Hetlabs Mexico, part of Indian owned Hetero Drugs group, has been operating in Mexico for three years. This initial foray into Latin America has led to further operations in Colombia, Peru, and Chile. The company has now invested US$150 million into the establishment of a factory in Mexico to serve these Latin American markets, which will begin production in 2016.
Q: How have some tough years globally for the pharmaceutical industry impacted the generics market in Mexico?
A: There have been many changes worldwide. Numerous markets have seen price erosion for generics and Mexico has not been spared this trend. However, Hetlabs continue to sell branded generics here, we maintain a good price base, and improved regulation has helped to rid the market of those companies that sold bad quality drugs. This is better for us as we are now only competing with high quality labs. So far we have invested over US $50 million in clinical trials, pharmaceutical studies, and in product registration in Mexico. COFEPRIS has successfully audited nine of our factories in India, which is rewarding as COFEPRIS’ regulations are tough. These audits covered more than 200 products, and we have now attained 22 market authorizations in Mexico. At the moment we are only importing products to Mexico, but we will be producing finished dosage forms in the country as soon as our new manufacturing site starts operations in the first half of 2016. APIs will continue to be imported, because even American companies have learned that it is better to have joint ventures with Indian companies for APIs manufacturing. Mexico was an important manufacturer of APIs in the past, but competitiveness has been lost in this area. Despite the Government supporting API manufacturing in Mexico, companies are only investing in finished dosage forms.
Q: How have recent regulatory reforms supported the local market?
A: The regulatory environment is now very clear, allowing for clinical trials to be performed only with a community of physicians. In the past, such trials were commercial, in order to gain data to sell products or formulate a market strategy. For example, we are submitting biotechnical products for approval, for which we need to conduct clinical trials to be able to incorporate into the Mexican market. In Mexico, we now need to follow very strict regulations governing the protocol and conducting of the clinical trials for these drugs. The image that COFEPRIS is giving Mexico in the eyes of the world has helped make clinical trials here much more attractive. Mexico is one of the first Latin American countries to pass such regulations, leading to improved market perception and growth. Countries like Chile and Colombia are now aiming to emulate the model of COFEPRIS. Quality is increasing in Mexico as well as certainty among consumers and physicians that generics are as effective as innovators, which opens the opportunity for competing with big pharma and improving competitiveness.
Q: To what extent has the introduction of universal coverage by Seguro Popular increased demand for cheaper drugs?
A: Universal healthcare introduction has created an opportunity for Hetlabs. We are global leaders for HIV products, in which we have 30% of the global market. We are in the WHO Program for AIDS and we participate in Africa with health authorities to fight against HIV/AIDS. We also hold patents for certain antiretrovirals which is a big opportunity for us. CONACYT’s interest to push these innovations to market creates a big opportunity in antiretrovirals (ARV), in biotechnologicals, and in oncological products. It will also allow authorities to provide better coverage. 92% of the population is in theory covered by various entities, but in reality, over 50% of patients that are tested for various problems do not receive treatment. Therefore, providing such patients with the medicines they need represents a big opportunity for Hetlabs and for many other companies.
Q: How hard it is as a foreign company to establish relationships with the public sector and what is your strategy for bringing your products to market?
A: Indian companies have for the most part not been successful in Mexico at this. For us, it has been easier to reinforce our Big Pharma customers over the last five or six years that are working on the renewal of market authorizations. Any work on new products was completely stopped over that time. Once that was over and we had a development backlog on our hands, it became easier to partner up with private companies. For example, we are working with the best ARV companies and we supply products to them. We are able to maintain a good margin also because we are vertically integrated. This is a joint venture because they have the image, capabilities for distribution, market knowledge and we are experts in product development. We are building a new factory and will be able to supply products to the Government that are not part of any deal with our customers. We have to respect the contracts and agreements we have with our partners. So we have some patented products that we will launch directly to the market and have a strong partner for marketing and creating their image. We will keep the ARV supply, the B2B activities, Government relations, and promotion of added value products.
Q: To what extent does Mexico need further investment in clinical trials and where should this come from?
A: There are plenty of good clinical research centers in Mexico. The National Institutes of Health has excellent physicians. Some of the best doctors specialized in obesity and diabetes worldwide are Mexican. Also, surgeons fly from Mexico to the US to carry out heart surgeries. Unfortunately, there are not enough investments to develop this area, and that is not only the responsibility of the Government. In developed countries, it is the participation of the private sector that drives the development of this sector. The Government should be a regulator but the private sector has to provide more services. In Mexico, mostly all clinical trials for the pharmaceutical industry are phase III and phase IV studies, so phase I and phase II need to be conducted in the country too, so more companies should invest in this area. There are big Mexican companies doing clinical trials for orphan drugs in the US and Mexico, and also the multi-national companies are losing their patents and they do not have plans to expand their R&D activities to Mexico, unless they identify a big opportunity here like the vaccines market. The Mexican Government is investing in R&D in the country; however this budget is not enough, so companies have to invest more in the country.
This interview is an excerpt of a feature that will appear in Mexico Health Review 2015, to be released in the summer of 2015. To pre-order your copy now visit www.mexicohealthreview.com. Please direct all media enquiries to email@example.com.