Mexican Pharmaceutical Industry is in the growing stage with the market value of USD 9.35 billion in 2018. It is expected to grow at the CAGR of 9% within the time horizon of 2019-2024 because of growing health issues and spending, increasing aging population and demand for therapeutics.
- Definition / Scope
- Market Overview
- Market Risks
- Top Market Opportunities
- Market Trends
- Industry Challenges
- Technology Trends
- Pricing Trends
- Regulatory Trends
- Market Size and Forecast
- Market Outlook
- Distribution Chain Analysis
- Competitive Landscape
- Key Market Players
- Strategic Conclusion
Definition / Scope
Pharmaceutics is the discipline concerned with the process of development of a medication from a chemical entity or old drugs for the purpose of treatment of illness if used safely and effectively by the patients.
It is simply the formulation of a pure drug substance into a dosage form. It includes pharmaceutical formulation, manufacturing, dispensing, pharmaceutical technology, physical pharmacy and pharmaceutical jurisprudence.
The pharmaceutical industry is engaged in the discovery, development, production, and marketing of drugs for use as medication. It is segmented into following divisions on the basis of the type of medications:
- Patented Medicines
- OTC products
Globally, the Mexican pharmaceutical industry ranks in 12th position whereas it holds the second largest position in the context of Latin America. Mexico accounts for almost 37% of total pharmaceutical sales of Latin America.
Mexican Pharmaceutical market is in the growing stage. Its market value has been increased from USD 4.33 billion from 2015 to USD 9.35 billion in 2018. It is expected to grow at the CAGR of 7% within the forecasted period of 2019-2024 because of the increasing health spending and trend of chronic diseases.
It is expected to reach USD 10.81 billion by 2020. Use of technologies such as nanotechnology, precision medicine, etc will further assist its growth and development. In 2018, patented medicine has the highest market size of 51% in comparison to another type of pharmaceutical products.
It was valued at USD 4.76 billion in 2018. The major key players engaged in this market are Pfizer Corp, Novartis, Merck, and Sanofi.
- Unlawful sales practices and counterfeiting
In Mexico, counterfeiting accounts for almost 80% of the illegal pharmaceutical market with total sales of USD 1.5 billion. In spite of continuous efforts of WHO and other global institutions to end it out, it is increasing and creating a risk for the development and growth of the pharmaceutical industry.
- Risk of suspension of drugs registration
Recently, the Mexican Federal Commission for the Protection against Health Risks has suspended the registration of more than six thousand drugs. Because of this, the initiation of innovation in medicine production is affected.
Top Market Opportunities
- Low production cost
The production of pharmaceutical in Mexico is almost 17.1% lower in comparison to the cost in the US and is the lowest among OECD countries. It provides a significant opportunity for the flourishment of the pharmaceutical industry in Mexico.
- High output from huge workforce
The workforce employed in the pharmaceutical industry comprised of almost 1.2% of the total manufacturing workforce in Mexico and accounts almost 42,000 people. Each and every employee is contributing to the growth of this market and productivity is quite higher than the average level.
- Ongoing Demographic transtition
In the context of Mexico, it is expected that almost one-fifth of the total population will be over 60 years old, which will be creating pressure for the health system. In order to cope with this demographic transition and increasing chronic disease, the government must initiate better medication facilities, which in turn create a favorable environment for the growth of the pharmaceutical market.
- Growth in health spending
In Mexico, the government is spending almost USD 500 per capita in the health sector and accounts for 6.1% of GDP in 2017 and is expected to reach 6.3% by the year 2020. It is creating a fruitful environment for the growth of the pharmaceutical industry.
- Increasing accessibility and utilization of pharmaceutical products
According to the National Halfway Health and Nutrition survey, the proportion of the population receiving prescribed medication has been increased from 65% in 2012 to 77% in 2016. Along with this, the utilization of pharmaceutical products is increasing at the rate of 5.5% annually. This increasing acceptance and utilization of medication are driving the pharmaceutical market.
- Free Trade Agreement
Mexico has signed a trade agreement with 12 countries such as Japan, Canada, Israel, etc. and is a member of NAFTA too. It was signed in 1994 and from that period, this industry is growing in the fast track. For instance, between 1999 and 2006 growth of 200% was observed in the pharmaceutical industry. It is widening the opportunities for the emerging pharmaceutical markets in North and Latin America.
- Intellectual property rights
The Mexican government has introduced the laws related to the protection of intellectual property rights in 1991. According to this, pharmaceutical companies will receive an incentive for the production of high quality and cost-effective medications. It is the policy in the flavor of the growth of innovation in this market.
- Misuse of drug illegally
At present, medicines are widely being misused and illegally consumed. An Addiction Survey conducted in Mexico in 2008 has revealed that almost 51% of the people were addicted to illegal drugs. It can restrain the growth of the pharmaceutical market.
- Increasing antibiotic resistance
Along with the irrational use of drugs, antibiotics resistance is in increasing trend. A retrospective study conducted among 22,943 strains of bacterias in 47 Mexican centers to assess the resistance rates of antibiotics.
It has revealed that the resistance was as high as 19.1% among gram negative bacterias. This creates the unfavorable environment for the use and sale of antibiotics, which in turn will restrain the growth of the pharmaceutical market.
- High pharmaceutical import
In the context of Mexico, almost USD 5.4 billion valued pharmaceuticals are imported from the US, Germany, France, Puerto Rico, and Switzerland. Here, the largest portion i.e. almost 24% is imported from the US. It can be a challenge for the growth of national pharmaceutical companies.
- Necessity of great effort for product innovation
As health being a multidimensional phenomenon, the causation of disease epidemiology is continuously changing over the time horizon. In response to it, innovation is required in medical products too. However, it is quite difficult to bring innovation to the existing medication process and products.
High efforts in terms of investment, research and registration, is required for it. For instance, only one product is launched as medication from 10,000 substances being researched out and requires almost 2.5 billion dollars for it. It is challenging for market players to bring innovation to the products for the sustainability of the market.
Revolutionary changes are beginning in the pharma industry through the introduction of new technologies and software. Research and developmental activities are blooming and acting as a boon for technological advancement in this industry. Some of the technological changes are as follows:
- Precision medicine: Through the use of this medical technology, information related to the biological basis of the disease can be understood from the clinical and molecular information.
- Nanotechnology: It is the microscopic technology that uses nanoparticles, which help in the delivery of anti-cancer drugs to reduce toxicity.
- Synthetic 3-D tumors: This technology is used to study the response of tumors towards the therapeutical procedures. It assists researchers to understand the metastasis invasion and treatment of cancer cells.
- Cell-free fetal DNA testing: It is used to test the chromosomal defects among the fetus through the use of mother’s blood, which isn’t harmful to the baby too.
- Wireless brain sensors: It can be used to measure the pressure and temperature of the brain through the use of bioresorbable electronics.
In Mexico, the price of medical products and drugs are based on a scheme of self-regulated maximum retail price only covering patented products. Price of the drugs varies on the basis of the type of drugs.
In comparison to other countries such as the US, the price of pharmaceutical products is quite cheaper in Mexico. For instance, the box of insulin costs USD 700 in the US while it costs just USD 65 in Mexico.
A bottle of acid reflux medicine Prilosec costs USD 125 in the US but USD 30 in Mexico. The average cost of an eligible drug in the US is over USD 4500 per month but it prices 40-60% lower in Mexico.
As health and its restoration is a very sensitive issue, the pharmaceutical industry is accompanied with strict regulations initiating from the stage of research of the medical product to health approval, sale and follow up of these products.
In Mexico, Cofepris is the regulatory authority and decentralized agency of the Ministry of Health for the regulation of the pharmaceutical industry. These regulations are as follows:
- General Health Law: It is the law imposed to regulate the import and export of medical products and foods.
- The code of Ethics and Transparency of the Pharmaceutical Industry: It ensures the adherence of CANIFARMA’s members to the code of conduct, guidelines, and standards of pharmaceutics.
- The code of Good Practices of Promotion: It consists of the principles which rule the relationship between pharmaceutical companies and health care providers.
- The code of Good Practices of Interaction of the Pharmaceutical Industry with Patient Organizations: These guidelines are established to regulate the relationship between the pharmaceutical industry and patient organizations accompanied with universal ethical principles and respect for human dignity.
- North American Free Trade Agreement: This agreement provides a favorable environment for the innovator companies and strengthens their rights.
- New regulation 2008: Previously, the foreign pharmaceutical producer must have local manufacturing facilities to operate their business in Mexico. But new regulation by COFRPRIS has phased out the regulation and no one must have manufacturing facilities to do so.
Market Size and Forecast
Mexican pharmaceutical market is booming at the rate of 6% growth and 2.5 billion unit sales of medication are sold annually. As per the yearly basis of sales in considered it generate revenue of USD 2 billion from pharmaceutical products.
It is in the growth stage. The market size of Mexican Pharmaceutical Industry was valued at USD 9.35 billion in 2018 and is expected to reach USD 10.18 billion by 2019.
On the basis of the segmentation of market size by type, the patented medicine has the highest market size valued at USD 4.76 billion in 2018.
Mexican Pharmaceutical Industry is estimated to grow at the CAGR of 9% within the forecasted time period of 2019-2024. It is expected to reach USD 10.81 billion by 2020 and USD 11.26 billion by 2022 because of the increasing population aging and the burden of the chronic illness among them.
Distribution Chain Analysis
Within the pharmaceutical market sector, stakeholders are engaged in terms of discovery, production, distribution, sale, and regulation of pharmaceutical products.
They are playing a vital role in the regulation of this market. Key stakeholders involved in this market are summarized as below:
In this industry, there are dozens of multinational and domestic companies engaged in the manufacturing of pharmaceutical products such as antibiotics, cancer treatment products, vaccines, etc. In total, there were almost 718 manufacturers of pharmaceuticals.
On the basis of the type of medicine, the patented medicine hold the largest market share in this industry. It is comprised of 51% of the total market share by value.
Key Market Players
Out of the world’s top 25 largest pharmaceutical companies, top twenty pharmaceutical companies are operating their business in Mexico. They are:
- Merck: It is the leading company specialized in the production of high-quality products related to healthcare. life science and performance materials.
- Schering Plough: It is US-based pharmaceutical company founded in 1851. It manufactures many drugs mostly for allergies, anti-cholesterol, and brain tumor drugs.
- Boehringer Ingelheim: It is a global pharmaceutical company driven by research with the aim to improve human and animal health.
- Bayer: It is an innovative company engaged in the field of health and agriculture developing innovative solutions to improve the health of people, animals, and plants.
- AstraZeneca: It is one of the pharmaceutical organization concerned with the research and development of therapeutic alternatives.
- Liomont: It is committed to prescribe a wide range of high quality safe and effective medicines.
- Sanfer: This laboratory provides the range of OTC medicines for Mexican and Latin American markets.
- Silanes: It is a research and development organization producing almost 50 medical products so far.
- Hormona: It is the prestigious pharmaceutical company committed to the healthcare sector and wellbeing of Mexico.
Mexican Pharmaceutical Industry is overwhelmed with significant opportunities in terms of increasing aging population, chronic illness and growing demand for the utilization of medicine.
It is expected to grow at a rate of 9% but irrational and misuse of drugs might restrain it. So, the market players especially regulatory agencies must be concerned with it.
- OECD= Organization for Economic Co-operation and Development
- WHO= World Health Organization
- NAFTA= North America Free Trade Agreement