Ignacio García-Téllez, Director of Health of KPMG in Mexico, spoke with Mexico Health Review on the challenges and opportunities the healthcare sectors sees on the horizon.
Q: NAFTA is facing a renegotiation. What would be the potential impact for the health industry?
A: The origin of components is one of the main areas that will be impacted. We can take the example of the medical devices cluster in Tijuana. They import inputs, manufacture a product, send it as a semi-finished product to the US, where it is packaged or undergoes a final process, and then is sold back to Mexico as a final product. We may have to develop more inputs internally, bringing more value to the manufacturing process from as early as the R&D stage. This is something the government has strongly focused on and in April 2017 a new national consortium for innovation was established. This is what places R&D on another level.
Q: How is KPMG advising clients in this respect, especially makers of medical devices?
A: We advise them to diversify, to turn their focus to Central and South America and to discover what the needs of those markets are, as well as developing raw materials. Those regions do not have a strong industrial platform so there are opportunities for Mexico to enter and meet the need for medical devices, medicine and for hospital infrastructure because Mexico has a long tradition of operating hospitals through PPPs.
The main challenges for companies entering these markets will be to understand the market’s rules, especially as Latin Americans are traditionally nationalistic. It is more difficult for Mexican companies to enter Argentina and Brazil, but there may be areas for building synergies. Companies need to pinpoint the business style of their target countries and figure out how to collaborate with them. The regional respect and recognition of Mexican regulatory authorities is something we should take advantage of. Most Central and South American countries recognize COFEPRIS as a relevant regulatory institution
Q: What are the main tax issues that concern clients?
A: The OECD is pushing for tax systems to be more compatible and comparable to avoid risks or mismanagement of financial resources. That is the concern companies have: how to adapt their financial statements to international standards. If, for example, a bank lends money to a corporation but a local office writes their statements using different accounting practices, it will be difficult to consolidate. One of the main reasons for international standards is consolidation, comparability and transparency.
Q: Why is data analytics important in healthcare and how is the information being used?
A: Data analytics is important because every hospital, network and person is a source of information. Analytics is useful with electronic medical records for tracking a patient’s condition, for doctors to follow up on treatment schemes and for pharma and medical devices companies to plan their production and distribution in advance. It also plays a role in budgeting because the health sector plans its budget based on historical calculations but epidemiology behaves erratically. Although controls are in place, it is difficult to predict how a disease will develop in society or a given population.
Q: Which companies or sectors is KPMG most interested in targeting?
A: The most important organizations are pharmaceutical and medical devices companies, hospitals, pharmacies, distributors and service integrators that buy inputs and sell services to the healthcare sector, such as anesthesiology, hemodynamics or interventionist procedures. Although some believe they belong to the retail sector, their main focus is medicines and products geared toward wellbeing and they need a good distribution chain to allow affordable prices for their clients. Thirty to 40 percent of visits to doctors in Mexico occur in offices located in pharmacies, so those are becoming important providers. Technology companies are not yet focusing on this segment because it is still developing. They are beginning with simple things, such as blood pressure and weight measurement, while the world is innovating around personalized medicine. We want to help take advantage of global opportunities to address the needs of local patients.
If you want to get more information or participate with relevant insights regarding the Mexican healthcare industry visit Mexico Health Review.
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