Mexico - A New Pharmaceutical Landscape

A changing regulatory environment …

The shape of the Mexican pharmaceutical market is changing rapidly, due to increasing regulatory measures and the economic downturn. Producers are renewing their drug registrations, as the deadline is coming closer. By February 2010, there will only be patented and bioequivalent generics in the market. Further regulatory changes affecting the market include the regulation of biologic and biosimilar drugs and the elimination of pharmaceutical manufacturing requirements in the country. The economic downturn has also encouraged generic sales in both the private pharmacy and public sectors to the detriment of branded sales which are falling.

Increasing generic sales …

Opportunities, particularly for generic sales, have increased in Mexico, but these need to be measured carefully. The generic market is going to increase in both the private pharmacy and public sectors, but threats do exist. Most of the generic market is still in the public sector. However, the public sector wants to fix drug prices for the 2010 period, as it did in 2009. This measure has proven very unpopular for the industry, because the exchange rate fixed in 2008 is no longer unrealistic for a peso which has lost about half of its value against the dollar. Even if it is able to fix drug prices for 2010, how is the public sector going to quantify the effects of the changing regulation?

A recent wave of acquisitions …

Due to an unfavourable exchange, production and operational costs have increased by 40% in 2009. Also, producers have had to absorb high costs associated with the renewals of their drug registrations in the last two years. However, the process has not been easy and has been more difficult for small producers. Therefore, some of them are on sale. Foreign producers are actually increasing their participation in the Mexican pharmaceutical market: Valeant announced the acquisition of Tecnofarma in July 2009, whilst sanofi-aventis purchased Kendrick early in 2009. The industry still expects more acquisitions in the short-term.

Further reading - An in-depth analysis of the Mexican pharmaceutical market is available from Espicom: The Pharmaceutical Market: Mexico (published June 2009)