pharmaceuticals mexico report 2008

MexicoPharma reportOctober 2008

S1 FOCUS REPORTS OCTOBER 2008

SPONSORED SUPPLEMENT www.focusreports.net

Espinosa Chacón, Mexico

MEXICO: Climbing to the Top of the Pyramid

“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 develop-ing 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). Fur-thermore, the continuous growth of the Mexican population’s purchasing power, together with the ongoing changes in its demo-graphic 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 gov-ernment 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 pharmaceu-tical industry to keep its eye on this market for a long time—as clearly in Mexico, the best is still to come.

This sponsored supplement was produced by Focus Reports.Project Editor: Paul MedrischProject Coordinator: Laura VidelaFor exclusive interviews and more info please log onto www.focusreports.net or contact us at [email protected]

OCTOBER 2008 FOCUS REPORTS S2

Mexico Report

Mind the waves

For many years, says Abelleyra, the Mexican pharmaceuti-cal 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 expand-ing its flagship program called Seguro Popular (People’s In-surance), which offers free basic healthcare to the uninsured population. Today, Seguro Popular has more than 20 million affiliates, and according to Secretary José Ángel Córdova Villalobos it should cover all uninsured Mexicans by 2012.

The Mexican government has also been paying close attention to how it spends ev-ery peso, through a commission charged with centralizing all institutional purchases of in-novative 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 gov-ernment 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 play-ers 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, leav-

ing aside other key variables such as quality. Nevertheless, Secretary Córdova Villalobos thinks this

should not be an issue. “By 2010, quality will not be vari-able 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 ap-proved 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 ap-

pointed 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.”

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 ap-proved in 2005, only last February were industry players informed on how exactly to proceed with re-newals. According to Ro-berto Rosas Puente, gen-eral manager of Streger, “This means that compa-nies now have less than 15


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Mexico ReportSPONSORED SUPPLEMENT

Carlos Abelleyra, President of CANIFARMA and Managing Director for Wyeth

“By 2010, quality will not be variable

in the Mexican market anymore.”

José Ángel Córdova Villabos, Secretary of Health


Mexico Report


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 the prices for these tests skyrocketing.”

Rosas Puente argues that the financial burden of test-ing will force many manufacturers of high-quality, low-cost products to sell out, close their operations, or choose a limited number of their products to continue in business. Unless the deadline is extended, Rosas Puente argues, the reform process will end up reducing competition in the market, and its main beneficiaries will be the large pharmaceutical companies.

Dagoberto Cortés Cervantes, general director of Hormona and President of AMEGI, the association that represents the main manufacturers of interchangeable generics, does not nec-essarily see a reduction in the number of players as negative in itself. “The market is undergoing a process of natural cleaning, and the main beneficiary of this process is the consumer. Only those companies with quality products will be left in the mar-ket, making Mexico a more competitive country,” he claims.

The debate will certainly continue up to the February 2010 deadline. What is not being contended anymore is

that Mexico is today seriously pursuing an upgrade of its quality standards with the in-tention of taking a more important role in the pharmaceutical world. Certainly, the players that will benefit from these changes will be those better prepared to ride the new waves in the lake.

A question of flexibility

Like any other large emerging market, Mexico poses unique challenges and responds to a particular logic. De-

spite their very different strategies, most MNCs agree that

Miguel Angel Toscano, Federal Commissioner, COFEPRIS

As in many emerging countries, it is taking a while for Mexican

legislation to catch up with the latest technologies. Alejan-

dra Mendoza, general manager of Genzyme Mexico, says that

regulation has been the main challenge her firm has had to face.

“We were pioneers in biotech in Mexico, so we had to approach

the health authorities with therapeutic solutions that did not fit

in Mexico’s regulatory framework! It took us three years, from

2002 to 2005, to be allowed to bring drugs into Mexico under

the category of orphan drug, a category which did not previously

exist here.”

Since then, Mendoza explains, there has not been one year

in which the company has not introduced a new product into

the Mexican market. “What really keeps us busy is keeping up

with the launching of our new products,” she says proudly. For

Mendoza, despite the many challenges, launching operations in

Mexico was the right decision. “Genzyme is here to stay, and to

continue bringing the best therapies. We have a long term com-

mitment to the country and to our Mexican patients.”

The Mexican government is making efforts to adapt the regu-

latory framework to biotech products. In this sense, the country’s

Congress is currently discussing legislation on biosimilars. This

draft legislation can be seen as a step in the right direction, but

some are skeptical about how long it will take the authorities to

act on it; for the last few months the legislative agenda has been

monopolized by a controversial energy reform.

According to Esther Lucero Zarate Villa, regulatory affairs &

safety director for Amgen in Latin America, a key challenge biotech

firms find in emerging markets such as Mexico is the fact that, un-

like developed markets, these countries have no reimbursement

schemes. Thus, in Mexico, only a very small part of the population

can afford expensive biologics. “We will sell to the private market,

but we will not succeed in these markets if we are not able to work

closely with the government,” she argues.

Amgen has analyzed the potential of Asia Pacific, the Middle

East, and Latin America, evaluating these regions from different

points of view such as regulation and pricing, with an eye toward

creating a tailor-made business plan for each market. “In Latin

America, at present we are focusing in the biggest countries,

Brazil and Mexico, because together they make up 80 percent

of sales in this region,” says Zarate Villa. “These are countries

with good regulatory frameworks, well-defined markets, and gov-

ernments that aim to promote companies with high levels of re-

search in the country. Amgen conducts R&D activities in those

countries. We have around 3,500 patients participating in clini-

cal trials in Latin America.”

Amgen has huge expectations for Latin America. “We have

great hopes because Amgen has excellent products, a uniquely

robust pipeline and is very well structured and organized. Now

the challenge is to extend this corporate structure to these mar-

kets,” Zarate Villa explains.

Thanks to their size and fast economic development rates,

large, emerging markets are more and more attractive for bio-

technology firms. Nevertheless, these companies will have to be

highly innovative in their strategies to engage patients, doctors,

and governments; as their main strength, their strong pipelines,

will not be enough on its own to guarantee them success.

Biotechnology: The waiting game





Mexico Report

any recipe for success here must have as its main ingredient a flexible organization that allows talented managers to maneuver according to each market’s idio-syncrasies.

Astra Zeneca Mexico went back to the fundamentals to jump in the sales rank-ing from the 18th to the 4th position. “We basically built

our growth on the basis of increased loyalty from physicians towards our brands,” President Ricardo Alvarez-Tostado explains. He considers that given the increasing importance of E7 countries (Brazil, Rus-sia, India, China, Mexico, Turkey and Indonesia) one of the biggest challenges for the industry in the coming years will be to reconcile the need for funding innovation with the access limitations of emerging markets. “We need to break the taboo that if we have differential pric-

ing across the world it will have consequences on the de-veloped markets. That is simply not true. There is not one

wealthy individual who will criticize a company for giving the poor access to the same quality drugs they themselves have access to.”

Wyeth Mexico has also been out-growing the lo-cal market (26% vs 8% in 2007) thanks to its innova-tive strategies. As Abelleyra explains, Wyeth Mexico has been the first country office from a developing market to succeed in having a vaccine (Prevenar) included in a na-tional program. As the company’s headquarters intended to maintain international prices, the Mexico office came up with an innovative scheme by which it created a dona-tion program to make sure the vaccines reach the poorest sectors of society. “This way we are able to be socially responsible while at the same time maintaining interna-tional prices for those segments of society that can afford it”. Cartier, of Sanofi-Aventis, the market leader, sums up the general feeling: “Basically, if you try to manage Mex-ico the way you manage the US or France, you will forget about a large chunk of the market.”

Big Ambitions: Mexico’s generic players want to change history

These days, it is not difficult to come up with the names of several Indian, Chinese, or Brazilian pharmaceutical

companies that have leveraged success in their local markets to become global players. The same, however, cannot be said about Mexican players.


Miguel Múnera Gomez, General Manager for Roche Mexico

Ricardo Álvarez-Tostado, General Manager AstraZeneca Mexico



One reason for this is that Mexican generic companies have traditionally scarcely invested in R&D. The roots of this phenomenon can be found in Mexico’s unstable track record in terms of pat-ent legislation. In 1976, the law on Invenciones y Marcas identified three areas as strategic for the country’s development: national security, food, and healthcare. According to this legislation, patents could not be obtained in any of these areas. Thus, drugs and Active Pharmaceutical Ingredients (API) could not be patented. In 1987, with the objective of developing strong local industries, the government published a decree by which patents could be ob-tained in the three aforementioned areas, but only after January 1, 1997. “Many companies increased their expenditures in R&D, and at Probiomed we started investing significantly on biotechnology,” explains Jaime Uribe, President of ANAFAM, the association that represents the largest generic play-ers in Mexico, and general manager of Probiomed.

Nevertheless, in 1991, in order to join NAFTA, Mexico passed a new patent law that retroactively


Top 30 corporations in the Mexican market by sales

SOURCE: Retail Market (April 2008)

Sanofi-Aventis 7.30 % Market Share Nestle 2.50%

Pfizer 6.50% Senosiain 2.40%

Schering Plough 4.80% Lilly 2.40%

Roche 4.70% Nycomed 2.20%

Novartis 4.50% Valeant 2.00%

Johnson & Johnson 4.30% Liomont 1.90%

Bayer 4.20% Sanfer 1.80%

Boerhinger Ingelheim 3.90% Schering 1.30%

GSK 3.80% Armstrong 1.30%

BMS 3.50% Rimsa 1.30%

Astra Zeneca 3.40% PiSA 1.10%

Home Products Corp. 3.10% Siegfried Rhein 1.00%

Merck 2.80% Aplic. Tecnome. Corp. 0.90%

Merck Sharp Dohme 2.70% Silanes Corp. 0.80%

Abbott 2.60% Chinoin 0.80%

Others 14.50%



Mexico Report

“Our product for Alzheimer’s is a blockbuster worldwide, with

sales of more than US $1 billion. However, it is obviously

not a product of great volume in Latin America,” explains Nicolas

Freudenberger, general manager of Merz Mexico. The difficulties

pharma companies face in emerging markets are related to their

therapeutic area of specialization. For central nervous system (CNS)

drugs, Mexico’s young population

can prove challenging. “We need to

be flexible in choosing which prod-

ucts of our portfolio in Germany are

more promising or which products we

can get through alliances and licens-

ing that can be a perfect fit in each

market,” argues Freudenberger. “For

example, in Brazil we have products

that are very successful in that coun-

try, but are not significantly important

for our European operations.

Herman Santoni Ramos, manag-

ing director

of Lundbeck Mexico, explains that social

perception of CNS disorders can prove

challenging as well. “Conditions such as

schizophrenia or obsessive compulsive

disorder continue to be taboo,” he says.

“However, we have come a long way, and

people today are more comfortable talk-

ing about depression or anxiety.”

Lundbeck focuses much of its effort

on disease awareness, organizing events

with hospitals, universities, and special-

ists. “We also offer support to patients

and family members,” says Santoni Ra-

mos. “Here in Mexico, we have imple-

mented workshops for family members

and caregivers of patients suffering from

Alzheimer’s. It is very fulfilling to know

you can make a difference in the quality

of life of those who suffer from these dis-

eases. Every time I receive a letter from

a patient or family member sharing how

their lives have changed for the better, I

know I am in the right industry.”

Both Merz and Lundbeck have

launched operations in Mexico in the

last decade, and have rapidly positioned

themselves as leaders in CNS. Further-

more, as Santoni Ramos explains, the

CNS segment is growing as physicians

and the general population become more familiar with these dis-

eases. In this sense, he sees a very positive future for his com-

pany in Mexico. Freudenberger agrees, with good reason: In the

last five years, Merz’s average annual growth in this market has

been between 25 and 30 percent.

Both firms know that to sustain their success they need to

continue finding new compounds, not only through their own

R&D structures, but also by accu-

rately identifying opportunities for

partnering with companies that

might not have a core CNS capa-

bility and need a Mexican partner

to maximize their products’ poten-

tial. At present, both companies

have local agreements for their

Mexican operations, as well as

global agreements, such as the

one Lundbeck and Merz actually

maintain at the global level.

CNS: Breaking taboos and teaming up

Nicolas Freudenberger, General Manager of Merz Mexico

Herman Santoni Ramos, Managing Director of Lundbeck Mexico


Mexico Report

allowed products that were of public knowledge to be patented. According to Uribe, “this had a significantly nega-tive impact on the development of the local industry. Just as an example, we were ready to launch our first biotech product, IFN alfa 2a, in 1995. We had developed this product under the protec-tion of the 1987 decree that said that this product could not be patented. However, when we wanted to commercialize it, we found out that Roche had been given a patent! We were not able to launch the product in the Mexican market until 2000.”

A second explanation for why we still do not see a Mexi-can Ranbaxy, Dr. Reddy’s, or EMS is the low penetration of generics in the Mexican market. According to Rodrigo Iturralde, general manager of Randall Laboratories, the main reason for this is that the generic concept is still very young in the country. This concept was introduced less than a decade ago under the name of Interchangeable Generics to differentiate it from the other generics that existed at that time which had not passed bioequivalence tests.

Hector Carrillo, president of Apotex Mexico, adds that in the late 1990s, just when it looked like a generic culture was starting to grow in Mexico, the Farmacias Similares chain of stores appeared, generating great confusion in patients and even in doctors. “People started thinking that Farma-cias Similares were selling generics, when they are actually a marketing concept. The idea behind this firm is to sell drugs at the lowest possible price. This is quite different from our idea of selling quality products at accessible prices. We can-not even think of selling low-quality products without hurt-ing the whole concept of generics,” he argues.

Finally, Dagoberto Cortés Cervantes, general director of Hormona, argues that scarce governmental support to the ge-neric culture contributed to low penetration rates in Mexico’s private market.

Although for a long time generic players have taken a sec-ondary role in Mexico’s pharmaceutical market, there have been many signs of change in recent years: Patent legislation has been pretty stable for more than a decade; generics penetra-tion of the private market has been growing at annual rates of over 30 percent; and the February 2010 regulatory change is expected to significantly increase the population’s aware-ness of the benefits of generics. As Cortés Cervantes explains, “Fortunately, the country’s current Secretary of Health is a firm believer in the role that generics should play in a country like Mexico, in which 50 percent of the population has no health coverage and pays for drugs out-of-pocket.”

This positive scenario for generic manufacturers has given place to significant investments in R&D and manu-

facturing capabilities, together with ambitious plans of in-ternationalization. Today, there is a strong feeling among Mexican generic players that they are facing a historic chance to become truly global players.

Overcoming the R&D bottleneck

Not only does Mexico have an unstable track record on pat-ent legislation, but the country also suffers from a serious

lack of integration between academia and industry, says Alfonso Álvarez Páramo, general manager of PiSA. This situation is ac-tually exacerbated by a research system biased toward publica-tions instead of patents. Consequently, argues Álvarez Páramo, Mexican companies should focus their efforts “in developing other capabilities in which we have competitive advantages. We need to concentrate in creating the right alliances. We need to cooperate with the best in each area.” PiSA is currently estab-lishing a research center in India together with Biocon, which will be mostly dedicated to biosimilars. “Cooperating with such companies which are world-class in R&D allows us to overcome the research bottleneck that we find in Mexico.”

According to Guy-Jean Savoir, CEO of TechSphere Group, the way to master this challenge is to invest on developing in-house talent. For a long time, TechSphere’s policy was to hire top scientists from Mexican institutions of higher education and require them to get their master’s degree while working. “You can put in place high-end R&D infrastructure in Mexi-


Dagoberto Cortés Cervantes, General Director of Hormona

Hector Carrillo, President of Apotex Mexico

Jaime Uribe, President of ANAFAM, and General Manager of Probiomed



co, but you need to be willing to invest in the long term. Today, we

have a group of 130 highly trained researchers working for us, who are capable of making innovation happen, but this is the result of 20 years of hard work!”

Its strong R&D capabilities have allowed TechSphere to en-joy a unique position in Mexico; the company has products that are avant-garde even for developed markets. “On one hand, we have the capabilities to come up with between three and five ‘su-pergenerics’ per year. These products do not have the potential to really be successful in First World markets, so they are mostly geared toward our operations in Mexico and the rest of Latin America. We leverage on these products to form a critical mass of capital so as to penetrate the First World markets. On the other hand, we have the potential to come up with what would be one better-than-supergeneric per year for the next six years. These are truly innovative products, but they are not based on new chemical entities. We have already successfully registered one of these products in Mexico, and are currently negotiating a license for Canada, the US, and Europe with an MNC,” Savoir explains proudly. This will probably be the first investigational Mexican product to reach developed markets since the early 1960s, when Syntex (now Roche) was able to synthesize Nor-ethindrone. Furthermore, Savoir expects the second product of this type to be registered in Mexico at the end of this year, and start clinical trials in the US by early 2009.

Liomont, one of the largest pharmaceutical companies in Mexico, has bet on developing its R&D capabilities mostly in the area of clinical trials and bioavailability tests. “Although we know we are just giving the first steps for what we will be doing in the future, we are very proud of our broad spectrum of R&D activities,” claims Alfredo Rimoch, general manager of Liomont. For the past five years, Liomont has maintained

an alliance with a research-based US company for which it has carried out several Phase I studies, and it is currently in the process of teaming up with three similar foreign research firms. “In the next years, we expect to see much more of this kind of cooperation agreement, as there is a large number of companies that need firms like Liomont to carry out their for-mulations, clinical trials, etc.,” explains Rimoch.

Apotex, the Canadian generics giant, has also developed drugs in Mexico, but as Carrillo explains, this was more the result of need rather than of a broad R&D global strategy. In order to tailor its portfolio for the Mexican market, Carrillo realized Apotex Mexico needed to develop some products that were not a priority for Canada. “Since we have a lab and trained people here, our options were either to wait for some years until Canada got to our request or to do it ourselves. In this sense we started with very simple drugs. As we were build-ing our strengths in product development we saw opportuni-ties in the government market, so we started developing more complex products such as antiretroviral drugs. We have even developed some drugs faster than our colleagues in Canada! We will now establish an R&D center with an investment of around US $6 million. We have earned the support of our headquarters by means of being creative and proactive. Our headquarters did not identify Mexico as a hot spot for R&D; we just showed them what we could do,” he explains.

A different story can be found at the local laboratory Stre-ger, which has focused its investments on developing new manufacturing technologies. While four years ago Streger had 200 employees working in its manufacturing facility, today it has only 25. “This is the result of our success in develop-ing unique technologies that have dramatically increased the company’s efficiency,” claims Roberto Rosas Puente.

For example, Streger has succeeded in developing a dryer that works through magnetic fields and is able of doing the same job than a common dry air oven in one-sixteenth of the time. Streger has sold the patent of the device to Kolpi, a Dutch company that will start commercializing it in 2010. Streger has also generated technologies for packing and for more ef-ficient mixing and homogenizing of liquids.

This company is currently completing a system that will permit sterilization on the production line. “This process is quite unique since it is not only designed to sterilize glass, but also plastic. It used to be more time-consuming and expensive to use plastic rather than glass, but this technology actually


“We have a group of 130 highly trained researchers, but this is the result of 20 years of hard work.” —Guy-Jean Savoir, Ceo of TeChSphere Group

TechSphere R&D center


makes it faster and more affordable. Our vision is to leverage our new capacities to become an extremely efficient manufac-turer of injectable drugs in plastic ampoules,” explains Puente.

Through different approaches to innovation, pharmaceuti-cal companies in Mexico are taking important steps in R&D. The reasons for this are that they know research is the path, not only to sustainable growth, but also to global competitiveness.

Looking to the world

With generics on the up and the country’s economic clout growing, many local companies are preparing ambitious

plans to internationalize. “Exports represent the future for Tech-Sphere. We do not want to remain a Mexican company, we want to become a truly multinational player, and we have all the ele-ments necessary to take this jump: we have the right products, the right people and a plant that is FDA approved” explains Savoir, replicating the vision of many of his colleagues.

Hormona shares the same goals. Although this firm has long based a large part of its growth on establishing licens-ing agreements for the Mexican market with MNCs (Pfizer, Takeda, BMS, Daichi, Recordati, and GSK, among others), in the late 1990s it drafted a new strategic plan that included aggressive international objectives to make it an even more attractive partner. As part of this scheme, four years ago Hor-mona inaugurated a state-of-the-art manufacturing plant, Grimann. “This facility was designed so that it can satisfy our demand for the next 20 years,” explains Cortés Cervantes. “Thus today we use only 60 percent of its manufacturing ca-pability and we have 40 percent capacity available for contract manufacturing. We are currently awaiting visits from FDA and EMEA, as our idea is to look into export possibilities as we know we have the necessary capability and quality.”

As a second step, last November Hormona acquired a phar-maceutical company in Colombia with operations in seven Central American markets. According to Cortés Cervantes, they knew they needed “to not only look for new market niches but also seek for new markets. We are now looking into acqui-sitions in other countries such as Argentina and Brazil.”

Even a company such as Liomont, which has long succeeded by focusing mainly on the Mexi-can private market, is now looking outside the country’s borders. Lio-mont started exporting its prod-ucts in the early 2000s to Central America, Mexico’s natural market; since then it has gradually moved toward South America, with its products currently in Ecuador, Venezuela, Peru, and Colombia. “Liomont has a great potential for

tapping into foreign markets, and we consider exports to be the next stage in our growth,” explains Rimoch. “We are currently in the process of entering Chile, and we have been in talks with potential partners in Brazil and Argentina.” Furthermore, this company has recently started sales of Conazol, a topical antimycotic, in the United States. “We see this that as a first step, as we are in the process of de-veloping ANDAs for the European and the US markets,” he says. “However, we know this is a process that will take time, patience, and careful planning. Furthermore, we need to find the right partner to succeed in this bold move.”

The Mexican pharmaceutical company PiSA, a leader in the hospital business, has long had a presence across Latin America. This Mexican giant has nine manufacturing sites, and will start constructing a new facility in Colombia in the next two years. This has also allowed it to become an active contract manu-facturing player in Mexico and the United States, particularly


Mexico Report

Roberto Rosas Puente, General Manager of Streger

Alfredo Rioch, General Manager of Liomont



Mexico Report

In the late 1990s, Rodrigo Herrera Aspra wanted to

commercialize a new anti-acne formulation, and was

advised by a friend who was involved in the pharmaceuti-

cal industry to hire a group of medical reps. “After think-

ing on this issue, I concluded there was something wrong

with a business model in which we would pay a medical

rep eight hours of work for him to spend seven and a

half hours waiting in the lobby. It is not the medical reps’

fault, the model is just flawed! Therefore we prepared the

first infomercial in Spanish in the world and it was a great hit,”

recalls Herrera Aspra, president of Genomma Lab.

During the last decade, Genomma Lab has become a leader

in the OTC and personal care markets in Mexico, thanks to a

very innovative business model. First, in terms of R&D, the firm

is constantly looking for the safest and most effective active in-

gredient that exists for every indication that can be treated with

an OTC product. “We do not get married with an active ingredi-

ent; if a new and better one comes up

in the market we just adopt it for our

product. This process is quite straight-

forward, as even though we have our

own labs and manufacturing facilities,

we contract manufacture most of our

products,” explains Herrera Aspra.

Secondly, Genomma Lab advertises

heavily. “But usually what we do is to

limit our communication only to the ill-

ness and to the particular effect

of a specific medicine. We want to

inform and educate the consumer

and it works,” he stresses.

Thanks to its creative ap-

proach today Genomma Lab, not

only exports to over 30 countries,

but has also recently successfully

launched an IPO at the Mexican

stock market. According to Her-

rera Aspra, “we are looking into

the long term. We wanted to raise

money to reach some targets in

the coming years. We are currently analyzing targets in Mexico,

although our international business is growing at a faster rate

than the local business.”

Having started with just a garage-made, anti-acne formula-

tion and an infomercial, and being today in his early 40s, Her-

rera Aspra represents a new breed of entrepreneurial young

Mexicans and is set to continue spicing up the Mexican phar-

maceutical market with his innovative ideas.

Spicing up the Mexican OTC market

Rodrigo Herrera Aspra, President of Genomma Lab

in the area of medical devic-es. “We have manufactured millions of units for the US market, and even de-veloped specif-ic components for diverse

products such as infusion pumps,” ex-plains Álvarez Páramo, who expects the share of PiSA’s revenues that come from exports to grow from 5 percent today to 20 percent, in five years’ time.

International ambitions are not a matter of size among Mexican players.

Rodrigo Iturralde, Gen-eral Manager of Randall Laboratories




This is proved by the case of Randall Laboratories, a medium-size company that, having successfully launched its products in Ecuador, is now looking toward other international opportuni-ties. “Our next step is to establish close commercial alliances with other distributors from the Americas and with pharma-ceutical companies across the world,” says Iturralde. “We have recently maintained close conversations with companies from countries that go from Colombia all the way to the Nether-lands, and we are looking at promising opportunities in terms of hosting contracts and manufacturing.”

Going Global: Easier said than done

Pharmaceutical companies from emerging countries face some obvious challenges in attempting to penetrate de-

veloped markets. They must engage in complex dealings with highly demanding regulatory agencies such as the US Food and Drug Administration (FDA) or the European Medicines Agen-cy (EMEA). For a Mexican company to expand successfully to the rest of Latin America is not easy to achieve either. Al-though the region might seem highly homogeneous, because of its common history, religion and (with the exception of Brazil) language, these markets actually display big differences.

As Hector Carrillo from Apotex Mexico explains, the first step is to decide whether to establish a direct presence or look for a partner. “It depends on the market,” he explains. “In vari-ous Central American countries, we chose to purchase a num-ber of companies that were family owned, so it took a big effort to professionalize them. On the other hand, in Guatemala we decided to go with distributors. When it comes to Colombia, we are currently evaluating which would be the best approach to what is actually quite a large market. It takes a long analysis on how much you are willing to invest and what will be the ex-pected return on investment. Furthermore, we need to analyze where we will supply the market from—Canada or Mexico,” he explains.

According to Carrillo, the differences among these markets require companies to be highly flexible. “Latin America as a whole traditionally loves the blister pack presentation, while

Canada only produces bottles,” he says. “That is why when the product arrives here we change it into blister packs. Moreover, some Central American mar-kets even require for the blisters packs to allow the product to be sold by unit, so we have adapted our packaging ma-chines to serve this need. We are lucky that we are very flexible at Apotex.”

Miguel Ángel Castro Rincón, general director of Grupo Unipharm in Mexico,

explains that it is key to match the right product with the right market. Unipharm, a Swiss-Guatemalan company, established its presence in Mexico 14 years ago, and since then has shown significant growth, particularly in the area of generics. “Our objective is to excel in the development, manufacturing, and distribution of generics in terms of quality and efficiency,” explains Castro Rincón. “The idea is to offer more top-qual-ity products at very competitive prices” This way Unipharm expects to become a very attractive supplier for highly com-petitive markets such as those of South America. “We expect our attractive product portfolio to allow us to get numerous distributors in every one of these markets, so as to have a more aggressive expansion,” he adds. Unipharm also expects to tap into non-traditional markets such as Syria, Pakistan, and Egypt. “There are many opportunities in those markets because they are usually not covered properly by most phar-maceutical companies,” says Castro Rincón.

On the other hand, Unipharm is planning on using its nutra-ceutic capabilities to expand its presence in North America—it already sells products in these markets through its company Novum—and to penetrate the European markets. “We already have very interesting and attractive developments in chelated minerals—chelated iron, calcium, potassium, etc.—and we also developed pre-mixes for fortification of food and bever-ages. The latter have been developed by us since 2003 under a business-to-business model.”

Like most other players in the Mexican pharmaceutical industry, Castro Rincón expects to see a turning point in its company’s history in the next years. “Our strategic plans are

ambitious, and we are forecasting impressive growth in our revenues for the coming years,” he says.

Although conscious of the chal-lenges of internationalizing their operations, most generic players expect their own capabilities, to-gether with the right partnerships and strategic alliances, to allow them to hit the ground running. Mexican generic companies are confident their time has come.

“We need to concentrate on creating the right alliances. We need to cooperate with the best in each area.” Alfonso Álvarez Páramo,

General Manager of PiSA

Miguel Ángel Castro Rincón, General Director of Grupo Unipharm



Mexico Report

Beyond the bright lights of Mexico City’s Santa Fe and Polanco districts, roughly half of Mexicans lack access

to quality healthcare or medicines. This presents a chal-lenge for pharma companies in terms of corporate social responsibility (CSR). To Miguel Múnera, general manager for Roche Mexico, CSR isn’t just a way to do business—it’s the only way. “You might be able to do good business in the short term without being socially responsible,” he says, “but you will fail in the long term.”

Many players are certainly committed to giving back to Mexican society. Liomont, for example, organizes a na-tionwide environmental award for high school students; organizes free cleft lip and palate surgeries; and with UNI-CEF participates in the “Escuela Amiga” program, which provides resources for basic schools in communities of 50 to 100 people in Mexico’s poorest states. “We believe

that in order to be truly effective, CSR is something that should come from the heart,” argues Alfredo Rimoch, Gen-eral Manager of Liomont, who is very much involved in each of the company’s social activities.

Many other local companies are highly involved in CSR. Genomma Lab has a unit dedicated solely to corporate so-cial responsibility. Even a small pharma company such as Suanca is behind the Foundation “Dibujando un mañana” (Drawing Tomorrow), which assists thousands of Mexican kids in distress.

In markets such as Mexico, there are innumerable opportunities for large, medium, and small pharmaceu-tical firms to develop fresh approaches to CSR. Contrib-uting to society in this way also allows them cooperate among themselves, with the government and the com-munity as a whole.

The importance of being responsible

The best is yet to come

As a result of the continuous growth of the Mexican pop-ulation’s purchasing power, together with the ongoing

changes in its demographic pyramid and the expansion of its healthcare system, Mexico is set to continue being a very at-tractive market for MNCs for years to come. Furthermore, given the upgrade in the country’s regulatory framework, the growth of the penetration of generics in the Mexican private

market, and the new global ambitions of local players, Mexi-can companies will continue expanding their international footprint well into the future.For these reasons, Ricardo Álvarez-Tostado, president of AstraZeneca Mexico and a respected industry veteran, argues that “if anyone is sitting in a saturated environment and their next step for growth is territorial expansion, Mexico is clearly one of the best places to consider. With all the challenges Mexico faces, it is years ahead of other emerging markets, making it one of the most attractive places to invest.” Mexico’s pharmaceutical industry is certainly undergoing a time of unique opportunities.

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