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But what does this recent categorization as a 'growth market' suggest for Mexico's pharma industry, recently left red-faced
in regional second place after Brazil's bullish and apparently unstoppable growth?
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 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 public 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.
Most notably, the Popular Insurance Scheme 'Seguro Popular' increased its coverage from 17 million Mexicans to more than 50
million who were previously not under any kind of health scheme. Now almost every single Mexican in the country is covered
under a public health system.
The Federal Commission for the Protection against Sanitary Risk (COFEPRIS) oversaw several recent regulatory changes. Suppression
of the manufacturing plant law in 2008 enables foreign pharmaceutical companies to distribute and sell their products in Mexico
without the presence of a manufacturing plant on Mexican territory. The deadline for new generic drug registrations passed
in February 2010 which, after being subjected to stringent bio-equivalency testing, cleaned up an estimated 7000 products
from the market. Additionally, the antibiotics law was enacted in August 2011, requiring a prescription to be presented before
any antibiotic can be dispensed.
Rafael Gual, General Director, CANIFARMA
For Rafael Gual, general director of CANIFARMA, the National Chamber of the pharmaceutical industry, there is one goal that
COFEPRIS must still achieve, "Full recognition [from PAHO, the Pan American Health Organization], which will provide a strong
opportunity for national companies to reach the Latin American market; a win-win situation for both industry and government."
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 pharmaceutical 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 many 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."
But to grow, or in some cases survive, pharmaceutical companies must adapt to dynamic market conditions. Those who manage
to achieve this flexibility in Mexico will be the ones with smiles on their faces in 2020 as successful players in one of
the world's largest economies.