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Is there a future for MNCs in Mexico?

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Marked socio-economic differences in Mexico are playing an important role in pushing the uptake of generics, and these issues are starting to affect multinational corporations (MNCs). MNCs are being forced to open up and diversify, quite simply to have their fingers in as many pies where they can compete successfully. Alternatively they are applying a more focused sales strategy to concentrate on niche markets.

Alvarez Tostado of AstraZeneca believes that MNCs need to adjust their activities to become competitive in both the private and public sector. “Mexico provides a uniquely generous market structure where you have the institutional sector, the private out-of- pocket segment of the market, and then you have the new up-and-coming popular insurance systems that will cater to those who have very little access to medical care, if they have access at all. So in that regard, I think the industry has to realign itself to make sure that it is able to provide adequate services to the institutional sector; provide broadened access to the out-of-pocket consumer, and obviously realign to be competitive in the Seguro Popular concept.”

Mexico is no exception to the global trend of companies moving towards branded generics, a successfully growing sector in a very much brand-driven Mexican society. Bertrand Baron, general director of Sanofi Mexico, is confident that Sanofi’s global strategy of diversification fits well with the current climate in Mexico. “I believe that Sanofi in Mexico is a perfect example of what we are as a diversified healthcare player because here we are playing in all the markets: human vaccines, consumer healthcare, biotech, rare diseases, innovative products, generics, and soon we will be in eye care.”

Sanofi acquired Mexican laboratory Kendrick in 2009, and last year bought Medley, the Brazilian branded generics company that currently sits at #1 in Brazil and #3 in Latin America. The acquisitions are perfect examples of decisions that will allow the company to compete in all market segments. “We believe there is a huge market, and generics were a piece of the market we were not tackling. Now we are doing it with good quality brands, guaranteeing quality to both the physician and the patient.” he continues. The first products under the Medley brand were launched in the Mexican market just a few months ago with high expectations. Medley is already rising fast in the industry ranks.

Aspen Labs, the South African pharmaceutical giant and relative newcomers to the market, started operations in Latin America through a 50% acquisition of Strides in 2007. They found the key to success in Mexico was through turning an originally hospital-focused and opportunistic market business, into a business driven primarily by promotion and branding.

“In 2009, Aspen started to implement a structure that would enable us to enter into the private ethical market, or the prescription-based business. That is where we started to build up our sales and marketing team. At the same time, we were launching a small portfolio of locally developed and manufactured branded generics. The combination of the two would provide a strong platform with greater brand recognition for future Aspen branded generics.” says Peter Erlbacher, COO of Aspen Labs, Spanish Latin America. This turnaround strategy to harness the Mexican market trends was proven successful as Erlbacher goes on to explain. “Since then, Aspen Labs has performed incredibly well: we have delivered significant growth, more than tripling our turnover in the last three years.”

Other MNCs did not turn around to join in the generic playground, but fought back by taking it a step further from a localization point of view. They are making tailor-made solutions from their current portfolio, or using their innovative pipelines to target niche biotechnology sectors.

Tim Daveler, vice president and general director of MSD in Mexico explains that they “have a unique development laboratory here in Mexico [the Mexican Product Development Laboratory] that is not commonly seen in other companies, especially not multinational companies. We use this development laboratory to expand the lifecycle management for our products in order to meet the needs of Mexicans. Many of our products that are on the shelves in Mexico have come from our development laboratory, in order to meet the market needs here in Mexico.”

Similarly, Karel Fucikovsky, general director in Mexico & Central America for the French company Pierre Fabre Medicament, believes a specialty focus will bring reward. “The rules of the market will keep changing. International companies will start to focus on higher specialty drugs, and a company like Pierre Fabre Medicament that is very focused on products and medical specialties, will be able to deliver growth.”

Medical education and awareness has traditionally been quite challenging in Mexico, leading some companies to put resources into education in order for the market to open up. Angel Sosa, general director in Mexico of human protein specialists Octapharma, explains that “it is not easy to show the government authorities the savings to be made in giving patients the treatments that they require, but it is possible, and it is also the key to further developing immune deficiency treatment in Mexico.”

Octapharma takes an active role in promoting this, he says. “We participate in both government and scientific meetings in which authorities, physicians and patients discuss awareness issues openly… and in the field of immune deficiencies, we have been working very closely with a patient organization by sponsoring a road trip across the country that transmits the key focal signs of the diseases to local physicians.”

“We are clearly flying onto the radar; Mexico is a priority market and Pierre Fabre Medicament is here in Mexico to stay”, remarks Karel Fucikovsky. Despite the range of necessary strategy shifts deployed by many multinationals to stay present on the undulating Mexican landscape, it seems there is so much potential to be realized that it is duly worth the effort. In some cases, it has catapulted Mexico onto the priority list for investment and resource assignment- in some cases assigning Mexico as their Latin American headquarters.

Norbert Oppitz, senior vice president for Nycomed, A Takeda Company, in Latin America points out, “Today, Brazil is the most important economy, but in a regional context Mexico will be the most important player for decades to come. Mexico today is much more consolidated than many of the other so called truly emerging markets, it is a more industrialized and modern society than many people realize. Things are moving here, and one of the most dangerous things we can do as a multinational company is not to understand it.”

To read more articles and interviews about Mexico, and to download the latest report on the country, click here.

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