Mexico in both
entering the United States market, and some Latin American
markets.” Silanes has completed its learning curve, which
leads Funes to conclude: “By the end of 2013 we hope to
have two more products approved by the FDA, and we will
then submit a further three. Now we know the mechanisms
and the processes behind approvals, we can be more
efficient and faster in complying with them. The long term
outlook of Silanes is fantastic: we have patented products in
biotechnology, with a plant that is FDA and soon to be EMA
approved, we are ready to compete globally”
Many other national companies are also exporting homegrown innovation. Guy Jean Savoir of Carnot Laboratories
realized that their differentiated and innovative pipeline
was essential to export success. “Today Mexico is a tougher
market; you have to be aware of the added benefits of a
differentiated product. When you export generics the only
driving factor is price, which means you have to be very price
conscious if you want to succeed and be competitive. This is
not our business model- we have 130 people in Research and
Development and we have decided that this is the side of the
fence for us to be on. In fact, our differentiated pipeline was
exactly what enabled us to successfully export and launch in
different markets in the first place”, says Savoir. His advice:
“don’t overlook Mexican innovation. Mexico is a place where
multinational companies might want to come and find out
what we are doing, and to take our products into markets
where we are not capable of going by ourselves.”
Building Trust
Other companies decided to stick to their strategy during these
tough times and came out on top, due to the strength of their
brands and the trust built up with the medical community.
Liomont Laboratories, whose portfolio is 75% prescription
medicine, will celebrate 75 years in the industry next year
and is in the top ten rankings for prescription drugs in the
country. Alfredo Rimoch, general director of the company,
explains how they won through on trust and reputation.
“Over recent years we have put particular focus on
branded generics which we promote to doctors through a
very strong sales force. We prepared well for the boom in
pure generics, which took a lot of work, but we succeeded.
Branded generics have existed for a long time in Mexico
and we have worked for many years in promoting our
vision of the company which is based on quality and trust
through our services and our products.”Equally, Stendhal
has based a large part of its business on in-licensing
innovation from multinationals, and building itself up to
be the government’s partner of choice. That is not an easy
task, especially when focused on the anti-retroviral market
involving tricky negotiations with government healthcare
institutions. The company has managed to maintain 2530% yearly growth over the last two years and its products
are now offered to 70% of HIV patients in Mexico. Luis
Calderon, managing director of Stendhal, attributes this to
their long-term attitude and quality.
“Stendhal is not a company that looks for opportunistic
business, by participating in a tender one year and
disappearing the following year: we want to increase our
PHARMACEUTICALS
31
market share sustainably and be in a place where we can
adapt alongside the changing interests of the healthcare
environment in order to increase patient share.” he explains.
Maquila country
Other companies have turned to contract manufacturing, an easier
revenue generator as long as you have quality standards and longterm vision. In fact, many companies use contract manufacturing
to provide the revenue needed to develop their own brand.
“We want to increase our market share sustainably and be in a
place where we can adapt alongside the changing interests of
the healthcare environment.”
Luis Calderon, Managing Director, Stendhal
This is the case with Biofarma Natural CMD, whose general
director Ignacio Luna explains, “creating a brand in Mexico
involves many years of hard work and a lot of investment, and
for us it has been much easier to simply generate revenue
through our manufacturing strengths. We are proud of the
fact that we are one of the only manufacturing plants in
Mexico granted licenses for both medical products and herbal
products. We have all the certificates and Good Manufacturing
Processes (GMPs) that go with it. This attracts companies in
the industry who are searching for high quality.” O
32
PHARMACEUTICALS
Unreached potential
According to industry data, the pharmaceutical sector represented 7.2% of Mexico’s manufacturing GDP last year.
When compared to other manufacturing industries in Mexico, this is significant, but by no means in stellar. But can
we call Mexico a real ‘hub’ for the pharmaceutical industry?
Rafael Gual of CANIFARMA clearly states that “our goal is to make the Mexican
pharmaceutical industry the biggest manufacturing sector in Mexico over the
next 5 or 6 years. Currently pharmaceutical manufacturing represents 7% of
manufacturing GDP in Mexico, and we want to push it into first place.”
In 2008 COFEPRIS abolished article 168 and 170 of pharmaceutical legislation,
which meant that companies no longer needed a plant in Mexico in order to
distribute their products. Since then five companies entered the market without a
manufacturing plant. This includes Italian company Menarini, Daiichi Sankyo from
Japan, and Swedish Meda Pharma. But it also resulted in several multinationals
re-assessing their Mexican manufacturing strategies as plants were no longer
required to be part of the market.
Miguel Salazar, general director of Boehringer Ingelheim Mexico points out that
“the pharmaceutical real estate market is getting crowded because everyone is
selling their plants.”
“In 1995, Boehringer Ingelheim
wrote their manufacturing strategy
and decided that Mexico was to be
a center of excellence in terms of
manufacturing.”
Miguel Salazar, general director of
Boehringer Ingelheim Mexico
However, there are some obvious benefits in setting up a manufacturing hub for
Latin America in Mexico, as compared to Brazil. Labor costs are significantly lower,
it is geographically very strategic bordering the United States, and Mexico also
shares a common language with most of the region.
“In 1995, Boehringer Ingelheim wrote their manufacturing strategy and decided
that Mexico was to be a center of excellence in terms of manufacturing, and the
company invested more than $70 million USD in a new plant which would be
one of the manufacturing hubs for the rest of the world”, boasts Salazar of the
company’s award-winning plant located in the south of Mexico City. “Around 60% of
our products are exported globally and 40% is local. We are focused on high quality
and high delivery.”
Along the same lines, Bertrand Baron of Sanofi comments, “Today we have three
manufacturing sites in total and we strongly believe in increasing our business in
Mexico. 80% of what we sell in terms of volume is coming from our local plant. I
would be shooting myself in the foot if I withdrew our Mexican plant.”
Despite these multinationals here to stay, how can the industry live up to Gual’s tough
target of becoming the number one manufacturing sector for the country? Socorro
España Lomeli of ANAFAM strongly believes that the government should play a bigger
role, especially when it comes to local companies. “I believe fiscal incentives are very
important because they encourage industries to grow”, she concludes. O
PHARMACEUTICALS
33
Pharma’s affair with private labels
When asked to define the three most impactful changes on the Mexican
pharmaceutical industry over the last few years, executives put Seguro
Popular, and COFEPRIS regulation in the lead. The third change is muttered
perhaps a little more reluctantly. “The Point of Sale”.
The truth is that the rise of large pharmacy chains is starting to hit the industry
big time. This is a fast-moving shift of control away from the pharmaceutical
wholesalers, who have been the traditional torch bearers. It does not just change
the dynamics of the industry today; it transforms the future dynamics of the
pharmaceutical landscape.
“Many years ago power in the industry
was in the hands of the pharmaceutical
companies, a few years after that it was
in the hands of the distributors, and
today we have it in the points of sale.”
Gabriel Zavala, Commercial General
Director, Farmacias del Ahorro
Pharmacy chains are gradually moving their purchasing ratio in favor of buying
directly from pharmaceutical companies who manufacture, as opposed to the
wholesalers. The manufacturers involved do face opposition from wholesalers, but
they can still see the potential benefits.
Farmacias del Ahorro, one of Mexico’s largest pharmacy chains, is starting to
take warehousing and distribution into its own hands. It recently opened a large
warehouse just outside of Mexico City, and is planning to open two more in the
34
PHARMACEUTICALS
“The stigma that private labels are low quality stayed in
the mind of the Mexican consumer, but this has changed
dramatically over the last several years.”
Ricardo Ganem, VP & general manager, Perrigo Mexico
coming years. “The most recently opened warehouse will
account for 70% of the units that we buy directly; today we
have a ratio of roughly 60/40 favoring direct purchasing
from the pharmaceutical companies”, says Gabriel Zavala
the company’s commercial director. “The distributors will
always be necessary in the future. But at the same time, we
will be prepared for ongoing changes in the market with the
infrastructure to support more laboratories if they wish to
sell directly.”
fairly slow on the uptake of private label products – not only
for pharmaceuticals. Ricardo Ganem, vice president and
general manager of Perrigo Mexico, explains why it took so
long. “For many years, store brands in general were all about
putting a “cheaper” product next to the leader with focus on
low prices, but often at the expense of quality. The stigma
that private labels are low quality stayed in the mind of the
Mexican consumer, but this has changed dramatically over
the last several years.”
Not only are pharmacy chains buying directly from
pharmaceutical companies, but a more visual change
is taking place. Private label drugs have had a growth
explosion in Mexico and are affecting the way both national
and international companies operate. Hector Valle of IMS
explains, “The national companies who used to sell to the
government are now coming to the private market because
of the price drop in the institutional sector. Now private labels
give them a very good opportunity to do just that. This enables
national companies to grow but also affects the brands from
the multinational companies as well.”
Ganem also notes that Mexico is the country with the highest
brand loyalty index. He observes that this can be explained
by studies on the monopolistic advertising structure favoring
high-priced media such as television, for the last 60 years.
The historical attrition to well-known brands is exactly what
is helping to make private labels successful now. Mexicans
feel confident buying own-brands from pharmacy and
supermarket chains that they know and love.
Companies promoting their own brands to sell in retail stores,
at the same time find themselves increasingly attracted to
manufacturing private label goods for that very same point
of sale. Pharmaceutical companies are ‘having an affair’ with
private labels, but can they have their cake and eat it?
Local company Gelpharma is doing just that. Luis Verduzco,
managing director of the company, realizes just how
important private labels are to his business after producing
primarily for the public sector. “The private market didn’t
have the same level of uncertainty as the government
market, so we changed direction. At the moment, we are
giving higher priority to third party manufacturing for
private labels because the relationships we are forming
with pharmacy chains and supermarkets are extremely
important. If we don’t make those relationships robust now,
maybe in a couple of years there will be another company
offering the same service and we will lose market share.”
The core Mexican business of U.S. company, Perrigo, is
manufacturing private label medicines. When compared to
the United States or Europe, up until now Mexico has been
In August 2010, regulations prohibiting the sale of antibiotics in
retail pharmacies were implemented by the health authorities,
with the intention of reducing risk related to inappropriate use of
antibiotics and increasing bacterial resistance. Retailers came
up with a solution in the form of having a qualified doctor on
site to avoid any problems, which also fuelled the intense rise
of private label medicines. A recent study by IMS Health showed
that the majority of Mexicans who use a doctor at the point of
sale had used the service up to ten times previously. This is clear
evidence of its popularity. The most common reasons for using a
doctor present in a pharmacy were found to be convenience and
low price; the perfect combination for a busy, working Mexican
on a budget.
So what next for the private label business at the points of
sale? Ganem is already thinking to the future and working
on innovative ways to develop his customers’ product. “I’ll
give it another three or four years before most retailers
will have upgraded strategies in place with differentiated
brands to satisfy specific consumer needs.” Zavala adds,
“Many years ago power in the industry was in the hands of
the pharmaceutical companies, a few years after that it was
in the hands of the distributors, and today we have it in the
points of sale.” O
PHARMACEUTICALS
Strengthening guidelines for biosimilars
3
Uribe adds, “Half of new
innovative drug registrations
given here in Mexico are for biotechnology products: the world
is looking to biotechnology and companies are investing more
and more every day.” Indeed, Mirassou sees Grupo Ifaco’s
biotechnology center as the main growth driver for the group,
and concludes: “Mexico is emerging as an important hub for the
production of biotechnology products. Once we have our legislation
in order, we will be extremely competitive, not only inside Mexico,
but internationally.” O
3
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3
3
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Recently concluded a joint project
with the UNIDO to prevent damage
to the ozone layer.
3
3
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3
According to BMI figures, Mexico’s biopharmaceutical
sector currently employs almost 25,000 Mexicans in more
Ana Cristina Mirassou,
Biotechnology Manager,
Grupo IFACO
3
Dr. Ana Cristina Mirassou, director of biotechnology in Jaliscobased company, Grupo IFACO, tells us how this lack of tight
regulation affected the launch of their first biotechnology
product. “There has been some turmoil around biotech
regulation in Mexico, and for a long time, the authorities
were uncertain as to which requirements to ask for in a new
biotech product. Companies who were able to register their
products before this turmoil were granted the registration in
about six months, whereas we had to wait three years.”
“There has been some
turmoil around biotech
regulation in Mexico.”
3
“This enabled almost unmonitored competition from China, India,
South Korea and other fast-growing countries, which sometimes
caused more damage than good to the patient”, explains Jaime
Uribe, CEO of Mexican biosimilar company, Probiomed. “This is
the reason why biosimilars started to be regulated much more
closely, and after five years of negotiations the law was finalized”,
he continues. The Mexican guidelines for the approval of biotech
and biosimilar drugs became effective in April 2012.
than
32
biotechnology
companies. Biotechnology
is also becoming more of a
priority for many States in
Mexico when compared to
traditional pharmaceuticals.
“The governor of Jalisco
declared biotechnology as
one of the key strategic
industries for the state. He
sees biotechnology as the
future,” Mirassou says.
3
Despite being in the Mexican market for over twenty years, biosimilars
have never been regulated as a separate entity. They have always been
regulated as simply another category of generic medicines.
35
3
o
36
INTERVIEW: SMART SCALE
Interview with Fabiola Trigueros
President and Owner of Smart Scale
Knowledge, experience, dedication and enthusiasm!
Smart Scale was recently certified and recognized for its international quality
standards. What have been the main growth drivers?
Our experience and deep knowledge of the pharmaceutical market has been
rewarded by the ISO 9001:2008 certification which we managed to get when the
company was established. It shows that we are able to meet and fully understand
the needs and requirements of our customers at an international scale.
Smart Scale’s owes its stable growth to quality, which has always been the key
value for us, along with dedication and care, in every single service we provide.
Smart Scale is composed of experts working in the field, providing ad hoc solutions
for pharmaceutical industry sales and marketing departments, such as targeting,
database, deployment, rep. Equiv., CRM, benchmarking, etc…We deliver efficient
and accurate solutions to help companies achieve a better decision making process.
Smart Scale operates under a diversified product portfolio. Could you give us a
breakdown of these products as well as how do you achieve synergies between them?
Our objective is to provide external support to companies to help them being innovative:
First, we have the best database in the Mexican market for the pharmaceutical
industry, doctors, pharmacies, hospitals, etc… (complying with the Data Protection
Act). If companies ask themselves, who should we sell or promote to? Where
should we sell? Why must our products be sold there? The answer is Smart Data.
Second, we are experts in medical, pharmacy, hospitals, and retail outlets visits,
etc. Smart Scale is considered the best option for business strategy and sales force
automation as “Media Soft “ is the most advanced, flexible, fast and user friendly
tool for the Latin American market. The goal of our CRM “Sales Vision” is to analyze
and provide feedback on the effectiveness of our clients’ business strategy.
Our third innovative tool is called Marketimetrics, that provides very precise
information for the sales and marketing teams of pharmaceutical laboratories.
The data is collected from different sources coming from our clients, and it allows
them to get the information directly rather than spending time searching for it
themselves.
All our tools give “state of the art” information through high technology, with the
permanent goal to help pharmaceutical companies improve their sales and profits.
What are the future challenges and opportunities for Smart Scale, and what message
do you want to convey to the readers of our review?
We want to achieve a worldwide recognition as the leaders for the Latin American
pharmaceutical market in technology and information services.
As a Mexican businesswoman with over 27 years of experience in this wonderful industry,
and as a mother, wife, sister, daughter, friend, my message would be: Smart Scale can
be a significant support between information technology and health care science for us
to fulfill our mission; to ensure that everyone has a Better Quality of Life. O
“Smart Scale owes its
stable growth to quality,
which has always been
the key value for us, along
with dedication and care,
in every single service we
provide.”
38
LEGAL PERSPECTIVES
The legal perspective on…
ALEJANDRO LUNA FANDIÑO, Partner, Olivares & Cia
I. Pricing & Reimbursement.
Price control in the private sector is based on a scheme of self-regulated maximum
retail price (MRP) covering patented products, as overseen by the Ministry of
Economy. Pharmaceutical companies’ participation is voluntary. Under the price
control each product’s MRP must not exceed an international reference price,
estimated as the average price in six major markets, plus a market factor. There
are no established sanctions for violations of the MRP.
In 2008, the government created the Committee for the Negotiation of Drug Prices
(CNDP) to:
- Support public acquisitions through a process of negotiation transparency
between public insurers and pharmaceutical companies.
- Determine the cost-benefits ratio of new medicines and therapies in relation to
their prices and those of other products in the market
Public sector purchases are made through public tender processes. The CNDP
analyzes the effectiveness of drugs and relevant therapeutic alternatives, and the
feasibility and implications of an eventual substitution with equivalent medicines.
The CNDP also conducts an economic evaluation of the cost-effectiveness of
patented medicines compared with potential substitutes. Drug payments by the
government (mainly in the IMSS) derive from the obligatory fees paid by both
employees and employers. However, federal government subsidies are necessary
in all segments of the public health system at the federal and state levels.
In the private sector, the majority of payments are made on an out-of-pocket basis.
Private insurers are currently improving the level of pharmaceutical coverage as
the private market in medi¬cines has grown considerably in the last six years.
II. Patents
Conditions and legislation
Patent applications are regulated by the Intellectual Property Law (IPL) and its
regulations. Patentable inventions must (Article 16, IPL):
-Be novel.
-Result from an inventive step.
-Be industrially applicable.
The Mexican Institute of Industrial Property (IMPI) now grants patents protecting
the compounds, formulations, uses and manufacturing processes of medicines.
ALEJANDRO LUNA FANDIÑO
Partner, Olivares & Cia
T +52 55 5322 3080
F +52 55 5322 3001
E alf@olivares.com.mx
W www.olivares.com.mx
LEGAL PERSPECTIVES
Article 19 of the IPL excludes medical procedures from being
the subject matter of an invention. However, a patent can be
obtained for a therapeutic method by drafting the claims in
the Swiss-style format, that is, claiming the medical use of
the compound for the treatment of a specified illness.
Process and timing
The average time for obtaining a Mexican patent varies
depending on the field of technology. Generally, it takes from
four to six years to obtain a patent.
A patent is obtained by filing a patent application with the IMPI.
Duration and renewal
The term of a Mexican patent is 20 years from the effective
filing date of the patent application. For Paris Convention and
non-Paris Convention applications, the effective filing date is
the filing date in Mexico. For Patent Cooperation Treaty 1970
applications, the effective filing date is the date of filing of the
international patent application.
The patent cannot be renewed.
Data Package Exclusivity
Arguably in conflict with international law (which contains
provisions concerning industrial secrets and the protection of
data package exclusivity rights (DPE)), Mexico does not have
any domestic legislation which expressly establishes and
protects DPE.
Extending protection
There are no provisions for exclusivity term extensions or
supplementary protection certificates in domestic law.
39
to exclude others from making, using, offering for sale or
importing the patented invention. In a patent infringement
action, the claimant must prove the following:
- Ownership or recorded license over a granted, valid
and fully in force patent. Generally, a certified copy of
the “file wrapper” of the patent prosecution is enough to
prove these requirements. Validity of the patent can be
challenged by the defendant.
- That someone is using, making, offering to sell or
importing the patented invention. The IPL establishes
direct infringement over the manufacturer. Infringement
against sellers requires evidence of prior notice of
the alleged infringement. When a claimant claims
infringement of a patented process, the defendant has
the burden of proving the use of a different process other
than the patented process. There are no grounds in the
IPL to apply the contributory infringement doctrine.
- Use of the patented invention. Under the IPL, only literal
infringement is recognized. No doctrine of equivalence
applies.
The burden of proving authorization is on the defendant. The
doctrine of implied license has never been tested before the
Mexican courts.
Proving patent infringement in Mexico is a difficult task, since
the jurisdiction follows a strict civil law system which has
formalistic rules for both evidence and proceedings.
Patent infringement
The patent infringement claim must be submitted before the
IMPI. The claim is served on the alleged infringer, who then
has ten working days to respond and, if applicable, bring a
counterclaim. That response is then served on the claimant
for the claimant to refute it. All the evidence is analyzed, and
finally a decision is issued. That decision can be challenged
before the Federal Courts.
The IPL grants patentees the right to the exclusive exploitation
of the patented invention. Therefore, a patent grants the right
The IMPI is an administrative authority. There is no judge or
jury participation in patent infringement actions. O
In theory, the life term of a patent could be extended under
certain international treaties (for example, NAFTA) where
the Health Authority has delayed the process to obtain a
marketing authorization for a patented product. However, in
practice no-one has yet attempted to do this.
40
EXPERT EYE
The Mexican Public Sector
José Carlos Ferreyra. President, Pharmaceutical Institute, A.C., info@investigacion-farmaceutica.org
In the past 10 years, México has been dramatically changing the market dynamics
of the pharmaceutical market, as well as the health sector, in general.
The private sector has been reducing its values and its strategic weight, while the
public buyers (the public sector) are gaining a more competitive advantage, and are
becoming a must-have line of business due to its unprecedented growth.
Nowadays, the overall view of the public sector:
• Accounts for more than 50% of the total Mexican market in units.
• Is composed by aprox 150 public health providers, or institutions (IMSS, ISSSTE,
PEMEX, the armies, National Institutes and Hospitals, and the States. These
last ones receive every year over $ 5,000 million USD via the Seguro Popular
program).
• Per year, more than 1,000 public tenders or biddings are published with
opportunities for the pharmaceutical products manufacturers and distributors
to sell to these public institutions.
• The public sector manages over 7,000 different hospitals and medical units.
The Mexican population is divided into the following major grouping1,2:
• IMSS: 55 million beneficiaries.
• Seguro Popular: 52 million beneficiaries.
• ISSSTE: 12 million beneficiaries.
• PEMEX: 750,000 beneficiaries.
In order to make a good penetration in the Mexican public sector, the pharmaceutical
manufacturers come every day to our facilities, to search for consultancy, either for
a better understanding of the Mexican public market dynamics, or to analyze the
entry/growth strategies to make public buyers a real business opportunity.
Footnotes:
1 Population joints may occur, i.e.: multiple
health coverage per beneficiary.
2 Gross numbers.
We must consider at first, which market segments offer better business scenarios.
Based on the database information of the public sector we grow every day, we
assess our clients by the following:
3 Based on the pharmaceutical products
acquisitions audited information of more
than 100 public institutions in México.
Source: Pharmaceutical Institute, A.C.
Each market must focus on a differential strategy. This means, for the same
pharmaceutical product that we wish to sell to the Government buyers, we must
create a differentiated strategy based on:
4 Group names according to the National
Health Counsel official national
formulary.
EXPERT EYE
41
• Differentiated Price. Even though the law establishes
the prices to be observed and followed, in the practice we
can see that each public buyer will set up different prices
for the same product.
• Patient outsourcing. This model is being offered by
• Differentiated Seller/Distributor. The same distributor
that can win the tenders in IMSS or ISSSTE, is not the
same that will make a good market penetration in the
Seguro Popular (states).
peritoneal dialysis. This growing model is allowing the
• Differentiated Value added. All the 150 public buyers
in México are different, and so as well, their priorities
in terms of value added. Don’t think of a good access
strategy that worked well in an institution to be bulletproof anywhere else.
and supplies needed.
the private industry, on which the provider takes along
all the service required by the public institution. For
example, in the private clinics of hemodialysis and
big public institutions to refocus their budget to other
priorities, due to the fact that by outsourcing patients,
the institution no longer has to buy the pharmaceuticals
• Local pharmacies. Take into consideration that providing
drugs and medicines to over 100 million Mexicans, is not
an easy job. This is why, the recipe for the beneficiary,
sometimes must be provided by a local pharmacy (which
Besides, in order to make public buyers the best bet you can
get, you must observe accurately and develop commercial
and access strategies for a good coverage of the following
market dynamics:
• Service integrator owner (SIO). This model is being
quickly adopted by Mexico’s public sector. Within this
contract scope, the SIO must buy, store and distribute all
the pharmaceutical products (all other medical supplies
as well) under a fixed contract that includes the margin
and benefits for the SIO. So, in order to make your
product available to the institution, you must establish a
good relationship with the SIO.
• Private hospitals. The huge chain hospitals are
becoming a very important provider of the Mexican public
institutions, for an outstanding number of services that
are being now provided to the public beneficiaries in
private hospitals all over the country.
has the surrogate-recipe contract with the institution),
with no cost to the beneficiary. However, in México,
the pharmacy employee can offer either a generic or a
substitute to the product signed in the recipe.
If you are looking to make your business grow, Mexican public
sector is the answer. Look for a strong market database tool
(market database providers MUST tell you exactly where the
source information is coming from), who also has proven
knowledge in assessing access strategies, and can also train
and certify your KAMs and Government Sales Reps in both
promotion and Contract Management for each client you
want to reach.
In the Pharmaceutical Institute we can help you develop the
best mix of strategies to reach this huge public market.
Contact us for any consultancy you might need. O
TABLE 1: TOP GROWING MARKET SEGMENTS3,4:
Top 10 markets growing in units
(2012 vs 2011)
Top 10 markets growing in values
(2012 vs 2011)
Top 10 markets growing in average price
(2012 vs 2011)
1. Ophthalmology (+36.29%).
1. Endocrinology (+59.45%).
1. Endocrinology (+54.47%)
2. Psychiatry (+26.87%).
2. Ophthalmology (+31.49%).
2. Nephrology and urology (+30.04%).
3. Neumology (+19.10%).
3. Nephrology and urology (+27.59%).
3. Immunoallergic diseases (+27.91%).
4. Oncology (+17.95%).
4. Immunoallergic diseases (+25.69%).
4. Hematology (+21.31%).
5. Gynecology (+16.94%).
5. Neumology (+23.28%).
5. Intoxications (+20.30%).
6. Otolaryngology (+10.18%).
6. Hematology (+19.36%).
6. Analgesics (+12.88%).
7. Dermatology (+6.20%).
7. Gynecology (+18.79%).
7. Plasma substitutes (+12.49%).
8. Endocrinology (+3.22%).
8. Neurology (+10.33%).
8. Neurology (+10.74%).
9. Gastro (+2.62%).
9. Plasma substitutes (+8.38%).
9. Anesthesia (+7.22%).
10. Oncology (+1.55%).
10. Analgesics (+3.12%).
10. Infectious diseases (+4.41%).
42
EXPERT EYE
The Healthcare System and Regulatory Framework in Mexico
By Sandra Sánchez, President of the Mexican Association of Pharmaceutical Research Industries (AMIIF)
Despite the considerable progress done towards an effective public health system in
Mexico, all healthcare actors, from government to pharmaceutical companies and
health providers, recognize that much more needs to be done. Too many patients still
suffer from delays and insufficient availability of high quality care. Only by working
together more closely, we will find better solutions for healthcare in Mexico.
“It is a complex task, and, even within the pharmaceutical industry, opinions vary
as to which is the best way to achieve this. Nevertheless, there is a consensus
around the need to expand access and promote innovation. Regarding these two
key issues, in AMIIF we are proud to say that we think Mexico is on the right track,
with a number of positive initiatives underway. There is still, of course, work to
be done – specifically, in offering access to innovation. Out of the three necessary
steps – regulation, inclusion in the National Basic Formulary (NBF) & Institutional
formularies, and supply of innovative drugs for the population– we have made
substantial progress in regulation through COFEPRIS. However, we still need to
focus on moving forward with inclusion into NBF and Institutional formularies,
as well as securing supply of innovative drugs. It is important to ensure that any
improvements in any of these areas, quality, cost and effectiveness can be sustained
in the long-term.
Within AMIIF, we are working on a number of proposals and I would like to share
our top line thoughts with Focus Reports.
The regulatory framework in Mexico: improvements, drawbacks, and future perspectives
In terms of improvements, drawbacks and future perspectives in the regulatory
framework in Mexico, there are three key areas to work on. First of all, the efficiency
and effectiveness of the regulatory authority must be maintained and guaranteed.
To this effect, a series of factors should take place under this new administration.
To begin with, the improvement that started last year by “COFEPRIS” (especially
the PAHO certification), should continue. It should be noted that all improvements
took place under Comissioner Mikel Arriola´s leadership, and as a result of his
performance, he was reappointed in this position. There is still work to be done
“It should be noted that
all improvements took
place under Comissioner
Mikel Arriola´s
leadership, and as a
result of his performance,
he was reappointed in this
position.”
EXPERT EYE
to guarantee the adherence to deadlines for regulatory
approvals, but there are also high expectations in regards to
the improvements Mr. Arriola is planning to achieve during
his new tenure.
Biotechnology and biosimilar
COFEPRIS has taken significant steps towards developing
a regulatory and legal framework for “Biocomparables”
(as they are called in Mexico) drugs, potentially creating the
standard for Latin America and being one of the most robust
on an international scale. However, this regulation still needs
continued review and effective implementation as the nature
of each class of drugs is complex and very different between
them. We believe science-based standards offer the best
opportunity for expanding access and protecting patient safety.
Patient safety is a collective effort. Making biologic medicines
- whether innovative or biosimilar - is neither straight forward
nor easy. Biologics have highly complex manufacturing
processes and today require significant investment in order
to deliver high quality and reliable supply – both important
to patient safety. Complex products require high standards.
We believe that sound science-based regulations must start
and finish with rules that protect and preserve patient safety,
including:
• appropriate standards for the approval of biosimilars
/”biocomparables”;
• strict rules about substitution and interchangeability;
• a focus on the need for medical providers and patients to
make individualized decisions; and
• a process that ensures that each biologic productwhether innovator or biosimilar—enters the marketplace
in a manner that permits its use to be tracked and
traced to assure that any safety issue can be addressed
promptly, and that products are monitored and used
responsibly (pharmaco-vigilance)
The biosimilar approval pathway presents opportunities
and challenges. Stringent guidelines will play a key role in
advancing the safety of biologics and improving the lives and
productivity of Mexican citizens.
Intellectual property,
It encourages the research and development of new
innovative drugs. The most recent improvement in this area
is that the ‘Linkage mechanism’ has taken a step forward
with the inclusion of formulation patents, eliminating court
orders that forced authorities to respect them. However, this
protection still needs to be established in the proper legal
precepts as this mechanism today does not explicitly consider
formulations or secondary use patents when COFEPRIS
43
validates with the Patent Office (Instituto Mexicano de la
Propiedad Intelectual – IMPI), whether a drug registration
application violates patent rights or not.
Combating the illegal market (counterfeit, adulterated and /
or expired)
There is a need to strengthen interagency collaboration with
industry participation to eliminate it and raise awareness on
the health risks it entails; hence it has not only become a
national priority but a worldwide one in recent year.
The R&D pharmaceutical industry has been very proactive
at taking steps to combat these illegal activities by
maintaining a close collaboration with various government
agencies (COFEPRIS, IMPI, PGR, Internal Revenue Service
“SAT” through its customs offices and the States General
Attorneys). Albeit, both industry and Government have shown
a strong determination to combat and reduce the problem,
and their actions have resulted in benefits to patients, the
medical community, and the industry, mechanisms for
more efficient and continuous collaboration still must be
identified.
Recommendations for the healthcare system in Mexico
One of the biggest hurdles and challenges of the Healthcare
system in Mexico is access, ensuring availability to innovative
drugs to most of the Mexican patients who need it, which
entails securing a lengthy formulary reimbursement process
to get on the “National Basic Formulary” (NBF) and “Basic
Formularies” (BFs) of all government institutions / payers.
Transparency, redundancy and consistency in the evaluation of
dossiers remain a concern and limits patients to have access to
innovative drugs. There are still important changes that could
be made to the review process to eliminate redundancies in the
system and establish a unified set of criteria for determining
cost effectiveness that will have an even greater impact and
increase access to new life saving medicines.
Recommendations for the healthcare system in Mexico
include the need for clear, transparent and streamlining the
inclusion process for NBF and BF, as well as comprehensible
mechanisms for purchasing and supply. The roadmap for
achieving these goals consists of 4 key actions.
1. Standardization of criteria for the development and evaluation
of health economic data (pharmacoeconomics) needed for
the inclusion of new therapeutic options in the NBF.
2. Streamlining evaluation process and reducing duplicative
reviews
3. Transparent bidding and negotiation of drug prices
4. Effective purchasing and efficient supply / distribution /
Rx filling of drugs O
44
INTERVIEW: GSK
Interview with José Alberto Peña,
VP & General Manager of GSK Mexico
Following a previous assignment as general manager for GSK in Hong Kong, José Alberto Peña was appointed in
July 2012 in his current position – bringing a fresh look and new perspectives to the Mexican market.
How would you describe the current Mexican pharmaceutical landscape and what is
GSK’s strategic positioning?
GSK today is the 6th pharmaceutical company in Mexico with a 4% market share,
structured in 4 divisions: the pharmaceutical division, the consumer division, and
2 manufacturing divisions. Within the pharmaceutical department that is under
my responsibility, we have 4 business units: the first one focused on innovative
brands, the second one on classic brands and generics, one on vaccines and the
last one on dermatology. Over the last few years, we have diversified our offer to
follow the market trends, and there have been some important changes in the
market in both private and public sectors.
In the private market there has been a shift towards generic products. The impact of
generics can be positive, the main benefit being more access to these products for a
lot of people, notably because of the lower pricing. The second change is in pharmacy
channels. Nowadays we see doctors at the point of sale, which changed the whole
dynamics of the pharmaceutical industry. The presence of doctors in pharmacies is
becoming more significant and the number of visits to these doctors has dramatically
increased, making it a new channel that we need to consider as a group as big as
IMSS in terms of visits. As a result, we need to adapt our go-to-market strategy.
On the public sector front, there have been some important challenges as well. If we
look at the past few years, the amount of new products that have been included in
“We need to get closer
to our consumers; we
need to understand their
needs as well as their
limitations.”
José Alberto Peña, VP & General
Manager of GSK Mexico
INTERVIEW: GSK
the public sector has been significantly reduced. As a result,
access to new pharmaceutical products has been limited. One
of the challenges is to plan a strategy to work closer with the
government institutions. Our goal would be to find win-win
situations for innovative commercialization approaches with
shared risks and common benefits, in order to satisfy the
existing market. There is no doubt that innovation continues
to be a prime driver of GSK’s business, taking in account
that we are launching 3 to 5 products per year, and we will
continue going forward. Our pipeline is very interesting but it
is becoming more specialized, making it more crucial to work
with government institutions.
What is your opinion on value based pricing and how would you
describe your proposal to the Mexican healthcare system?
45
Morelos, and one in Queretaro. For us, local manufacturing
is definitely something that is important, for the local market
as well as for exports. We have our footprint here, but now
our objective should be to maximize the installed capacity
and see how we can make the best out of it.
I think Mexico has the basics, and the right support. There
are a lot of positive aspects here, especially if we look at the
macroeconomic environment in Mexico, with 4% growth in
GDP. Also, from a basic perspective, Mexico has the right
framework. Is it sufficient to say that it will become the
leading manufacturing hub? Of course there could be more
incentives to attract more manufacturing, because there
will always be a competition between countries. That is very
difficult to say, but it can definitely be more competitive.
We need to get closer to our consumers; we need to
understand their needs as well as their limitations. One
of the limitations we see in IMSS is that they get a lot of
financial pressure. As a result, we need to adapt our style
and our way of going to market by accepting that things have
changed. It is more important to understand their needs and
share responsibility through a real win-win situation rather
than just selling products to users. I believe that we need
to look at alternative models and we need to open up to
different options.
What are your priorities as General Manager of GSK and what
do you think of the Mexican healthcare work environment?
Do you think Mexico has the qualities to become the biggest
manufacturing hub in the region?
One of the biggest challenges we approach with great
interest is access to innovative medicines and making sure
that people who need these new treatments can have access
to it. We are open to discussion to see how we can make
things change in that sense. O
GSK has 4 manufacturing sites in Mexico, and there are
very few companies that can compete with that in the
pharmaceutical industry. We have one in Mexico City, two in
GSK is a great company globally, it has a fantastic image,
and we need to put it back on the map in Mexico where it
deserves to be. We want to be part of the decision making
process in the Mexican healthcare sector: being an influence
rather than a reaction.
As a final message, as an industry leader in the pharmaceutical
industry, what do you think should be improved in the Mexican
healthcare system?
46
ORPHAN DRUGS
Focus on orphan drugs
Interview with MARCUS KRENZLIN, Country Manager, Shire Mexico
Please can you give us a rundown of Shire’s activities in Mexico in the last four years,
and the key achievements and milestones along the way?
Shire started operations in Mexico in 2008 and we have had a compound growth
rate of almost 100 percent per year. We are doing this by focusing on a segment
of the market that has always been there, but only now are people actually
receiving the treatment.
I think that Mexico has a great attitude towards orphan drugs. The Mexican
authorities are very conscious of the various niche problems that exist for
patients across the country and have been very open in making orphan drugs
available to them. This is why Shire has been able to establish itself here and
make treatments available to patients. Over the past two years we have been able
to get four products on the market, three of which are available in the public
health system: one for Hunter’s Disease, another for Fabry Disease, and the third
that was approved last year is for Gaucher´s Disease.
The situation in Mexico seems different from Brazil where some patients have had to
fight in court in order to receive their treatment. Has this ever happened in Mexico?
We know there are patients in Mexico that have legally fought for access to their
drugs, but now there is no need to take legal action. We made access possible for
our orphan drugs simply through dialogue with the authorities.
A great example is Seguro Popular, which provides one of our treatments – for Hunter
Disease – to patients under 10 years of age. These are very poor patients whose families
would never be able to afford a biotechnology drug in order to be treated privately.
There was a change to general health law in Mexico published on February 29th
2012. Article 224 has been amended so that it both recognizes that there are orphan
diseases, and that there are orphan drugs to treat them. In essence it means
that the Ministry of Health has to support the development of the diagnosis and
treatment of these diseases. I think this opens up considerable possibilities, and if
you look at the social issues in Mexico then you can see this is a huge step forward.
We have now cases with people living in very poor and remote areas that are getting
treated with a biotechnology product.
How did you manage to get orphan drugs under the umbrella?
The Seguro Popular covers basic needs but it has also very important programs for
catastrophic diseases such as certain type of cancers. It’s true that our products are
“The Mexican authorities
are very conscious of the
various niche problems
that exist for patients
across the country and
have been very open in
making orphan drugs
available to them.”
Marcus Krenzlin, Country
Manager, Shire Mexico
ORPHAN DRUGS
47
not cheap, but they are providing great value to patients and
their family and the society overall by really enabling people
with life threatening diseases to lead better lives. In addition
to the authorities’ awareness of the problem, there are also a
number of very active and well organized patient organizations
who, through dialogue, have been able to open up the doors to
get these approvals.
know the families and the patients, which helps them to handle
the problem more effectively. We are also giving continuous
support to physicians for diagnosis, but even though we are
trying to play our part it is very difficult as many of the patients
live in extremely rural areas, and Mexico is a huge country.
Do you think there is enough awareness for the diseases you are
treating in Mexico, amongst both the public and the physicians?
Yes I believe so. We are already in discussions with the
authorities on how we can support them and provide training
and information to the parties involved. At the end of the day
Shire is a company that enables patients with difficult and
life-threatening diseases and their families to live much
better lives.
Awareness is definitely a problem: if you look at prevalence
or incidence data and how many patients have been either
identified or are on treatments, you will find figures indicating
that only 10-15 percent of the theoretical disease population
have been diagnosed. This means there are a large number of
patients in need of our treatment but not receiving it.
Even though there is not a high level of awareness, it is difficult
to conduct any big campaigns because these diseases are so
rare. There are maybe 250 cases in the whole of Mexico, so we
need to deal with awareness differently. We usually manage
awareness through supporting medical education programs
or through supporting the patient associations because they
Will the growth of healthcare from the government aid this
awareness issue?
Where can we expect to see Shire in five years’ time?
At the moment we just do Human Genetic Therapies (HGT)
here in Mexico, but there are two more business units one
of which specializes in Attention Deficit and Hyperactivity
Disorder (ADHD) and Gastrointestinal (GI) which are about to
be launched here rather soon, and the third business unit is
regenerative medicine. So we expect establishing full Shire
operations in the country in the mid-term. O
48
EXPERT EYE
Optimizing pharmaceutical distribution channels
By Dominik Bacher, CEO, and Reto Zoppi, Commercial Director, BacherZoppi
Mexico’s last decade of political and economic stability has brought about
demographic changes that are shifting the structure and needs of the country’s
healthcare industry. In parallel, the regulatory framework for pharmaceutical
products has been evolving to address a new socio-economic reality of greater
economic polarization, leading the different actors of the industry to test the
new rules through innovation. Whereas innovation has traditionally been known
as the development of new pharmaceutical products, in Mexico innovation
pertains to experimenting with new business models that break away from
traditional paradigms regarding the distribution, pricing and sales methods of
pharmaceuticals.
In the short term, Mexico will face an accelerated aging population, which will
generate significant increase in demand for medical services, particularly in the
detection, prevention and treatment of chronic diseases. Under such market
dynamics, no longer will product characteristics be the differentiating factor
for their sales, but rather there will be an equal onus on secondary services
and benefits that are offered to patients. This combination represents a great
opportunity for both pharmaceutical laboratories and pharmacy chains across
the entire spectrum of products; from prescription drugs to OTC and personal
care. Ultimately, this is a chance for the industry to enhance the added value they
can offer patients through their products.
At BacherZoppi, we are prepared to support, design and execute innovative
marketing strategies across all types of distribution channels and of points of
“At BacherZoppi, we are
prepared to support,
design and execute
innovative marketing
strategies across all types
of distribution channels
and of points of sale.”
EXPERT EYE
sale. Through the hard work of our talented sales-force in
conjunction with the most current marketing data provided
by our collaborators, we are determined to develop the
best practices in optimizing pharmaceutical distribution
channels.
The Pharmacy Modernizing Mexico’s Healthcare Industry
2011 marked the beginning of a decline in Mexico’s young
population (ages 15-24), decreasing from 20.2 million in
2010 to 14.1 in 2011. This has also initiated a reversal of the
country’s population pyramid. The group of elderly (those
above 64 years old), is currently on a fast-track growth path
that will see its expansion from 5.8 million in 2008 to an
estimated 25.9 million in 2050. As we speak, two-thirds
of healthcare expenditures in the poorest 10th percentile
of the population stem from the purchase of medicines.
With the new trend of people living longer, the demand for
medicines, medical services and personal health products
is bound to by amplified dramatically, further exacerbating
the heavy medical expenses of the Mexican population.
Equally as striking has been the change over the past few years in
the way Mexicans purchase medical products and the structure
49
of their points of sale. Recent studies have revealed that, while
pharmacy chains and self-service locations only account for
30% of the total points of sale, they are responsible for 80% (in
terms of quantity) of all pharmaceutical products sold.
All market actors are currently readjusting to accommodate
this reality, including the pharmaceutical laboratories,
distributors and pharmacies themselves. Pharmacies of
all kinds, whether independent, chains or wholesalers,
are now looking to determine their competitive advantage
in order to survive under the new market dynamics. For
independent pharmacy owners, this has meant a reduction
in their presence as it becomes increasingly harder for them
to compete with larger chains. They have been relegated
to selling generic medicines that are not favored by the
majority of consumers or medical experts. On the other
hand, pharmacy chains are fostering a market penetration
of private brands that has allowed both national and
international laboratories to become direct providers of
their own brands. This has meant an increase in volume of
such products, counterbalanced by a reduction in their final
sales price. O
MEDICAL DEVICES
51
Medical Devices
52
MEDICAL DEVICES
Mexico’s Potential for Medical Devices
While the medical device industry is perceived as less appealing and alluring than its pharmaceutical counterpart,
the sector has been thriving in recent years. Mexico has taken advantage of its experience and expertise in light
manufacturing in order to capitalize on the growing demand for medical devices around the world.
Mexico’s strengths as a manufacturer, and the fact that the country has more
free trade agreements in place than any other country in the world, make the
country an excellent hub for multinational companies to base their medical
device manufacturing, particularly given Mexico’s close proximity to the US.
However, it must be noted that at this point, Mexican companies have not taken
full advantage of the possibilities offered by the medical device industry: there
are no domestic companies currently manufacturing medical devices. However,
many multinationals are located in Mexico, and although the market opportunities
available in Mexico are not game changing, the potential for cheap and good quality
manufacturing make the country particularly interesting.
Similar to the challenges faced by pharmaceutical producers, the medical device
industry has been struggling to expand their business in Mexico in the face of
lengthy registration and approval times. Unlike a pharmaceutical product, medical
devices tend to have much shorter life cycles. This means that any delay in the
product’s registration process can seriously reduce its profitability and lifespan.
COFEPRIS has been working to reduce registration bureaucracy, yet there are
still numerous examples of unnecessary delays. Additionally, once registration
has been achieved, medical devices also encounter obstacles in regards to their
coverage under healthcare plans and their sales through public tenders.
As the local market matures to widely accept the use and benefits of medical
devices, manufacturers are taking advantage of the country’s free trade agreements
to export these products to other markets. Given Mexico’s numerous free trade
agreements, strong intellectual property rights protection, and an inexpensive
labor force, medical device manufacturers have discovered that there are several
advantages to producing in Mexico. According to the Global Trade Atlas, medical
device exports from Mexico reached USD$5.79 billion in 2010, with a strong
proportion of the products destined for the US.
Many of the world’s biggest names in medical devices have manufacturing facilities
close to the US-Mexican border, benefitting from Mexico’s famous maquiladora
program. Under this scheme, companies can import parts duty free for assembly,
as long as a majority of the production is destined for export. This has proven a great
incentive for international medical device companies that are taking advantage of
this unique production environment. O
“Although the market
opportunities available
in Mexico are not game
changing, the potential
for cheap and good
quality manufacturing
make the country
particularly interesting
for multinationals.”
MEDICAL DEVICES
53
A Challenging Regulatory Landscape
Today in Mexico, the regulatory environment is a point of particular
concern for medical device manufacturers. Although health authorities
are earnestly trying to improve the system, many companies struggle with
long delays when registering new products for production and distribution
in the country.
“Product registration has been the
main headache for all the medical
devices and pharmaceutical companies
in Mexico.”
Jose Alberto Villazon, executive vice
president of Siemens in Mexico
The situation is without a doubt trying for pharmaceutical companies, but for
the medical device sector the COFEPRIS backlog is particularly burdensome.
Incremental innovation is a way of life, and many medical devices are constantly
improved based on practitioner feedback and rapid technological improvement.
Product lifespans are short, with an estimated expiration date of a mere two years
for most products.
For many medical device companies, this situation in Mexico is dire. According
to Jose Alberto Villazon, executive vice president of Siemens in Mexico, “Product
registration has been the main headache for all the medical devices and
pharmaceutical companies in Mexico. Even if COFEPRIS strives to improve the
situation, many issues are still pending and the process is one of the most complex
and time consuming in the world. Consequently, new innovations and technologies
that would benefit the population and, in many cases, reduce healthcare costs,
are available in the country with a one- to two-year delay compared to the US or
European countries.”
In an effort to alleviate delays, COFEPRIS has implemented several measures,
which have received mixed reactions from medical device companies. On 25
November 2010, “Fast Track Health Accord” came into effect in Mexico, which
recognizes medical devices that have been approved and sold in the USA and
Canada. Today, the accord also includes products authorized in Japan. According
to COFEPRIS, medical devices registered and commercialized in these countries
should be evaluated and authorized within 30 days from when the importer files.
“The main challenge for COFEPRIS has
been the registrations, and today the
fast track health accord has changed
the ballgame tremendously.”
Ramon Soto, managing director at
St Jude Medical Mexico
54
MEDICAL DEVICES
For many companies, the measure is making a difference. Ramon Soto, managing
director at St Jude Medical Mexico, says “the main challenge for COFEPRIS has been
the registrations, and today the fast track health accord has changed the ballgame
tremendously. Just some weeks ago, we had three product approvals granted in
eight days. So the government is listening to us. Meetings with COFEPRIS are very
useful so that they can hear the opinions of the industry and try to act on them.”
Similarly, Mauricio Monjardin, the director of 3M’s Healthcare Division in Mexico,
also reports a positive experience dealing with the authority. “What we decided to
do with COFEPRIS is to really select the priority products that we wanted to be
registered instead of wasting time on trying to get all our products approved,”
Monjardin explained.
And with 80% of their products receiving timely approvals, the strategy seems to be
working for the company. “We allow them to save time, and we get more efficiency
from them, so it is a win-win situation at the end. We can even focus more on training
them so that we are sure they know our products perfectly well,” Monjardin said.
“Although it is too early to judge
the impact of these third authorized
parties, I truly believe this measure
is game changing and will give us the
certainty we need to prosper.”
Kurt Wicker, general manager of Becton
Dickinson Mexico
However, the experience has not been as positive for all companies, especially those
based in Europe. Carlos Jimenez, managing director of B Braun, a German medical
device and pharmaceutical company, explains that “in Mexico, the only process that
is working in terms of registration is the fast track—and as a European company,
our portfolio benefits from the EC mark rather than FDA approval, so we do not
fully benefit from it. The certification we receive from the European authorities does
not correspond to what COFEPRIS asks for. The European community in Mexico is
working together to improve this situation.”
Nonetheless, the company sees a bright future in the country. “My expectation
for 2015 is to double sales. The question is whether the purchasing model of the
government will be changed towards more quality and better services…. Today,
Mexico is back on the investment map. We have a growth rate of about 20 to 25%
every year and this is also our expectation for the next years,” Jimenez said.
Another effort to reduce product registration delays, COFEPRIS has recently given
the green light to “Third Authorized Parties” to prepare and pre-screen registration
applications for a fee. Kurt Wicker, general manager of Becton Dickinson, a USbased manufacturer of medical devices, instruments, and reagents, said, “Although
it is too early to judge the impact of these third authorized parties, I truly believe this
measure is game changing and will give us the certainty we need to prosper. In the
past, our low expectations of lead-time to register our products were weakening us.
Today, we feel good to be benefited by such improvements.”
“What we decided to do with COFEPRIS
is to really select the priority products
that we wanted to be registered instead
of wasting time on trying to get all our
products approved.”
Mauricio Monjardin, the director of 3M’s
Healthcare Division in Mexico
Similarly, Adriana Ibarra, partner with Baker McKenzie, a global law firm, is
optimistic about the pre-screening services. “I am convinced that the outcome will be
extremely positive. The procedures will be facilitated and accelerated with the help
of personal face-to-face meetings to resolve product queries and general doubts
on the application review. Third authorized parties are extremely necessary since
companies suffer from slow internal regulation processes, heavy competition, and
tight schedules for product launch,” Ibarra concludes.
Critics of the system, however, are concerned that it gives an inside track to multinationals
with the financial wherewithal to take on the additional fees. Nonetheless, given the
current regulatory landscape and persisting authorization delays, most companies are
pleased to have another option. According to Ibarra, third parties will have to first “earn
companies trust” to determine their future place in Mexico’s regulatory process. O
56
MEDICAL DEVICES
Carving Out A Medical Device Market
With an epidemiological profile that increasingly resembles that of a developed country, with rates of diabetes,
cancer, and cardiovascular disease on the rise, Mexico offers plenty of market potential to medical device
manufacturers. However, often called a “country of pills,” there is a strong societal resistance to surgery and
invasive therapies. In order to make inroads in Mexico, medical device companies must raise awareness about the
benefits of long-term healthcare solutions to convince patients, healthcare practitioners, and providers.
Luis Nieto, Managing Director of ConvaTec in Mexico, a medical device company that
specializes in wound therapeutics, ostomy, and continence care, is well aware of
these market dynamics. “Mexico is more a ‘quick fix’ country—there is a systematic
preference for pills rather than the use of a therapy or medical device (surgery) that
could solve the problem. Some of the most advanced therapies have only penetrated
the market up to 4 or 5%, leaving great room for opportunity. However, it is complicated
to change people’s perception of treatment and adopt the medical device and the
solution to their condition rather than fixing the problem with a pill,” states Nieto.
For Medtronic, a global leader in medical technologies, proof of this Mexican
mindset can be seen in the numbers. German Garcia, regional director of Mexico
and Central America for the company, pointed to the low level of sales of one of
the company’s key products. “The use of pacemakers is highly underdeveloped in
Mexico. Around 123 pacemakers of all brands are implanted per year per million
inhabitants here versus 400 in Argentina, around 1,000 in the US, and more than
1,000 in Europe,” Garcia said.
“Patients believe implanting a pacemaker will be a complicated procedure, and
refuse to do it. So we are working on providing information to the population,” Garcia
explained and said that raising awareness is a key part of the company’s in Mexico.
“Mexico is more a ‘quick fix’ country—
there is a systematic preference for
pills rather than the use of a therapy
or medical device (surgery) that could
solve the problem.”
Luis Nieto, Managing Director of
ConvaTec in Mexico,
“The pharmaceutical companies have done a very good job on this aspect and today
the penetration of drugs in Mexico is comparable to developed countries. However,
in terms of surgeries, we are by no means comparable to developed countries, and
this is something that medical devices companies need to work on together as an
industry,” Garcia said.
According to ConvaTec’s Nieto, to reach its full potential, the industry has to overcome
four challenges—physician awareness, patient awareness, physician capacity
(hospital beds and operating rooms), and healthcare capacity—to have more people
treated and with better outcomes. Nieto said, “Out of these four challenges, physician
awareness is by all means the most important and needs to by systematically
addressed. Of course, all are linked in a virtuous—or vicious—circle, but it all starts
with physician awareness, since they are the first ones to meet patients.”
Along the same lines, for BSN Medical, a global medical device company, education
in Mexico must start with the healthcare practitioners. Jose Manuel Lezama,
general manager of the company in Mexico, explains that “clinical education is
extremely important to us and needs to be consistent. You cannot only have training
programs when you launch a product, because you constantly have new nurses
“Patients believe implanting a
pacemaker will be a complicated
procedure, and refuse to do it. So we
are working on providing information to
the population.”
German Garcia, regional director of
Medtronic Mexico and Central America
MEDICAL DEVICES
“Clinical education is
extremely important to us
and needs to be consistent.”
Jose Manuel Lezama,
general manager of BSN
Medical in Mexico
“Lack of proper training is
one of the main causes why
dentists do not consider
implants as their first
alternative to treat patients
“One of the issues at hand
was to know how we were
going to bring more patients
to attend their dental
practitioner.”
Enrique Saldivar, general
manager of Nobel Biocare
Mexico
Armando Martinez Reyes,
general manager of KaVo
Sybron in Mexico
and new users. If you are seriously committed to clinical
education like we are, you have to do it every day to make a
difference. To date, we have already trained 500 healthcare
specialists all over the country.”
“We don’t only sell medical devices, we are committed to
clinical education. Every week, we are doing training in different
hospitals; we continually train nurses, physicians and wound
care specialists. If you want to make a difference, you have to
be committed to clinical education. Sales will follow after you
have made a positive impact on users,” declares Lezama.
Similarly, Enrique Saldivar, general manager of Nobel
Biocare, world leader in innovative restorative and esthetic
dental solutions, said that physician education is also the
missing link for the dental sector. “Even when there are a
few implantology programs offered by universities, these are
still very limited considering the 80-100 thousands dentist
practicing in the country. Lack of proper training is one of
the main causes why dentists do not consider implants as
their first alternative to treat patients. Only 5% of dentists
do it because it is “risky” and most of them were not taught
this treatment while they were studying, although it is a longterm solution that will outlast all other options”
Armando Martinez Reyes, general manager of KaVo Sybron
in Mexico, another leading dental company, concurs.
57
“Mexicans engage in
self-prescription and
medication, which can really
worsen their condition.”
Francisco Ascension,
general manager Bausch &
Lomb Mexico
“Here, the opportunity relies on education, and spreading
information as to increase the importance of dental risk
prevention. For example, we are explaining that orthodontics
is not only a problem of esthetics but also of hygiene. I
have been working with key dental decision makers and
professionals, and one of the issues at hand was to know
how we were going to bring more patients to attend their
dental practitioners. Nonetheless, I am convinced that
education will resolve these issues, and health prevention
will prevail in the middle and long term.”
Francisco Ascencion, Bausch & Lomb, a US-based company
focusing on eye health products and medical technologies,
also notes a pressing need to increase awareness not only
to physician but also to patients. “Mexico’s level of pollution
and altitude cause a phenomenon called dry eye. In Mexico,
only a small part of the population has knowledge of this
eye condition, and Mexicans engage in self-prescription and
medication, which can really worsen their condition.”
Improving awareness of the importance of medical devices in
the healthcare ecosystem was a sentiment expressed by many
medical device stakeholders in Mexico. An emerging voice of
the sector, the Mexican Association for Innovating Industries
in the Medical Devices Industry (AMID) is helping to get out
the message that medical devices can provide solutions that
are more sustainable for patients and healthcare systems. O
58
MEDICAL DEVICES
Seguro Popular Needs To Extend
Its Reach
Limited in resources, Seguro Popular has so far focused primarily on
prevention and primary care. Therefore, patients who are covered by this
regime are largely unable to benefit from sustainable medical device
interventions. While the medical device sector is pleased that more people
have access to healthcare, many stakeholders are pointing the need for
additional coverage.
“Unless you own very good private insurance, most medical expenses relative to
eye care are not reimbursed,” notes Francisco Ascension of Bausch & Lomb. This is
illustrated by the fact that the contact lenses market in Mexico is one of the lowest in
the world with a market penetration of two to three percent.
Lourdes Mejia, director general of Smith & Nephew in Mexico, a UK-based company
specializing in orthopedics and wound management, hopes to see Seguro Popular’s
coverage extended in the years to come. “We believe that wound management and
orthopedics will play an important role. For example, in Mexico, 60,000 people
are affected by osteoarthritis every year and need replacements. Unfortunately,
“We believe that wound management
and orthopedics will play an important
role.”
Lourdes Mejia, director general of Smith
& Nephew in Mexico
MEDICAL DEVICES
only 30% are being treated, and we believe that Seguro
Popular will give the chance to the remaining 70% to receive
treatment,” Mejia said.
However, some question whether the popular insurance scheme
has the financial means to sufficiently cover the country’s
healthcare needs in the future. German Garcia of Medtronic
said, “Mexico does not have enough health infrastructure to
cover this drastic increase in the insured population.”
As for most of the medical device companies in Mexico, he noted that
the initiative has not meant much to his business. “Seguro Popular
hasn’t really started having an impact for us. For example, stents
have just been included in Seguro Popular, but the hospitals doing
the procedure need certifications that most have not acquired. The
59
implementation hasn’t been smooth,” Garcia said.
For Diego Prieto, country manager of Coloplast, an international
company focusing on medical devices and services related to
ostomy, urology, continence, and wound care, said that in general,
the country needs to take on a more holistic approach to health.
“There is a need in Mexico to create public policies for people that
need our medical devices. For instance Seguro Popular, Instituto
Mexicano de Seguridad Socia (IMSS), and Instituto de Seguridad y
Servicios Sociales de los Trabajadores del Estado (ISSSTE), focus
way more on medicines that on medical devices. Usually medical
devices rely on nurses’ decision and this needs to change in a sense
that it should be integrated in the healthcare system together with
medicines”, says Prieto. O
Ottobock: Offering Mobility
Solutions and Fighting
Stigmas
As the official technical service provider for the
London 2012 Paralympic Games, the German
prosthetics firm garnered international attention
and showed the world the performance potential of
disabled people. In Mexico, Ottobock is also trying
to help society see people living with disabilities in a
different light.
Interview with Orison Huerta, managing director of the
company in Mexico.
How would you describe the landscape of the Mexican market
when it comes to Ottobock’s product offerings?
It is difficult to assess the size of our market in Mexico, because
the statistics tend to vary. Government statistics assume that there
are about five million handicapped people, including problems
with ears, eyes, etc. However, these statistics are very low
according to some non-profit organizations, which estimate that
there are about 10 to 20 million in Mexico living with disabilities.
Around 50% of those people have a problem related to mobility.
Some were amputated or injured; others had congenital diseases
that ended with a certain limitation of their abilities.
What is the main challenge that you face in Mexico?
Our main challenge is that the situation of handicapped people
is not properly addressed by the authorities, mainly because of
the way it is seen in the society and among families. We want to
change people’s mind and prove that handicapped people have
the right to be taken into consideration for economic activities.
We want to show our government and institutions how important
it is to rehabilitate disabled people to be productive again. We
are launching a large awareness campaign through a special PR
strategy by showing the problems we have as a country.
Very often, recruiters avoid hiring disabled people, even with
equal skills. How are you addressing this issue in Mexico?
People need to understand that disabled people are normal. That’s
why the backbone of the problem is: awareness, making people
understand that it is not something strange or bad, and that it
could happen to anyone. We want to show them that we are all
equal no matter what physical problem some of us may have. We
need to reinforce and increase laws in favor of handicapped people.
At Ottobock, we are taking this very seriously and we have already
suggested solutions and projects to Mexican politicians to address
these challenges. O
60
MEDICAL DEVICES
Made in Mexico
Along the US border, Baja California, Chihuahua, Sonora, and Nuevo Leon have been key destinations for international
medical device manufacturers for decades. Companies there have set up shop to benefit from “maquiladoras.”
It’s the Mexican term for manufacturing operations in a free trade zone where
companies can import materials duty-free for assembly in the country as long
as most of the finished products are shipped back out. The regime has made
Mexico a particularly attractive manufacturing location and the numbers show it.
According to data from Global Trade Atlas, by 2011 Mexico’s medical device exports
surpassed USD$ 6 billion, putting the country in eleventh place for the industry
globally. Additionally, Mexico is the leading exporter in Latin America and is the
main supplier to the US.
Many of the big names in US medical device manufacturing are set up along the
border to benefit from the system. With manufacturing facilities in Tijuana and
Sonora, Medtronic is one such example. Other companies include Becton Dickinson,
Productos Bard de México, BSN medical, among many others (see chart opposite).
US-based company Baxter has manufacturing roots going back to 1948. Victor Pedroza,
managing director for the company in Mexico, said the country has long been attractive
to US companies. “We decided to come to Mexico and very early on, we also chose to
have manufacturing facilities in the country. Mexico has a lot of opportunities to offer,
mainly a very large market, and proximity to the United States”, says Pedroza.
Beyond maquiladora and the strategic location, companies are also attracted to
Mexico for its low labor costs, high quality of work, and strong intellectual property
Sonora
19 exporting companies
Chihuahua
Coahuila
Nuevo León
Baja California
Tarnaulipas
Jalisco
Estado de México
+
Concentration of companies
Distrito Federal
Source: ProMexico
Other exporting
companies 170
“Mexico has a lot of opportunities to
offer, mainly a very large market, and
proximity to the United States.”
Victor Pedroza, managing director for
Baxter in Mexico
protection. Bio-Rad Laboratories, a USbased life sciences company, opened a
state-of-the-art manufacturing facility
in Mexico City in 2010 and has been
exporting all over the world. Octavio
Zendejas, regional manager of Latin
America for the company claims that
“our manufacturing facility is perhaps
the only one in the diagnostics segment
fully ISO 13485 certified in Mexico.
Thanks to this certification, we are
exporting, mainly to Europe but also
worldwide.”
“We are producing according to the
highest international standards of
quality, and this is perceived positively
in Mexico. When you invest in such
certification and with all the high tech
production systems, your products may
not be the cheapest on the market, but
they are the best”, boasts Zendejas.
According to BSN’s Lezama, Mexico is
an essential hub of production for the
group, with its largest facility located
MEDICAL DEVICES
in Reynosa. “We now employ more than 500 people there,
despite the fact most of the facility is automated. We have five
different manufacturing lines. Ten percent of the production
stays in Mexico; the US represents 70% of exports and the
rest goes overseas. We are in the optimizing phase for the
moment, but when we’ll need additional capacity, we do have
additional plans for another facility in Reynosa.
61
However, some critics of the current situation caution that
Mexico’s reliance on the US for exports is far too great. The
difficult economic situation in the US and President Obama’s
move to strengthen economic ties in Asia could threaten
the status quo in the future. For increased stability, Mexico
should make a move to expand export destinations beyond its
northern border. O
Mexico’s main trade partners for medical devices (2011)
Imports (million)
Exports (million)
United States
5639
92.9%
United States
1993
65.7%
France
145
2.4%
Germany
233
7.7%
Ireland
144
2.4%
China
195
6.4%
Germany
19
0.3%
Japan
72
2.4%
Netherlands
15
0.2%
Switzerland
48
1.6%
Belgium
11
0.2%
Netherlands
48
1.6%
Canada
11
0.2%
Brazil
42
1.4%
Venezuela
10
0.2%
Ireland
41
1.4%
Columbia
8
0.1%
France
37
1.2%
1.1%
UK
Other
Total
8
0.1%
Taiwan
34
62
0.1%
Others
289
9.5%
6072
100%
Total
3032
100%
Source: Global Trade Atla
“ Thanks to [our]
certification, we are
exporting, mainly to Europe
but also worldwide.”
Octavio Zendejas, regional
manager of Latin America
for Bio-Rad Laboratories
Think in Safety
Think in B. Braun
B. Braun Mexico | Tehuantepec 118 | Roma Sur |Del. Cuauhtémoc | ZIP 06760 | Mexico City
Lada 01 800 522 7286 | Tel +52 (55) 5089 7800 | www.bbraun.com.mx
62
MEDICAL DEVICES
Doing Business With “Integrators”:
A Unique Distribution System
In Mexico, health institutions are increasingly issuing tenders based on the cost of procedure, rather than individual
devices or products.
From the anesthesia and the surgery instruments, to Class III medical device,
companies are called to provide the integral package. This is a tough task given that
companies rarely have such a broad portfolio. Therefore, new firms called “integrators”
are putting all of the pieces together and taking on increasingly important role in
Mexico’s distribution system.
For Siemens Healthcare, the company has come to rely on integrators for the sale of
clinical products and diagnostics. Siemens’ Villazon estimated that “around 80% of the
public business and also some of the private hospitals use integrators and do not invest
directly in clinical laboratory equipment.”
This is clearly an advantage for public institutions. “They do not need to invest in assets,
and avoid warehousing expenses and product losses or damages. The integrator
is responsible for overall operation of the laboratory taking that weight from the
healthcare institution. This concept is gaining power, and it has already expanded into
areas like laparoscopy, anesthesia, short term surgery and other healthcare services,
with a tendency to keep growing into services like diagnostic imaging and oncology”,
concludes Villazon.
Philips healthcare division develops a wide range of medical devices including large
size equipment, such as MR and CT scanners. Alejandro Paolini, general manager of
Philips healthcare in Mexico, believes that integrators play a key role in the country’s
distribution system today. “I believe the government used the integrators as a means
to face the infrastructure gap. Appropriate infrastructure and standard quality service
in health are the real issues.”
“In order to close this gap, the government offered two different options – Integral
services and public-private partnerships. Philips for example has sold its equipment
to different integrators, and as a provider of equipment we remain transparent with all
our clients. In the end, selling our equipment to integrators is the same as selling to
any other client from the private sector,“ Paolini said.
It’s a good outlook to have because these integral service providers are gaining
ground in Mexico’s healthcare system. According to Mejia of Smith & Nephew, “These
integrators have completely changed the market dynamics and we believe they will
stay in the market for a very long time.” O
“I believe the government used the
integrators as a means to face the
infrastructure gap. Appropriate
infrastructure and standard quality
service in health are the real issues.”
Alejandro Paolini, general manager of
Philips healthcare in Mexico
DISTRIBUTION
Source: BOMI de Mexico
64
Distributing Health
3PLs: the new prescription for distribution
The Mexican distribution market has traditionally been dominated by a handful of
very powerful wholesalers: Nacional de Drogas (NADRO), Casa Saba, Casa Marzam,
and Fármacos Nacionales. However, as market dynamics change, one niche is
emerging as the trusted partner to the industry: Third Party Logistics companies
(3PLs).
Mario Sicilia, CEO of 3rd party logistics company BOMI Mexico tells us, “The
suppression of the manufacturing plant requirement has helped the third party
logistics industry, because we have had more customers from outside of Mexico.
Our solution is usually their best option to comply with regulation and create value.
These kinds of customers can operate using our sanitary license after signing
a contract with BOMI. This saves a lot of time with COFEPRIS, and of course
guarantees a better and more efficient logistics operations.”
Moreover, as pharmaceutical companies start selling directly to pharmacy chains
and supermarkets, another market opportunity was created for 3PL companies.
Indeed, if this distribution channel is new for the healthcare industry, it is not
unknown to some of these companies. DHL, for example, already handles a large
part of the distribution volume to these outlets - around 20 to 25% of their loads
every day - creating economies of scale and allowing them to deliver multiple
orders in a single truck.
Luis Felipe Martinez, Senior Director of Operations Retail, Life Sciences, Strategic
Development of DHL Supply Chain Mexico continues on a third market change
which benefitted the 3PL industry: the rise of integrators. “Our perception is that
integrators are traders that add real value because of their commercial skills,
but show no real desire on developing expertise or participating and investing in
distribution. This creates opportunities for companies such as DHL Supply Chain
to combine our logistics know-how with the commercial ability of the integrators”,
he explains.
“Our perception is that integrators are
traders that add real value because of
their commercial skills, but show no
real desire on developing expertise
or participating and investing in
distribution.”
Luis Felipe Martinez, Senior Director
of Operations Retail, Life Sciences,
Strategic Development of DHL Supply
Chain Mexico
DISTRIBUTION
65
the cutting edge of security advancement and options. We
have developed some of the technology in house, with the
goal of protecting our customers’ products. Our state of the
art boxes can only be opened by a GPRS satellite device. Our
GPRS technology even allows DHL to track the merchandise
even in the case of theft”, Martinez explains.
“Similar to our investments in facilities and controls, we invest
in full monitoring systems which help us control and maintain
our operating conditions. Our GPRS system has multiple
purposes: monitor the temperature in real time, analyze the
vibrations inside the truck, and assess the driver’s behavior.
We go even further by voluntarily monitoring humidity even
though it is not yet a requirement.” he continues.
“We always try to make our employees aware that they are not
just pulling a cart or pushing a box in the warehouse: they are
saving or improving someone’s life.”
Mario Sicilia, CEO, BOMI de Mexico
The company also managed to take advantage of the
geographic context as many medical devices are assembled
in Northern Mexico along the maquila model, and the cross
border flows represent an important strategic opportunity.
Outsourcing logistics is also increasingly seen as a real winwin partnership by healthcare companies. “Outsourcing
logistics allows companies to focus on their core business
through a less expensive and more transparent operation;
you get one invoice for the cost of logistics, rather than having
a ‘black box’ in your P&L. Logistic Operators also take care of
all compliance with warehousing and distribution regulations
for their customer”, BOMI’s Mario Sicilia explains. “Moreover,
companies who choose to outsource eliminate the need for
CAPEX, and have the flexibility to grow because they don’t
need to invest in a warehouse. If operations increase or
decrease, we can adapt to that as well. We ultimately receive
a customer’s product, linking their manufacturing processes
to their final customers. We act as commercial partners to
our clients, keeping in mind that their success is ours.”
However, managing logistics in Mexico is not a walk in the
park. Whether it is insecurity, theft and robbery, the climate
or the geographic disparity of the country, the challenges are
real and have to be overcome.
“Our vehicles and facilities have GPS active monitoring and
are protected 24/7 by strong dissuasive processes and active
protection forces. In addition, when a customer requests an
escort or a guard inside to protect the merchandise of the
truck, we provide this service. DHL Supply Chain stays on
But beyond the challenges, distributing health is no common
business. According to Mario Sicilia, BOMI’s success comes
directly from the company’s philosophy that he has spread
among the employees: “When I came into the company, we
changed the historical mission and vision to a mantra that
says: “We save and improve lives”. We always try to make
our employees aware that they are not just pulling a cart
or pushing a box in the warehouse, but they are saving or
improving someone’s life. This has also allowed us to link
ourselves much more closely with our customers, especially
those who are focused on high quality and high service level”. O
The new distribution paradigm
Own
DISTRIBUTION
Challenges
PRODUCTS
Biotechnological
products handling
ies
part
third
h
g
u
Thro
MARKET
Regulatory
harmonisation
• Temperature
• Traceability
• Expiration
• Negotiation
• Pharmacy chains
• Supermarkets
• Reduction of regional warehouses
• Increase number of direct shipments
• Increase minimum delivery size
• Computerise orders processing
• Computer-designed distribution routes
• Environmental protection
Benefits,
(financial,
tax, logistic,
medical care)
Information
Technologies &
Communications
(EMR, m-Health,
e-Health)
Socially
Responsible
Business
Source: PwC Mexico 2012
66
INNOVATION
Creado en México?
Forgetting the maquila – and looking at Mexico’s innovation capabilities
The rise of healthcare costs around the world is transforming the way life sciences
are evolving. Governments are increasingly being forced to streamline and review
their provision of healthcare services while private industry faces greater pressure
to develop new business models, molecules and products while lowering expenses.
At the heart of this evolution lie the clinical trials that provide the basis for all new
drugs released into the market. With a heightened focus on maintaining costs as
low as possible, pharmaceutical companies are more frequently conducting their
trials in countries that offer a price advantage. From Eastern Europe to Asia and
Latin America, R&D of new pharmaceutical products has become a truly globalized
endeavor, forcing countries to compete against each other in order to attract R&D
investment. India and China have been leading the trend, attracting the largest
number of trials outside of the US and Europe.
In Latin America, Brazil and Argentina have traditionally been the favored
destinations for clinical research, with Mexico trailing behind. This scenario,
however, has been shifting over the last few years as Mexico leverages its
advantages to become a likely contender as a preferred clinical trial destination.
“The main advantage of developing clinical studies here in Mexico, aside from the
significantly lower costs, is the type of population that we have – from children
and adolescents, to adults and seniors, and from a variety of different climates
that enables us to re-create different situations and setups for the clinical trials”,
explains Arturo Rodriguez, President of the Association of CROs in Mexico (ACRO).
Mexico’s ethnic diversity is undoubtedly a boon for the pharmaceutical industry,
INNOVATION
67
The country has fantastic world class
institutions for generating scientific
and engineering talent but it is critically
important to provide strength to Mexican
small and medium sized organizations
that create and innovate. [...] Alandra
Medical’s successes are meant to reflect
well on Mexico as a research location, to
stimulate other Mexicans to participate
in a value chain, and to be a global
testimony of Mexico’s high quality level of
research, innovation and creativity.”
David Hite, CEO, Alandra Medical
as it allows companies to test their drugs on a wide variety
of gene pools at the same research location. Furthermore,
as Mexico’s economic development has progressed, the
disease profile of the country is comparable to that of the US
and Europe, where pharmaceutical companies make most of
their profits.
“Currently Mexico is working on harmonizing guidelines for
clinical trials with those of the international community”,
adds Rodriguez. This will inevitably make the country more
competitive once universal protocols become standard
practice. In July 2012 The Mexican Federal Commission for
the Protection of Sanitary Risks (COFEPRIS) was certified by
the Pan American Health Organization (PAHO) as a national
regulatory agency of regional reference, alongside those of
Brazil, Argentina, Colombia and Cuba.
After this event “the government has promised to reduce
regulatory process timeframes, and to also increase the
number of reviewers, at the same time implementing a
specialized section in COFEPRIS made up of experts who
will work on setting up a faster approval structure depending
on the type of submissions”, states Rodriguez. The agency
was set up in 2001 as the country’s independent regulatory
body that oversees all activities related to the healthcare
industry, from research and pharmacovigilance to the control
of pharmaceutical marketing. Since its creation, attracting
clinical research has become a priority for the country.
Time is of critical essence for clinical trials, and is often cited
by companies to be more important than cost concerns.
Some pharmaceutical companies still complain that Mexican
approvals are slower than they need to be, averaging 14-16
weeks. However, this is still quite speedy when compared
to Brazil and Argentina that hold average approval times of
8-11 months and 6 months respectively. Mexico is becoming
particularly attractive to small and medium-sized biotech
companies based in the US who collaborate with Big Pharma
to create new molecules for them. Since these smaller biotech
companies do not have the deep pockets that Big Pharma
does, the cost savings of clinical research in Mexico and the
acceptable timeframes have become rather attract.
The bottom line is that there are still many improvements that
can be made for Mexico to become a major clinical trials hub.
This includes increasing the number of beds available for
clinical research given that overall the country has a shortage
of beds to meet the needs of its population. Additional sites
are also needed considering that most of them are now public
institutions with stretched resources.
Furthermore, one of the main challenges to clinical research
in the country is quite specific to the Mexico’s diverse cultural
and linguistic heritage. The informed consent of patients in
Mexico can prove to be burdensome due to language barriers
and illiteracy in the country. UNESCO estimates that 10% of the
68
INNOVATION
country’s population is illiterate, while other statistics place this
number closer to 50% of people being functionally illiterate.
Similarly, with over 50 indigenous languages spoken across the
country, getting patients to sign a consent form can be tricky
when they don’t speak Spanish or even less English. This has
caused some questionable ethical practices in the past where
patients were simply coaxed to participate in clinical studies
without truly understanding the risks. Arturo Rodriguez of
Infinite Clinical Research explains how his CRO has dealt with
this issue. “The main step taken was the audits, both from those
inside the same clinical research companies, and externally. Our
business culture does not allow a mistake to happen more than
once, and this can be attributed to the amount of feedback with
which we work. For example if a doctor did not register a piece
of information or did not safe-keep paperwork for the patient
the solution we find to prevent it from happening a second time
is almost always through better training for those involved, and
for those who were not, but who can learn from the situation.”
Examples such as this are proof of Mexico’s improving
clinical research landscape and of a general cultural shift
to increase life sciences R&D in the country. This notion
has even led companies to develop drugs in Mexico and to
question whether the country can in the future create its own
molecules for the rest of the world.
Some local academics are strong believers that the country
has the capacity for pure innovation and are betting on local
scientists to come up with new products. They have gone
as far as creating a Biocluster that is entirely dedicated to
research in developing life science products.
Dr. Gregorio Cuevas, president of the Biocluster explains that
“eight years ago I developed ‘Biocluster’ which is a not-for-profit
group made up of the State Council for Science and Technology,
various Universities in the state, different Chambers, the State
of Jalisco, and the pharmaceutical companies dedicated
to research and promotion in the biotechnology sector. I set
up this group to get everyone involved in putting the state of
Jalisco on the map in terms of biotechnology. We are looking at
the companies here that are investing in new technology that
can be applied in the sector. At the moment we are working on
tissue clusters in order to develop vaccines with re-combinant
proteins and synthesized peptides. Before we start any new
research project, we always ask the government which are
INNOVATION
the strongest demands at the moment in the healthcare
sector, and as a result we are working predominantly on novel
treatments for diabetes, obesity, and cancer.
We have also made it clear to COFEPRIS that we are not
working on generics, or bio-similars; we are innovating to
provide treatments for currently unmet needs in biotechnology.
Because of this we have received special pre-approvals for our
laboratory phase developments from them. If we can show them
that we comply with the entire federal requirement for bio-tech
research and development then we can move to the second step.
Biocluster is the first group of its kind in Mexico, and
initiatives such as this in Jalisco really help the company to
push research forward and to soon become the leader in its
field on a national level- we are breaking a lot of paradigms.”
Certainly this initiative is commendable, although some experts
lament the limited “cluster effect” found in Mexico’s healthcare
and life sciences sector today.
Jose Alarcon, partner at PWC Mexico, claims that “Mexican
academic institutions, both public & private, should be
playing a bigger role in transforming the way healthcare is
69
being provided in the country – simply because they train the
health professionals and are a key player in research. For
instance, Tec de Monterrey or Panamericana, as well as public
universities such as the University of Nuevo Leon, should
have the entrepreneurial spirit to join forces and create APPP
(Academic Public- Private Partnerships) such as bioclusters.
That would be a key driver that would create some change
rapidly. The concept of bioclusters is still a challenge for the
industry but is slowly emerging – and one example is the
Campus BioMetropolis in the south of Mexico City.”
However, some question how successful or productive
these initiatives will be. Guillermo Abdel Musik, director of
competitiveness at the Autonomous Technological Institute of
Mexico (ITAM) recommends that before spending resources, the
government should establish very specific investment priorities
in order to reach critical mass and the cluster emulation
necessary to innovation. Altogether, rather than spending these
resources on research that might eventually not be marketable,
he suggests that Mexico should concentrate on what they know
to do best: creating innovative business models that directly
address the inefficiencies of the national healthcare system. O
70
CASE STUDY: SILANES
Developed in Mexico: Silanes as a case study
Silanes is the first and only Mexican company to have an innovative drug developed on home turf and approved by
the FDA. Guillermo Funes Rodriguez develops on his winning strategy.
We are an innovative Mexican company that invests more than 10% of our sales
back into R&D. Mexico is still our principal market, and we have five manufacturing
plants in the country, including a 52,000 square meters plant in Toluca for solid
pharmaceuticals.
In 2007 we formed an alliance with the Brazilian company Ache Labs, after which
we started exporting to Brazil. We also have another international strategic
alliance with Sanofi, in order to distribute anti-diabetic products in other Latin
American countries, and we also have an alliance with Procaps, a Colombian
company, to distribute our products in Colombia. With these strategic alliances
we can cover South America, while still operating our own forces in Mexico and
Central America.
On the research side, our investment program is three-fold. The first area is
traditional pharmaceuticals with a very strong emphasis on cardiovascular, diabetes
“We are ready to compete globally.
The approval of Anascorp was just our
first step”
GLOBALIZATION
CASE STUDY: SILANES
71
and metabolic disorders which include obesity. In this area
we have patents, alongside twenty two academic liaisons in
Mexico, the United States, and Europe.
venom, which we subsequently submitted to the FDA for
analysis and approval. It took them 11 years- but we finally
got the approval.
The second area of our investment is in biotechnology,
which has three main focuses. The first focus is on our antivenom treatments which we use as a platform, and might
also be used to treat pain. The second focus is on molecular
biology and genomic techniques, in partnership with UNAM
and a research institute in the United States. Our third focus
is on molecular diagnostics, where we are investing in both
pharmacogenomics and proteomics.
Anascorp is a completely new patented and innovative drug
that is selling fantastically in the United States, and now we
also have sanitary registers for the drug in Africa and we will
be launching Anascorp there in less than a year: specifically
in South Africa, Kenya and Senegal amongst others.
If we had decided to go into the North American market with
just generics, as other companies have done, we would have
failed because Asian countries are selling their generics
to the Americans much more cheaply than Mexicans ever
could. So we had to conquer the North American market
with quality and innovation in the field of biotechnology. The
biotechnology branch of the company, Bioclon, developed
Anascorp which is a snake, scorpion and spider bite anti-
Receiving FDA approval means open doors everywhere you
go because it is the agency of reference. By the end of 2013
we hope to have two more products approved by the FDA,
and we will then submit a further three. Now we know the
mechanisms and the processes behind approvals, we can be
more efficient and faster in complying with them.
The long term outlook of Silanes is fantastic: we have
patented products in biotechnology, and with a plant that is
FDA and soon to be EMA approved, we are ready to compete
globally. The approval of Anascorp was just our first step. O
Headquarters:
Amores 1304, Col. Del Valle
México D. F., C. P. 03100
Tel. (52-55) 5488 3700
Manufacturing plant :
Prolongación 6 Norte No. 200
Parque Industrial Toluca 2000
Toluca, Edo. de México.
Tel. (722) 548 0770
www.silanes.com.mx
Providing the world with health solutions
AND INNOVATION
REINVENTING HEALTHCARE
73
Reinventing healthcare
74
EXPERT EYE
3 questions about Public Private Partnerships (PPP)
to Jose Alarcon, Partner Healthcare at PWC Mexico
Mexico’s PPP law is expected to transform the healthcare landscape, with procurement for infrastructure projects
but also high tech services. Lessons to be learnt from Mexico.
What are the challenges and opportunities of having a PPP implemented today?
Where there are not enough resources, PPPs come in line as an innovation
in financial models. Thanks to PPPs, the government has an enhanced cash
flow management to provide the services they want, and the patients get better
efficiency. It also brings better infrastructure that is built faster.
The financial model is a trust in which the government allocates ticketed resources.
There is in most cases a 20 to 25 years contract in which the private sector commits
to build and then operate the infrastructure for this period of time, providing the
management while the government provides the supervision and the clinical services.
The real challenge is to educate and raise awareness among the local governments
on how the PPPs work.
How do you incentivize local governments to engage in PPPs ?
The advantages of a PPP are very clear. First, they reduce risk for the government, as
responsibilities and costs are shared with the private sector. Another very important
factor is that cash flow pressure on the government side is reduced, allowing for
bigger scale projects in the short term. In turn, this means that the population is
provided with better services. PPPs also reduce administrative complexity for local
governments, as the daily management of logistical services such as cleaning or
laundry can be managed by the private partner. Finally, PPPs leave a lasting legacy
for the government administration that created them.
EXPERT EYE
75
“The real challenge is to educate and
raise awareness among the local governments on how the PPPs work.“
José Alarcon, Partner at PWC Mexico
The main obstacle and challenge of PPPs is that they require
strong and agile leadership from the government side.
Strong leadership is the key, since the political cycle is illadapted to PPPs. The local governments have to think through
a long-term vision if they want to make the right choices, but
on the other hand they are only in place for 6 years, which
makes the task much more challenging. The issue is making
sure that they leave the right projects in place for the future
government without causing problems to the population,
especially if there is a change of political party. Also, you need
to sell the idea to the local congress and unions and convince
them you are not giving away public property. That is a matter
of education and awareness, and I am confident this will soon
be an issue of the past.
Then, agile leadership, as PPPs are complex to implement
politically. For example, the only players that have the
financial leverage to build the infrastructure and get
payments only after initiating operations are medium to large
size companies. Often, the state governments tend to like
more to provide investment opportunities to local or national
companies that are often too small to support the financial
challenges of integrating a PPP. A way around this challenge
would be that the large companies often hire the smaller local
companies to benefit from their market knowledge. Another
political challenge that requires agility is being able to find
a constructive agreement between federal & local levels for
effective patient referral.
How do you get a PPP right for all parties in the healthcare
industry?
In the planning stages, it is crucial that the government gets
the best advice possible as it is a long term and highly complex
project. The first step is to get a strong market study in order
to forecast the size of the hospitals. It is absolutely critical
to identify the minimum demand level to justify the project
and guarantee to private investors the minimum return on
investment they could receive – and this has been a major
problem in Mexico so far. Then, the government should get a
detailed business plan that would serve as a grid to evaluate
the quality of proposals in the bid phase.
On the private side, companies should identify the right level
of definition of the architectural design to ensure harmony
while allowing reasonable flexibility of design and amenities.
The rest of the factors are linked to typical successful project
management: adequate governance structure, a quality
supervisor, monitoring key performance indicators (KPIs),
independent assessors, appropriate penalties, and a strong
Project Management Office (PMO) for aligning work streams
and oversee risk management.
It is also very important to look at what has been done in
Mexico PPPs project up to today, to extract best practices
and capitalize on lessons learnt to better plan the next PPPs.
One of the lessons learnt in Mexico is that the market study
period is critical. Two of the PPPs conducted in Mexico – in
Nuevo Leon and Ciudad Victoria –faced a big challenge there
because there was an apparent mismatch between the
infrastructure built and the actual demand.
Second, there is a need to gather the most precise details in
the bidding process phase to increase transparency and avoid
legal complications at a later stage.
Third, the medical devices companies can’t bid for a 25 year
contract when they don’t know what tomorrow’s technology
will be. Therefore, the timeframe for medical device has to
be divided into several layers, depending on expectations for
the technology’s future obsolescence. We could also think of
different models such as opening to full service outsourcing
for certain areas of the hospital, and leasing the equipment
with a service level agreement.
Fourth lesson is how to deal the IT infrastructure in the
hospital, and whether to keep it in the frame of the PPP or
leave it outside. There is no rule here, but this is something
that needs to be considered.
Another question that was raised is how to include the clinical
personnel in the PPP – and correctly evaluating how much
staff will be necessary to correctly run the hospital is crucial.
Last, Big Pharma still has to find their place in PPPs, possibly by
offering clinical trials that could take place in those hospitals. If
pharma companies get smart enough, they can win with PPPs. O
76
INTERVIEW: VITALMEX
Interview with Jaime Cervantes, President of Vitalmex
Discussion on how integrated services are reshaping the Mexican healthcare system… and beyond.
Can you give us a historical overview of the company and tell us about the vision
behind its creation?
Vitalmex is a very humanistic company that puts the patient at the center of its
activities. We focus on a very specific strategy based on 3 goals: accessibility,
availability, and opportunity.
There is clearly enough money for healthcare in the country. However the issue is
infrastructure and the articulation of the fragmented elements of the system: it is
too complex and not efficient.
Vitalmex saw this issue 20 years ago. We were pioneers as we were the first
integrator in the country, creating the comodato system (when the government
buys equipment, they have to buy all the accessories from the same provider) and
the first offering an integrated services model. It means that innovation, medicines,
information, technology, financing, are articulated around the patient’s needs.
Mexico is a very challenging country when it comes to healthcare, and there are
a lot of barriers that do not allow us to work as we wish. At Vitalmex, we are used
to changing paradigms and we happened to modify the way the government was
purchasing products, just by our strong will to improve the system.
We realized that we had invented a very specific business model that could even
become an example for other countries. We convert the investment in equipment to
current expenses, which helps the hospitals and the government a lot. We believe
that if private companies get a bigger role in the healthcare system, by offering
better management systems and integral solutions, the level of care will increase
and the country will be able to offer better service to its population.
How would you describe your growth strategy for the near future?
There are 3 different Mexicos that need to be taken in account, and therefore 3
different ways to do business.
INTERVIEW: VITALMEX
77
“To work with the poorest, we need to change the way we behave: that is why
we are not only distributors, we are not only manufacturers, or integrators, but
we are developers of healthcare systems. We want to give them accessibility,
availability and opportunity.”
Jaime Cervantes, President of Vitalmex
The first Mexico is extremely rich, with 23 million Mexicans
that can receive world-class and expensive care. They are the
target of the 5-star hospitals that Mexico as such as Hospital
Angeles, ABC etc.
The second Mexico is based on the social security system,
where the employees prepay for their care through their
federal taxes. However people are not using this system fully
because the quality is not always reliable.
The third Mexico accounts for 40 million people, which are
considered as poor. They are supposed to rely on Seguro
Popular, which is a fantasy. The level of training of the staff
working in these institutions is very low, funds are misused,
the infrastructure is in bad condition, the equipment is
obsolete, abandoned, 80% of the budget goes to payroll,
so the institution is only running with 20% of the budget
dedicated to the patient.
We decided to focus on this bottom of the pyramid target
because the challenges are huge and it is in our values and
philosophy to try our best to increase the level of healthcare
for this part of the population. To work with the poorest, we
need to change the way we behave: that is why we are not only
distributors, we are not only manufacturers, or integrators,
but we are developers of healthcare systems. We want to give
them accessibility, availability and opportunity.
How can developers create value for Mexico?
As developers we want to create 4 different criteria for value.
First, we want to create what we call flexible standardization,
with a system that could be individualized, universal and
functional. Second, we can bring economic benefits to the
government from our solutions. We have engineers looking at
the best technology, even to reuse equipment that is obsolete
in Europe or in the USA but that could be refurbished and
used in Mexico at a low cost. Our third criterion is simplicity,
in order to create an affordable solution. We provide exact
numbers and statistics to the government and we align our
offer to these realistic needs, which creates economical
advantage. The fourth is the guarantee of service, because
we are committed to provide high quality.
Our offer is completely unique: it is not focused on the
hospital, not on the surgeon, nor technology. Our one and
only focus is the patient – and we have strategic partnerships
with companies such as SAP, Philips, Johnson&Johnson,
Boston Scientific…
Today in Seguro Popular, everything is purchased and organized
separately: transportation, technology, telecommunications,
medical equipment, infrastructure, staff training, logistics, etc.
What Vitalmex offers is putting everything together.
Our offer is an integral solution based on a yearly fee with a cost
per patient. We make sure to avoid any kind of shortage, lack
of staff or technical problem as the service is global and takes
every variable into account. In some cases the government
might even ask us to build new hospitals or refurbish some
clinics. We also train and provide physicians. We are not
selling products but opportunity of health. We operate all the
equipment and are in charge of the maintenance. We basically
provide everything to run a hospital so that the patients can
get the best care out of the available infrastructure.
Our first project where we were able to show that we were
pioneers was at a public hospital in Veracruz for which we have
a 12-year contract. Based on the PPP law, our hospital runs
15,500 procedures per month in Veracruz, and we created 150
jobs there. We installed surgery rooms, high specialty surgeries,
imaging, hemo-dialysis clinics. We raised the capacity and
productivity and the perception of quality of the service we
provide is up to 96%.
We developed not only a new business model, but also a new
healthcare system. Our knowledge of integrated services can allow
us to be developers and spread our program with universities,
social funds, non-profit organizations, private hospitals, etc.
The system is so fragmented in Mexico that we could be the
solution to unify all the different segments that compose the
system, if the government would contract us, state by state.
We have a strategic planning of 20 years and we want to
contribute to a better future for Mexico. Vitalmex is also opening
in Spain, Peru and Colombia because we believe our model
could help other countries solve their healthcare issues. O
80
LEADERS
Looking for leaders
“The right job can transform a person’s life. The right person can transform a business.“
Gerardo Kanahuati, partner Healthcare, Hays Mexico
In the face of globalization and convergence, leadership skills within life sciences
are becoming increasingly crucial for the success of the sector. Whereas in the
past most industry leaders had a purely medical and technical background,
the leaders of today must have a solid grasp of business concepts, as well
understand different legal, financial and cultural frameworks. Often functioning
ambassadors of a global group in their country, they must not only adapt best
practices to the local needs, but also develop the company’s operations, while
being flexible towards the rapid changes of the industry.
To address these challenges, those industry leaders need to be strongly trained
and talented. Recruitment firms such as Hays Mexico or Korn Ferry help
companies find the best match to take the reins of their operations.
According to Carlos Apellaniz, Sector Leader, Life Sciences for Korn Ferry, the
main asset for a candidate in leading positions of the healthcare industry should
be its “Learning Agility”. Korn Ferry has coined the concept and assures it has
the highest correlation to success and return on investment that can be observed.
Apellaniz explains that “some practices support the idea that high potential
individuals are individuals who will be able to grow certain number of levels in
management positions in a defined timeframe. The truth is quite different, since
high potential individuals are individuals who are capable of switching from a
completely new role and yet be successful in either parallel or higher positions
in their organizations. The key is to always locate an individual who has a strong
learning agility. Being able to anticipate in order to better understand the changes
of the market is key to survive in a very competitive landscape.
“You need to separate two different angles in the profiles: the expert and the
creative individuals. The experts are capable of grasping the market by analyzing
past factors and defining the stakeholders – yet that is not necessarily enough
in the current changing dynamics. On the other side, the creative ones are
highly innovative, but do not necessarily understand the new trends in time in a
pragmatic way. The ideal individual must be balanced between the expert person
and the creative mind, in order to have the ability to learn and deliver results in
both a short and long term, while adapting to the new circumstances.”
Hays Mexico, another recruiting firm with a specialized life science subsidiary,
takes a long-term view of future structural changes by identifying 4 trends that
will change the work landscape: the emergence of structural growth markets; the
macroeconomic cycle; skills shortages; and the globalisation of the flow of labour.
This is why Hays Mexico “helps clients simultaneously deal with talent shortages
in certain markets, while having to reshape workforces in others”, says Gerardo
Kanahuati, managing director of Hays Mexico. “Industry leaders need to be more
proactive and take strategic long term commitments”, he concludes. “The right job
can transform a person’s life. The right person can transform a business.” O
“Some practices support
the idea that high potential
individuals are individuals
who will be able to grow
certain number of levels in
management positions in
a defined timeframe. The
truth is quite different.”
Carlos Apellaniz, Sector Leader,
Life Sciences, Korn Ferry
SUCCESSFUL TARGETING AND SALES,
WITH A SIMPLE CLICK..!
82
DIABETES
Convergence in action: a focus on diabetes
Type 2 diabetes is Mexico’s leading cause of death – but could be prevented through education, risk screening and
early treatment.
According to the Mexican Ministry of Health , there are currently 11 million people
living with diabetes in Mexico, and data published suggests that there will be more
than 16 million sufferers by the year 2030. Not only is the disease incurable, but
diabetic patients are sometimes referred to as “ticking bombs” given the variety of
medical complications associated with the disease – retinopathy, heart diseases,
kidney failure, diabetic foot just to name a few. As it stands, it is estimated that
diabetes represents about 35% of all Mexico’s public health spending, and as
the prevalence increases, so do concerns for the sustainability of the healthcare
system as a whole.
Joel Duran Chavez, director of marketing for Mexico at Novo Nordisk, suggests
that due to the sheer size of the problem, a solution backed by all stakeholders in
the market has to be found. “Given the speed at which diabetes is rising we need
stronger collaborations and partnerships in order to change the mentality of the
Mexican people. We should beat diabetes before it beats us.”
From treatment to patient care
Not many people can disagree with that stance, but it may be easier said than done.
Even today, there is still social stigma surrounding diabetes. This would probably
explain the high percentage of undiagnosed sufferers – around 35% of Mexican
diabetics haven’t been diagnosed yet according to statistics.
In the meantime, Mexico continues to be top in the world for child obesity, and
number two in adult obesity. Carlos Lopez Patan, general director of Medix, the
Mexican healthcare company specialized on obesity, explains that “diet, nutrition and
exercise are extremely important but there are also several psychological, social and
environmental factors to consider when looking at treatment for a patient. We can’t
just offer a product, but you need a holistic solution that addresses many factors in
the equation.”
Novo Nordisk’s Duran believes there is a strong emotional connection with food in
Mexico because of the high proportion of family events that involve eating. “This
“You need a holistic solution that
addresses many factors in the
equation.”
Carlos Lopez Patan, general director, Medix
DIABETES
83
“Given the speed at which diabetes is rising we need stronger
collaborations and partnerships in order to change the
mentality of the Mexican people. We should beat diabetes
before it beats us.”
Joel Duran Chavez, director of marketing for Mexico at Novo Nordisk
emotional connection is preventing a lot of patients from
making small but crucial changes in diet and lifestyle habits
that would enable better treatment compliance”, he explains.
“It´s very hard to change the cultural habits, and as a country
it is key not to lose our cultural identity. Family and social
events are common in our culture, and that will not change.
Therefore, education is a main prevention factor for diabetes
and obesity”, shares Claudia Duran, President of the Mexican
Federation of Diabetes.
If mentality is the underlying cause of both under-diagnosis and
non-compliance with treatment, it becomes even more important
to break down barriers and start to tackle this mammoth. Carlos
Baños, president and general director of Eli Lilly in Mexico
believes, along with the majority of the industry, that education is
the only answer to address treatment compliance. This not only
involves telling people about the disease and what they need to
do, but tailor-making real educational solutions for society.
“In Mexico the average person reads fewer than two books a
year. This is a big challenge because we can produce the most
beautiful material about how to manage diabetes, but achieve
nothing because the materials have not been read.” One of Eli
Lilly’s solutions to the problem is an educational tool called
Diabetes Conversations Maps.
“This tool was developed globally and adapted locally to adjust
to the culture of Mexico. It is a game, similar to Monopoly, which
helps teach people living with diabetes and their family all they
need to know on the disease and how to care for themselves”,
he explains.
“The most important health problems must be attended by
everyone: government, private enterprises, patients, families,
doctors, and society at large”
Claudia Duran, President, Mexican Federation of Diabetes
Education can often be seen in Mexico in the form of a trained
nurse who spends more time with the patient than the doctor
in the patients’ own homes, to show them how to use the
treatment equipment, how to clean it and store it properly. A
big investment on the part of the healthcare companies, but
brand loyalty for chronic illnesses is surely worth it.
Dominik Bacher and Reto Zoppi, director general and
commercial director respectively of BacherZoppi, the leading
contract sales organization in the Mexican healthcare market,
remember their first contract promoting a diabetes related
product. “We had to set up a pool of psychological talent to
support the patients throughout the therapy. The support
teams also trained the patients’ relatives on technical and
nutritional aspects, and kept the patient motivated through
the initial adaptation phase. Compliance is also a driving
force with the physician: if a patient drops out of the therapy,
doctors become more cautious in recommending the
therapy to the patient. This has been an incredible learning
experience for us - to be closer to the patients, understanding
them, considering their context, their family. The industry is
just starting to see the tip of the iceberg when it comes to
patient care. “
84
DIABETES
to neighborhood grocery stores and pharmacies to provide
health management opportunities for casual shoppers.
Today, Previta has also entered the mobile health (mhealth)
segment with their trademark e-healthtracker.
Falcon is another company investing in mhealth. The company
recently launched a program called HDO designed to work with
the clinical history of the patient. “We want to use algorithms
to cross reference the patient’s medical information, which
will allow the program to automatically provide medical
recommendations to the patient. The idea is to create a
dynamic interface between our system and the patient”,
explains Alejandro Bolin, Falcon’s general manager and head
of HDO. By using accurate indicators and business rules, the
program would update the patient’s statistics without having
to send him to the clinic.
Morgan Guerra, Founder, Previta
From mobile health units to leading the mobile health revolution
Mexican health authorities clearly feel the urge to shift from
a curative health scheme to a preventive approach, and
this is materialized through a series of prevention policies
encouraged by both companies and institutions. Companies
started to commit themselves to this new goal of teaching
better nutrition habits, by implementing wellness programs at
the work place such as encouraging the use of stairs and the
consumption of fruits.
One of the pioneers in mhealth in Mexico is the The Carlos
Slim Health Institute. Today their groundbreaking diabetes
monitoring program DiabeDiario is in evaluation phase of
600 patients in the city of Xalapa, Veracruz. If successful,
DiabeDiario could have a tremendous impact not only on the
Mexican healthcare landscape – but also worldwide.
What is certain is that, in a country that has more mobile
phones than people, mhealth is set to reinvent the way
Mexicans deal with diabetes – and the way they perceive their
healthcare system. O
The second main channel of prevention improvement is
encouraged by the government through the use of “Health
Caravans”, medical mobile units created by the Ministry Of
Health, that can diagnose and alert people on certain health
habits rather than just provide curative care.
These mobile units are an opportunity for the country to solve
part of its diabetes problem, by implementing more mobile
facilities able to raise awareness on nutritious habits and
weight in the country. This is an issue directly linked to the very
uneven distribution of infrastructures and human resources
throughout the country, since some rural areas do not get to see
the opportunity to see a specialist physician or receive proper
care on time given the scarcity and fragmented quality of care
in remote regions.
Some innovative companies have decided to tackle the
prevention challenge. Created in 2004 by two brothers,
Morgan & Christian Guerra, Previta provides preventive
healthcare services, including diagnostic tests, clinical
laboratory exams, vaccinations, and affordable and
convenient health-monitoring programs. Previta’s mobile
health centers treat communities and corporate employees
through preventive campaigns, while its retail clinics venture
“In Mexico the average person reads fewer than two books a
year. This is a big challenge because we can produce the most
beautiful material about how to manage diabetes, but achieve
nothing because the materials have not been read.”
Carlos Baños, president and general director of Eli Lilly

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