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"In Sanofi-Aventis we do not talk about BRIC, but about BRICMEX. This country is key in terms of sales potential, industrial investments, and clinical research," explains Nicolas Cartier, General Manager of Sanofi-Aventis Mexico. With the developing world being the main driver for growth in drug sales, pharmaceutical companies are focusing much of their attention on large emerging markets. In this sense, Mexico, one of the largest pharmaceutical markets in the world, is at the top of the agenda for most of the industry players.
Already being ranked as one of the largest markets in the world (between 10th and 13th position, depending on the measurement method) Mexico's true size might actually be underestimated. "Audit firms are not able to correctly measure the government market, which is huge and one of the main growth drivers," explains Carlos Abelleyra, President of CANIFARMA, the largest pharmaceutical association in Mexico, and Managing Director for Mexico & Central America of Wyeth.
Mexico is attractive not only for its size, but also for its significant growth potential. With healthcare spending at 6.6 percent of GDP in 2007, Mexico has a long way to catch up, not only with fellow OECD countries (where the average is 8.9 percent), but also with other large Latin American countries such as Colombia and Brazil (7.6 percent) and Argentina (8.9 percent). Furthermore, the continuous growth of the Mexican population's purchasing power, together with the ongoing changes in its demographic pyramid, paint a promising picture for the almost 300 pharmaceutical companies present in the country. In addition, the industry is experiencing a boost in exports thanks to Mexico's robust network of free-trade agreements.
Probably the most promising factor of all is that the Mexican government seems finally to have realized the importance and potential of the country's pharma industry. Since 2000, the government has been implementing innovative regulatory changes to enhance the quality of its pharmaceutical industry and healthcare system. If these policies achieve their intended results, expect the global pharmaceutical industry to keep its eye on this market for a long time--as clearly in Mexico, the best is still to come.
Mind the waves
For many years, says Abelleyra, the Mexican pharmaceutical industry could have been compared to a very calm lake. Multi-national companies (MNCs) were fully devoted to the private sector, while local players fought between themselves for a share in the government market. "Nothing really happened. Nobody cared about IP protection or patents. Today, everything has changed, and the lake is now full of large waves!"
The most significant of the recent transformational changes is probably the government's plan to universalize healthcare. Currently, only about 50 percent of Mexicans have access to a healthcare system directly linked to formal employment. Nevertheless, since 2004 the government has been expanding its flagship program called Seguro Popular (People's Insurance), which offers free basic healthcare to the uninsured population. Today, Seguro Popular has more than 20 million affiliates, and according to Secretary Jose Angel Cordova Villalobos it should cover all uninsured Mexicans by 2012.
The Mexican government has also been paying close attention to how it spends every peso, through a commission charged with centralizing all institutional purchases of innovative drugs. Although some companies initially perceived it as a move toward price regulation, there is now a consensus that the government's real intention is to maximize the efficiency of its spending. As Abelleyra explains, "Today, the government agencies which are part of the healthcare sector pay different prices for the same medicines. Just as I want to get the best possible price from my suppliers, so does the government."
Cost effectiveness will also be applied to the purchase of generics. The Secretariat of Health is considering adopting a reverse auction system for its purchases. Many local players that have long subsisted on sales to the government--and an increasing number of international companies that have started to tap into this lucrative market--consider this a step toward a system that would consider only price, leaving aside other key variables such as quality.
Nevertheless, Secretary Cordova Villalobos thinks this should not be an issue. "By 2010, quality will not be variable in the Mexican market anymore," he says. The Secretary is referring to what will certainly be a historic turning point for Mexico's pharmaceutical industry. Today, the Mexican market is composed of innovative products, generics (both branded and interchangeable generics), and similares, which are drugs that have not demonstrated bioequivalence.
Starting in 2010, all drugs will have to be re-registered every five years. As part of the new registry process, they will have to meet bioequivalence standards in order to be approved for commercialization. This means that by February 25, 2010, all similares will have to either become generics or leave the market.
The Mexican regulatory agency, COFEPRIS, expects about 10,000 drug registrations to be renewed before this date, but many companies are concerned the agency will not be able to meet the deadline. However, the recently appointed COFEPRIS Federal Commissioner, Miguel Angel Toscano, says the agency is up to the task and asserts that the date of February 2010 is "non-negotiable."
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Most in the industry agree that the end of similares will be a historic event, the main beneficiary of which will be the Mexican consumer. Nevertheless, there is some debate on how the change is being implemented, particularly regarding Toscano's lack of flexibility. The root of the issue is that, while the regulatory change was approved in 2005, only last February were industry players informed on how exactly to proceed with renewals. According to Roberto Rosas Puente, general manager of Streger, "This means that companies now have less than 15 months to finance a cost that should have been absorbed in a period of 60 months. On top of this, today we face a scenario in which the 15 companies that conduct bioequivalence tests in Mexico face a demand for 10,000 products, which has resulted in...
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