The Pharmaceutical Market: Mexico

Mexico is the second most important pharmaceutical market in Latin America, behind Brazil. The private pharmacy sector accounts for 72.9% of the market at retail prices, while the public sector represents the remaining 27.1%. Its close proximity to the USA and its membership within the NAFTA make Mexico the preferred location to establish a subsidiary, in many cases serving the needs of the Central and/or South American regions or acting as an export basis to the USA and Europe.

Due to the economic downturn, out-of-pocket pharmaceutical expenditure in the private pharmacy sector is slowing down. The private pharmacy sector at manufacturers' prices was expected to grow by 7.0% in dollar terms in 2008, but new estimates put annual growth at between 4.0% and 5.0%. The annual private pharmacy sector was valued at US$8.9 billion at manufacturers' prices by August 2008, which represented an annual growth of 4.0%.

under a decree published on 5th August 2008, local manufacturing plant requirements will be phased out over two years. under a decree published on 26th February 2008, the public sector has created a Commission to Co-ordinate the Negotiation of Prices of Medicines & Other Health Products. The reform of the Health Supplies Regulation, published in the Official Bulletin on 2nd January 2008, has improved the renewal and registration processes of pharmaceuticals, and there will only be patented drugs and bioequivalent generics in the market from 24th February 2010.

Competition from foreign producers is going to increase, particularly from those which until now did not have the resources to establish manufacturing facilities in Mexico. Opportunities in the vaccine sector will rise from 2009 onwards; Cuba is a leading producer of vaccines in the region and might enter the sector. in one year's time, producers of biologics such as insulin and erythropoietin will also be able to export to Mexico. The market will be fully opened by the second half of 2010.

IT is going to be tough for the new commission to negotiate patented drug prices for the public sector, as drug sales are already down in the private pharmacy sector. Negotiations started on 23rd September 2008, but producers have only offered price reductions of 2-3%. The commission wants to obtain higher savings, estimated at 5.0 billion pesos (US$466.1 million), equal to around 10.0% of public drug expenditure. The first price negotiations were expected to be finished by 15th November 2008.