Dr. Dagoberto Cortés was appointed President of the Mexican National Pharmaceutical Association (CANIFARMA) in 2013. The association is tasked with supporting the health of Mexico’s pharmaceutical industry, and promoting the exchange of knowledge and resources between the public, private, and educational sectors. Dr. Cortés is also the Director General of Laboratorios Hormona.
MEXICO HEALTH REVIEW: What is your view on the current state of the pharmaceutical industry, and what are the biggest challenges and opportunities in the coming years?
DR. DAGOBERTO CORTÉS: This is a very special time for the pharmaceutical industry in Mexico because recently the authorities have made it clear that the sector is considered a priority in the development of the country. This is an objective that we have been pursuing for many years. Some time ago we recognized that if we wanted to be considered a priority we had to make a serious impact on the national economy. Recently we published the first census of the pharmaceutical industry and identified that we have a 7.2% share in manufacturing GDP, ranking us as the second largest manufacturing sector, just behind automotive. In terms of the national GDP, we represent 1.5% of the whole economy, which makes us one of the country’s most important industries. In Mexico there is a very good marriage between the government and the private pharmaceutical sector. There is also high loyalty for branded generics from both consumers and professionals. Nearly 80,000 people are employed in the pharmaceutical sector, and approximately 45% consist of sales representatives, highlighting the brand loyalty of Mexican physicians. Finally, drug stores have been growing significantly, with almost 23,000 points of sale, and all of that growth represents opportunities for us to place our products in the market.
Q: What are CANIFARMA’S main goals to support development of the industry?
A: Our current strategy is focused on three objectives. The first and most important one is to keep our position as a priority industry. We place great emphasis on R&D activities in order to supply the current and future demand for medicines and to treat the diseases that have the highest mortality rates in Mexico. Our collaboration with the federal government is equally important in keeping our priority industry status because we need to create public policies that drive the development of the pharmaceutical industry, and we need to become self-sufficient in terms of active pharmaceutical ingredient production, technological development, and pharmaceutical innovation. Our second objective is to develop a very strong sanitary agency, in which we act as representatives of the private sector. Getting international recognition from health authorities is very important because this means that a pharmaceutical dossier approved in Mexico will be acknowledged worldwide in terms of product quality and regulation standards, greatly simplifying the registration process of our products in other countries. Reaching international regulation standards will be the most determinant factor in the success of exporting our products. Increasing our exports is very important because we need to modify our balance of trade, which is very negative. While we export only US$1 billion, we import US$5 billion each year, which is an unacceptable situation for a country like Mexico. Fortunately, the Mexican regulatory agency (COFEPRIS) has been certified by the WHO and the PHO as a regulatory reference agency. This means that the quality standards of our sanitary authorization processes are considered among the best in the region. We interact face to face with COFEPRIS and its head, Mr. Mikel Arriola, who is very willing to collaborate with the pharmaceutical industry in reaching its targets while never forgetting that the main objective is the population’s safety. The third objective for CANIFARMA is to turn Mexico into Latin America’s leader in terms of clinical research and technological development. We believe we have enough talent, natural resources, public institutions, and medical centers to achieve this.
Q: Is the increasing presence of generics good news for the industry or bad news for the innovative companies?
A: It is good news for Mexico because the use of generics represents significant savings in government expenditure on medicines. It is beneficial for consumers who have to pay for their own medicines as well, because generics allow them to choose the best medicinal option according to their budget. The government now spends 80% of its budget on innovative medicines, which in terms of units only represent 20% its purchases. Generics represent 80% of the total purchase, and yet the government only spends 20% of its budget on generics. A good example of the benefits of generics is Atorvastatin, which is a medicine for the treatment of high cholesterol. The product was first developed by Pfizer and branded as Lipitor. Lipitor has been a worldwide success and used to be the number one selling pharmaceutical product even in Mexico. When the patent expired, however, it took only two months before five generic versions of Atorvastatin entered the Mexican market, which resulted in a price drop of 66%. Immediately after the price drop, the social security system that used to buy Lipitor increased its purchases by 200%, which meant a huge increase in the number of patients who could receive this treatment. The increasing use of generics is also important considering Mexico’s rapidly aging 120 million-strong population. We have more than 10 million elderly people with a high demand for medicines and this represents a challenge for the pharmaceutical industry in terms of product offerings. In the product portfolio of a Mexican pharmaceutical 20 years ago, 70% consisted of medicines targeted to fight infections, diarrhea, and anti-infectives. Nowadays, however, chronic diseases, mental diseases, and generative diseases occupy the first place in terms of mortality. This means that medicines for cancer, hypertension, diabetes, and high cholesterol are now priorities. Pharmaceutical companies are constantly studying the market in order to be ready to introduce a generic version as soon as a patent of an innovative product expires. Mexico has a large respect for intellectual property law and the patent term of 20 years is abided by, but this does not mean that Mexican generic producers cannot start developing the generic three or four years before the patent expires, which is exactly what they do in order to be ready when the patent expires. The increasing presence of generics is good for big pharma as well, since it opens up the market for new innovative products. There are two sorts of generics: non-branded generics and branded generics, and Mexico has a unique market for branded generics because consumers and professionals are very brand-loyal. Pharmaceuticals are therefore adapting their R&D strategies to produce products that are different from other generics. Often multiple versions of a generic drug are available and they are all similar in terms of price, dosage, appearance, and efficacy. Pharmaceuticals are therefore developing drugs that can offer enhanced delivery, for example by providing ‘slow-release’ alternatives.
Q: How are Mexican generics moving from being budget offerings to evolving brands in their own right?
A: Mexican pharmaceuticals are looking to offer fixed combinations of medicines, for instance, by identifying ways to integrate the active ingredients of two medicines into one pill. This will reduce side effects, the number of pills a patient has to take, and increase general comfort. This is especially helpful for elderly people, who on average have to take five to six pills per day, and often have trouble remembering all the pills they have to take. This is another way of adding value to a generic product. Approximately 20% of the sanitary registers granted by COFEPRIS consist of these fixed combination products. These products represent an interesting opportunity for pharmaceuticals since it is not easy to produce fixed-combination products. It requires a lot of research, laboratory testing, and highly specialized chemists to produce these products. Big pharmaceuticals, however, see the benefits of these products because they obviously sell for higher prices than regular generics.
Q: A seven-decade stagnation of the market has created certain perceptions of Mexico’s health sector. What are the main misconceptions that need to be corrected?
A: First of all, Mexico is waking up. For example, 25 years ago Mexico imported only 10% of raw materials needed to produce a pharmaceutical product, and today we import 95% of our raw materials. Mexico’s numerous free trade agreements have made our sector very dependent on foreign countries, especially on India and China since 65% of the ingredients we import come from these counties. This can cause serious problems for Mexican pharmaceuticals because once a drug is approved ingredient suppliers cannot be changed. While there may be four or five suppliers of the same ingredient, the pharmaceutical company can only use ingredients from the supplier listed in the sanitary register. If a registered foreign supplier has a problem with the delivery or prices go up, the pharmaceutical in Mexico cannot produce the drug anymore or faces losses because it cannot switch suppliers. In consequence, the social security system that used to buy that drug finds itself in difficulty too. When President Peña Nieto was appointed in office, we presented this problem to him and he agreed on a program to revise the pharma-chemical industry in Mexico. As an industry we are pushing very hard to achieve this in order to avoid that harmful dependence.
Q: What do you think foreign companies have to do to successfully participate in the rebuilding of the Mexican pharmaceutical industry?
A: Mexico represents a great opportunity for foreign pharmaceuticals, especially because COFEPRIS removed the manufacturing presence requirement in 2009. This means that nowadays you only need an office in Mexico and to be registered as sanitary reliable to begin importing and supplying the Mexican market. Beyond that there are three things that make Mexico a very attractive market for foreign pharmaceuticals. The first is that if their products are protected by patent rights, they can rest assured that Mexico will respect those rights. Secondly, the domestic market comprising of 120 million inhabitants is a highly attractive market. Finally CANIFARMA combines national and international members that are all working hard to stimulate the industry. We have a very good relationship with the Ministry of Health and COFEPRIS, and we were able to include our six-year industry development plan in the government’s National Development Plan. Legislation was enacted six months ago that enables a COFEPRIS approved product to be registered in El Salvador, Ecuador, Peru, and Colombia in just 45 days. A few years ago that would have taken two or three years. All these developments are clear signs that we are overcoming obstacles and Mexico is becoming a very strong market for pharmaceuticals.
Q: What role should R&D play in transforming Mexico into being a key exporter?
A: We have to turn from being a manufacturer of commodities to a manufacturer of high-tech products and high-quality generic products. R&D undoubtedly is the right way toward self-sufficiency and to get an appropriate health statement of the society. A healthy society is a productive society. If Mexico is able to understand the needs of foreign countries in terms of top mortality causes, healthcare systems, and purchasing behaviors, millions of new potential consumers can be reached. We have to take advantage of the federal government’s new philosophy concerning its commitment to R&D. Just before President Peña Nieto came to office, the total amount of investment in R&D in Mexico was just 0.37% of GDP compared to OECD countries average of 6%. Mexico is lagging behind and this year the government announced plans to increase spending over three times to 1% by the end of this year. In terms of R&D, the field of biotech products is very important; biotech products are the medicines of the near future. If we consider that in 20 years 47% of the Mexican population will be older than 45 years, biotech products will become a very popular therapy. Recently a group of Mexican pharmaceutical representatives went to South Korea to look for business opportunities in the biotech field through technology transfer initiatives. The aim of this trip was to reduce the time it will take Mexico to become a manufacturer of biotech products.
This interview will feature in Mexico Health Review 2015 – www.mexicohealthreview.com