written on 21.03.2014

Doing business with the Mexican public sector


In the past 10 years, Mexico has been dramatically changing the market dynamics of the pharmaceutical market, as well as the health sector in general.

The private sector has been reducing its values and its strategic weight, while the public buyers (the public sector) are gaining a more competitive advantage, and are becoming a must-have line of business due to its unprecedented growth.

Nowadays, the overall view of the public sector:

– Accounts for more than 50 percent of the total Mexican market in units.
– Is composed by approximately 150 public health providers, or institutions (IMSS, ISSSTE, Pemex, the army, national institutes and hospitals, and the states. These last ones receive every year over USD 5 billion via the Seguro Popular program).
– Per year, more than 1,000 public tenders or biddings are published with opportunities for the pharmaceutical products manufacturers and distributors to sell to these public institutions.
– The public sector manages over 7,000 different hospitals and medical units.

The Mexican population is divided into the following major groupings:

– IMSS: 55 million beneficiaries.
– Seguro Popular: 52 million beneficiaries.
– ISSSTE: 12 million beneficiaries.
– Pemex: 750,000 beneficiaries.

If you are looking to make your business grow, the Mexican public sector is the answer.

In order to make a good penetration in the Mexican public sector, the pharmaceutical manufacturers come every day to our facilities, to search for consultancy, either for a better understanding of the Mexican public market dynamics, or to analyze the entry/growth strategies to make public buyers a real business opportunity.

We must consider at first, which market segments offer better business scenarios. Based on the database information of the public sector we grow every day, we assess our clients by the following:

Each market must focus on a differential strategy. This means, for the same pharmaceutical product that we wish to sell to the Government buyers, we must create a differentiated strategy based on:

– Differentiated Price. Even though the law establishes the prices to be observed and followed, in the practice we can see that each public buyer will set up different prices for the same product.
– Differentiated Seller/Distributor. The same distributor that can win the tenders in IMSS or ISSSTE, is not the same that will make a good market penetration in the Seguro Popular(states).
– Differentiated Value added. All the 150 public buyers in Mexico are different, and so as well, their priorities in terms of value added. Don’t think of a good access strategy that worked well in an institution to be bulletproof anywhere else.

Besides, in order to make public buyers the best bet you can get, you must accurately observe and develop commercial and access strategies for good coverage of the following market dynamics:

– Service integrator owner (SIO). This model is being quickly adopted by Mexico’s public sector. Within this contract scope, the SIO must buy, store and distribute all the pharmaceutical products (all other medical supplies as well) under a fixed contract that includes the margin and benefits for the SIO. So, in order to make your product available to the institution, you must establish a good relationship with the SIO.
– Private hospitals. The huge chain hospitals are becoming a very important provider of Mexican public institutions, for an outstanding number of services that are being now provided to the public beneficiaries in private hospitals all over the country.
– Patient outsourcing. This model is being offered by the private sector, on which the provider takes along all the service required by the public institution, for example, in the private clinics of hemodialysis and peritoneal dialysis. This growing model is allowing the big public institutions to refocus their budget to other priorities, due to the fact that by outsourcing patients, the institution no longer has to buy the pharmaceuticals and supplies needed.
– Local pharmacies. Take into consideration that providing drugs and medicines to over 100 million Mexicans is not an easy job. This is why, the prescription for the beneficiary sometimes must be provided by a local pharmacy (which has the surrogate-prescription contract with the institution), with no cost to the beneficiary. However, in Mexico, the pharmacy employee can offer either a generic or a substitute to the product mentioned in the prescription.

The private sector has been reducing its values and its strategic weight, while the public buyers (the public sector) are gaining a more competitive advantageIf you are looking to make your business grow, the Mexican public sector is the answer. Look for a strong market database tool (market database providers MUST tell you exactly where the source information is coming from), who also has proven knowledge in assessing access strategies, and can also train and certify your KAMs and Government Sales Reps in both promotion and Contract Management for each client you want to reach.

In the Pharmaceutical Institute we can help you develop the best mix of strategies to reach this huge public market. Contact us for any consultancy you might need.

To read more articles and interview on Mexico, and to download PharmaBoardroom’s latest free report on the country, click here.

Instituto de Investigación e Innovación Farmacéutica, A.C.
info@investigacion-farmaceutica.org investigacion-farmaceutica-logo-mexico
Tels.: 9000-5386, 9000-5387.
Fax: 9000-5386, 9000-5387 ext. 105.
México D.F.