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Mexico Pharmaceuticals and Healthcare Report Q4 2008
Business Monitor International, Oct 2008, Pages: 76
Mexico Pharmaceuticals and Healthcare Report provides independent forecasts and competitive intelligence on Mexico's pharmaceuticals and healthcare industry.
Mexico’s drug market was valued at MXN132.2bn (US$12.1bn) in 2007. While the market is second to Brazil in its overall size, other factors such as a regionally high per capita drug spend (US$114 in 2007), a free pharmaceutical pricing environment and strong trade ties with the US, make it one of the top prospects for drugmakers.
BMI expects growth to average 7.5% year-on-year (y-o-y) over the forecast period (2008-2012) in local currency. Growth should average 11% in US dollar terms over the same period, demonstrating the belief that there should be mild appreciation of the peso against the US dollar over the next five years. By the end of 2012, the expectations are that the drug market to be worth MXN190.2bn (US$20.4bn).
In the past, the requirement for drugmakers to operate a local manufacturing plant in order to market pharmaceuticals in Mexico had deterred some mid sized foreign pharmaceutical companies, especially those in the generics segment, from entering the market. However, the imminent abolition of the rule, highlighted by President Felipe Calderón’s pledge at the AIDS 2008 conference in August 2008, should dramatically cut the barriers to entry for foreign drugmakers.
The abolition of the rule has been predictably condemned by local manufacturers, with Mexico’s pharmaceutical association, AFM, stating that the decision could have ‘unforeseeable negative consequences’. However, it has been welcomed by NGOs, which believe that greater competition from importers should help to lower drug prices in the country, which are generally considered high by regional standards.
Foreign drugmakers have invested heavily in Mexican production facilities over the past decade. While the end of the local plant requirement will reduce the regulatory need for such investment, beliefs other factors – not least the rapidly growing local market and Mexico’s potential as a low cost outsourcing solution for US pharmaceutical companies, thanks to the North American Free Trade Agreement (NAFTA) – will sustain the strength of the local industry.
In the updated Business Environment Ratings for Q408, Mexico remains in fourth position out of 10 Americas markets surveyed. Its score of 62 places it behind only the developed states of the US and Canada and US-aligned Puerto Rico.
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