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Mexico Pharmaceuticals and Healthcare Report Q1 2008
Business Monitor International, Dec 2007, Pages: 68
The Mexico Pharmaceuticals and Healthcare Report provides independent forecasts and competitive intelligence on Mexicos pharmaceuticals and healthcare industry.
Mexico’s market continues to grow robustly in value terms, but volume growth appears to be lagging. We estimate 2007 market growth at 8.7% year-on-year (y-o-y), reaching a value of US$13.3bn. The new five-year forecast for the period 2007 to 2012 sees average annual growth in dollar terms of 5.4% and in local currency terms of 7.4%. According to IMS Health, the market grew 7.5% in value terms y-oy over the first seven months of 2007, whilst the number of units sold edged up only 0.7%. Local market sources indicate that volumes remain nearly static, despite record spending by the state sector. One interpretation of this data is that Mexicans continue to pay too much for medicines, a perennial source of controversy. This is attributed, to over-concentration in distribution, corruption and inefficiency in the state sector and generally weak market oversight. Still, with the legitimate generics market thriving - to the long-term detriment of copy drugs or similares - and multinationals carrying out new launches, there is also some evidence that more effective medicines are being used in smaller volumes than older drugs. The one certainty is that with a growing population, more pensioners and a surge in the number of obese and those diagnosed with diabetes, Mexico’s drugs bill will continue to rise.
With just over 50% of the population having some form of healthcare insurance - mainly through state schemes and private-sector policies - President Felipe Calderón warned in October 2007 that comprehensive universal coverage would not be achieved until 2030. At the same time, more money is going into the system - the government claims total health spending will jump 38% if it remains the same as in draft 2008 budget. One crucial pillar in coverage is the long indebted ISSSTE social security provider. In a step forward, state-run pension fund provider Afore Pensionissste. will manage wage contributions from federal workers from 2008 under legislation aimed at keeping the system solvent. How much state funding goes to medicines will depend on the ability of the authorities to efficiently manage purchasing. The development of the market will also depend on continued improvements of the intellectual property (IP) environment. In the new Business Environment Rankings for the Americas, Mexico scores third after the US and Canada, reflecting its relatively strong IP protections and continued growth potential. The opening of a new oncology medicines plant by Swiss drugmaker Roche in Toluca, representing a US$60mn investment underlines the attractiveness of the market.
But there is still room for improvement. In October, trade body La Asociación Mexicana de Industrias de Investigación Farmacéutica (AMIFA) called for stronger data protection under Mexico’s North American Free-Trade Agreement (NAFTA) commitments. One reason for deficiencies is the lack of research and development (R&D) work by both the local private sector and state institutions, driving dependence on copy drugs and generics. Some 98% of patents are of foreign origin, a dismal rate by even emerging market standards. Arguably, the lack of an industrial policy for the sector - such as the twin generics and R&D strategies pursued in Brazil - will leave local players fighting a constant rearguard action against tighter rules and, crucially, better enforcement.
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