2017

As 2016 turned the corner into a new year, macroeconomic uncertainty kept the world – and the global business

community – on tenterhooks. The Mexican health industry cast a wary eye on events north of the border that

were impacting the local exchange rate while also focusing treatment efforts on obesity and diabetes, which

continued to top the country’s major health concerns. Considered as epidemics by the government, steps are

being taken to eradicate these diseases in the country, especially through prevention. However, universal access

to health, a key to promoting prevention in an increasingly aging population that is not accustomed to continuous

medical checkups, remains an illusive ideal in the face of a fractured Mexican health system and the large number

of people who continue to work informally, which complicates their access to a system marked by budget cuts.

In this context, collaboration between the public and private sectors is vital for improving quality of life.

In the private sector, global economic uncertainty, and the election of US President Donald Trump, led large

pharmaceutical companies to begin 2017 with some misgivings about peso volatility versus the two major

currencies: the dollar and the euro, although initial fears faded as stability returned to the domestic currency. In

fact, most continue to report growth and show a commitment to the development of health in Mexico through

investments in areas such as clinical research, an area in which the country aspires to become a referent.

The health sector, which represents around 6 percent of the country’s GDP, continues to be a strategic industry

for Mexico, a country blessed by an ideal geographical location, neighbor to the US and gateway to Latin

America for many companies, and a diverse population. Mexico Health Review 2017 offers key insight into the

challenges and the opportunities the industry continues to face, providing top-shelf interviews, analyses, insights

and infographics. Mexico Health Review 2017 is essential to understanding the state of the health industry in

Mexico today and for the path ahead.

2017

A L L R I G H TS R E S E RV E D

© Mexico Business Publications S.A. de C.V., 2017. This annual publication contains material protected under International, United States and Mexican

Laws and international Treaties. Any unauthorized reprint or use of this material is prohibited. No part of this book may be reproduced or transmitted

in any form or by any means, electronic or mechanical, including photocopying, recording, or by any information storage and retrieval system without

express written permission from Mexico Business Publication S.A. de C.V. Mexico Health Review is a registered trademark.

The publisher has made all reasonable efforts to provide accurate information, and the information contained in this publication is derived from

sources believed to be true and accurate. However, the information in this publication should not be considered to be complete or definitive, and

may contain inaccuracies or typographical errors. The publisher accepts no responsibility regarding the accuracy of information and use of such

information is at your own risk. The publisher will not be liable to any party for any direct, indirect, special or other consequential damages arising

out of any use of information in this publication. The publisher provides no representations or warranties, express or implied, including any implied

warranties of fitness for a particular purpose, merchantability or otherwise in relation to any information provided by the publisher in this publication.

I S B N : 978 - 0 - 9 9 93 1 0 8 - 0 - 9

TABLE OF CONTENTS

CLINICAL RESEARCH & TESTING7 DOING BUSINESS IN MEXICO14

BIG DATA & HEALTH APPS6 ATTRACTING & RETAINING TALENT13

MEDICAL DEVICES5 INSURANCE12

GENERICS & BIOSIMILARS4

BIG PHARMA3

HEALTH CONCERNS11

YEAR IN REVIEW1

LOGISTICS & SUPPLY CHAIN10

HEALTHCARE SYSTEMS2 NUTRITION & WELLNESS9

BIOELECTRONICS & BIOTECH8

Downtown, Mexico City, Mexico Tourism Board

5

As public institutions face shrinking budgets, they are struggling to cover a

larger number of patients who are increasingly suffering from preventable

disorders such as type 2 diabetes (T2D), obesity and conditions such as cardiac

insufficiency that ensue. These have also worsened due to poor lifestyle habits

such as a lack of exercise, smoking and alcohol consumption. External factors

are also worrying. The Mexican peso has dropped against many currencies,

pushing up the cost of importing goods and parts. This has hit the bottom line

of companies in all sectors of the industry. Many are so far reluctant to pass on

those added expenses to consumers, but for how long? An uncertain security

environment in Mexico and the persistent problem of access to healthcare for

many add to the question marks surrounding the sector.

This chapter will provide an overall review of the healthcare industry, featuring

insights from the most prominent and important figures in the sector. It includes

interviews from pertinent health and industry associations, government

institutions and health-related agencies while discussing the state of the Mexican

health system, the changes in regulation that occurred over the year, the progress

made and the challenges to come.

YEAR IN REVIEW

1

7

CHAPTER 1: YEAR IN REVIEW

8 ANALYSIS : Despite Headwinds, Optimism Reigns

12 VIEW FROM THE TOP: José Narro, Ministry of Health

14 VIEW FROM THE TOP: Julio Sánchez y Tépoz, COFEPRIS

16 VIEW FROM THE TOP: Rafael Gual, CANIFARMA

18 VIEW FROM THE TOP: Cristóbal Thompson, AMIIF

20 VIEW FROM THE TOP: Edgar Romero, AMID

22 VIEW FROM THE TOP: José Campillo, FUNSALUD

24 INSIGHT: Patricia Uribe, CENSIDA

 Carlos Magis, CENSIDA

26 INFOGRAPHIC: COFEPRIS Breaks Down Barriers

27 VIEW FROM THE TOP: Ana Güezmes, UN Women

28 VIEW FROM THE TOP: Pressia Arifin-Cabo, UNICEF

30 ANALYSIS: Air Pollution World’s Fourth-Biggest Killer

8

DESPITE HEADWINDS, OPTIMISM REIGNS

epidemics, the first noncontagious diseases to

be considered as such. Although many private

and public-sector initiatives are afoot to combat

the diseases and related complications, to make

true progress personal habits need change, says

José Narro, the Minister of Health of Mexico. “The population

is not fully conscious about the dimension of the problem.

Secondly, although there has been a deceleration of the death

rate, there is no decline. The number of deaths due to diabetes

multiplied by about seven times between 1980 and 2015, from

around 14,600 in 1980 to 98,500 in 2015. In the 21st century

so far, there have been 1.1 million Mexican deaths directly due

to diabetes. This is a grave problem. We must ensure that

the measures that appear to be effective are maintained. We

also must act to protect young children and teenagers. For

this reason, in May 2017 we began the Salud en tu Escuela

(Health in your School) program, which will send doctors to

over 1,700 primary and middle schools to talk about key health

topics,” Narro says.

The government’s measures include raising awareness

through various publicity campaigns but it remains hampered

by access issues with the public health system and a shrinking

government budget. With less money to spend, government

institutions have placed a priority on generics, pressuring Big

Pharma companies. On the other side of the ledger, both the

public and private spheres have penciled in clinical research

as a strategic segment that could provide a windfall to

companies, government institutions and ultimately, patients.

A FRACTURED SYSTEM

The theme of access to health remained a significant topic

in 2016/2017. The many Mexicans working in the informal

sector are denied access to the main public healthcare

institutions and are obliged to pay out-of-pocket for

Global economic and geopolitical uncertainty marked the

latter part of 2016 and the first half of 2017 and sparked

concern for many companies worried that currency

fluctuations would negatively impact their bottom line. The

peso yo-yoed in line with US polling predictions in the run-up

to the November 2016 US elections and further depreciated

against the US dollar post-elections as newly elected President

Donald Trump maintained his nationalistic rhetoric, much of it

directed against Mexico. The dollar appreciated against many

other currencies, including the euro, against which the peso

faltered, negatively impacting many European-based health

companies. As 2017 rolled out, the Mexican peso stabilized

and saw its best quarter in decades. The health sector plans

for the long-term and most companies reported growth and

plans to continue investing in Mexico, despite their initial fears.

“Teva has drawn up a list of countries with growth markets

and Mexico is among those,” says Guillermo Ibarra, Director

General of Teva Mexico, a unit of the world’s largest generics

company, which produces 120 billion tablets and capsules

per year. “One of my jobs has been to internally sell Mexico to

our global headquarters. It is a country that has industrialized

greatly and is not reliant on commodities; it has steady

economic growth of around 2-2.5 percent per year, which

in the long term makes Global want to continue investing

in the country. We have invested many millions of dollars in

improving, updating and raising the bar for our plants.”

Aside from the economic headwinds that buffeted the

sector before tailing off, two diseases loomed over the health

industry: obesity and diabetes, both of which were declared

ANALYSIS

Despite geopolitical and economic pressures both at home and

abroad, Mexico’s health industry is pulling together to improve

access, raise awareness of the need for prevention and taking

steps to position itself as global hub for clinical research

—US Dollar —Euro

Source: Ministry of Economy

MEXICAN PESO EXCHANGE RATES AT THE BEGINNING OF THE MONTH 3Q16 TO 4Q17

Peso to Dollar Peso to Euro

EXCHANGE RATES ON THE FIRST WORKING DAY OF THE MONTH

18.3018.85 18.85

19.32 19.13

15

20

25

JuneMayAprilMarchFebJanDecNov OctSeptAugJuly

2016 2017

20.74 20.73 20.77

19.90

18.73 18.77 18.59

20.8720.49

19.95

20.96

22.4321.8922.04

21.0921.71

21.04 21.0220.36

9

35 percent. Like glaucoma, macular degeneration must be

detected early because the impact is irreversible. Diabetic

retinopathy is common due to the big diabetes problem

in Mexico and occurs in both T1D and T2D. It also requires

early diagnosis to stop the progression of problems in the

retina,” he says. However, the theme of access remains. To

carry out checkups and catch conditions and diseases early,

the population must have access to healthcare services.

Amid belt-tightening, public-sector institutions are

stretching budgets to cover more people. The Seguro

Popular, for instance, has started eliminating duplicate

registrations with other institutions. “We have cleaned

up our database and no longer have 9 million duplicate

registrations. We will continue to work on this in 2017 and we

expect to reflect this in a higher quality service for patients

because there will be more resources per policyholder.

Seguro Popular has been sharing information with other

health systems since 2016, a year in which we lowered the

number of policyholders by 3 million,” says Gabriel O’Shea,

National Commissioner for Social Protection in Health of

Seguro Popular.

PRIVATE SECTOR UNDER PRESSURE

Companies are also feeling the pressure to make their

products available to a larger proportion of the population.

Big Pharma companies are often the only producers of a

certain treatment and therefore have a responsibility to

ensure it is as widespread as possible. In recent years, as the

government tender process has consolidated and amplified,

budget requirements often mean generics are favored over

patented brands and some brands have even been liberated in

Mexico so that generics companies can create less expensive

versions of the products. This has pushed some Big Pharma

companies out, and some have created their own generics

lines to remain competitive. “In 2016, the Mexican health

industry saw one of its toughest years, achieving single-digit

growth in terms of value due to the introduction of new

products and price increases,” says Raúl Camarena, General

Manager of Aspen Labs Mexico. Despite a difficult year, the

Mexican pharmaceutical market remains the second largest in

treatment or use Seguro Popular. This encourages the

population to delay seeking diagnosis and treatment, as

many prefer to live in blissful ignorance of a condition than

to have it formally diagnosed. Not beginning treatment

causes diseases to worsen and the effects cost dearly.

“In most countries, pharmaceuticals represent only 10

percent of the total cost of diabetes. If people can invest

that first 10 percent or even a little more to get access to

better products, a big part of the other 90 percent of costs

can hopefully be avoided. In Mexico, this is critical, because

the system is now treating the complications of people that

began suffering from diabetes 15 years ago. Since then, the

diabetic population has more than doubled,” says Yiannis

Mallis, Vice President and General Manager of Novo Nordisk

Mexico, the market leader for diabetes pharmaceuticals.

Faced with shrinking budgets, public institutions are

struggling to cover a larger number of patients who are

increasingly suffering from preventable illnesses such as

type 2 diabetes (T2D), obesity and the ensuing conditions

from these diseases such as cardiac insufficiency. These

are worsened by poor lifestyle habits such as a lack of

exercise, smoking and alcohol consumption. Dealing with

the complications is keeping the hospital sector busy.

While public institutions are bursting, private hospitals

have capacity to spare. The two are working on a more

efficient way of collaborating to alleviate the public sector

burden and improve access. Several PPPs were announced

during the year for the construction of hospitals, most of

which will be operated by ISSSTE. However, many argue

that increasing the number of hospitals is not the key to

improving the health of Mexicans. “Health is a process, not

a state. Health ranges from the complete state of physical

and mental wellbeing as defined by the WHO, to a second

before death, when health is basically lost. In between there

are many states, some better than others. If people see

health this way, prevention can be put in place. We want to

promote education so that more people can take control of

their health. We must begin to build processes for healthy

aging,” says Narro.

This is vital with any disease but it is especially important

for diabetes and cancer given their impact, related

ailments and high number of sufferers, which big and small

companies have recognized. Janssen, part of giant Johnson

& Johnson, for example, is working on early diagnosis

methods for prostate cancer while young Mexican startup

Higia Technologies is developing early detection methods

for breast cancer. Rogelio Villarreal, Director General of

Centro de Oftalmología Monterrey and Ojos Para México

Foundation, says the problem runs across many afflictions.

“Although the prevalence of glaucoma is 5 percent at

40, at 70 it is 18 percent and above that it rises to 30-

MEXICO'S PHARMACEUTICAL MARKET (US$ billion)

Sources: BMI Research, Seale & Associates

3.3Generics

MEXICO’S PHARMACEUTICAL MARKET

11.2Total value

10

branded generic products available from large pharmacy

chains and retailers. The world’s largest company in this

sector, Perrigo, is confident in the Mexican market. “Our

business in Mexico is extremely important to Perrigo’s global

operations. Not only do we share a very similar business

model with the US branch of Perrigo but we service many

of the same strategic customers that have presence on

both sides of the border. We have identified Mexico as

the country in Latin America with the greatest potential

for growth as the economic and demographic conditions

are very promising for our industry. We believe that each

day there will be more opportunities to develop significant

supply-chain partnerships between our countries due to

NAFTA,” says Ricardo Ganem, Vice President and General

Manager of Perrigo Mexico. “Each retailer is different, with

distinct formats and specific strategies. Our job is to work

with them in developing products and brands that best

fit each of their strategies. Even smaller pharmacies have

varying strategies. Some sell from behind a counter like

traditional pharmacies, whereas others are more like mini-

supermarkets where you could even buy groceries and

other convenience items. This is a model more often seen

in the US but it is a growing trend in Mexico,” he adds.

Medical device manufacturers face some of the same issues

as Big Pharma companies, as some devices have high price

points and suffer if budgets remain too low to invest in

new equipment. In addition, specialized devices are facing

tough competition from more generic, cheaper and older

models. “The prices are also low, so they are not sustainable

in the long term. We can offer those prices for one year, but

not several years running, especially with the depreciation

of the Mexican peso against other currencies. This is not

sustainable and endangers quality,” said Martín Ferrari,

Director General of Dräger Mexico.

One method that can be used to find ways to improve

healthcare is Big Data. Although the collection of Big Data

in healthcare has been slow in the past due to the lack of

digitalization, with the penetration of smartphones and the

increased number of startups it is taking off in 2017 with

giants such as Grupo PLM, Google and even Facebook.

“Many healthcare organizations use incredibly sophisticated

technology in diagnostics and treatment but substantial parts

of their workforce use only rudimentary or no technology.

Less than 20 percent of payments to healthcare providers and

their suppliers are done digitally, for example,” states a 2016

McKinsey article in Harvard Business Review. These gaps are

huge opportunities to digitalize and implement Big Data tools

in Mexico, as with the right push the country could leapfrog.

TESTING … TESTING

The first half of 2017 also saw a push for clinical research as

the authorities stepped in to help make Mexico the clinical

Latin America and among the top 15 worldwide, according to

KPMG. BMI Research reports that the Mexican pharmaceutical

market as a whole was worth US$11.2 billion in 2015, of which

Seale & Associates estimate US$3.3 billion was attributable to

generics. Generics producers are keen to make sure their more

affordable alternatives are available in as many points of sale

as possible. Releasing packets of innovative medicines so that

generics companies can create options and increase access

has been one of the greatest weapons in the government’s

plan to offer increased access. However, price pressures have

begun impacting companies that are unwilling or unable to

go as low as requested. “We hardly sell to the government

because it has adopted an aggressive price-reduction policy.

This policy erodes income at companies like pharmaceuticals,

which need to earn money to continue reinvesting in research.

For companies like us, selling to the government is not

viable. We have decided to only sell particular products to

state hospitals, so 95 percent of our sales are to the private

market,” says Felipe Espinosa, CEO of Mexican pharmaceutical

Laboratorios Collins.

As a result, many companies have begun turning to the

private sector for growth, looking for other streams of

revenue such as manufacturing for private labels, the

ANALYSIS

AVERAGE AGE IN MEXICO

0

5

10

15

20

25

30

20152010200520001995

21 2224

26 27

NUMBER OF ELDERLY ADULTS PER 100 CHILDREN AND YOUTHS

0

5

10

15

20

25

30

35

40

201520102005200019951990

1618.5

21.3

26.4

30.9

38

NUMBER OF ELDERLY ADULTS IN MEXICO (per 100 children and youths)

AVERAGE AGE IN MEXICO (years)

Source: INEGI

11

is a hot topic that requires care. We are a low-margin

industry, so all additional costs immediately impact

our profitability. We need to be prudent about how we

manage additional expenses, which, ideally, we should

not have. The health industry in Mexico is also a complex

and fragmented one that requires different skillsets.

I truly believe that Mexico is one of the most complex

healthcare markets,” says José Alberto Peña, Director

General of Grupo Marzam, one of the country’s big four

wholesalers/distributors of the health sector.

Then there is the black market and the issue of

counterfeit medicine. To render faking medicine less

appealing, pharmaceuticals are enhancing security at

their warehousing facilities, as well as working to provide

security features on their packaging. Holograms, braille

and QR codes are just some of the methods used to prove

authenticity. The medical devices sector suffers less from

counterfeiting but more from the illegal importation and

sale of devices that are not stored in adequate conditions

to ensure patient safety. Herbal products have also faced

shake-ups recently, with many being removed from sale

after COFEPRIS inspection. Ensuring the authenticity of

claims on packaging has been a main goal for this sector.

However, IMSS has been looking into including herbal

medicine, a Mexican tradition, as the public institution

is in desperate need of safe, cost-effective alternatives.

LOOKING FORWARD

Although challenges remain in the Mexican healthcare

system, there are also opportunities for companies to

bridge gaps, the most notable of which is set to remain

access to healthcare as both sectors seek to increase

treatment options for a growing number of people, at a

price that does not break the bank. Companies will need to

balance this with providing innovative solutions, as well as

ensuring they can be amplified to suit the needs of Mexico’s

121 million inhabitants.

research hub many have been predicting for years. “In

January 2017, we signed an agreement to promote clinical

research that simplifies processes and integrates them. To

meet all requirements and obtain all permits used to take

365 days but we are reducing this to 45 days. Our goal is

to triple the investment in clinical research in Mexico and

we hope to see US$600 million over the next two years,

up from under US$200 million. An agreement has been

reached with IMSS and ISSSTE will soon join the program.

We are working on another agreement with the national

health institutions and with UNAM. This will no doubt

happen by the end of 2017,” says Julio Sánchez y Tépoz,

Commissioner of COFEPRIS. Medicines that are released

by companies cannot be sold immediately in the Mexican

market, as regulation stipulates that they must undergo

testing by COFEPRIS, in addition to the clinical trials they

underwent either in Mexico or elsewhere, to first ensure

their safety and efficiency. The backlog COFEPRIS saw in

this area led the regulatory agency to create the authorized

third-party figure which can perform testing on its behalf.

“Speeding up processes through authorized third parties

helped make the regulatory procedures more efficient

and thus increased the attractiveness of Mexico as an

investment destination for health,” says Geraldine Rangel,

Director General of Healthlinks, a Mexican firm that provides

market analysis to companies wishing to enter Mexico.

SECURING PRODUCTS

The flip side of improving access is maintaining security, a

challenge logistics companies are up to. The distribution

of essential medicines in Mexico is complicated by the

tough geographical terrain and the uncertain security

environment. Many employ distinct methods to prevent

vehicle theft, such as using dual GPS to circumvent

jammers, employing electromagnetic locks and distinct

route planning. “One of the greatest challenges we face

is Mexico’s size, so we must ensure the provision ofan

effective, efficient and continuous service. Security

0

20

40

60

80

100

Breast Cancer

Prostate CancerT2D

201520142013201220112010

DEATH IN MEXICO

80,7

88

82,9

64

5,50

8

5,0

62

5,6

66

5,22

2

5,9

11

5,6

13

6,0

23

5,54

8

6,2

96

5,9

97

6,4

47

6,2

73

85,0

55

89,4

69

94

,029

98,

521

T2D, BREAST AND PROSTATE CANCER DEATHS IN MEXICO (thousands)

� T2D � Prostate Cancer � Breast CancerSource: INEGI

12

Q: In 2016, you declared diabetes and obesity a crisis.

However, FUNSALUD’s José Campillo has said that rates

are leveling off. Is this a success?

A: I cannot yet say that we have had success because the

population is not fully conscious about the dimension of the

problem. Secondly, although there has been a deceleration

of the death rate, there is no decline. The number of deaths

due to diabetes multiplied by about seven times between

1980 and 2015, from around 14,600 in 1980 to 98,500 in

2015. In the 21st century so far, there have been 1.1 million

Mexican deaths directly due to diabetes. This is a grave

problem. We must ensure that the measures that appear

to be effective are maintained. We also must act to protect

young children and teenagers. For this reason, in May 2017

we began the Salud en tu Escuela (Health in your School)

program, which will send doctors to over 1,700 primary and

middle schools to talk about key health topics.

Q: How do you control the various media campaigns

aimed at children and what is the key to promoting

healthier habits?

A: There is increased control over advertising campaigns

that target children, such as for candy, food and drinks.

I agree with President Peña Nieto that health begins at

home. It begins with topics such as hygiene, nutrition

and lifestyle. We need to work with parents because they

must understand that a child of four should not have food

portions equal to that of the father. School is the second-

most important place where children develop good or

bad health habits. The Ministry of Health and the Ministry

of Public Education have an excellent relationship and the

Education Reform will enable us to further improve this.

Q: How effective have public information campaigns been?

A: There is an important link between public campaigns

and health but we have to keep pushing. There have been

great marketing campaigns to raise social awareness in

this country. Going back several decades, there were

intelligent, wonderful campaigns that were strong for

their time concerning reproductive health, family planning

and nutrition. We are continuing this tradition and in 2017

our focus is on diabetes.

Young people are generally healthy, although they must

look after themselves. The elderly are another issue

altogether: the idea of being ill frightens them. They

prefer not to go for check-ups for fear some condition

will be discovered, but prevention is the name of the

game. We have to bet on prevention and this has to be

cultivated from a young age. We used to think that a

chubby child was happy and healthy but they must have

a healthy weight. We must all act.

Q: Life expectancy is increasing. What challenges are

arising for healthcare as a result?

A: Mexico’s population, like many around the world, is going

through a demographic transition. Population pyramids

have changed from 20 years ago when there was a strong

base of young people. Now, the number of old people is

increasing. Forty-five years ago, the median age was 17.8.

Now, it is 27, so we can say that the population is maturing.

Children and the elderly are dependents and there are

just over five million people aged over 70 but that figure

will increase to over 17 million in 2050. Today, a regular

infection can be cured while chronic, nontransmissible,

nonparasitic infections can be controlled. Health is a

process, not a state. Health ranges from the complete

state of physical and mental wellbeing as defined by the

WHO, to a second before death, when health is basically

lost. In between there are many states, some better than

others. If people see health this way, prevention can be

put in place. We want to promote education so that more

people can take control of their health. We must begin to

build processes for healthy aging.

Q: Pollution is an ongoing issue in Mexico that directly

impacts health. What is the Ministry of Health doing in

this regard?

A: We have serious problems in Mexico City, but both

local and federal governments are taking action. We now

have much better ways of measuring pollution levels and

better instruments to measure the impact that polluting

particles have. Some actions taken include the restriction

of vehicles and industrial activity, which limit mobility. The

Environmental Commission of the Metropolis (CAMe) is a

A 121 MILLION PEOPLE CHALLENGEJOSÉ NARROMinister of Health of Mexico

VIEW FROM THE TOP

13

Q: To what extent will the Ministry of Health be working

on reforming medical degrees for young doctors?

A: We are working on a revision at the moment and in

early May we attended the ANFEM assembly. The number

of schools, programs and students has increased greatly.

The number of specialists, however, has not increased

greatly, because there is neither need nor space for

a greater number to train as specialists. We have not

valued the role of the general practitioner. If there are

no positions for general doctors, how can they be hired?

There are organizational aspects of health that must be

reviewed, so we must be clear. The reality of rural Mexico,

where we need doctors, is not attractive to them. We

are speaking only of doctors but there are many other

professions in healthcare. The topic of human resources

is obviously central and so we are working on this.

Q: What are your priorities for 2017?

A: Diabetes is one of our highest priorities, but it is difficult

to tell which is the most important because there are

many, such as cancer and heart disease. When speaking

of priorities, I often speak of diabetes because it generates

the most deaths as a single cause. Cardiovascular disease

may cause more deaths when grouped together, but the

causes are many and can be split into three main groups:

heart attacks, hypertension and others.

Another great issue is pregnancy in girls and teenagers.

Children of 10-14 years old are having babies. There were

400,000 births in 2015 and almost one in every five births

is to a teenage mother. The government has implemented

a national strategy aimed at preventing teenage

pregnancies, which are often unwanted and unplanned.

The consequences are many: families are ruptured, studies

are abandoned, the young girl often has to work and often

the father of the baby disappears and leaves her with the

child or children. We have been working with different

structures since January 2015 on this strategy, which is

being coordinated by the National Council of Population

(CONAPO). Prevention and education are fundamental.

Regarding cancer, the Chamber of Deputies and the

Chamber of Senators in the Mexican Congress has

approved the establishment of the National Register

of Cancer, which will be a powerful tool for delineating

public policies on how to allocate resources and where

the focus should be. Cancer is the third highest cause of

death in Mexico.

coordinating mechanism that includes local, state and federal

levels of government. President Peña Nieto requested that

the commission includes the Ministry of Health.

Q: What challenges arise in ensuring the continuity of

projects after the 2018 presidential elections?

A: There has been much done in terms of health over the

past few years. Under the current government, maternal

mortality has fallen by over 18 percent, infant mortality has

decreased by 6 percent, mortality due to accidents has

also dropped and the frequency of dengue fever has been

reduced by two-thirds. In addition, there have been many

new medicines incorporated into the healthcare system.

Since 1948, the change has been phenomenal. Infant

mortality has decreased by over 90 percent. Back then, 132

of every 1,000 children died before their first birthday. Now,

the rate is 12 of every 1,000. This country has been lucky with

public policy in several programs, otherwise we would not

have been able to achieve what we have. A clear example is

vaccination. For over 40 years we have been dedicated to

vaccinating the population. There is no rubella or congenital

rubella in Mexico, we have controlled diphtheria and tetanus

and neonatal tetanus has been eliminated.

Since 1974, there has been a program for family planning

and now for reproductive health. Thanks to these

programs, Mexico has 121 million inhabitants instead of

over 150 million. There has been an extremely successful

campaign running since the 1980s to protect children

against diseases caused by dehydration. I trust that

even with political changes, current health policies will

be maintained.

Q: What is the Ministry of Health doing to spread its

message on reproductive health to all of Mexico,

including rural areas?

A: We have to make the problems visible or they will

not be solved. We are providing information and

education and we must also provide services. In the rural

environment, we have two mechanisms to spread health

awareness, the first being state governments. Programs

are defined nationally but implemented by the states.

We must also ensure the service is available. IMSS-

Prospera, for example, has services for teenagers in

rural and indigenous environments. We must guarantee

that services to provide condoms, pills and other anti-

contraceptive methods such as salpingo-ophorectomy

or a vasectomy can be offered. Some are more adequate

for young people than others, but for someone that has

already had many children, one of these methods may

be more appropriate. We must guarantee access to

information and to these services for all so that people

can make their own, informed decisions.

Dr. José Narro is a surgeon from the Faculty of Medicine at

UNAM, with a master's in communitarian medicine from the

University of Birmingham, England. Narro was head of UNAM

from 2007 to 2015 and in 2016 was named Minister of Health

14

Q: What are the most important advances COFEPRIS has

made in the past year?

A: We have made great strides on ethics and transparency,

we have become an institution that is much closer to

citizens and we have put 10 catalogues of open data at

their disposal. These are registers of licenses, permissions

and other types of information that was previously

requested of us. We have also installed a telephone

service that receives 16,000 calls per month.

COFEPRIS regularly removes patents from groups of

medicines to allow for the production of generics. In 2016,

we released Group #14 because in February 2016 there was

an issue with influenza and the active substance to treat

it, oseltamivir, was only produced by one laboratory and

manufactured in Switzerland. In May 2016, we liberated

Group #14 and there are now three generics available for

oseltamivir. In total, 37 active substances have been liberated

through our generics strategy, producing 491 generics, which

represent MX$25 billion (US$1.4 billion) in savings while an

extra two million people can be treated thanks to these

savings. In 2017, we will continue with this strategy and more

than 40 new molecule authorizations will be announced. Last

year, Mexico was named Vice President of the International

Coalition of Medicines Regulatory Authorities (ICMRA), an

international association that unites the 14 most important

regulatory agencies, for two years. We are a leader due to

our generics strategy, innovation, reduced processing times

for protocols and special pathways for administrative forms,

which can now be obtained in 15 days instead of two years

as it was five years ago.

Q: How is COFEPRIS working on bringing more knowledge

to Mexico?

A: One of the most important themes internationally is the

creation of the COFEPRIS Center of Excellence. We began

working on this idea around two years ago with the aim

of closing the knowledge gap because knowledge is not

shared in the pharmaceutical sector. Those that have money,

like large companies with the capacities to invest in R&D,

do so in specific areas. But there is a gigantic difference

between the amount of R&D that goes on in developed

countries compared to less developed economies. A first

gap is created here. A second gap occurs because of the

difference in technical knowledge. They want to protect

knowledge and for this reason it is not transmitted. Secondly,

knowledge only reaches those countries that collaborate and

that offer assurances.

As an example, it is doubtful that Brazilian research

centers share their knowledge quickly, efficiently and

transparently with Nigeria because standards are

asymmetrical. We need to improve the flow so that

every country can benefit quickly and efficiently from

knowledge. We aim to contribute to reducing these gaps

as much as possible through a center of excellence. This

was an idea of the WHO and APEC and they should

compile information and generate joint public and private

actions so that knowledge can be shared. Our center has

several research and training projects underway in areas

in which it is difficult to find an expert. There are few other

centers but those that exist are linked. Japan, the US and

Brazil each have one.

Q: According to ProMéxico, Mexico carries out only 1

percent of global clinical trials. How will you boost this

number?

A: In January 2017, we signed an agreement to promote

clinical research that simplifies processes and integrates

them. To meet all requirements and obtain all permits

used to take 365 days but we are reducing this to 45 days.

Our goal is to triple the investment in clinical research in

Mexico and we hope to see US$600 million over the next

two years, up from under US$200 million. An agreement

has been reached with IMSS and ISSSTE will soon join the

program. We are working on another agreement with the

national health institutions and with UNAM. This will no

doubt happen by the end of 2017.

DYNAMIC CHANGES PROPEL MEXICO TO WORLD STAGEJULIO SÁNCHEZ Y TÉPOZCommissioner of COFEPRIS

VIEW FROM THE TOP

The Federal Commission for the Protection against Sanitary

Risks (COFEPRIS) is a regulating authority responsible for 44

cents of every peso spent by Mexican households, 9.8 percent

of GDP and 10.9 percent of foreign trade

15

Q: How do you evaluate which areas should be the main

focus for sanitary authorities?

A: We evaluate which conditions have the greatest

prevalence in Mexico through reports such as ENSANUT,

which was released in late 2016 and covers NCDs. We

use these results to assign resources and generate

biotechnology to solve the most prevalent health

problems in Mexico. We were the first country in the

world to authorize the dengue vaccine and we are in

the process of establishing a protocol for its application.

Q: What results have you seen and what do you expect

from the new pharmacovigilance NOM?

A: NOM-220, which was published in March 2017, represents

a paradigm shift. It implies that many more players are

responsible for pharmacovigilance: the patient, the doctor,

the laboratory, the pharmacy and the distributor. This change

generates more reports that help COFEPRIS to provide a

more punctual and strategic follow-up on the effects and

quality of these medicines. With few reports, all we can do

is check manufacturing plants but with pharmacovigilance

we have more information and this propels change.

Q: What process does the commission use to identify

areas of overregulation and resolve them?

A: We will be working on the third phase of deregulation of

medical devices and we are considering removing regulation

from 10 percent of the devices currently on the market,

perhaps more. This has been presented in international

forums where we have been identified as innovators.

We base our decision on analyses of sanitary risks.

Scientific advances in medical devices means that the

sanitary risks are lowered or eliminated as faster and

more effective solutions are discovered. The sanitary risk

of technology in medical treatment and medical devices

changes depending on technological advances and the

same happens with medicine. There are combinations

that do not generate increased secondary side-effects.

Another element is that we realize that there are delayed

administrative processes. We are digitalizing processes to

avoid unnecessary costs in transport, paperwork and time.

This is part of COFEPRIS Digital, implemented in December

2016, which has taken 99 forms and administrative

processes online. With the extra 50 that we are adding,

we will save 600 tons of paper in a year. All these simplified

processes will help bring us closer to citizens and to provide

a much more agile service. In addition to being based on

reviews, we also perform an audit biyearly, one of which is

focused on our internal quality-management system.

Q: What is the single most important area COFEPRIS will

be focusing on in 2017?

COFEPRIS REGULATES

9.8%of gross domestic product

44¢of every peso spent in Mexican households

10.9%of Mexican trade

152.4 million vaccinesapproved and analyzed to ensure their quality in the National System of Vaccination

74%cheaper than in the US

21therapeutic areas covered

+250 innovators

6,307new registrations

2,242deregulated devices

+6,300medical devices

+500 generics

% of out-of-pocket expenditure of total health spending

42

40

41

20142012

71%of mortality

causes covered

1,998,202additional

patients treated

61%price reduction

COFEPRIS RESULTS (2012-2016)

Source: COFEPRIS

A: My mandate is to protect public health. If I had one

dream for 2017 it would be for the population to be closer

to us, to consult us, to give us a chance and to call us. It

would be wonderful if before citizens took a decision of any

kind, they first looked after themselves and consulted us.

To ensure this message reaches all of Mexico, we have an

amazing program called Seis Pasos de la Salud (Six Steps

of Health) that is translated into 17 indigenous languages.

It will see a new component with the Ministry of Public

Education through which we will soon reach schools.

16

Q: How has the pharmaceutical industry evolved in the

past two years?

A: I think it has evolved well and regulation has continued to

advance. The structure of registration has been simplified so

that time targets set out in the law are met for any process

involving the sanitary authorities. This is an important advance

that has allowed the pharmaceutical industry to be more

competitive in Mexico and in international markets. Being

recognized as a regulatory agency has allowed COFEPRIS

to be much more agile in registering products in Central and

South America.

In terms of R&D, we have authorized a series of third parties

to be much faster in clinical authorizations, which will allow

Mexico to become a center of clinical research. In economic

terms, the market has maintained 3-4 percent yearly growth

over the past decade, a rate that will probably not increase as

the market is mature and grows in line with the population. The

export market has grown in double digits and will continue

to do so thanks to COFEPRIS, which has been recognized as

a national regulatory reference agency in Central and South

America. Companies have this advantage in addition to GMPs.

Thanks to economies of scale, the Mexican economy is more

competitive and can export to these other regions.

Q: How has the new pharmacovigilance NOM affected

companies and how easy or difficult is it for companies

to adapt to it?

A: The new norm offers patients security and provides faster

product registration. If a drug does not have any reports

of major adverse effects caused by the pharmacovigilance

NOM, then registration can be renewed quickly. The NOM

also commits other parties such as doctors and patients to

reporting adverse effects. It is no longer the sole responsibility

of the industry. It will cost the industry more but we think

we will reach an agreement with the authorities on what is

necessary and what is desirable.

Q: How is CANIFARMA helping the industry homogenize

its regulation with the FDA and EMA?

A: They are already homogenized. There is not much

difference between the regulation that exists in Mexico and

those countries. Existing regulations and laws in Mexico are

not insufficient; all that is lacking is evidence that they are

being followed. Having them written is one thing, ensuring

compliance is another. The recognition from the WHO and

PAHO of Mexico in terms of vaccines provides certainty that

the role is being fulfilled. COFEPRIS has to report evidence

of verifications and certainty of reports. Tracking may be

different in the US and Europe, but we are still missing an

agreement with the FDA and the EMA on a bi-dimensional

code that can be applied worldwide.

Q: What advantages does Mexico present for clinical

research, other than its large population?

A: In Mexico, most R&D is carried out in private centers. The

main issue is researchers being paid to carry out the studies.

There is a promising environment in IMSS to incentivize

clinical research in Mexico, sponsored by the industry as

there were issues with IP. This has been changed. Previously,

if IMSS found a second use then the IP belonged to the

agency. But an agreement has been reached so that the

IP does indeed belong to the industry sponsoring the

research. The advantage is that there are 50 million patients

in IMSS with varying stages of disease because in Mexico

there is no culture of prevention, which means diseases are

available for study at advanced stages that may be hard to

find in other countries.

Q: What other steps are being taken to boost clinical

research in Mexico?

A: IMSS, COFEPRIS and CANIFARMA are on the verge

of signing a contract to facilitate the path to clinical

research. During our CANIFARMA Awards 2016 we

announced that a research fair would be held during

which companies will be able to have direct contact

with the companies that won the awards in 2016 and

2015, to allow the research to be taken to market. Julio

Sánchez, Commissioner of COFEPRIS, has announced

he will support this with a certificate and the research

will be followed by COFEPRIS from the beginning. This

will contribute to further improving the relationship with

the industry. Brazil and Argentina are Mexico’s biggest

competitors in clinical research in the region. The fact

SIMPLIFIED REGISTRATION BOOSTS MEXICO PHARMA MARKETRAFAEL GUALDirector General of CANIFARMA

VIEW FROM THE TOP

17

Q: What area will you focus on in the future?

A: Previously, a product had to be registered every five

years. We are working on a scheme that will allow changes

in a product to be recorded before its five years are up,

as the current process created bottlenecks at the end of

five years. Many products are modified slightly and this

will allow companies to reregister it as soon as it happens.

that we have a large number of patients to register in a

clinical trial aids our competitiveness worldwide. Mexico

can increase patient numbers greatly if we make the most

of IMSS. Brazil and Argentina are more agile.

Q: What are the biggest challenges in the human pharma

industry?

A: We need to become an important center for clinical

research because its potential is underused and we have

to consolidate COFEPRIS’ recognition to open new markets

for the industry. There is great quality in the products

manufactured in Mexico and they are competitive. In

addition, we need to continue consolidating regulations.

I would add access, which is one of the main issues in the

country, including new technologies which, despite having a

greater cost, can bring increased benefits to the population.

We need to facilitate this access in IMSS, ISSSTE, CSG

and the National Formulary and I personally believe that

opening clinical research in IMSS will facilitate the inclusion

of new technologies, because having done the trials will

shed light on the benefits they can provide in comparison

to current medicine.

Q: What are the biggest challenges in the veterinary

pharmaceutical industry?

A: They are extremely different. First, because there is

no animal social-security system and there is no worry

of incorporating new technologies. Challenges are more

related to competitivity and access to international markets,

as the market has been conservative in worrying only about

the Mexican market. There are many multinationals here

that are growing. The main issue is the topic of pure salts

in food mixes. If a farmer administers pure salts instead of

the correct medication it will cause problems. There are

also issues with antibiotic resistance due to residue in food.

There is no pure clenbuterol medicine for example, only

medicine that contains traces of it. Sadly, we do not have

the muscle in Mexico to create a regulation around this.

Q: What role do you play in investigations such as that

of COFECE?

A: We give COFECE the information it requests but we

do not have a proactive role. We clarify the panorama of

the pharma industry. There are topics such as prices that

are forbidden for discussion during any of the chamber’s

meetings. In every act it says that it is forbidden to exchange

commercial information. This legally binds the chamber and

its members to avoid these issues, so we provide requested

information. We are asked for example why all expired

patented products do not have generic alternatives. It may

not be commercially viable, it may be a difficult product to

create or the ingredient source may be unique, and this is a

worldwide condition. If the patented product is interesting

enough for a generic to exist, it will.

The National Chamber of the Pharmaceutical Industry

(CANIFARMA) works toward developing the industry in Mexico

with three main objectives: sanitary regulation, research and

innovation and economic development and industry policies

The market has maintained 3 to 4 percent yearly growth over the past decade

MX$200 billionis the current value market of the Mexican pharmaceutical industry

50%of CANIFARMA employees have higher education

degrees

JOBS CREATED BY COMPANIES AFFILIATED TO CANIFARMA (thousands)

Sources: COFEPRIS, CANIFARMA

0

50

100

150

200

250

300

IndirectDirect

CANIFARMA ACHEIVEMENTS

NOM - 241 on GMPs

was revised for medical

devices

Changed regulation on advertising

Established an institutional relationship

with COFECE

2013-2018 development

program for the pharmaceutical

industry - results so far

Created the CANIFARMA Award to encourage research on the most significant causes of mortality

Two new NOMs established: NOM - 059 for GMPs for medicinal products and NOM - 164 for GMPs

for pharmaceutical products

Processing times

shortened

79,0

00 30

0,0

00

18

Q: Research, development and innovation are AMIIF’s top

three core values. Which is the most important for 2017?

A: Innovation is always at the top of the agenda. It is the

reason why we exist and we have been working on this. The

goal of AMIIF’s 2024 vision, its midterm plan for innovation,

is to contribute to improving Mexico’s productivity and

competitiveness through pharmaceutical innovation. That

is our key goal. As President Peña Nieto has said, we are

experiencing a renaissance for innovation. For example,

hepatitis C products, which have a 95 percent rate of cure,

have just been approved for inclusion in the public health

system, which is an incredible breakthrough. There are new

treatments in HIV and patients are living almost as long as

nonpatients and with minimum side-effects. There are also

new innovations in cancer treatments.

One issue for pharmaceutical innovation is how to finance

it. We sat down with IMSS and now we have three teams

working with the institution to establish innovative access

models based on patient health outcomes. The project

began between February and March 2017. Our first group

is working on the analysis of the cost to the system and the

epidemiological impact of the main therapeutic areas to be

prioritized in this project (potentially: diabetes, cancer and

cardio-vascular diseases). The objective of the second group

is to analyze new performance indicators and criteria to align

patients and institutional needs in said therapeutic areas.

The third group is a legal team discussing how and when the

government could be able to implement innovative access

models, aligned with the proper legal framework. Financial

and legal experts and doctors also attend these meetings.

We are also looking at how we can bring in more resources

via clinical research. In January 2017, there was an agreement

made between all parties with President Peña Nieto present.

Its objective is to increase investment in the sector from

around US$250 million to above US$600 million. A meeting in

early May 2017 brought together COFEPRIS, IMSS, ISSSTE, the

decentralized institutions, ProMéxico, the Ministry of Economy,

SAT, Customs and the industry. We will have monthly meetings

to provide updates on each area, understanding that by the

end of 2017 we should have a better process for getting

protocols approved to bolster the amount of funds coming

into Mexico.

A pillar of increasing access to innovation is to make

understood its potential impact on productivity and

competitiveness. Last year, we presented a study with the

automotive industry in Guanajuato, which tried to show the

impact of lost productivity on a sector. In the case of the auto

industry, the impact of lost value was around 7.3 percent of

the industry’s value, of which 1.3 percent was absenteeism and

6 percent was due to presenteeism. We are close to the big

employers such as the Business Coordinating Council (CCE),

COPARMEX and CONCAMIN to make sure that everyone has

a voice in making sure our health system, social security and

Seguro Popular deliver a better job.

Q: How much awareness remains to be raised among

governors?

A: At the beginning of May 2017, Dr. Narro, Minister of Health,

attended our board meeting for the first time. He said that

health and education are the two highest social equalizers. At

the federal level, we have done a great job and awareness is

COLLABORATE TO INNOVATECRISTÓBAL THOMPSONExecutive Director of AMIIF

VIEW FROM THE TOP

The Mexican Association of Pharmaceutical Research

Industries (AMIIF) encompasses over 40 of the leading

pharmaceutical and biotechnological research companies in

Mexico and aims to promote innovation in the health sector

The objective of the agreement is

to increase annual investment in

clinical research from around

US$250 million to above US$600

million

19

A: We hear a different version every day, from modernization

of NAFTA, which is something we want and that the

government is clear about in its position, to removing it

completely. Although we do not know what will happen, we

are prepared for various scenarios. The chairman of GE was

here in May 2017. He made it clear that NAFTA was very good

and he said that the big employers need to start speaking up.

I think they will start coming out and saying that yes there

are areas for improvement but overall commerce is highly

integrated. How can it be disintegrated? Impossible. The

companies here have been present for many years and they

will not go back. It the treaty collapses, we will not see major

issues, unless a tax is imposed on imported products, but

we do not think that will happen. Overall, NAFTA has been

beneficial for all three countries and I am sure renegotiation

will center on optimization and on areas that did not exist

when it began, such as e-commerce.

Q: How does the Accelerated Access initiative decided in the

WEF in Davos this year complement AMIIF’s 2024 vision?

A: This is a huge initiative. Top pharmaceutical companies are

joining together to develop a common framework that will

help patients and countries battling NCDs in low and middle

income countries. The industry is talking about looking for

a full, holistic approach to the health system, trying to find

ways to make overall improvements and enabling medicines

to patients. For example, 300 billion units of medicine

are donated every year to Africa, but it lacks distribution

infrastructure. What we are implementing in Mexico is already

a step ahead of what my colleagues in other countries tell me.

Q: What will AMIIF focus on in 2017?

A: Our main focus is how we can grant greater access to more

patients. We will be finalizing steps to attract more investment

to clinical research, to keep working with COFEPRIS to

continue improving timings and processes for approvals of

new molecules and finally to maintain the current standards

of IP protection.

higher than it was three years ago. Having said this, budgets

were cut last year, showing that although there is awareness,

this does not correspond to action yet.

At the governor’s level, we have to improve awareness.

Investment must be holistic: people must be healthy and with

a good level of education. They must have infrastructure and

public services, but there must be a good health system too.

We have been asked by the Ministry of Economy to undertake

another study like the one we did in Guanajuato, a state that

is growing at 6-7 percent per year. If employment continues

to grow but the health system does not keep pace, there will

be a bottleneck, a problem of too much success too quickly

but with a gap in these kinds of public services for workers

and their families. Again, investment usually goes to places

with good infrastructure. If this is not addressed, there will be

limitations in economic development.

In May 2017, Mikel Arriola, Director General of the IMSS,

announced tests in Nuevo Leon in which IMSS would follow

up on company employees to see who was at high risk and

to begin taking preventive measures early on. The more

information we can give the government, the better.

Access to innovation is low, as only 10 percent of innovative

medicines approved by COFEPRIS are in the public health

institutions. Early diagnosis and secondary prevention is much

less expensive than waiting five years for patients to get out

of control. Then, by the time you give them innovation, the

cost will still be too high. In Guanajuato, we asked companies

what they were given from the government: land and tax

incentives. They did not think to ask about health. Getting

the big employers onboard is a big part of the agenda and

this will resonate when we hold events. Investment will come

but states have to look at how to maximize that investment.

Q: A renegotiation of NAFTA is likely. What will AMIIF’s top

priorities be?

Hemophilia research

20

The Mexican Association of Innovative Industries of Medical

Devices (AMID) aims to promote efficient and transparent

regulatory and procurement processes and to ensure safety,

quality and effectiveness of solutions in healthcare services

Q: AMID was created to eliminate “regulatory challenges”

in the industry. What are the biggest problems?

A: AMID was indeed created for regulatory reasons to

bring products to Mexico. COFEPRIS was the main focus

of our efforts for around eight years. Our agenda is now

broader and our main focus is access: how to collaborate

with authorities to gain advances for patients and be a

more productive country based on investment in health.

We also have an ethics and compliance committee because

we must ensure these practices are the best they could

possibly be in Mexico while trying to establish the same

rules as in Europe and the US. We are also working against

the black market. We want products to be controlled and

traced from the point they leave the manufacturing site to

the point they are implanted in a patient. Finally, we are

working on being known as a reference in healthcare in

the same way as the pharma industry.

Q: How have medical device trends evolved since 2015?

A: Products now have a shorter innovation cycle than 15-

20 years ago. There is an increasing number of players

with new technological processes, including Big Data.

Consequently, the government faces the challenge of how

to evaluate them and ensure that the most innovative

medical devices reach patients. Now, from releasing a

product to releasing its next generation, there are only

two or three years and the evaluation system for new

products is not used to working with such short time

frames. Medical devices account for 70-80 percent of

sanitary registrations in Mexico. How to evaluate them

and the cost/benefit over time is a new challenge for any

government, including Germany and the US. The main

challenge is bringing these devices to the country.

Q: What is the impact of the black market, which is

usually associated with pharmaceuticals, on medical

devices companies?

A: The impact of the black market may not be as large

in medical devices as in pharma but there are medical

devices that cross borders illegally without the proper

temperature controls and distribution procedures.

Appropriate techno-vigilance needs to be implemented.

It is not that devices are copied like in other industries;

for example, many are bought abroad and brought

across the border without the correct quality protocol

and temperature control, or a hospital may throw away

devices and they are fished out from the trash.

We have an agreement with COFEPRIS: if we find out

about the sale of illegal products, they act immediately

to remove them from the market.

Q: How are AMID members impacted by COFEPRIS’

deregulation of medical devices?

A: We have always had good channels of communication

with COFEPRIS, but in 2016 and 2017 AMID planned a

full schedule with them. They are working on the third

package of deregulated medical devices. The first came

through in 2011 and the second in 2014. This deregulation

is simply recognizing that certain products used in medical

practice are not medical devices and as such should not

be regulated by COFEPRIS. There are some companies

that are part of AMID that commercialize these products,

but they are merely components of medical devices per

se. This causes a problem as the number of devices in

the market is multiplied by the number of side products

that are produced. COFEPRIS was saturated by regulating

these products they never needed to. These deregulation

PROMOTING THE MEDICAL DEVICES SECTOREDGAR ROMEROPresident of AMID

VIEW FROM THE TOP

Medical devices account for

70-80 percent of sanitary

registrations in Mexico

21

designed before the corresponding regulation. At this

moment, the challenge is how to evaluate innovation

faster. We are behind when compared to similar countries

such as Colombia, Chile, Brazil and Argentina.

Q: How are global economic conditions impacting

imports and exports of medical devices?

A: Since the Mexican peso depreciated against the dollar,

it has been an industrywide worry but companies plan

on a long-term basis. The peso appreciated against the

dollar in the first three months of 2017, strengthening

from MX$22 to the dollar to MX$19. There has been an

impact on profitability but we need to think long-term

and see this trend through. No company has shown

genuine concern or considered leaving the country.

AMID associates are projecting growth above 9 percent

in sales during 2017 and expectations for 2018 remain in

a good health. In addition, AMID is ensuring its presence

in free-trade negotiations such as NAFTA. We are

being present as an industry to ensure the continuation

of adequate conditions. We generate US$8 billion in

medical devices exports but we export 92 percent of

that to the US. The medical-devices sector is considered

an emerging economic area for Mexico, along with IT and

pharmaceuticals.

Q: What will be AMID’s main focus for 2017?

A: During the second half of my presidency, we will

focus on finishing our work with the CSG to improve

patient access to medical devices for better diagnostics,

treatment, prognosis and the patient’s quality of life.

AMID will also continue promoting ethics and compliance

in the healthcare industry. We grew from 23 to 30

companies last year thanks to a broader agenda and we

now run several agenda items in parallel, which enables

us to get more done.

packages are a list we share with the authorities of these

accessories that can be deregulated. We are responsible

for 80 percent of COFEPRIS’ sanitary registers and as

innovation cycles decrease, their workload increases.

Deregulating these items is good because COFEPRIS

can use its time to check true technological innovations

instead of regulating these other products. This will

increase investment in innovation because less time

needs to be spent on other things.

Q: What regulatory points are you lobbying for to

improve access?

A: The toughest part of gaining access is going through

the CSG. We are asking them to make their processes

simpler and to implement the most adequate rules

possible for medical devices as the current rules were

designed for pharma. If we followed pharma’s rules,

we would have to innovate at the same rhythm as that

industry, which is much slower. We have been working

with the CSG since 2016 and we have just begun our first

efforts with the IMSS on a process level. They have the

ability to define whether or not a product will reach a

patient through public hospitals. We are looking at how

we can help make this process faster.

Of the three stages of approval (COFEPRIS, CSG and the

institution), CSG is always the hardest for us. The process

can take up to four years, while an ideal process takes

two to three years. We want to implement this time frame

for everyone, regardless of their product, and we want to

make the approval process predictable so that everyone

follows the same steps. This is an additional challenge.

If the innovation cycle shortens but approval still takes

the same amount of time, it becomes unprofitable to

create new products; by the time a product is approved

a second generation is already available, so we have to

try and gain general approval. In summary, innovation is

22

Q: In 2016, FUNSALUD established diabetes, breast

cancer, obesity and mental illnesses as priorities. Have

these changed in 2017?

A: Our priorities remain the same because these

conditions have a high incidence and involve a great cost

to society and the country’s finances. At the end of 2016,

Minister of Health José Narro declared diabetes a health

emergency. It was an atypical statement because there

was intention to take drastic action but only to emphasize

that diabetes is a serious national public health problem.

At the end of 2016, the ENSANUT survey was released.

It measures obesity, overweight and diabetes prevalence

among the Mexican population. In some segments, which

vary between urban and rural communities, rates begin

to stagnate rather than continue shooting upward.

However, there is another hypothesis: we are reaching

saturation levels where things cannot get any worse. In

2017, emphasis should be placed on the prevention of

diabetes and its complications. Data from this survey

show there has been a 175 percent increase in diabetic

foot amputations.

Q: Are citizens more aware now than before of this type

of complication?

A: I do not think the population has that information and

if it does, it has not resulted in a lifestyle change. This

is the main challenge of a problem that is multifactorial

and that depends not only on food but on life habits. A

change in the population’s mentality is required.

Q: The IMSS estimates that in the next 35 years the

number of patients with diabetes in the country will

double. Do you agree?

A: There are many possibilities. In addition to the 6.5

million diabetics diagnosed it is thought there is almost

the same number undiagnosed, so the logical thing is for

The Mexican Foundation for Health (FUNSALUD) is a private

institution that aims to contribute to the improvement of

health in Mexico by being a reference point for the discussion

of the health agenda

prevalence to increase. FUNSALUD has corroborated this

number with its own studies. In 2013, we estimated that

the cost of diabetes would be MX$362 billion (US$20.1

billion) per year or 2.3 percent of national GDP. This figure

will continue to grow and there may come a time when

the public sector does not have the economic, technical

and human resources capacity to deal with this tsunami.

Q: Which countries can Mexico look to for a way to

attack this epidemic?

A: Chile and Costa Rica are seeing good results, although

the comparison in terms of population is different.

European countries like the UK also have good models.

However, we are seeing the problem in all countries,

which is due to urbanization, lifestyle changes and

consumption habits. I think Mexico, the country with the

highest obesity rate after the US, could be the place to

experiment with immediate action. One action should

be to increase clinical research, especially for economic

reasons. It is a gigantic global market in which Mexico

does not even reach 0.1 percent and needs to be

improved. Mikel Arriola, Director of IMSS, is convinced

of this. The industry is also ready and COFEPRIS is at

the best moment in its history, with great international

recognition. Mexico can be an important crucible to start

doing scientific research on diabetes that provides us a

favorable cost/benefit ratio. In 2017, it would be desirable

for the Ministry of Health to take the lead to carry out a

concerted policy with the Ministry of Economy and the

Presidency of the Republic. Ties with the industry exist

thanks to the great work carried out by COFEPRIS.

Q: What has changed in the last 12 months in relation

to conditions such as breast cancer or mental illness?

A: The capacity of care for these diseases has increased.

However, budgetary or political considerations have

meant that these are no longer priorities for the federal

government. In terms of breast cancer, much progress

has been made in perception and detection. The

pharmaceutical industry is shielded from any political

aggression by the current president of the US and the

Ministry of Health is at the core of the solution. By

DIABETES AND OBESITY: HEALTHCARE PRIORITIESJOSÉ CAMPILLOExecutive President of FUNSALUD

VIEW FROM THE TOP

23

everything, appears in none of them. It is an element

that is systematically forgotten but without a healthy

population there can be no healthy economy. The priority

for 2017 should be to place health at the heart of any

strategy, which is not easy.

Q: To what extent are doctor’s consultancies in

pharmacies a solution or an externalization of the

problem of health access?

A: Their existence tells us many things. It is a phenomenon

that appeared spontaneously to solve problems that

should have been resolved by the government. However,

waiting times are shorter and care is personalized,

inexpensive and close. They are a tool that depends on

us to make them favorable or harmful. There are about

15,000 offices and they must be taken into account.

Now, ethical principles have to be established as well as

a register of patients and greater communication, among

other elements. FUNSALUD wants to make a substantive

proposal in this regard in 2017 in which we will try to

bring together government, academia and industry to

conclude a document in 2018. Emphasis should be placed

on the first level of care.

improving the health of the working population, great

savings will be made.

Q: Universal access to health is a goal of FUNSALUD.

How is the Ministry of Health working toward that goal?

A: Universality is not a utopia but an obligation. Family

wealth should not be affected by healthcare. It is an

inalienable universal right that cannot be postponed.

The conditions of the country in 2017, and perhaps for

the next five years, are going to be very adverse, so we

have to rethink proposals to reinterpret the reality and

be precise in our aspirations. The most important part is

to ensure prevention and first-level care. One of the main

problems is that the model we followed was seen from

the perspective of the disease and not from health; we

have been curing and not conserving health. We need a

policy of prevention.

Q: How will budget cuts affect the goal of achieving

universal access to health?

A: Recently, an agreement for the protection of the family

economy was signed and four strategies were proposed

but the health sector, which should be the beginning of

The Pulmovista 500, an electrical impedance tomography system performing respiratory monitoring

24

INSIGHT

“There is a challenge for Mexico and other Latin American

countries that have concentrated epidemics,” she says.

“We must develop different approaches for each group

and control all of them at the same time. It is easier to

fight generalized epidemics because we can offer a blanket

service to the entire population.”

According to CENSIDA statistics, one out of every 1,500

women lives with HIV. Other affected groups include

0.07 percent of pregnant women, 15 percent of men who

have sex with men, 18 percent of transgender people and

6 percent of people who inject themselves with drugs.

Two years ago, CENSIDA started developing a National

Detection Campaign in alliance with civil organizations with

the objective of reducing the number of people infected

with HIV. “We are one of the areas of the Ministry of Health

that works the most with civil society, as well as working

with hospitals and managing the treatment of the majority

of the patients in the country,” says Magis.

The institution is in charge of purchasing and distributing

drugs for 66 percent of patients with HIV and it receives

MX$3 billion (US$166 million) every year from the Fund

for Prevention of Catastrophic Expenses (FPGC) to buy

medication. There are 138 Prevention and Attention Clinics

for AIDS and Sexually Transmitted Infections (CAPASITS)

across the country that provide treatment to 85,000

patients who are living with HIV but who do not have social

security. CENSIDA finances the social projects awarded in

the tenders, which cost around MX$100 million (US$5.6

million) per year to improve HIV detection and prevention

among key populations. In an effort to eliminate the HIV

epidemic, UNAids declared a 90-90-90 treatment target

by 2020: 90 percent diagnosis, 90 percent treatment and

90 percent viral suppression.

Regarding perinatal transmission, healthcare institutions

began offering the HIV test to every pregnant woman, which

has helped reduce newborn transmissions to 46 percent. In

2015 there were only 71 cases but the aspiration is to follow

in Cuba’s footsteps as the only country in Latin America

that has successfully eradicated perinatal transmission. The

The concentrated nature of the HIV epidemic in Mexico

creates unique challenges for the agency tasked with

eradicating the disease, the National Center for Prevention

and Control of HIV and AIDS (CENSIDA). While the country

continues to mark milestones in control and treatment, the

disease's 'very diversity hinders progress.

“The infection has different dynamics depending on

every state’s heterogeneity and social habits,” says Carlos

Magis, Integral Care Director of CENSIDA. This diversity is

a wakeup call for health institutions because even though

it seems to be generally in control, there are concerns

in specific areas.

CENSIDA has three main objectives: eradicate perinatal

HIV, control HIV via sexual transmission and reduce new

infections through intravenous drug use. The institution

has implemented plans for each type of transmission. The

center is the main governing body for the management

of the epidemic in Mexico and is in charge of providing

treatment to patients. According to the institution, in

Mexico HIV blood transmission is eradicated and perinatal

transmission is almost eliminated. Health institutions

have also reached 63 percent detection, a reduction in

new infections and they are close to achieving UNAids’

treatment goal of 90 percent by 2020.

Patricia Uribe, Director General of CENSIDA, says Mexico

has a concentrated incidence among certain social groups:

gay men and other men who have sex with men (SMS),

transgender people, sex workers and their clients, prisoners,

migrants and people who inject themselves with drugs.

There are 138 Prevention and Attention Clinics for AIDS and Sexually Transmitted Infections (CAPASITS) across the

country

FIGHTING HIV EPIDEMIC MEANS FIGHTING DIVERSITY

Carlos MagisIntegral Care Director of CENSIDA

Patricia UribeDirector General of CENSIDA

25

challenge is in targeting states with more women. “It is

an issue in states that are demographically more female

such as Chiapas, Guerrero or Veracruz, while in Morelos

eradication was accomplished in 2011,” says Magis.

In terms of sexual transmission, Uribe says this is one of

the biggest challenges as many people do not use or have

access to effective prevention methods and comprehensive

harm-reduction services. CENSIDA has created campaigns

against sexual transmission with different focuses

depending on the social group. “Our most critical are

teenagers because they are becoming sexually active and

they do not have all the information they need,” she says.

For this campaign, the main message is usually to avoid

unprotected sexual relationships but that is not always

effective because strategies for women and vulnerable

populations are different, explains Uribe. “There are

women who are infected by having sex with their partner

so targeting for the test demands us to consider gender-

inequality issues and to address social determinants such

as access to health services, education, employment and

gender violence.”

In the case of transmission through intravenous drug

use, CENSIDA has designed specific projects for this

demographic. However, as Uribe explains, it is a challenge

to provide these patients with safety measures because it

may be mistaken for promotion of drug use. “This type of

transmission is not an issue across the country, it is focused

in the north, in cities like Tijuana and Juarez City, and it has

started to spread to Guadalajara,” says Magis.

The efficacy of these programs and CENSIDA’s access,

coverage and treatment-quality care can be measured

by mortality rates. There are peaks in certain parts of the

country such as south of Veracruz, Tabasco and Campeche.

These states have 10 deaths per 100,000 infections, while

in the center of the country there are four per 100,000.

Magis says that many AIDS deaths occur because of late

treatment. “This infection has a lot to do with addictions

and sexual diversity, which is directly related to a

discrimination stigma, so many people are reluctant to ask

for help,” he says. The results from the most recent national

discrimination survey held by CENSIDA in 2010 showed

the biggest discrimination in Mexico is against those with

HIV and AIDS and members of the LGBT community. “It

is particularly important to eliminate discrimination and

gender inequality because this prevents us from achieving

the impact we need,” says Uribe.

The CENSIDA Director General acknowledges that HIV and

AIDS have forced healthcare institutions to innovate their

approach to health issues. “We have to deal with topics that

were not covered before, like sexual diversity, sex work and

intravenous drug use,” she says. “Society sees us as an open

window to promote other aspects besides HIV.”

The specialized Clinica Condesa in Mexico City is a clinic

for transgender patients that not only treats HIV but it also

helps in the process of undergoing sexual reassignment.

CONASIDA was also established to discuss HIV and AIDS-

related topics with representatives of civil society who

provide ideas to deal with problems.

Paradoxically, keeping up with all these improvements

becomes a threat as patients’ life expectancy increases

at the same rate as treatment prices. According to

CENSIDA, in 1985 survival was one year but today a patient

diagnosed with HIV and who begins treatment can survive

for approximately 44 years. Right now, 91 percent of HIV

treatments are ambulatory and patients frequently receive

vaccines and odonatological, nutritional and psychological

care, which has improved their life quality.

“Every year, our detection rates increase, meaning we have

more patients and the MX$3 billion (US$166 million) budget

rises by MX$500 million (US$27.7 million) every year,” says

Magis. He says HIV is one of the most expensive diseases

covered by the FPGC because it has no cure, which means

patients require lifetime treatment. The high cost of HIV

is also due to the antiretroviral patent scheme. There is

no control over drug prices in Mexico, explains Uribe, due

to the Mexican acquisition law that protects patents. “The

pharmaceutical price for the most used drug for HIV in

Mexico is four times higher than the manufacturing price,

at MX$2,500 (US$138) per month for every patient,” he

continues. “In Africa, the drugs are sourced from generics

labs and the cost is MX$200 (US$11) per month. We have

to create a dialogue between COFEPRIS and the authorities

that negotiate the treaties.”

CENSIDA

0 50 100 150 200

viral supression

in treatment

diagnosed

estimated total of people with HIV by 2015

MEXICO'S PROGRESS ON MEETING THE UNAIDS 2020 GOAL (thousands)

� 2015 � UNaids Goal 90%

Source: CENSIDA

26

0 1 2 3 4 5 6 7 8 9 10 11

Belize

Panama

Data not available

Mexico US$11.2 billion

Ecuador US$1.6 billion

El Salvador US$527 million

Costa Rica US$835 million

Colombia US$3.3 billion

Chile US$3.3 billion

Peru US$1.6 billion

US$1.18 billion

PHARMA MARKET IN 2015

Recognizes COFEPRIS since

COFEPRIS BREAKS DOWN BARRIERS

One of the reasons Mexico is such an attractive destination

for foreign companies, other than the size of its population

and its growing economy, is the fact that its main sanitary

regulatory agency, COFEPRIS, is recognized

by the WHO and by other Central and South

American countries. A product that has

successfully obtained registration in Mexico is

much easier to launch in Costa Rica, Colombia,

Ecuador, El Salvador, Chile, Panama, Belize and Peru. This

makes Mexico an ideal springboard from which to begin a

Latin American expansion for big multinationals.

Sources: World Bank and BMI Research

0.4 Caribbean Public Health Agency (CARPHA)

Belize

6.1 Medicine and Sanitary Product Administration

El Salvador

16.1 National Agency of Regulation, Control and Sanitary Vigilance (ARCSA)

Ecuador

4.8 Sanitary Product Regulation Administration (DRPIS)

Costa Rica

3.9 National Administration of Pharmacies and Drugs (DNFD)

Panama

48.3 National Institute of Vigilance of Medicines and Food (INVIMA)

Colombia

18 Instituteof Public Health

Chile

31.4 General Administration of Medicines, Consumables and Drugs

Peru

MEXICOPart of the Pacific Alliance

121 millionHome regulatory agency:

Federal Commission for the Protection Against Sanitary

Risks (COFEPRIS)

PART OF THE PACIFIC ALLIANCE

COFEPRIS AGREEMENTS

MILLIONS OF INHABITANTS

2012

2013

2014

2015

Since being recognized as a regulatory agency by the WHO,

over the past five years several Central and South American

countries have followed suit, increasing Mexico’s attractiveness

as a Latin American base of operations

INFOGRAPHIC

REGULATORY AGENCY

27

Q: What are the main priorities for UN Women Mexico?

A: We have three priority areas. The first is the participation

of women in government and in leadership roles. Mexico is

one of only eight countries worldwide with electoral parity;

in fact, 42 percent of parliamentarians are women. However,

there is only one female governor and in the private sector

the percentage of female CEOs is only 5 percent.

The second area of priority is economic empowerment.

According to INEGI, in 2016 only 43 percent of women in

Mexico participated in the workforce, compared with 78

percent of men, so we need to increase the number of

employed women, promote formal jobs and end the wage

gap. UN Women projects that it will take around 80 years

for women to achieve workforce equality.

Our third priority is to increase women’s autonomy

regarding health by providing universal access to sexual

and reproductive care and by ending gender violence.

Q: What are the main health concerns for women in

Mexico?

A: PAHO and UN Women's health division are mainly worried

about three situations. The first is teenage pregnancy. We

are working on a campaign with 12 UN agencies called De

la A a la Z (From A to Z), from Aguascalientes to Zacatecas.

The campaign promotes awareness of freedom of choice

regarding marriage, because in Mexico one in every five

women marries before the age of 18. Another priority in

terms of public health is the lack of access to healthcare

and pension funds for women who work in the informal

sector. This is also the situation for all those women who

have to stay at home to take care of family members. In

Mexico, more and more people are living longer while

suffering from chronic diseases and women are usually

responsible for their care. According to the census, in

Mexico around 30 million people need permanent care, 3.5

million have a chronic disease, 1.2 million have a disability

and a large percentage of the 10 million adults aged over

75 require special care. Our third health concern regarding

women is gender violence, which is the clearest expression

of inequality.

Q: What has the campaign HeForShe achieved in Mexico?

A: HeForShe is a platform that seeks the commitment of

men in the struggle for equality and already has more than

110,000 individual memberships in Mexico. In addition, many

universities have integrated the platform. For example,

UNAM has committed to imbue their health faculties with

a stronger gender perspective on public and individual

health. IMSS has also proposed more in-depth training for

their health professionals to closely monitor compliance

to NOM-046, a regulation that obligates health services to

detect and prevent violence against women and to offer

safe and legal abortions for victims of sexual violence.

Q: #noesdehombre (#notamanthing) was the first

campaign directed at men to raise awareness of sexual

violence. How effective was it?

A: It was a campaign in collaboration with Mexico City that

focused on preventing violence on public transport. The

elaboration of the campaign was based on a study done

by the Mexican college that showed that most men who

perform violent actions in public spaces do not consider

it violence.

Q: What needs to be done achieve more impact of the

awareness against gender violence?

A: When we talk about gender sexual violence, something

very perverse happens, which is to say that women are

blamed for it and sometimes rape is justified because

of the way the woman was dressed or because she

was alone. We worked with the government to create

a public program that ends impunity. There is a feeling

that violence is not an issue because not many cases

become public. However, we are working with the Ministry

of Interior to get more answers from the media. Most of

the attention on the topic comes from campaigns on

social networks.

THE COMPLICATED ROAD TO EQUALITY

ANA GÜEZMESMexico Representative of UN Women

VIEW FROM THE TOP

UN Women was created by the United Nations to promote

gender equality and the empowerment of women. In Mexico

it focuses on the promotion of women's access to healthcare,

participation in government and eradication of violence

28

Q: What is UNICEF’s approach to combating child obesity?

A: Figures demonstrate that 95 percent of obesity cases

are attributed to poor nutritional patterns, therefore, the

main priority to fight childhood overweight and obesity

lies in campaigning and advocating good habits, but

also in promoting breastfeeding, water consumption and

physical activity.

In Mexico, 60 percent of adolescents do not do any physical

activity and although it is a compulsory subject in schools,

it is not enough to compensate for their calorie intake. We

are developing strategies to promote physical activity. For

example, a new social media project will strengthen the

importance of physical activity alongside good nutritional

habits among adolescents. We are also working on

another initiative that advocates water consumption and

accessibility. Several bad nutritional habits can be traced to

the sugary drinks consumed by many children just because

their schools do not have potable water.

Besides diabetes and cardiovascular problems, there are

also many psychosocial effects associated with obesity.

The way obesity is perceived in Mexico can incite bullying,

which can also lead to children losing motivation, eating

more or suffering other nutritional diseases such as

anorexia or bulimia.

Q: How effective have measures such as the sugar tax or

the ban on salt-shakers on restaurants tables been?

A: The sugar tax has contributed to fighting obesity but

it is still low (about MX$1 or US$0.05). More investment is

needed to change children’s behavior and even more so

that of their parents. Working with children as agents of

change could be promising because they can inform their

parents and prevent them from buying food that is not

permitted in their schools. In Yucatan, for example, children

are only allowed to bring to school the foods that appear

in a healthy food chart, which has obliged parents to make

healthier choices.

Q: How can UNICEF fight dietary misinformation in Mexico?

A: There are several myths regarding breastfeeding. For

example, some women start feeding their child with

formula when they cannot pump milk because they believe

they have an issue. The truth is that they do not know how

to breastfeed.

Good nutrition starts in the womb so providing timely and

accurate information to pregnant and lactating mothers

is vital. Although one of UNICEF’s main priorities is the

prevention of teenage pregnancy, we also work to make

sure adolescent mothers get the right information to

provide their babies with the best nutrition and the best

beginning to life.

Q: What has changed regarding low breastfeeding rates

in Mexico and the impact on child obesity?

A: Tackling obesity is a priority for UNICEF and

breastfeeding is vital in combating obesity. Women are

getting more and more information about the positive

impacts of breastfeeding; however, awareness is only

slightly increasing and there is still much work to do.

UNICEF works closely with strategic partners such as

governments, academia, NGOs and the private sector

to support public health and advocacy campaigns. We

participate in high-profile events like breastfeeding day,

while also working locally with partners such as IMSS and

the Ministry of Health.

It is not only about encouraging breastfeeding per se,

it is also about making sure breastfeeding is a cross-

cutting and integrated element of other programs.

The main issue with breastfeeding lies not only in how

people perceive it, also in how people experience it. For

example, working mothers lack adequate breastfeeding

spaces in their workplaces and must leave their child at

home under a relative’s care. If a teenage mother does

not receive the right information on how to take good

CAMPAIGNS, BETTER HABITS NEEDED TO FIGHT CHILD OBESITYPRESSIA ARIFIN-CABODeputy Representative of UNICEF in Mexico

VIEW FROM THE TOP

UNICEF is the UN agency in charge of promoting children’s

rights and wellbeing. Its local agency works with the Mexican

government, NGOs and private companies to combat issues

that harm children’s quality of life

29

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possum audae volorpor sus de eturem esero cus doluptatiis

volum que veria cullaut landae ipsaes magnis plaut eium.

Giamus as eatet rerate corporunt ut adior si inctatio.

practices and combating childhood overweight and obesity.

It is not just about working at the policy level but also at

the budget level. This is a worthwhile investment because

what is invested in early childhood will pay off in the next 20

years. Investing in combating overweight and obesity will

save the government MX$64 billion (US$3.5 billion) yearly,

the amount that public health spends on treating diseases

associated with overweight and obesity.

Q: How can you demonstrate to the government what

works and what does not?

A: We gather data and look at different ECD indicators

such as health and nutrition as well as government

spending. We place a monetary value on each investment

to know the rate at which prevention expenditure reduces

correction expenditure.

Q: What will be the main priorities for UNICEF in Mexico

in the next two years?

A: In 2019, we will embark on a new six-year country program

in which obesity will continue to be a main priority. We will

increase our efforts to keep doing research and gather

evidence to support health systems to prevent overweight

and obesity from an early age. UNICEF will also work with

adolescents to champion physical activity through innovation.

We will tailor interventions to reach children and provide

basic public services that will help combat overweight and

obesity, including access to safe and potable water. We have

been firefighting the symptoms and consequences but we

really need to work together on the causes.

care of her child, which has a lot to do with lack of sex

education in schools, then it is easier for her to believe

in myths. Nutritional education for adolescents is crucial,

particularly for adolescent girls because they might

become mothers one day. If these girls receive adequate

and timely information, they could influence whether the

next generation will be obese or not.

Q: What are UNICEF’s plans for indigenous communities

in terms of nutrition?

A: The main challenges associated with reaching

indigenous communities are poverty, remote locations,

lack of access to market choices and the media. Due to

poverty, they buy high-calorie food with low nutritional

value just to get through the day. In addition, we cannot

lose sight of the chronic malnutrition that today continues

to affect 1.5 million children, especially in rural and

indigenous communities. The rural health centers have

benefited from interventions via text messages with

information on topics like breastfeeding, Early Childhood

Development (ECD), water and sanitation in schools and

good nutritional practices.

Q: How can UNICEF make these programs sustainable?

A: UNICEF and other UN agencies work closely with national

and local governments and other partners to support their

efforts. Program sustainability is tied to the government’s

empowerment to launch and continue these programs, while

funding them with sufficient resources. In middle-income

countries, UNICEF’s work is focused on supporting the

government on upstream work. All of these initiatives are

pilots and part of the process to generate evidence to show

the success a program may have: the costs and the benefits.

For example, part of UNICEF’s work is to encourage

public investment in ECD, which includes good nutritional

“In Mexico, 60 percent of adolescents do not

do any physical activity”

30

AIR POLLUTION WORLD’S FOURTH-BIGGEST KILLER

obstructive pulmonary disease (COPD),

ischemic heart disease (IHD) and stroke and

lung cancers in adults. Other associated

health effects include adverse birth outcomes,

childhood respiratory disease, diabetes,

atherosclerosis and neurodevelopment and cognitive

function, according to the WHO. A study published in 2016

in the National Academy of Sciences examined patients in

the UK and Mexico and showed links between air pollution

and Alzheimer’s disease. The exact link between pollution

and allergies is yet to be established but the WAO forecasts

that as air pollution and the ambient temperature increases,

so will problems related to allergies.

The organization measures air pollution in PM10 and

PM2.5, which is particulate matter of less than 10 and 2.5

micrometers. The measures are an average taken between

2010 and 2015, unless the latest available data precedes

this. It recommends no more than an annual mean of 20µg/

m3 for PM10 and 10µg/m3 for PM2.5. With the annual mean

in Mexico varying between 11-35 PM2.5 µg/m3, it sits well

above the recommended guideline.

In addition, pollution plays a role in other diseases and

conditions, such as depression and cardiovascular health.

“Urbanization and depression go hand in hand. As an

economy develops, the population is weighed down with

heavier workloads, we spend more time in traffic and

produce more pollution, all of which are stress factors

that can lead to depression,” explains Oscar Parra,

Managing Director of Mexico, Central America and the

Andes of Lundbeck.

Pollution in Mexico has long been a known-issue and its

capital, Mexico City, was one of the first cities in the world

to implement measures such as the license-plate-based

restrictions Hoy No Circula (No-Drive Day) in 1989. The

restrictions have evolved over the years and now prohibit

drivers with cars that are not granted a 00 or 0 hologram

(linked to car age and MOT results) and registered to

Mexico City from driving on one of the weekdays. Since

2008, the measure has been extended to Saturdays.

Cars with a 1 hologram are forbidden to be used on

two Saturdays per month, and 2 holograms and cars

not registered to the megalopolis are prohibited every

Saturday. There is an additional contingency, initiated

when pollution in Mexico City reaches 150 IMECA points,

a measurement based on six types of pollutants. However,

despite the extra Saturday measure, a paper published

Ninety-two percent of the world’s population lives in areas

that do not meet World Health Organization (WHO) safety

guidelines, according to a WHO study from September

2016. Mexico City is one of the most polluted cities in the

world, and according to government data, saw only 78 days

of clean air in 2016 according to WHO guidelines.

“Today, climate change and pollution are realities,” says

José Narro, Mexico’s Minister of Health. “We have serious

problems in Mexico City but both local and federal

governments are taking action. We now have much better

ways of measuring pollution levels and better instruments

to measure the impact that polluting particles have.

Mexico City is in a valley and pollutants do not disperse.

Some actions taken include the restriction of vehicles and

industrial activity, which limit mobility. The Environmental

Commission of the Metropolis (CAMe) is a coordinating

mechanism that includes local, state and federal levels

of government. President Peña Nieto requested that the

commission include the Ministry of Health. We all have to

realize that we have to do things for our own health. There

are several dimensions to health, one of which is individual

and another is collective.”

Poor air quality accounted for one in nine deaths in

2012, according to the report. This translates to 3 million

deaths globally for 2012 related to outdoor air pollution

and 4.3 million related to indoor pollution. Of the total

deaths, 93,000 occurred in low-middle income countries

in the Americas. Around 87 percent of the deaths linked

to outdoor air pollution occurred in low-middle income

countries, where 82 percent of the world’s population

live. According to the World Allergy Organization (WAO),

common outdoor pollutants composed of particulate

matter include vehicular traffic and fuels such as coal and

gas for heating and industry. Indoor sources include wood

and coal used for heating and cooking and tobacco smoke.

Air pollution was responsible for 10 percent of deaths,

the fourth biggest killer behind metabolic risks, dietary

factors and tobacco smoke, according to a 2013 World

Bank infographic.

Causes of death linked to air pollution include acute

lower respiratory infections in children under five, chronic

ANALYSIS

Low-quality air covers many of the world’s biggest cities

and Mexico is no exception. This creates a variety of health

problems but initiatives are beginning to emerge to improve

or solve the problem

31

are posted across the city and throughout the media,

encouraging workers to cycle or take public transport and

urging bosses to allow employees to work from home.

In high-income countries, 56 percent of cities with over

100,000 inhabitants do not meet WHO air-quality

guidelines, nor do 98 percent in low-middle income

countries. This prevalence of pollution costs the global

economy dearly. The World Bank estimates premature

deaths due to air pollution to have cost US$225 billion in

2013 in forgone labor income, up from US$162 billion in

1990. “The respiratory health of children is at higher risk

since they inhale a higher volume of air per body weight

than adults and their immune defense mechanisms are

still developing,” says the WAO.

With pollution so deadly, many are creating alliances to help

clean up the air. The World Bank partners with the Climate

and Clean Air Coalition (CCAC) and the Global Alliance

on Health and Pollution and the WHO has established a

campaign with the CCAC and the government of Norway

called BreatheLife, which has identified a number of ways to

clear the air, including sustainable transportation, industrial

emissions reduction, solid-waste management, renewable

power and energy-efficient homes. For true change to occur

however, a push for clean air needs to come not only from

concerned NGOs but also from an involved population.

in Nature by Lucas Davis, Faculty Director of the Energy

Institute at Haas, finds it has had “virtually no discernable

effect on air quality.” The main reason attributed to this

is that the expected increase in public transportation did

not occur.

Still, the Global Alliance on Health and Pollution ranks

Mexico among the top 10 countries worldwide turning

the corner on toxic pollution in 2014, due to its efforts in

turning a contaminated oil refinery in Mexico City into an

urban park with over a million visitors per year. Two other

Latin American countries, Peru and Uruguay, were also

among the top 10.

On March 1, 2017, the Ministry of the Environment and

Natural Resources launched a new National Strategy of

Air Quality (ENCA). ENCA aims to “control, mitigate and

prevent the emission and concentration of pollutants in

the atmosphere in rural and urban areas by 2030” through

five main lines, 21 strategies and 69 lines of action. The

five main lines are: integral management to improve

air quality, efficient and result-focused institutions,

companies committed to air quality, atmospheric

policies based on scientific bases and a responsible

and participative society. Action in the responsible and

participative society line has already begun as photos

of children who cannot play outside due to dirty air

LOCATIONMEAN PM2.5 (µg/m3)

1 Monterrey 36

2 Toluca 33

3 Salamanca 28

4 Leon 27

5 Iraputo 26

6 Mexico City 20

7 Puebla 20

8 Guadalajara 19

Source: WHO

< 10

11 - 15

16 - 25

26 - 35

Annual mean ambient PM2.5 (µg/m3)

AIR POLLUTION OVER MEXICO

8 5

6

1

7 2

34

Anesthetic machine Perseus A500 with IACS monitoring, mounted on a Movita arm with infusion pumps

33

The greatest challenge of 2016/2017 for the healthcare system is granting access

to improved services to a larger percentage of the population. That task falls on

the shoulders of the related public institutions, such as the Mexican Social Security

Institute (IMSS) and the Seguro Popular. Less than half of the Mexican population

has access to public healthcare and facilities, with 62.5 percent of the national

workforce informally employed according to El Economista in an October 2016

report. INEGI figures show that only 62.2 million people, or about 48 percent of

the population, had access to IMSS services as of July 2016. Despite government

efforts, this figure represents only a 33.3 percent increase since 2006.

This chapter will offer an overview of the country’s healthcare systems both public

and private. Alongside the main social institutions and hospitals in Mexico, it will

feature interviews from regional health ministries and it will cover the system’s

advantages and flaws, as well as the obstacles to overcome. This section will also

review how the public and private sectors can work hand in hand to improve

access to healthcare, notably through public-private partnerships. Investment in

the Mexican healthcare system and its promotion abroad, including infrastructure

projects such as new, innovative health facilities, will also be in focus.

HEALTHCARE SYSTEMS

2

35

CHAPTER 2: HEALTHCARE SYSTEMS

36 ANALYSIS : Access to Healthcare: An Ongoing Mission

37 INFOGRAPHIC: Mexico's Healthcare System

38 VIEW FROM THE TOP: Armando Ahued, Ministry of Health

40 VIEW FROM THE TOP: Gabriel O’Shea, Seguro Popular

42 VIEW FROM THE TOP: Marco Navarrete-Prida, PEMEX

44 VIEW FROM THE TOP: José Reyes, ISSSTE

45 VIEW FROM THE TOP: Roberto Bonilla, Hospitales San Ángel Inn

46 ANALYSIS: Public-Private Collaborations Boost Sector

47 VIEW FROM THE TOP: Alejandro Alfonso, ABC Medical Center

48 VIEW FROM THE TOP: Misael Uribe, Médica Sur

49 VIEW FROM THE TOP: Juan Galindo, Christus Muguerza Sistema de Salud

50 INSIGHT: Rafael Espino, Amerimed

51 VIEW FROM THE TOP: Miguel Castillo, Hospital Sedna

52 INFOGRAPHIC: National Health System Under the Spotlight

54 INSIGHT: Francisco Villarreal, Swiss Hospital

55 INSIGHT: Ricardo Bojalil, AsMed

56 VIEW FROM THE TOP: Jaime Cervantes, Grupo Vitalmex

57 VIEW FROM THE TOP: Ángela Spatharou, McKinsey & Company

58 VIEW FROM THE TOP: Lucas Olmedo, Fligoo

36

ANALYSIS

ACCESS TO HEALTHCARE: AN ONGOING MISSION

announced during 2017,” says Julio Sánchez y

Tépoz, Commissioner of COFEPRIS.

According to the OECD, in 2015 privately

financed health expenditure represented 48.5

percent of total sector expenses in Mexico. In addition,

few have private insurance to fall back on. Analysts peg

the number at under 10 percent of the population. In

2016, Moses Dodo, General Manager of Bupa Global Latin

America, explained that corporate clients are driving the

medical insurance market in Mexico and many young start-

ups are targeting the corporate insurance market. Others

are spotting opportunities to create innovative business

models, targeting the middle class.

A final challenge is the demographic transition Mexico is

facing amid a declining fertility rate and as the population

ages. According to the OECD, the country’s fertility rate has

dropped from 5.9 children per woman in 1975 to 2.2 in 2015.

“Mexico’s population, like many around the world, is going

through a demographic transition,” says Mexico Minister of

Health José Narro. “Population pyramids have changed from

20 years ago, when there was a strong base of young people.

Now, the number of old people is increasing. Forty-five years

ago, the median age was 17.8. Now, it is 27, so we can say

that the population is maturing. Children and the elderly are

dependents and there are just over five million people aged

over 70, but that figure will increase to over 17 million in 2050

thanks in part to medical advances. Today, a regular infection

can be cured while chronic, nontransmissible, nonparasitic

infections can be controlled. Health is a process, not a state.

Health ranges from the complete state of physical and

mental wellbeing as defined by the WHO, to a second before

death, when health is basically lost. In between, there are

many states, some better than others. If people see health

this way, prevention can be put in place. We want to promote

education so that more people can take control of their

health. We must begin to build processes for healthy aging.”

Although the system faces a great deal of challenges,

globally it does not fare so badly and has been mentioned

as a model that, with some tweaks, could inspire others.

The Bloomberg Healthcare Efficiency Index 2016 places

Mexico 17th out of 55 countries, weighing up factors such

as life expectancy (60 percent of the grade) and relative

and absolute health expenditure (30 percent and 10 percent

respectively). Mexico’s life expectancy has increased in

recent years despite high levels of obesity and diabetes,

which certainly boosted its ranking.

Less than half of the Mexican population has access to

IMSS, the largest public healthcare institution, and its

facilities, with 62.5 percent of the national workforce

informally employed, according to an El Economista report

published in October 2016. INEGI figures show that only

62.2 million people, about 48 percent of the national

population, had access to IMSS services as of July 2016.

Despite government efforts, this figure represents a 33.3

percent increase since 2006.

Institutions have made an effort to stretch budgets and

cover more people. The Seguro Popular, for instance,

has started eliminating duplicate registrations with other

institutions. “We have cleaned up our database and no

longer have 9 million duplicate registrations. We will

continue to work on this in 2017 and we expect to reflect

this in a higher quality service for patients because there

will be more resources per policyholder. The Seguro

Popular has been sharing information with the other

health systems since 2016, a year in which we lowered

the number of policyholders by 3 million,” says Gabriel

O’Shea, National Commissioner for Social Protection in

Health of the Seguro Popular.

However, the Mexican population pays a significant amount

of their healthcare expenditure out-of-pocket, even in

proportion to other countries. According to OECD figures,

only 5.8 percent of GDP in 2015 in Mexico was spent on

healthcare, almost half of which was out-of-pocket. Canada,

for example, spent 10.1 percent of GDP on healthcare in

2015, only 30 percent of which was out-of-pocket. In a

country with a minimum wage of MX$80.04 (US$4.4) per

day, paying for medical treatment out-of-pocket is simply

unaffordable for many. In addition, when medicine is out of

stock in the public sector, it forces workers that should be

covered to fork over money for their treatments. To make

medicine more affordable, COFEPRIS has been encouraging

the production of generics by liberating patents. “In total,

37 active substances have been liberated in our generics

strategy, forming 491 generics. This represents MX$25

billion (US$1.4 billion) in savings and 2 million extra people

can be treated thanks to these savings. In 2017, we will

continue with this strategy and in that of innovative

medicine. Over 40 new molecule authorizations will be

The Mexican healthcare system is fragmented, although

the government is striving to improve access, its foremost

challenge. That task falls mostly on the shoulders of public

institutions, such as the IMSS and the Seguro Popular

37

MEXICO'S HEALTHCARE SYSTEM

For those who belong to the military

For those who belong to the navy

For everyone who is formally employed and is not covered by another public institution

INSTITUTIONS OF HEALTH AND SOCIAL SECURITY

Institutions of state governments,

for those who belong to the state in question

For state workers

For those who work at the oil

and gas company

Others, such as police medical services

PUBLIC HEALTH INSTITUTIONS OTHER TYPES OF INSTITUTIONS AND

PROGRAMS IN PUBLIC HEALTH OR SOCIAL SECURITY

Seguro Popular A type of public insurance for Mexican

residents not covered through another institution

The Ministry of Health

IMSS-Prospera For those who do not have social security and live in rural or marginalized urban zones in extreme poverty

SNDIF National System for the Integral Development of Families. Social assistance for Mexican families providing family planning, childcare and fighting drug absuse

Others Such as university medical services

PRIVATE INSTITUTIONS

Private health institutions that offer subrogated services public sector workers

Private health institutions open to the general public

Medical units that belong to a charitable organization and offer services to general public,

such as the Red Cross

Others, such as private doctor’s consultancies in pharmacies

INSURERS, BANKS & OTHER

INSTITUTIONS OF PREPAID MEDICAL

SERVICES

Insurers that offer medical protection services

Banks that offer health services to their employees

Other prepaid services such as NGOs or not-for-profit organizations

INFOGRAPHIC

Source: INEGI

38

Q: Why has health education not been integrated into

school curriculums?

A: It is a political decision that has not been made. What

could be more important than children learning how their

body works, the risks they face and what needs to be done

to preserve their health and life? This needs to be done

today, but it may take years. Still, the seeds need to be sown

or in years to come we will continue to face the same issues.

Our children can lose 10 years of life due to overweight and

obesity. At home, children are given portions to eat that are

the same size as those the parents eat. We need to change

the consciousness of parents. We also need to seek help

from teachers.

When I was studying medicine, I was taught to cure sick

people, not to keep people healthy. This is good but doctors

should also know how to look after people and point them

in the right direction to staying healthy. The healthcare

system cannot handle the number of sick people who

did not look after themselves and did not go for regular

checkups. In addition, care becomes extremely expensive.

Stents cost MX$25,000 (US$1,389) and some people may

require three or four. Dialysis costs MX$2,000 (US$111) per

session and sufferers may need three sessions per week

for the rest of their life. There is no wallet or public budget

that can withstand this.

Q: How has the Ministry of Health promoted a preventive

health culture and what is its view on vaccinations?

A: In the swine flu pandemic that took place in Mexico City

in 2009 I had to make a historic decision: to close the city

to protect residents. This taught us that we were vulnerable.

When the vaccine arrived, there was much confusion and

fear of the vaccine because the Minister of Health of

another state had commented that it caused Guillain-Barré

Syndrome. We refuted this, but the fear was terrible. Even

health personnel did not want to get vaccinated.

To set an example and prove the vaccine was safe, I was the

first to be vaccinated. Thankfully, former Minister of Health

José Ángel Córdova negotiated with Sanofi and distributed

stocks of the vaccine to all the states of the country. One

Q: What steps is the Ministry of Health taking to quash

disinformation and spread knowledge on health issues?

A: Mexico City has spearheaded the promotion of health

information. We have launched campaigns on every topic

imaginable and we have also printed 1.4 million copies of

a book on health for distribution to children in elementary

schools. It covers such topics as dental health, nutrition and

general hygiene. We have a second book on sexual health

with over a million copies in print. It touches on all related

topics. A third book covers addictions: alcohol, tobacco,

drugs, myths and truths.

We must incorporate health as a subject in schools. I am

convinced that the only way to make people co-responsible

for looking after their health is to empower them through

knowledge and understanding. If the information is

provided to children, they will have it when they in turn

become parents. For example, children do not brush their

teeth properly because their parents cannot show them

how. This is why nine out of 10 children in primary school

have cavities and in secondary school they all have cavities.

On average, adults loose seven to nine teeth after the

age of 60; they cannot chew or bite, they begin to have

gastrointestinal problems and become malnourished, so

they get osteoporosis and they fall and break a bone. This

is why it is so important to teach dental hygiene and the

same goes for sexual health.

HEALTH CHALLENGES IN ONE OF THE WORLD’S BIGGEST CITIESARMANDO AHUEDMinister of Health of Mexico City

VIEW FROM THE TOP

Armando Ahued is a surgeon from the UAM. He became

the capital’s Minister of Health in 2007 and is known for

successful programs such as Médico en tu Casa (Doctor in

your House)

In winter of 2016-2017, Mexico City saw 23.6 percent fewer

cases of pneumonia and bronchopneumonia

than in 2015/2016

39

of protection. The best time to get vaccinated is in

September or October. The aim of the Ministry of Health

was to vaccinate 2,447,344 people in Mexico City,

1,003,426 of which belong to my ministry. Mexico City

met 98.8 percent of that goal.

In addition to influenza, we have vaccinated against

rotavirus and pneumococcus. Everyone in a risk group

should get vaccinated including pregnant women, children,

elderly, diabetes sufferers and those who suffer from

chronic respiratory illnesses.

Q: What will the Ministry’s priorities be in 2017? How will

it distribute resources to achieve them?

A: The greatest priorities will be to consolidate the

infrastructure that we already have, to improve the

equipment, to prepare and train our professionals and

to launch a campaign on dignified treatment. In addition,

we will continue to promote health and prevention and

early diagnosis. Without a doubt, the Médico en tu Casa

(Doctor in your House) program, which has sent doctors

and nurses to knock on doors to seek out sick people, has

been a successful experience and we will consolidate the

strategy by making free health services a reality.

day, he called me and told me that, despite the Ministry

of Health’s investment, people refused to be vaccinated.

He asked me to find a way to get it done. I had the idea

to place the vaccination stands in the city’s metro, which

sees foot traffic of around five and a half million people

per day. We put stands in the biggest stations and offered

free vaccinations. As a result, people were lining up. I took

Minister Córdova to visit the stands along with the press and

word got out that the people of Mexico City were getting

the vaccination. This created a domino effect. Vaccination

stands were placed in public areas throughout the country.

This was the start of a culture of care and prevention.

From 2009 to the present, we have been vaccinating

without a problem. In winter of 2016-2017, Mexico

City saw 23.6 percent fewer cases of pneumonia and

bronchopneumonia than in 2015/2016, the number of

acute respiratory infections remained stable while there

were 56.6 percent fewer cases of influenza. There were only

10 deaths this winter, compared with eight last winter in a

city of millions of people. The virus we expected to be most

prevalent was H3N2 but it was actually H1N1.

From 2016, two oseltamivir generics have been available

but people continue to associate the active ingredient

oseltmavir with the brand Tamiflu and refuse to buy generic

versions. Now, we have enough oseltamivir in stock to

cover both this winter and the next. One issue is that when

a family member gets influenza, everyone in the family

takes some of the medicine as if it were preventive, which it

is not. There is also the issue of rapid testing, which results

in false positives or false negatives 50 percent of the time.

My recommendation is to seek out a clinical diagnosis only.

In addition, it is pointless getting vaccinated in February

or March, as the influenza season ends in March and

the vaccine takes 45 days to reach the maximum level

people ho haven been vaccinated

Vaccinations in cdmx

VaccinationsINFLUENZA VACCINATIONS IN WINTER 2016-2017

2,447,344is the Mexico City vaccination goal

� 98.8% vaccinations acheived

� 1.2% vaccinations not completed

Source: Mexico City Ministry of Health

40

Siglo XXI, which is aimed at children. To face these cuts,

we have lowered duplicate registrations and we have

cut some programs. We have also reduced trips to other

states to check on how things are going and employees

no longer have company cellphones. A program I

would have liked to implement but have not been able

to is the milk bank in hospitals to encourage exclusive

breastfeeding for the first six months.

Q: Of all the Seguro Popular’s programs, which is your

favorite?

A: My favorite program is probably the cataract one

because I am an ophthalmologist. However, the program

that has had the most impact is that which cares for

children with cancer. In 15 years we have managed to

reduce by 11 points the out-of-pocket expenditure of

Mexicans, although we still remain the country in the OECD

with the highest rate of out-of-pocket expenditure. I am

certain that with the modifications to the law we have

made we will achieve a reduction of 15 points within the

next few years. We expect that from 2017 onwards this will

help state health services carry larger stocks of medicine,

which is what is most hitting the wallets of Mexicans.

Q: The Seguro Popular now has bariatric surgery among

its services. What has been the result of that?

A: This is happening in Mexico City mostly, but it is hard to

implement in other states because there may not be as many

bariatric surgeons. It is aimed at cases of obesity in which the

patient is incapacitated in his or her daily activities. I believe

everything should be tried before resorting to surgery:

dieting and exercise or even taking medicine. Unless we

Mexicans change our diet and exercise, it will be difficult to

justify resorting to bariatric surgery because we have done

nothing to try and fight the root cause. It is all well and good

for the public sector to instill healthy habits in schools, but

what good is it if parents undo this work once the child gets

home? This is a complex theme that requires engagement

from all sides: municipalities and mayors, but the largest

commitment is that of parents. We have made great strides

through the Prospera program in teaching people to eat well,

which does not cost a lot of money.

Q: The Seguro Popular registered over 8,000 migrants

returning to Mexico in early 2017. How is it reaching

these people?

A: This has become quite a theme since President Trump

announced he would repatriate 3 million Mexicans. We have

created 50 booths in the 50 consulates in the US managed by

the Ministry of Health from where we distribute information

to our citizens about what the Seguro Popular is. We tell

them that it is free, what it covers and what it does not, so

that when they return to Mexico they can sign up. In addition,

we placed 24 sign-up centers in the five Mexican border

states solely aimed at reaching those being repatriated.

However, we have not seen an increase in deportations and

the number of people registered in the first three months of

2017 was the same as the first three months of 2016.

Q: The Seguro Popular expects millions of people to renew

their policies this year. How do you cope with such volume?

A: As of March 2017, there were 54.9 million Mexicans

affiliated with the Seguro Popular. The policies of 17 million

Mexicans will expire in 2017, although there is a tendency

to leave things to the last minute, and so on the last day

we see huge queues of people. Therefore, we expect only

50 percent of those 17 million to re-affiliate. We had 57

million policyholders last time we spoke with Mexico Health

Review in 2016. We have since cleaned up our database and

no longer have 9 million duplicate registrations. The Seguro

Popular has been sharing information with the other health

systems since 2016, a year in which we lowered the number

of policyholders by three million.

Q: How have public-sector budget cuts impacted the

Seguro Popular? How is it ensuring patients are not

negatively affected?

A: The Seguro Popular has suffered from budget cuts

to programs such as catastrophic expenses or Médico

CARING FOR HALF OF MEXICANSGABRIEL O’SHEANational Commissioner for Social Protection in Health of the Seguro Popular

VIEW FROM THE TOP

The Seguro Popular is a public-sector institution of health

and social security that operates through medical facilities

belonging to the Ministry of Health. It covers almost half the

Mexican population

41

a healthcare system and we see this increase every day.

There are 12 million diabetics in Mexico, of which only 38

percent have their condition under control. The others

are suffering from side-effects.

We have seen a decrease in the costs of cancer patients

due to generic medicine. Today, a patient with breast

cancer costs less than three years ago and we have seen

the same effect with HIV patients. The Seguro Popular

monitors 81,000 HIV patients, each costing MX$37,600

(US$2,089) per year. This is a great burden for healthcare

systems because they now live longer. HIV is not a death

sentence as it was in the 1980s.

Q: How will the Seguro Popular continue to face the

diabetes and obesity epidemic in 2017?

A: It is no longer about building large hospitals. We have

to continue what we have started: the interchange of

services. The theme of universality we all dreamed of is

surely not so. It has steps, each of which can take years.

We began interchanging during this six-year presidential

term, meaning patients can be treated where there is

room, even if the facilities belong to another health

system. We need to make the most of infrastructure that

is already in place. There are 35 private medical providers

that offer services to the Seguro Popular. We need to

increase this number and we should reach 50 by the end

of the year.

Q: You are an ophthalmologist. What trends in Mexican

ocular health are most concerning?

A: Cataract is the first reversible cause of eyesight loss in

the world and in Mexico the first cause of non-reversible

sight loss is glaucoma. The main problems I see when

giving consultations and operating are diabetes and

obesity. They are our nightmare. If I could, I would focus

resources on fighting these two conditions, which would

have a huge ripple effect on other health costs.

In consolidated purchasing, we have saved MX$11 billion

(US$611 million) over the past three years. We want health

centers to be on the lookout for these things and be

testing for them. In addition, it angers me if centers are

lacking tests because I send the states money to buy test

strips for them. Now, instead of sending money, I buy

material and send that to them. The same thing happens

with condoms. Twenty percent of pregnancies in Mexico

are in girls under the age of 19, so now we buy condoms

directly and ship them to the states.

Q: In which areas has the Seguro Popular seen the

largest increase and decrease in costs in 2016?

A: The largest increase has been in NCDs, mostly cardio-

pathologies and diabetes mellitus, and treatment of

ensuing complications like hemodialysis, amputations,

laser surgery for diabetic retinopathy and implanting

an Ahmed valve. All of this is extremely expensive for

Emergency ventilator Oxylog 300 plus and patient relocation with the Infinity M540 monitor

Oxylog 300 plus

42

we have many elderly patients; 56 percent of PEMEX’s

beneficiaries are over 65 years old.

Q: What challenges does PEMEX face in retaining workers

when faced with many new market entrants?

A: We need to offer the best benefits to our workers so

they do not need to look for other employers. This year, we

are also negotiating our collective bargaining agreement.

We work closely with the union and it is committed to

our focus on prevention and health promotion. We want

both employer and employee to take responsibility for

employee health. The paternalistic scheme in which

the state or PEMEX provides everything to a passive

beneficiary does not work. There should be a commitment

from the employees, too. To this end, we have integrated

a health bonus, which is given to workers with a BMI of

less than 25 or for those who lose 10 kilos in a year. Their

cholesterol and lipoproteins also must be in normal ranges

and if they are already diabetic their glycohemoglobin

must be under seven. If they comply they get the bonus.

Q: What relationship do you have with other public

healthcare institutions?

A: President Peña Nieto and Minister Narro are working

on the universalization of health services, which means

that each institution has to be open to providing and

receiving support from other institutions. We have an

agreement with all the National Institutes of Health and

we hire subrogated services in some other locations.

We have partnerships with health institutions in Sonora,

Aguascalientes, Tamaulipas and Veracruz. In cases of

industrial emergencies, we receive a lot of support from

IMSS. In 2016, when there was an emergency at our plant

at Pajaritos, Veracruz, we received patients from IMSS

because we had the largest coverage in the area. We also

share successful experiences among institutions. In fact,

every year we do a course on treating burn patients and

we invite professionals from IMSS, SEDENA and SEMAR to

take part because we are all part of the same ecosystem.

We also have an agreement with the Ministry of Health to

fumigate work areas to prevent vector-borne diseases and

we provide them with fuel for their trucks.

Q: What are PEMEX’s health priorities for its

beneficiaries in 2017?

A: As a healthcare provider, we have to focus on

simultaneous targets. However, we began as a medical

services company, so labor health is our main concern. We

have doctors at every work site to deliver preventive care

and promote health, hygiene, risk detection and to evaluate

the compatibility of employees with the jobs they do. For

example, some employees work 35-60 meters above a

platform or land. They cannot suffer from vertigo, have

the flu or a high BMI because that would be risking their

life. At PEMEX Health Services we are further ahead in

health services than other industries such as automotive,

pharmaceutical and aerospace. Our priority is to have our

workers operating under the best conditions possible.

Instead of building more hospitals, we want to focus our

efforts on promoting preventive care. In fact, PEMEX has

41 health centers, including 10 first-class clinics, 24 hospitals

and 168 preventive centers of labor health. Our hospitals are

operating on average at 70 percent capacity.

Q: What are the main health concerns of PEMEX’s

beneficiaries?

A: They are similar to Mexico’s main health issues: diabetes,

cardiovascular diseases, obesity and systemic arterial

disease. Our rates of diseases are low and the most

common are usually hearing problems. We are a high-risk

company, but we experience less than 0.2 accidents per

million hours worked. There are many myths about PEMEX

but we have one of the lowest sick leave rates among

companies. Our workers take less than four sick days per

year thanks to our preventive initiatives, our efficiency in

setting appointments and the workers own commitment.

The life expectancy of petroleum workers is 80 years,

higher than Mexico’s average, which is 78. This is because

they have increased access to health services. Therefore,

SIMULTANEOUS TARGETS, POSITIVE RESULTSMARCO NAVARRETE-PRIDADeputy Director of Health Services for PEMEX

VIEW FROM THE TOP

Petroleros Méxicanos (PEMEX) is a state-created oil and gas

company and is the largest company in Mexico. It runs its own

healthcare system for its workers, which is also one of the

largest in the country

43

of Health’s priorities on prevention of vector-borne

diseases and teenage pregnancy. In addition, we have

vaccinated almost 100 percent of 1-year olds. During

pregnancy, we perform syphilis and HIV screenings as

well as promoting contraceptive methods. We are also

conducting an analysis of patients with hepatitis C to

offer them new treatments.

Q: What are the benefits of digitalizing patient

information?

A: We hold universal electronic records for direct and

subrogated systems. The software was created by PEMEX

10 years ago for direct services and won the Innova award.

Three years ago, we integrated it to the subrogated health

services. When a doctor receives a patient, he has a

password to access the patient’s data. The software is also

linked to the labor health department and to a diabetes

website on which doctors can create an alert when they

recognize a diabetic patient. All this clinical information

and laboratory data is also gathered to elaborate Big

Data, which can be analyzed and presented in graphics

to identify which patients, in which areas and in which

positions have which diseases and find correlations.

Q: What is PEMEX’s contribution to Mexico’s growing

clinical research industry?

A: We perform clinical trials to see which type of drugs

and medical devices are best. In fact, two years ago we

launched our molecular biology laboratory at the Hospital

Central Sur de Alta Especialidad in Mexico City, where

we are carrying out bacterial studies and soon will start

a genetic study of the PEMEX population. We have an

agreement with INMEGEN to know which diseases our

beneficiaries are prone to and to identify the best drugs to

treat them. In addition, we have a medical journal in which

PEMEX health professionals publish articles and research

papers. It is all part of our effort in preventive medicine.

Q: How did you manage the delegation of part of your

services to a private insurance company?

A: There are smaller locations in which we have fewer than

120 workers but we are still obligated to provide health

services. It would be very expensive for us to build a PEMEX

hospital in those locations. From the beginning, we have

hired private services to support those PEMEX locations

that lack a health facility but which have active workers,

or a total 104,000 beneficiaries. Two years ago, PEMEX’s

supply department designed a strategy to have one health

administrator instead of 95 providers. Unfortunately, the

results were disappointing and we are now in the process

of returning to our previous system.

Q: What opportunities do you offer students who want

to do medical residencies in PEMEX hospitals? Which

specialties are available to them?

A: Through PEMEX Health Services’s resident

program we have trained high-quality and specialized

professionals. We have schools at Hospital Central

Sur de Alta Especialidad and Hospital Central Norte in

Azcapotzalco, Mexico City; Hospital Regional Ciudad

Madero, Tamaulipas and Hospital Regional de Salamanca,

Guanajuato. There are 18 specialty and five subspecialty

programs available for 388 students in the country. We

are focused on the specialties we treat the most and for

10 years we have integrated successful students into the

positions we need to fill.

Q: What are PEMEX’s main current health campaigns?

A: We have permanent programs to promote health,

focused on child obesity, cervical and breast cancer

for women and prenatal care. We also perform chronic

degenerative diseases screenings, even in the workplace.

We run a constant campaign on HIV and we treat around

700 cases, some of whom are active workers not on sick

leave. We also run campaigns aligned with the Ministry

44

is to triple the number of mammographies from between

110,000 and 115,000 to 350,000. ISSSTE is raising awareness

among women between 25 and 69 years old. Although we

have reduced the prevalence of cervicouterine cancer and

the related mortality rate, the same cannot be said for breast

cancer. We named February Men’s Health Month because

men are less likely to visit a physician than women: 63

percent of first-time doctor’s appointments are women.

Q: On the business side, what are the advantages of

building hospitals through PPP schemes?

A: ISSSTE has an infrastructure program and fiscal resources

but, due to budget adjustments, we have had to vary our

financing to continue building and expanding hospitals and

clinics. We needed to migrate to a new scheme involving the

private sector. ISSSTE invested over MX$4 billion (US$222

million) last year in building and expanding a number of clinics

and hospitals. We have analyzed several new hospital projects

in Tampico, Acapulco, Oaxaca and Mexico City and there are

also some requests for new hospitals in San Luis Potosi and

Sonora. There is a PPP hospital being built in Merida and three

others to be tendered: Mexico City-Tlahuac, Villahermosa

and Tepic. We estimate that in this federal government

administration’s remaining time, investments from PPP

schemes could total about MX$14 billion (US$777 million).

Q: What criteria helps ISSSTE to decide where a new

hospital or clinic will be built?

A: The location of beneficiaries and public health

infrastructure are the key criteria. The Ministry of Health,

ISSSTE and IMSS have developed a strategy that prevents

duplication, so if there is an IMSS hospital in a community

with an ISSSTE clinic and someone at the latter needs

surgery, hemodynamics or cardiovascular services, these

will be subrogated to the IMSS hospital. Services will also

be subrogated from IMSS to ISSSTE, which does not mean

implementing a universalization program but exchanging

services and prioritizing cities and states according to

the demand for health services and the existing public

infrastructure. All public-sector agencies need to maintain

a close relationship. We also have collaboration and service-

exchange schemes between both public and private entities.

Q: In addition to health services, ISSSTE works on

prevention through public awareness campaigns. Which

areas are key targets?

A: We have a number of ongoing campaigns. One such

campaign relates to addiction prevention, particularly

smoking, and targets young people through courses,

conferences, personnel training, graphic information and

social media. We are also drafting several campaigns against

overweight and obesity and their related conditions, which

have a profound effect on quality of life and on the federal

budget. Twenty percent of ISSSTE’s health-allocated funds

were used to raise awareness of diabetes, overweight and

obesity, hypertension and cervicouterine, breast, prostate

and colon cancer. ISSSTE’s annual budget amounts to MX$45

billion (US$2.5 billion) and we are spending MX$10 billion

(US$555 million) or more just on these diseases.

Among specific programs, the Salud en tu Escuela (Health in

your School) campaign is focused on young people and on

the children of beneficiaries who suffer from overweight and

obesity. This is a joint effort between players in the public

health and educational spheres, such as the Ministry of

Public Education (SEP) and the National Education Workers’

Union (SNTE). Integrating teachers as health promoters and

developing permanent awareness and physical exercise

campaigns are key objectives that will enable ISSSTE to

evaluate the results at each school in the program. The

effort will include physicians, nurses and some students

from ISSSTE’s School of Nutrition and Dietetics. The ISSSTE

en tu Dependencia (ISSSTE in your District) program is

focused on monitoring the health of employees. ISSSTE has

identified about 570,000 diabetics among its beneficiaries.

Another campaign targets breast cancer across public health

institutions. We integrated 25 new mammography machines

into our facilities and we are finishing a new diagnosis center

in one of our hospitals. Between 2016 and 2018, ISSSTE’s goal

CAMPAIGNING FOR BETTER HEALTHJOSÉ REYESDirector General of ISSSTE

VIEW FROM THE TOP

The Institute of Safety and Social Services for State Workers

(ISSSTE) is the second largest of Mexico's public health

institutions, providing health and social services to almost 13

million government workers

45

with a new business model backed up by other hospitals

if complex treatments are needed. We opened this clinic

because our customers asked us for a location where minor

surgery could be performed.

Q: What are the main challenges and concerns for San

Ángel Inn?

A: Our main concern for the next four or five years is the

patient’s access to healthcare, which mutual health insurance

coverage could solve. In Mexico, people have access to diverse

health services through IMSS, ISSSTE, PEMEX and other public

entities, while private coverage is scarce, with only about 7

percent of the population under such plans. This percentage

has not grown in the last 10 years despite an expanding middle

class. Moreover, our main institutional clients are changing.

Banks do not want to continue using reverse quota schemes

and prefer to pay for social security while some insurance

companies are considering dropping high medical-expense

insurance on which they lose money. We need to learn to

collaborate with other industry players to improve access to

health. Our main challenge is in understanding how to increase

access to private and public medical insurance.

Q: What impact do you expect to see from the model of

chronic disease insurance?

A: It could improve the access to health services. Diabetes,

cardiovascular diseases and cancer are the main causes of

death in Mexico. A person who has corresponding coverage

has a 30 percent chance of access to a good hospital in case

something serious happens. San Ángel Inn is creating a product

specifically for cardio-metabolic and cardiovascular disease.

This low-cost premium scheme is far more accessible. However,

there is no insurance or prevention culture in Mexico. Hospitals

do not focus their marketing on creating awareness about the

need for health coverage because the existing demand for

their services is enough for most to perform relatively well.

Q: What makes San Ángel Inn different from its

competitors?

A: Our management model, which allows us to provide

patients with less costly services while delivering a long-

term return on investment. We offer good infrastructure

with quality care at substantially lower prices than our

competitors. That is why we are the preferred hospital for

closed-network patients and companies that manage their

own healthcare benefits. Other hospitals target individual

patients while we want to attract businesses that will direct

their employees to our hospitals.

Q: How does the hospital group keep up-to-date with

technological advancements?

A: San Ángel Inn makes an effort to be up-to-date but our

strategy does not require having the latest technologies. We

make sure we have the modern and functional technology

to resolve 97 percent of the cases we encounter, so having

state-of-the-art technology does not make sense with our

business model. The only treatments we cannot perform

because of technological limitations are radiotherapy, PET/

CT and some oncological treatments. We have a capable

medical team, enough technology and good infrastructure.

Q: What challenges do you encounter when hiring and

retaining nursing staff?

A: The issue is not in retention but in recruitment. The nurses

working at San Ángel Inn must have at least an undergraduate

degree. Our competition regarding human talent are not

private hospitals but public, because nurses in the public

sector work only five days a week and receive better benefits

than we can offer. We attempt to create a pleasant, patient-

oriented work atmosphere where nurses can grow. Within this

model, a nurse’s satisfaction does not derive from the benefits

the hospital provides but from gratified patients. When a

patient has a good experience, the whole team is pleased.

Q: What plans does San Ángel Inn have to expand?

A: We will finish consolidating our presence in Mexico City.

We have a new hospital in Patriotismo and we are about

to open a new short-stay and ambulatory clinic in Mier y

Pesado. This project is an opportunity to enter a new niche

GOOD INFRASTRUCTURE, QUALITY CARE, LOWER PRICES

ROBERTO BONILLADirector General of Hospitales San Ángel Inn

Hospitales San Ángel Inn is a hospital chain with four

installations in Mexico City. It offers a wide variety of

treatments and specialties, specializing in gynecology and

obstetrics and cardiology and hemodynamics

VIEW FROM THE TOP

46

PUBLIC-PRIVATE COLLABORATIONS BOOST SECTOR

The public sector has made great advances in recent years

in dealing with the country’s large volume of patients

and in improving quality of care, but there is still room

to improve. According to the OECD, 5.3 percent of the

Mexican population spent at least one night in hospital in

2014, equivalent to around 6.4 million people. In addition,

it reports that in the same year, an average of 2.6 doctor

consultations were carried out per capita, equaling 312

million visits. Outsourcing services, used in the right way, may

benefit both institutions and patients, hospital operators say.

Seguro Popular, one of the country’s main social security

institutions, does not own any hospitals itself. It outsources to

public and private hospitals the services needed by its insured

patients. The agency has a catalogue of required services that

private hospitals can address according to their capabilities

and for which they can seek accreditation. Once a hospital is

certified, Seguro Popular can begin referring patients.

“[The relationship] is important because of the volume of

patients the government brings but also as a contribution

to balancing the health offering in different segments of

the population,” says Miguel Castillo, Director General of

Hospital Sedna, which offers oncology services to Seguro

Popular to treat breast, colon and prostate cancer. Due to

the high incidence of those cancers in Mexico, these services

are in high demand. According to the WHO, in 2014 there

were 20,444 cases of breast cancer, 14,016 cases of prostate

cancer and 8,651 cases of colorectal cancer in Mexico. The

relationship with Seguro Popular is so fruitful that the

hospital hopes to expand the number of services it offers to

the government, looking to add general surgery and high-

risk pregnancies to its list. Castillo hopes that these further

accreditations will increase the number of patients seeking

treatment at the hospital.

Despite the many benefits for the health system, there are

still some kinks to be worked out. “Our relationship (with

the Seguro Popular) is strong but there are certain rules

that keep us from offering it more products and services,”

says Alejandro Alfonso, CEO of ABC Medical Center.

“For every MX$1 it pays us, we have to give MX$0.19 to

the government. Seguro Popular does not pay VAT but

as a private hospital we are not exempt. Another issue

is the difficulty of selling services to Seguro

Popular. Hospitals have to undergo several

time-consuming registration processes so the

patient stream is initially slow.”

Alfonso additionally explains that unlike IMSS patients,

Seguro Popular patients can expect treatment in any

participating hospital, which results in many patients

traveling in from city outskirts or from more rural or less

developed states to the big cities. “Seguro Popular was

created with the theory that ‘money will follow the patient,’

so the belief is that wherever he or she goes there is a budget

to pay for the service. The actual situation is that the federal

government gives each entity a budget targeted as money

for Seguro Popular, but a given entity may not necessarily be

equipped with the services specific patients need. Therefore,

there is a large migration of patients to Mexico City, where

large hospitals, specialized clinics and good services can

be found. When those patients arrive at hospitals in the

city, the center’s administrator must find a way of covering

each patient’s costs because the state to which the patient

belongs will not pay,” he says.

IMSS does have hospital infrastructure but it is often

overwhelmed with demand because it is responsible for

the health of over 70 million Mexicans. In this case, the

construction of hospitals and clinics in conjunction with the

private sector may be a better option.

“What IMSS has done is take advantage of new legislation

to facilitate the construction of new infrastructure, clearly

without medical care being in the hands of the private sector

at any point, which is a legal impossibility,” says Mikel Arriola,

Director General of IMSS. “We are having facilities built at

a faster pace, more efficiently and without the hurdles

associated with direct public investment. We have had

bidding processes for four hospitals. We are looking to be

more efficient. We want to build more hospitals with less

money. We have MX$20 billion (US$1.1 billion) to build 12

hospitals and four of those will be through PPPs.”

The relationship between public and private entities will

continue and even expand for the foreseeable future.

Obesity, for example, is one treatment area that will benefit

from the relationship. The OECD reports that more than one

in three people in Mexico are obese. To help alleviate the

issue, in 2016, Seguro Popular announced that due to the

high obesity rates bariatric surgery would be offered through

the public sector.

ANALYSIS

The Mexican healthcare system is fragmented and many industry

experts believe that increased collaboration between the public

and private sector and within the industry could increase cost-

efficiency and lower waiting times at busy institutions

47

every MX$1 it pays us, we have to give MX$0.19 to the

government. Seguro Popular does not pay VAT but as a

private hospital we are not exempt.

Another issue is the difficulty of selling services to

Seguro Popular. Hospitals have to undergo several time-

consuming registration processes so the patient stream is

initially slow. Seguro Popular was created with the theory

that “money will follow the patient,” so everywhere he or

she goes there will be a budget to pay for the service. The

actual situation is that the federal government gives each

entity a budget targeted as money for Seguro Popular

but a given entity may not necessarily be equipped with

the services specific patients need. Therefore, there is a

large migration of patients to Mexico City, where large

hospitals, specialized clinics and good service can be

found. When those patients arrive at the hospitals in the

city, the center’s administrator must find a way of covering

patient costs because the state to which the patient

belongs will not pay.

The truth is that money does not follow the patient

because security systems for patient care in Mexico are

sectored. With IMSS coverage, a patient can only go to

IMSS facilities. Mexico operates a vertical system, so there

are many patients for whom there is no budget. We see

teenagers with high-risk pregnancies camping outside

hospitals, waiting for care without a place to sleep, and

most of these are helped by civil organizations.

Q: What approach could help solve the health system’s

current situation?

A: The solution is not easy and is not short term. First, we

have to discuss which healthcare model we want to follow

with the participation of many social agents. Once the

model is established, we can decide our course of action.

Q: How is ABC Medical Center cooperating with the

public sector?

A: The healthcare situation in Mexico demands private

hospitals work together with the government because it is not

economically viable for the government to meet healthcare

service demands by itself. The key is to find the right way

to make this happen to avoid the perverse incentives in the

private and public sectors that pollute association. ABC

Medical Center has been working with public healthcare

through Seguro Popular and by offering occasional services to

other government institutions. As a not-for-profit organization,

we can afford to treat patients below cost and this is important

because helping those who do not have enough resources is

a part of our founder’s legacy. The challenge is to determine

the price the government can pay for these services and how

economically and clinically efficient we can be as a private

hospital when providing this aid. If there are no clear rules

about quality and affordability, we may find ourselves in a

situation wherein we can no longer help the population.

I am concerned about the decision to create general hospitals

without a structured business plan. The word “general” by

itself might be counterproductive because it suggests the

hospital can treat any manner of illness and it does not

highlight the public’s true needs. A general hospital is not

built based on a study of the population and popular diseases.

For its construction, rent is paid to a private company, which

fulfils its construction and installation contract, at which point

the government takes operational control of that hospital. The

little money this general hospital receives is spent paying the

private company and there is not enough left to treat patients,

which indebts the government. Instead, to improve existing

services there should be an inventory of the country’s hospital

capacity and an analysis of how they could be better used.

There are empty surgical theaters at certain times of the day

in private hospitals that could be used by the lines of people

in public hospitals.

Q: What is the thrust of ABC Medical’s relationship with

Seguro Popular?

A: Our relationship is strong but there are certain rules that

keep us from offering it more products and services. For

DISPARITY A CHALLENGE IN PUBLIC-PRIVATE COOPERATION

ALEJANDRO ALFONSOCEO of ABC Medical Center

VIEW FROM THE TOP

ABC Medical Center is a private institution in Mexico City

that offers treatment in the fields of oncology, neurology,

transplants, OB-GYN, pediatrics, traumatology, preventive

medicine and nutrition

48

Q: What is your added value proposition regarding

medical tourism?

A: Many people come to Mexico for plastic surgery but

we want to provide even more services. We performed a

liver transplant for a 7-month-old girl who weighed 8kg

using 200 grams of her aunt’s liver. She is alive and she will

recover. This is the kind of news we want other countries

to hear to attract patients. More than medical tourism,

what we offer is an efficient use of resources that leads

to affordable prices. A knee or hip transplant might cost

US$100,000 in the US. Here it is US$40,000. We must

follow the example of India, which has already become a

medical tourism destination for Americans. The cultural

difference and the actual distance between India and the

US are bigger than with Mexico, but India has talent and it

is open to promoting it.

Q: What are Mexico’s main requirements in terms of talent?

A: We need higher academic standards. Our future

generations will compete with future generations from South

Korea, India and Japan, where the pressure for excellence

is part of everyday life. Mexican students should demand

more rigorous programs from their academic institutions

to compete with the rest of the world. At Médica Sur, the

requirements to get into our program are very high, so our

residents are increasingly better. Only students with a GPA

above 9.5 can apply and we choose only 20 percent of those.

We have around 120 residents and interns and every year we

admit between 30 to 40 students. We also believe that the

learning experience and academic results are better when

physicians work with a small group of students.

Q: What role does Médica Sur want to play in the Mexican

health industry?

A: We do not want to fit into a role; we want to become

an example of good processes in the national and

international health industry. We want to show the

industry that a health service focused on the patient is

the most profitable model and that a sense of humanity

and responsibility are the main drivers of return. We will

also continue moving forward with technology and social

developments. We are an institution, not a business.

Q: What is Médica Sur’s strategy to ensure growth?

A: Médica Sur’s growth stems from two points. First, we seek

internal growth through the optimization of our processes.

This growth must be guided by a code of ethics to ensure

that we can provide quality service. Belonging to the JCI and

Mayo Clinic Care Network provides us a standard; however,

that is not enough because in healthcare we experience

changes every day. One major change is the increase

in ambulatory procedures in hospitals, which opens up

new opportunities and leads us to the second priority for

Médica Sur: implementing external growth through a larger

investment in diagnosis. Unfortunately, in Mexico there is a

lack of confidence in diagnoses and unethical practices are

common. There are many opportunities in this area. We will

be able to provide tools that will lead professionals to the right

diagnoses and in doing so, open access to a top-flight service

that is now privatized.

Q: Which values guide Médica Sur in an increasingly

competitive environment?

A: We have to work in a very competitive environment, but

we will never sacrifice the safety of a patient to economic

profitability. In our facilities, the average stay is two days, while

in public hospitals it is approximately 10 days. We are also the

only hospital in Mexico that publicly reports deaths that occur

in our facilities as well as infections and accidents.

Q: How are you delivering this message to the industry?

A: We created the Médica Sur Network to share our

ideal of making things better in Mexico. So far, we

have seven members and we have allies in Los Cabos,

Queretaro, San Miguel de Allende and Merida. They pay a

membership fee and we share our knowledge with them.

This network allows us to build a common front, nurture

better relationships with insurance companies, consolidate

purchases and share expenses.

CREATING ACCESS TO TOP-FLIGHT SERVICESMISAEL URIBEPresident of Médica Sur

VIEW FROM THE TOP

Médica Sur is a private hospital complex. With 31 laboratories

in Mexico City, one women’s clinic and two hospitals, it is a

member of the JCI and the Mayo Clinic Care Network. Médica

Sur also has a Pharmacovigilance Center

49

VIEW FROM THE TOP

Q: How does Grupo Christus Muguerza differ from other

hospital groups?

A: We are the only healthcare system to operate in Mexico as

a nonprofit organization, although fiscally we still pay taxes

because we are a large group. However, no partner takes any

of the profit for themselves and profit is entirely reinvested

in infrastructure and community service.

Reaching those most in need is fundamental in our day-to-

day. Christus Muguerza works with Operation Smile and has

already operated on around 500 children with cleft lips free

of charge. In 2016, Hospital Alta Especialidad operated on 12

children with congenital heart disease. These patients reach

our hospital through the charity Cardio Chavitos. A North-

American pediatric cardiology hospital helps us with the

equipment and teams are mixed Mexican-American.

Hospital Conchita in Monterrey is about to start a program

in laparoscopic gynecology surgery for women with

gynecological problems. There will be four groups of around

16 patients. This program does not only help people in need,

it also enables the head gynecologist to teach others how

to operate laparoscopically. Also, Hospital Del Parque, in

Chihuahua, has five years of experience providing free spinal

surgery for children with scoliosis or deformities.

Q: How has the hospital’s nursing program developed?

A: Christus Muguerza is involved in two nursing programs:

one with UDEM and one with the University of Chihuahua

as part of its community service program. The nursing

school has grown in recent years and now has around 600

students, whereas in previous years it saw averages of 120-

140. UDEM contributes to the program with its academic

value. It has long been a partner of ours as it used to own

the Clínica Conchita before we acquired it. We also send

bachelor’s and master’s students to train in the US. We

understand that not all the students will return to work

at one of Christus Muguerza’s hospitals but that does not

matter. Nursing is rewarded unfairly in Mexico because a

company has to take charge of hiring, taxes and insurance,

and is thus not able to offer the same benefits as the public

sector. IMSS, however, offers nurses three months’ holiday

per year and a two-month salary bonus at the end of the

year. This creates unequal working conditions. Some choose

to stay at Christus Muguerza because of our work ethic.

There are also 158 postgraduate residents studying a

specialty in our hospitals. This costs the group MX$50 million

(US$2.7 million) annually and it bears the full cost. Although

the government pays for medical residencies throughout the

country, private hospitals receive no subsidiary.

Q: What steps is Grupo Christus Muguerza taking to expand

its reach and what are its priority areas?

A: Surgical centers are moving away from hospitals, often

due to costs. We have acquired an ambulatory center in

San Luis Potosi and there is a center being remodeled in

Irapuato that will begin operating as a Christus Muguerza

surgical ambulatory center in August 2017. One of the largest

primary-care centers in Monterrey will also become a surgical

ambulatory center and will most likely open in 2018.

In September 2017, we will begin constructing a fifth

hospital in Monterrey, It will be the first hospital in Mexico

to follow a lean design, built with Perkins & Will. We

created an initial design and the firm is now drawing up

architectural plans based on our needs. I want it to be the

first sustainable hospital, with a water treatment plant,

energy sourced from solar panels and we are evaluating

whether to integrate oxygen processing, a common

practice in France and Canada.

In the next six months, we will begin performing complete

transplants in Hospital Alta Especialidad, the largest

hospital in our system. We will begin transplanting

pancreases, for which so far in Mexico there have only

been isolated efforts. This will be in partnership with the

Northwestern University Hospital in the US.

WHEN GENEROSITY, GROWTH GO HAND-IN-HAND

JUAN GALINDOMedical Director of Christus Muguerza Sistema de Salud

Christus Muguerza Sistema de Salud is a hospital group that

operates in Mexico and the south of the US. The group opened

its first hospital in Monterrey in 1934, and now manages nine

hospitals and 18 medical centers across the country

50

INSIGHT

INTERNATIONALIZATION ESSENTIAL FOR MEXICAN HOSPITALSRAFAEL ESPINODirector General of Amerimed

A boost in federal government support would bolster and

expand Mexico’s medical tourism, creating jobs and helping

to keep doctors from leaving for greener pastures, says Rafael

Espino, Director General of Amerimed, a hospital network

focused on treating tourists. “We need a coherent medical

tourism policy. The Ministry of Health and the Ministry of

Tourism should work together to promote the country’s

advantages through federal funding, better financing and

business promotion.”

The lack of a cohesive policy is keeping the hospital on the

fringes of the medical tourism industry despite the low prices

and top-notch doctors and nurses that make Mexico an

attractive destination to receive medical care. “The country has

access to state-of-the-art equipment from the US or Europe at

a good price, because Mexico has trade agreements with most

western countries,” says Espino. “We are more focused on

emergencies or consultancies. Medical tourism, which consists

of programmed surgeries or treatment, represents only 3 or

4 percent of our activities,” he says.

Espino says better policies could increase employment

and keep doctors in the country, giving Mexican cities an

aggregated value. He also cites changes in US healthcare

policies such as the current US administration’s rebuttal of

the Affordable Care Act, that could increase the number of

US tourists traveling abroad for medical care. That number,

according to Patients Without Borders, reached 1.4 million in

2016. “If healthcare prices do not drop with the suspension

of the Affordable Care Act (Obamacare), Mexico will be the

first option for Americans due to proximity, the number of

facilities near the border and low prices further favored by

the peso’s depreciation.”

The exchange rate, however, might favor his business. “Mexico

could become cheaper for foreigners, therefore more tourists

will be attracted to the country and the demand for hospital

services will increase.”

Amerimed has branches in two of Mexico’s main tourist

destinations: Cancun and Cozumel. Most of its patients are

vacationers who have been in an accident or have gotten

sick. “With more than 20 years of experience, our network has

received the majority of foreign patients in the country,” says

Espino. The hospital, which is focused on providing quality

services in strategic locations, has a patient profile that breaks

down to 70 percent Mexican tourists and 30 percent foreign.

According to Espino, Amerimed services are mainly delivered

to the private sector but as one of the few well-equipped

hospitals in its chosen locations, it frequently supports IMSS

and ISSSTE with X-rays, CT scans, MRIs and laboratory

services. The hospital network also participates every year in

government tenders.

To ensure its growth ambitions, Amerimed is working to

improve quality and the number of specialties available at its

hospitals. It is also obtaining JCI certification for both facilities

in Cozumel and in Cancun. “The JCI has good recognition

abroad and it is important for us as an international health

service provider to be certified by the most important

international agencies,” Espino says. Amerimed already is

certified by the General Health Council in Mexico and the

Canadian Accreditation Council. “We are the only hospital in

Cozumel that is internationally certified. This is important since

the island is a frequent destination for the main world cruise

lines, which like to have quality medical facilities available on

land,” says Espino.

Amerimed is also looking forward to branching into other

tourism locations. The company is building a boutique hospital

in Playa del Carmen, which will have a variety of medical

specialties, an intensive care area and two surgery rooms.

There also are plans to open a small hospital in Acapulco.

“This will be a new direction for the business model because

97 percent of the tourists in Acapulco are Mexicans, so the

business will be focused on national patients instead of

international ones,” Espino says.

To execute this growth, Amerimed has partnered with a

private equity fund in the US and is looking for additional

funding to increase its infrastructure and services. “We are

open to working with other private equity funds that want to

invest in the Mexican healthcare sector,” Espino says.

51

Q: In which areas have you been investing?

A: We have been working on updating our diagnostic

imaging equipment. We use German machines in this area

and next year we want to renew our surgical equipment

and to invest in an advanced laparoscopic surgical theater

so we can offer this service. The hospital is 10 years old

already and in the health industry you have to be constantly

updating. Equipment becomes obsolete and there are

constantly new inventions to help diagnose and care for

patients. We want to offer the best service to our patients

and stay up to date.

Q: To what capacity does the hospital operate and what

are your expansion plans?

A: We are operating at around 60 percent of our capacity.

The hospital has been expanding significantly since we

changed our focus from women to become a general

hospital. From 2015-2016, we grew 50 percent and we are

looking at growth of 30-40 percent for 2016-2017. We have

achieved this goal through our various client segments,

our quality of service and by seeking out doctors and

insurance companies that do business with us because we

offer much transparency. We also see doctors as clients

and we want them to enjoy their time here. They are

treated with a super-personalized service and we want

them to know that there are many people available to help

them with anything they need.

Q: How do you attract patients and what are the advertising

rules surrounding hospitals?

A: Customer service is one of our main values and safety

is our top priority, followed by service. We mostly attract

patients with our service. We firmly believe that by providing

a service that is humane and friendly, patients will come back

to us time and time again and will recommend us. There

is also the patient’s family, doctors and insurers, for whom

we have different lines of appeal. COFEPRIS’ advertising

regulations cover the entire health industry. Within that, there

are rules that cover the advertising of services. As a hospital,

we can advertise; it is not very restrictive. More than a legal

restriction, we have a moral obligation to tell the truth so

that the business can be sustainable.

VARIETY OF SPECIALTIES SPURS GENERAL HOSPITAL AMBITION

MIGUEL CASTILLODirector General of Hospital Sedna

VIEW FROM THE TOP

Q: How do you work with the public sector?

A: We do work with the government and tend to many

patients through the Seguro Popular, mostly with breast

cancer. Our partner’s oncological center is also accredited

to tend to rectal, colon and prostate cancer. We are the first

hospital in El Bajio to be accredited to offer recto-colon

cancer treatment. When working with the Seguro Popular,

a hospital must be accredited in certain specialties from

the institution’s catalogue of services. Once accredited, the

hospital tells the institution what space it has available and

based on that, patients are sent to the hospital. We provide

the same service when working through the government

as we do with private patients.

Q: What is the strategy behind offering high-risk pregnancy

services over normal pregnancy services?

A: High-risk pregnancies are in the Seguro Popular catalogue.

There are many institutions that offer services for general

pregnancies but very few offer a high-risk specialty. Given

our history in gynecology, we have the experience and the

expertise, so we are confident we can offer this service. We

do not want to open specialties in which we cannot offer the

required service.

Q: What are the hospital’s short-term plans?

A: We would like to continue building on our vision of

humane treatment. This begins with our people and so in

2017 we will be investing greatly in them. We also have

areas ready for growth and we could increase our capacity

by 40 percent. We have the space to grow and we have

140 doctor’s offices that could also grow by 20 percent. We

want to focus on obesity and bariatric surgery, one of the

country’s main challenges — epidemiological alerts have

been issued for diabetes and overweight in the country. We

are building an obesity clinic at the hospital for the integral

treatment of this condition and metabolic disorders.

Hospital Sedna is a private hospital located in Mexico City

that originally focused on female health but has expanded

to offer over 30 specialties and aims to become a general

hospital offering integral services

52

NATIONAL HEALTH SYSTEM UNDER THE SPOTLIGHT

INFOGRAPHIC

0

10

20

30

40

50

60

70

80

Oth

er p

ublic

inst

itut

ions

Pri

vate

inst

itut

ions

PE

ME

X,

SE

DE

NA

, SE

MA

R

Seg

uro

Po

pul

ar

ISS

ST

E

IMS

S

POPULATION DISTRIBUTION ACCORDING TO HEALTH INSTITUTION (DEC. 2015 IN MILLIONS)

74,0

32,4

37

12,9

73,7

31

57,10

5,62

2

1,893

,946

2,18

9,51

4

1,824

,595

AFFILIATES OF EACH HEALTH INSTITUTION AS OF DEC. 2015 (millions)

� 24.16% Workers

� 10.71% Nonworkers

IMSS AFFILIATES IN 2015

Insured Pensioned

Affiliated

� 16.44% IMSS-PROSPERA

IMSS-PROSPERA

Non-A�liated

Pensioned

Insured

Pensioned IMSS

Pensioned non-IMSS

Nonworkers

Workers

IMSS AFFILIATED IN PERCENTAGE (2015)

|

Rights hold

ers

|

Family

| IM

SS-P

ROSPERA

� 4.69% Pensioned non-IMSS

� 0.36% Pensioned IMSS

� 30.02% Insured

� 3.41% Pensioned

� 10.22% Non-Affiliated

74,032,437IMSS affiliated

population

GOING “UNIVERSAL”

Universal health coverage is a concept established by the World Health Organization.

• Implies making sure people have access to health services without affecting their finances

• Upholds quality and effectiveness in promoting healthcare, as well as prevention, diagnosis, treatment, physical therapy and palliative care

As the system has grown, so too have the challenges it

faces. OECD recommendations to strengthen the Mexican

health system include expanding coordination between

institutions, aligning the standardization of processes,

boosting competition among providers and

promoting the effectiveness of hospitals.

KPMG agrees with this needed coordination and

goes even further. According to the financial

services company, “a population’s health is an indispensable

value for economic development and social welfare.” This is

why better coordination between financial services firms,

suppliers, associations and institutions is required.

Born in the early 20th century, Mexico’s National Health

System has evolved through the years. Besides the widely

popular IMSS, the system now includes state oil giant PEMEX

and military facilities

Population aged over 65 will grow, impacting health services

121 millionMexicans

• 150 million: 2050 projection

2.2 children per woman

• Life expectancy:

75 years• OECD average:

80 years

2

6

10

203020202017

7% 10%

• 2,353,596 births were recorded in

Mexico in 2015

• 51 percent of Mexicans are women

and 49 percent are men.

• 1 percent: The annual growth rate of

the population

53

*Cardiovascular disease, cancer and diabetes are the most frequent

THE STORY STARTED 112 YEARS AGO

Sources: IMSS, KPMG, INEGI, OECD, WEF, Economist Intelligence Unit

The bad: Rising obesity,

tobacco use and chronic

illness (*)

The good: Steady

reduction in infectious

diseases

0 20 40 60 80 100

Zacatecas

Yucatan

Veracruz

Tlaxcala

Tabasco

San Luis Potosi

Puebla

Oaxaca

Nayarit

Morelos

Michoacan

State of Mexico

Hidalgo

Guerrero

Guanajuato

Chiapas

Campeche

Tamaulipas

Sonora

Sinaloa

Quintana Roo

Queretaro

Nuevo Leon

Mexico City

Jalisco

Durango

Chihuahua

Colima

Coahuila

Baja California South

Baja California

Aguascalientes

PERCENTAGE OF POPULATION THAT WORKED IN THE INFORMAL SECTOR PER STATE IN Q416

—57.2% National average

1905 Founding of Mexico's Hospital General

1922 Founding of the Public Health School of Mexico

1931 Rural hygiene program. Vaccination, school hygiene and mother-child services

1944 IMSS started providing services in Mexico City. In 1952, construction began on Hospital La Raza; today, the first IMSS Hospital Center is among the most important of the country

1917 Founding of the General Health Council (CSG) and the Public Health Department

1937 Founding of the Ministry of Public Assistance after the merger of the Department of Child Social Assistance and the Board of Public Welfare

1943 Founding of the Ministry of Salubrity and Assistance (today the Ministry of Health), after a merger between the Department of Public Salubrity and the Ministry of Public Assistance

2003 Founding of the Seguro Popular

For every 1,000 patients who need magnetic resonance imaging, there are:

In Mexico2.5 medics1.6 hospital beds

OECD average3.3 medics

4.8 hospital beds

CHALLENGES TO FACE

1960 Founding of ISSSTE

6%of Mexico's

GDP is attributed to the health

sector

US$500per capita

in 2016

US$570per capita in 2020

Increase in health spending

1987 Founding of the National Institute of Public Health

The Mexican Health System has many challenges. Chief among them is a lack of infrastructure.

54

INSIGHT

FOCUSED GROWTH TAKING MONTERREY FORWARDFRANCISCO VILLARREALMedical Director of Swiss Hospital

With declining fertility rates and increased life expectancy,

Mexico’s population is slowly but surely aging. With a

more advanced age comes a host of health issues not

experienced in younger years, including dementia, a

degeneration in ocular health and a weaker heart, all of

which require care.

The increased need for heart care has not escaped the

notice of surgical hospital Swiss Hospital in Monterrey, run

by Medical Director Francisco Villarreal. Villarreal noted

an increase in the number of elderly patients in their

emergency and intensive care units toward the end of 2016

and the beginning of 2017. “Over recent months, we have

been asked to offer hemodynamics.

There have been so many patients

that we have had to channel them to

other hospitals. We are now working

on a business plan with investors to

offer these services,” says Villarreal.

The advance of the technology has

led to a reduction of open heart

surgeries thanks to techniques such as heart valves or

through hemodynamics. The Hemodynamics Society

defines the science as “an important part of cardiovascular

physiology dealing with the forces the pump (the heart) has

to develop to circulate blood through the cardiovascular

system. Adequate blood circulation (blood flow) is a

necessary condition for adequate supply of oxygen to

all tissues.” Two of the main issues in hemodynamics are

hypertension and congestive heart failure and, according

to ENSANUT 2016, 25.5 percent or 32 million Mexican

adults are hypertensive. The OECD estimates that 101,600

people are admitted to hospital yearly for congestive heart

failure in Mexico.

Despite the number of hemodynamic issues, treatment has

simplified greatly over the past 30 years. “By inserting a

catheter and injecting a substance a blockage is cleared

and the patient goes home. The process is simple and

easy but bears a high cost. The number of heart surgeries

has been drastically reduced, as many use hemodynamics

or implant valves. In addition, patient recuperation after

hemodynamics is immediate as there is no surgical

opening and no need to stay in intensive care,” explains

Villarreal, adding that he hopes the hospital will soon be

approved to perform these surgeries.

Transplantations are also high on the hospital’s list. “After

hemodynamics, we would like to begin offering organ

and tissue transplants, mainly kidneys as they are most in

demand in Mexico and are not overly complicated,” says

Villarreal. In addition to offering this further specialty,

Villarreal says that by 2018-2019 Swiss Hospital would

become a teaching hospital, having already reached an

agreement with Del Valle University

in the State of Mexico.

“The number of places available

in the National Medicine Exam

versus the number of students is

a problem, mostly of planning. We

cannot create so many medical

faculties if there is nowhere to train

the students. Around 40,000 students graduate annually,

yet there are only 7,000-8,000 places. Those 32,000

students that do not make it go to pharmacies and open

a consultancy, earning MX$50 (US$2.8) per appointment

after studying medicine because there are not enough

hospitals,” says Villarreal, adding that private hospitals

opening up to teaching may be a type of salvation that

allows more doctors to specialize. In addition, he explains

that while some areas are high in demand, others are

forgotten. “Everyone wants to be a general surgeon, a

pediatrician, oncologist or anesthetist heart surgeon. No

one wants to be a pathologist or a geneticist, for example.

Students want the adventurous specialties like birthing.

They want to see blood,” he adds.

Ultimately, the problem lies with the high number of

students accepted to study medicine and the few

residencies available in hospitals. “We need to reduce

the number of students accepted to study medicine. Why

produce more doctors than the country needs?”

101,600people are admitted to hospital yearly for

congestive heart failure in Mexico

55

INSIGHT

The conundrum of receiving medical care in Mexico is

this: the public sector has long wait times but the private

sector is expensive. Mexico City clinic AsMed believes the

answer lies in its business model of providing ambulatory

and short-stay care.

AsMed’s model relies on alliances with doctors, explains

Ricardo Bojalil, Director General of AsMed. When these

doctors recommend a minor surgery to a patient, they

both go to AsMed’s clinic to perform the procedure in

a high-tech environment and in a short amount of time.

For the patient, the procedure is offered at a lower price

than in most hospitals, which is also an attractive model

for insurance companies because they would then have

fewer costs to reimburse.

“We are continually trying to make our operations more

efficient, so we can lower our prices even further, while

maintaining quality, processes and certification,” says

Bojalil, adding that although the clinic’s target is not

the public sector, indirectly it is involved in that sphere

because it works with the third party that performs

hemodialysis for IMSS. “We take care of part of its

contract, performing hemodialysis here in the clinic and

taking care of vascular access,” says Bojalil.

This is a market with great potential. According to 2014

INEGI figures, the value of ambulatory care services

represents almost 21 percent of paid health services in

Mexico, which means a monetary value of MX$190.6 billion

(US$10.6 billion), 0.9 percent of GDP. This is only slightly

less than the value of hospital services, representing 28

percent of paid health services, MX$254.2 billion (US$14.1

billion) or 1.2 percent of GDP. Patients can be assured

they are receiving top-of-the-range care, says Bojalil.

AsMed continuously works to maintain its accreditations;

the clinic will need to renew its CGS certification at the

end of 2017 but Bojalil says no extra effort will be needed

because the clinic strives to maintain high standards year

in and year out, regardless of whether the hospital is

under audit. It is also looking to receive international

validation, having recently decided to aim for JCI

ambulatory accreditation. “It is a daily commitment to

patient safety and security measures. We are making

some changes to the plans of the building but processes

are continually improved upon.”

In addition, the clinic maintains low costs for medical

devices, buying only the equipment needed to perform

the services it offers and looking for machines that have

several functions. “In this way, the same machine or

laparoscopic instrument can be used to perform different

surgeries, especially since those we offer are not very

complicated,” Bojalil says. “We offer the best technology

at affordable prices.”

Although still small, the company is already giving back

to the community. Since 2016, it has participated in

Cinépolis’ ophthalmological charity program Del Amor

Nace la Vista (Sight is Born from Love), performing

around 15-20 monthly surgeries for the beneficiaries of

the program. “We dedicate one or two days per month

to performing these procedures for Del Amor Nace la

Vista,” Bojalil specifies.

The company is validating its business model and then

hopes to scale across Mexico. “We have made some

adjustments from the first model, moving from a fully

ambulatory model to short-stay surgeries.” In 2016, AsMed

saw around 30 percent growth. This is much lower than

the growth rate of 100 percent seen in past years. Bojalil

explains that the clinic focused on making adjustments

and maintaining quality rather than expanding. Currently

operating at 60 percent capacity, its target is to reach

80 percent by the end of 2017. It will also expand: Bojalil

says the clinic will open two new operating rooms in 2017.

QUICK TURNAROUND FOR SIMPLE SURGERIES

RICARDO BOJALILDirector General of AsMed

There are 340 doctors registered with AsMed in Mexico City

56

In parallel, we are extending our capabilities to the private

market through focused investments.

Another growth strategy we are analyzing is the

development of our own clinics and hospitals with a focus on

the treatment of noncommunicable diseases and minimally

invasive surgery. The primary causes of death worldwide

are cardiovascular diseases, followed by cancer. Vitalmex is

an expert in treating these ailments and that is where our

development plans also focus. This is a high-growth area

in healthcare and we are carrying out market research to

analyze possibilities in that segment.

Finally, we believe there are opportunities to export our

business model. We are successful in Mexico and the

healthcare challenges that we face and the given services

are similar in many countries.

Q: Why expand to Europe when many exalt the

opportunities to be found in Mexico?

A: I believe that our business model is replicable in many

countries because healthcare challenges and trends are

similar to those in Mexico. We already have a great deal

of knowledge of integrated services and believe there

are many opportunities to create efficiencies for existing

hospitals in other countries. What we offer is a proven

model to help them reduce their capital investment

costs, increase their productivity, optimize their installed

capacity and improve quality indicators, as well as

treatment techniques.

Mexico is a market with a great deal of potential. However,

there are also many opportunities abroad, in both emerging

and mature markets. In places like Germany, Switzerland,

the UK, France, the US and Austria, the cost of medical

devices and disposables is increasingly high. In those

countries, hospitals and insurance companies are looking

to reduce costs and we believe that our integrated solutions

are an attractive and proven way to do so. For example, the

owner of 12 hospitals in Switzerland invited us to evaluate

their operations. It turned out that we could reduce their

costs by around 15 percent through integrated services.

Q: Which of your products differentiate you from your

competition?

A: The first product we offer to public institutions are

personalized solutions based on specific health needs and

challenges. This product has worked well in Mexico because

it offers flexibility for public healthcare providers. We are

working with three imaging clinics in the north and south

regions of Mexico, where we are looking to improve access

to diagnoses for local communities. The second product we

offer is integrated services, a pay-per-procedure strategy

for elective surgeries and procedures. The hospital or

clinic pays us for completed procedures, which means

the customer does not need to invest in fixed assets and

inventories to offer health services. It is a win-win situation

because we profit through the correct management of

economies of scale in the procurement of medical devices,

high logistics efficiency and high productivity with our

latest-generation equipment. Our third product is inventory

management. We are experts in transporting medical items

and devices. Because of the volume that we manage in 210

hospitals in the public sector, we offer this service to private

hospitals as well with significant reductions in variable

costs and permanent availability of materials. Our fourth

product is the management of health centers and hospitals.

Our vision focuses on three segments: infrastructure

development for the public health system, working with

insurance companies to reduce the cost of premiums

and satisfying the needs of patients at the bottom of the

socioeconomic pyramid through micro-credits.

Q: What are your expansion plans over the next several years?

A: Our plans detail three strategic lines of development and

growth from two main sources. The first line is to maintain

business with our public sector clients. The main products

we offer to public institutions are personalized solutions

designed to address the national health coverage challenge.

MEXICAN COST-REDUCING TECHNIQUES TO HIT EUROPEJAIME CERVANTESCEO of Grupo Vitalmex

VIEW FROM THE TOP

Vitalmex is a consultant that helps clients improve their business

model. It has three main lines of business: imaging diagnostics,

surgery and the treatment of chronic diseases. Originally

established in Mexico, it has now set its sights abroad

57

basic care. For example, access to primary care in doctors’

offices located in pharmacies out-of-pocket. The theme of

effective and timely access is vital for Mexico.

Quality remains another priority issue. Different systems

in Mexico recognize there is a lot of internal variation and

even more variation across systems. If this is not addressed

within the next few years, it should become a clear priority for

any next administration. This is one of the important topics

people will put on the table. Leaving quality aside, there

has been progress in cost reductions and efficiency efforts.

Many initiatives have been in the media like the consolidated

purchases but there is still ground to cover.

Innovation is emerging, often through interesting startups, but

there has been much less investment in Mexico to-date than

in other geographies. Start-ups at different levels of maturity

need to undergo different rounds of financing and access to

funds for innovation in Mexico remains an issue. While there is

more access to funding now than before, it is still not enough

to sustain a robust market. The startup market is particularly

difficult on the retail side. If a model relies on consumers

signing up and paying a small amount each month, investors

often find between two and three years down the line that

the numbers may not materialize. The quickest avenue to

market is still through an institutional buyer. Recently, we were

talking to a start-up that offers micro-insurance to individual

consumers for healthcare services but it is now morphing

into a company providing care management products to

institutional buyers interested in capping their employee or

insured risk – a B2B model. Speaking broadly, there is a large

amount of insecurity in the Mexican labor force. Consumers

with poor job security may not want to commit to regular

installments. The percentage of people in the private health

insurance market is still relatively small; typically the largest

part is sponsored through employer coverage.

Q: Last year, you told MHR that companies were not making

drastic changes in the face of global economic challenges.

What is your view now?

A: In both the public and private sectors, we have seen more

significant efforts to reduce costs, which have taken different

forms. Organizations are delivering more consistently against

programs they have developed in previous years and are

looking forward to a tangible impact by 2018.

In the private health provider and insurance sectors, many

organizations are looking more drastically to leverage digital

and advanced analytics tools. In some cases, this is generated

by the local market environment and led locally; in others,

this may be an area of focus led by headquarters that are

abroad. There is definitely a step-change, meaning it is not just

business as usual but quite often a part of a comprehensive

effort to revolutionize core processes and improve customer

experience and retention. This is where digital has diverse

functionality, supporting cost reduction, growth and customer

experience improvements.

Q: To what extent are digital advances penetrating hospitals?

A: It differs between the public and private sectors. In the

public sector, there seems to be an issue of “bottlenecking”

in many organizations in how much can be done to improve

information-management systems or to introduce analytics

and digital platforms on a national scale. There are often

small, grass-roots innovative initiatives in individual hospitals

or regions, but these can only be scaled up through the

center. There are still problems around digitalization,

with frequent delays in core programs that go back a few

years. In the private sector, the situation is a little different.

Particularly, the problems of health insurance businesses in

Mexico within international firms that are faced locally have

often been addressed in other geographies and solutions

can be deployed at speed.

Q: What are the most prominent issues you have noticed?

A: There is still a general issue of access through the systems,

both in terms of specialized care, where there are many

delays, and in basic access to primary care. What we have

seen is consumers finding other avenues to secure access to

LITTLE, BUT PROMISING, CHANGEÁNGELA SPATHAROU

Partner at McKinsey & Company

VIEW FROM THE TOP

McKinsey & Company is a global management consulting firm

that serves leading businesses, governments, NGOs and not-for-

profits. It is the largest and longest-established management-

consulting firm in Mexico, working in every major sector

58

Q: What makes Fligoo different from its competitors in

terms of added value?

A: We compete directly with IBM Watson Health. We

have close relations with the company in San Francisco

as we share an office. However, it did not create the

algorithms or technology it uses. IBM Watson Health’s

focus is mostly consulting, so they implement a solution

and then sell another and another. It will cost millions

and take years. Fligoo delivers a much faster impact and

identifies a client’s exact needs. Finally, we built all the

technology in-house. All our employees are engineers

with a strong background in data and a lot of experience.

Q: What are the first steps to be taken in a hospital that

does not have electronic medical records?

A: The first step is data collection. This can be challenging

in places with no digital records or prescriptions, so we

must analyze where the information should be taken from.

Most times it is a mess, so we must recognize and identify

the information that is available and make it digital. The

second step is to identify what will help a client or the

industry from the information available. Many companies

try to begin analyzing data as soon as possible but first

we must understand the company’s vision and which

elements will help them get there, as well as identify

patterns and key factors in the data. The third step is to

develop the solution, the algorithm or technology that can

process millions of pieces of data and extract the most

important information to come to conclusions must faster.

Many companies say they do data analysis and that they

are innovative but we truly impact a company’s results; we

try to decrease their costs, increase revenue and profits,

accelerate processes and save employee claim costs.

Q: What are the main challenges you have encountered in

implementing solutions? How have you overcome them?

A: We often go to a warehouse and find boxes of paper,

which is not organized; it is hard to find a person’s file.

Fligoo strives to show impact and results in one quarter,

to show clients that, although they may have nothing

today, in one quarter they will have some data and some

analysis. We have scanned millions of sheets and forms.

It is true that companies see challenges in digitalizing.

They struggle to think about data when they do not even

have digital processes. We explain we can do it all for

them and structure the data. We explain it is not a huge

investment and does not take a lot of time. Thinking of

Big Data, ArtificiaI Inteligence (AI) and analytics can

seem complicated for those who do not have a tech

background but we can implement it easily.

Q: How adaptable are your solutions to clients?

A: That is our main focus when we create a product.

We know that our solutions have to be easy to integrate

and without taking a long time to implement. A client

does not want to spend a year implementing a piece of

software, paying for engineers and hoping it will work.

Our solutions are therefore very tweakable, ad-hoc for

each client. We ask them what they want to accomplish,

what is most important for them and then adjust the

algorithm accordingly to make it work for that client.

Technology must be able to adapt to clients that have

had a system in place for 10-15 years and are reluctant to

change. We must make it as easy as possible for them.

Q: What is your strategy to grow the company?

A: We have plans to open an office in Mexico City, another

in Barcelona and in 2018 we would like to go to Asia,

perhaps to Singapore, Hong Kong or Tokyo. We will be

investing a lot in expansion in 2017-2018 and trying to

show how good we are and how we can solve problems

globally. We work in other sectors too, such as finance

and banking, although healthcare represents 60-70

percent of our business. Expanding across countries and

sectors simultaneously is a big challenge. We have also

just confirmed we will be opening new business units

for education.

REAL DATA ANALYSIS IMPACTS RESULTSLUCAS OLMEDOCEO of Fligoo

VIEW FROM THE TOP

Fligoo is a US-based company that provides data solutions.

It aims to solve complex problems and provide extraordinary

results, and has the mission of democratizing world opportunities

through technology and innovation

59

FLIGOO CASE STUDIES

IMPROVING ELECTRONIC HEALTH/MEDICAL RECORDS USABILITY THROUGH SEARCH AND DICTIONARY SYNONYM DATABASES

CHALLENGE

The client needed to significantly reduce costs

and improve its complex and expensive health

revenue cycle that employs multiple channels

to collect from all payers regardless of the

case. The management platform works with

the cycle of claims submission, medical coding,

charge capturing, payment posting, denial

management services and account receivables.

Even though it is a core initiative, people from

other projects cannot be relocated and building

a new internal team is too expensive and would

delay the process for months of useless billing

costs.

OUTCOME

The solution catalogued cases into categories using data

on treatments, insurance, bill amounts and credit scores,

among others, identified the optimum channels and

timing for communication and determined the maximum

investment that should be made per case. Conversion rates

CHALLENGE

The client needed to improve the search

component for all its products since it would

not deliver an accurate result unless the user

typed the exact name, which was unusual,

especially for non-technicians. A mistake in

a record can have an impact on a patient’s

life. The health system has a large and

complex vocabulary. The name of conditions,

medications, immunizations and diagnoses

are difficult to learn and even more to spell

for most people. The search engine would not

understand typos, partial words, words in a

different order or synonyms. The probability of

not finding the desired result was high.

OUTCOME

In three weeks we were able to predict what the user was

looking for with 99 percent accuracy with three letters.

The company was able to improve the usability of all its

products through search speed, and reduced the number

of mistakes in health records in less time than expected.

We adapted our search engine to its platforms in a way

that is optimized for health vocabulary, we built a database

that relates the synonyms that each name has across all

health dictionaries and we applied machine learning based

on the specific user and the population to provide the most

accurate results.

SOLUTION

Fligoo has a proprietary search engine that combines

phonetic, spelling and machine-learning algorithms that

understand typos, words that have a similar phonetic

composition and it is optimized to search for partial words

or sentences. The expected time for development was two

months, with under 80 percent accuracy, but we delivered

it in three weeks with 99 percent accuracy at 34 percent

of the cost expected.

REDUCING REVENUE CYCLE MANAGEMENT COSTS WITH MACHINE LEARNING

improved progressively as the machine learned about cases

and the company saved millions in useless billing costs.

SOLUTION

A mixed in-house and nearshore Fligoo team composed

of eight senior engineers worked on this project, applying

their expertise in the industry and with Big Data. The project

kicked off on-site in the client’s office for four weeks and

was continued remotely from San Francisco and Argentina,

with the leaders traveling to the company’s site every four

weeks to keep the project going almost as if on-site while

being efficient on budget as well.

We mined the company’s complete history of cases with

machine learning to identify patterns among customers,

cases and response behavior in the past to each stage

of the cycle (answered, partially paid, completely paid,

appealed, etc.). We were able to understand the different

kinds of cases the company usually dealt with and built a

model that analyzed every situation in real time to define

the optimum collection procedure.

The manufacturing of prolonged liberation capsules

61

Besides better services, patients also require access to new innovative medicines,

which in Mexico can take years. Due to increasingly constrained public sector

budgets, the pace of purchasing expensive, innovative or new medicines is

gradually slowing. As a result, Big Pharma companies have been turning ever

more to the private sector for sales and growth. However, many Big Pharma

companies have also been impacted by world events such as the election of US

President Donald Trump, the peso’s depreciation and worldwide economic and

political uncertainty. Caution has become the rule of thumb for many companies.

This chapter will provide an overview of the largest pharmaceutical companies

in Mexico, focusing on the economic challenges they face and how to overcome

them, how they are ensuring patients have access to their products, their recently

released drugs and the medicines they have in the pipeline. Interviews held

with the CEOs and Director Generals of the sector’s biggest players reveal how

important Mexico is to their Latin American and global strategy. Insightful Q&As,

informative articles and original analyses bring this key segment into focus.

BIG PHARMA

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CHAPTER 3: BIG PHARMA

64 ANALYSIS: Uncertainty for the Present, Hope for the Future

66 VIEW FROM THE TOP: Pedro Galvis, Merck

68 VIEW FROM THE TOP: Félix Scott, Sanofi

69 VIEW FROM THE TOP: Raúl Camarena, Aspen Labs

70 VIEW FROM THE TOP: Rodrigo Puga, Pfizer

71 INSIGHT: Mario Sturion, Janssen

72 VIEW FROM THE TOP: Karel Fucikovsky, Pierre Fabre Médicament

75 ROUNDTABLE: What are the Greatest Challenges Pharmaceutical Companies Face?

76 VIEW FROM THE TOP: Alexis Serlin, Novartis

77 ANALYSIS: Pharmaceutical Deals Completed in 3Q16 Through 2Q17 over US$1 Billion

78 VIEW FROM THE TOP: Oscar Parra, Lundbeck

80 VIEW FROM THE TOP: Vincenzo D’Elia, Alfa Wassermann

81 INSIGHT: David López, BioMarin

64

UNCERTAINTY FOR THE PRESENT, HOPE FOR THE FUTURE

“In 2016, the Mexican health industry saw

one of its toughest years, achieving single-

digit growth in terms of value due to the

introduction of new products and price

increases,” says Raúl Camarena, General

Manager of Aspen Labs Mexico.

This situation has led some companies with interests

in Mexico to take precautions, according to Vincenzo

D’Elia, Director General of Alfa Wassermann. “We have

seen significant currency devaluation, which has lifted the

cost to import products and increased our operational

costs. There are many services we have to cover in foreign

currencies. In some cases, we have to take the loss, but

we must also reduce and relocate resources. For example,

if we had three projects planned for next year, we would

only go ahead with two.” 

Despite the headwinds, the industry overall remains

optimistic, partly because of the diversity of investment

in the country. Speaking to El Universal in February

2017, Cristóbal Thompson, Executive Director of AMIIF,

downplayed Trump’s impact on the pharmaceutical over

the long run. “Trump has talked about repatriating plants

but in the case of the pharmaceutical industry it does not

apply because [our industry does] clinical research. In

addition, we attract investment from Japanese, European

or Latin American companies,” he said.

THE BRIGHT SIDE

There is good reason to be hopeful. According to the

report  The Mexican Pharmaceutical Industry, News,

published by KPMG, Mexico’s pharmaceutical market is

in a good position. KPMG says the segment is among

the top 15 in the world and second in Latin America,

impacting 161 national economic sectors and providing

74,000 direct jobs and more than 300,000 indirect jobs.

In addition, Mexico accounts for 1 percent of the global

Big Pharma market, with an impact on the country’s GDP

of about 6 percent.

Transnational companies are banking on Mexico’s industry

potential and working together with public institutions

to empower growth in the sector. Novartis established a

five-year plan in agreement with the Ministry of Health to

increase clinical research. Also, the company is confident

enough about Mexico´s leadership in the industry that

it is building the Novartis Center of Operations for Latin

America in Mexico. “This project is a great opportunity

Big Pharma knows there is a growing market in Mexico

– 20 of the world’s 25 top pharmaceutical companies

are already here, according to ProMéxico – and they are

hungry to improve market share, introduce innovative

products and expand the country’s blossoming generics

markets. But they remain hampered by strict regulations

while dealing with a weakened Mexican currency that is

driving up prices.

“We are a heavily regulated industry and even more so

due to our internal compliance with government policies.

In Mexico and Latin America, our time-to-market for

drugs is getting slower,” says Karel Fucikovsky, Director

General of Pierre Fabre Médicament LATAM. He points

to the registration process for new products as among

the hardest hurdles with which to comply, even with

recent moves to simplify processes and time frames.

“Unfortunately, we have examples of novel drugs that have

been in the registration process for almost six years and

there is still no answer as to when market authorization

will be granted. This obviously generates financial and

business forecasting issues for us, plus big questions from

our partners in Europe trying to understand the situation.”

The companies understand the necessity for strict

oversight but point to the need to improve access to

innovative medicines in a country that is aging and hence,

seeing greater prevalence of chronic diseases. Further

hampering their efforts is a government that has tightened

its purse strings and curbed the purchase of these drugs

and treatments. At the same time, more substances

have been liberated, helping spur growth in the generics

segment. “Thirty-seven active substances have been

liberated through our generic strategy, which represent

MX$25 billion (US$1.4 billion) in savings while an extra two

million people can be treated thanks to these savings,”

says Julio Sánchez y Tépoz, Commissioner of COFEPRIS. 

EXTERNAL IMPEDIMENTS

Outside factors are also pressuring the sector. US President

Donald Trump, elected in November 2016, has publicly

called for lower drug prices and also targeted companies

doing business in Mexico, leading directly to the weakening

of the Mexican peso.

ANALYSIS

A tough regulatory environment and the impact of a weaker

peso are among the hurdles Big Pharma companies face in

Mexico but the general landscape provides optimism and

suggests strong growth ahead

65

“With 121 million inhabitants, excellent professionals and a

decent level of infrastructure, there should be much more

clinical research in Mexico,” says Rodrigo Puga, President

and Country Manager of Pfizer Mexico. “This does not

happen because administrative processes and institutions

delay procedures more than they should. The company

has over 400 research centers in Mexico, although it is

still an incipient process. According to AMIIF, Mexico

could be looking at a US$500 million investment in

clinical research in the near future. Pfizer will invest US$16

million in Mexico in research in 2017.” US-based Pfizer is

one of the world’s leading biopharmaceutical businesses. 

Mexico’s public health sector is also extremely cognizant

of the urgent need to encourage people to see doctors

earlier in the disease cycle. Its approach is to conduct

clinical research, speed up bureaucratic processes,

improve transparency in the public procurement of

medicines and to promote prevention programs.

However, according to Sturion, there is still much work

to be done. “For Mexican healthcare, prevention is still a

hope but it is a challenging area to move in. The actions,

resources, programs and initiatives are still limited across

the country,” he says.

According to KPMG, Mexico has 2.5 doctors per 1,000

inhabitants, close to the average of the OECD member

countries, while the projections presented by the firm on

the consumption of pharmaceutical products in Mexico

are encouraging. By 2020, total spending will be slightly

above US$24 billion, compared to just over US$16 billion

spent in 2016. Although the industry is weathering a

tough period now, the future looks bright.

for Mexico. Once completed, the team will grow by 1,000

associates and in two years we will reach the 500 mark,”

says Novartis Director General, Alexis Serlin.

On the regulatory side, there is also room for optimism,

despite complaints of a snail-like pace, because

companies do see progress being made in many areas.

COFEPRIS, the national regulatory agency, has positioned

itself in recent years as one of the most influential in the

world and its international relevance is becoming more

noticeable. Its processes, essential for the development

of drugs such as generics, are slower than in other Latin

American countries but there is one distinct advantage:

the lack of price controls.

“One of the main differences is getting products into

the government healthcare system. New technology is

more easily accepted into the National Formulary in other

countries. However, Mexico enjoys price freedom. This is

a positive benefit for us because price controls and caps

in other countries have been a challenge,” says D’Elia. 

Many factors come into play before launching a product,

such as initial investment, research and paperwork to

achieve the patent. According to KPMG, of every 10,000

investigated substances, only one is produced. Given this

situation COFEPRIS is working to speed up its processes.

“COFEPRIS has done a fantastic job accelerating

processes and reducing bureaucracy,” says Oscar Parra,

Managing Director of Mexico, Central America and Andes

of Lundbeck.

INCENTIVES FOR RESEARCH

Another major challenge Mexico is facing – but which

is an opportunity for Big Pharma – is that Mexicans

are living longer. A longer life expectancy gives way to

the chronic diseases that have become national health

antagonists. Part of the blame for this sits with the

country’s population, which mostly shuns prevention and

refuses to undergo periodic checkups.

Big Pharma companies, such as Janssen, have identified

this problem and are already working on solutions. “Our

vision is to have a world without disease, including

cancer,” says Mario Sturion, Director General of Janssen.

“With that mindset, we created an area for disease

interception. This looks at how we can intervene in the

pathway of the disease before it even becomes a disease.”

To this end, research and development has become a key

target area for many top pharmaceutical companies that

see Mexico has having the right mix of demographics and

economic incentive. But, again, regulations are a barrier

to what many believe should be a prosperous area.

Fuente: INEGI

PHARMA CONSUMPTION PROJECTION (US$ billions)

15

17

19

21

202020192018201720162015

15.32

16.16

17.05

17.99

18.98

20.02

5.5% compound annual growth rate

66Q: What role will personalized medicine play in

biopharma?

A: This is critical. We have been working on personalized

medicine for some years and we were one of the first to

do so in oncological treatments. For example, Erbitux is

a product approved for treating metastatic colorectal

cancer and locally advanced and recurrent metastatic

head and neck cancer. We were among the first to

implement and generate know-how of genomic testing

in colorectal cancer. Depending on the mutational

status of specific genes in a patient’s DNA, a doctor

can decide on the best treatment for that individual. It

has been interesting yet challenging because it entails

much research, education and work with physicians and

specialists.

Now, personalized medicine is part of our daily life. Many

of the products in our pipeline will also be related to

personalized medicine. Avelumab, recently approved

in the US for an aggressive form of skin cancer, will be

launched in the field of immuno-oncology.

Q: Merck is working with the Seguro Popular. To what

extent is personalized medicine widely available?

A: It is starting to be increasingly available. Metastatic

colorectal cancer was included in the Seguro Popular’s

catalogue three years ago. It has taken some time for

hospitals to get accreditation but now there are around

13-14 hospitals in Mexico that are accredited to provide

this treatment on behalf of the Seguro Popular. We expect

that very soon other catastrophic diseases like multiple

sclerosis and Turner syndrome will also be included in the

Seguro Popular catalogue to cover those patients in need.

Q: Merck operates in many areas, some highly

competitive. What is its strategy to stand out in each?

A: The structure we have implemented allows us to focus

on each business sector and especially on our patients’

needs and those of our customers. This latter point is

key to differentiating our products and services offer. We

continuously adapt our strategy to the local environment

and work closely with our team to take advantage of

existing opportunities. We have high-quality, innovative

products and a truly motivated and engaged team.

Q: How up-to-speed is regulation of personalized

medicine in Mexico?

A: There are not many challenges in the area of regulation. It

has not been a critical issue. The authorities have been open

to discussing this and to integrating personalized medicine

into treatments. It is also in the guidelines for most specialists.

Q: If regulation is not an issue, what are the main

challenges that need to be overcome?

A: The biggest challenge we face as an industry is market

access, as our innovative products must be available to

the patients who need them. Unfortunately, this situation

is not good enough at the moment and is definitely below

the international standards set for a country with the

size and population of Mexico. When compared to other

OECD countries and those in the region, Mexico has one

of the lowest access indexes, so we are working on this

through AMIIF. First we collaborated with COFEPRIS to

try to speed up the regulatory process for registration and

approval. Then, we worked with the CSG and together we

managed to improve processes. Finally, our next step will

be to work with IMSS and ISSSTE. There is limited access

to innovative products. There have been several budget

cuts, the institutions were not financially viable and they

were really struggling, but this is improving. While we

understand the issues, the country needs to push for

health to improve productivity.

Mexico’s economic situation is not that different to that of

other countries, as budget constraints are an issue all over

the world. We have been looking at alternative contracting

models and risk-sharing options, among others ideas, to

increase access to innovation.

WITHSTANDING THE TEST OF TIMEPEDRO GALVISGeneral Manager of Merck Mexico

VIEW FROM THE TOP

Merck is the oldest pharmaceutical and chemical company in

the world, founded in 1668 in Germany. It works in biopharma,

OTCs, allergen immunotherapy, high-tech chemicals and life

sciences. Merck has been present in Mexico since 1930

67

may be a lot but we continuously innovate and every year

we bring out new products and technologies. Innovation

is at Merck’s core.

Q: What role do your chemicals play in healthcare?

A: What used to be the chemical division is now the

life-sciences division. Most pharmaceutical research

companies and academia use our portfolio of over

300,000 products, reagents, lab equipment and

devices to solve the most difficult problems in the

industry. We also supply raw materials, water systems,

biopharmaceutical manufacturing systems and regulatory

advice to our most important customers. The acquisition

of Sigma Aldrich in 2015 significantly extended our

portfolio and our e-commerce platform.

Q: What will your priorities be for 2017 and for the

Mexican market?

A: We have achieved aggressive growth over the past

four years, growing at double-digit rates, which is around

three times that of the market. The challenge after four

years is to continue this growth; we are having a positive

year so far and so we hope to deliver on this expectation.

We are doing this through our core products, but we will

also launch new products in general medicine and cardio-

metabolic care. In 2017, it is vital to prepare for new

strategic launches in specialty care, such as Avelumab

in immuno-oncology and Cladribine, a new product for

multiple sclerosis.

Q: Generics have faced resistance in Mexico but

are gaining ground. What are the advantages and

disadvantages of selling a branded OTC?

A: In Mexico, generics are a large part of the Mexican

pharmaceutical market. Merck had a generics division

that was divested due to strategic reasons, but we

understand it is an option to guarantee access to some

products. However, the big issue continues to be the

quality of these products. We believe in the value of our

brands. Our growth hormone is one of several options in

the market. Ours is differentiated through the quality of

the product and because of the devices we use, such as

our electronic auto-injector that keeps track of patient

adherence and of past doses by recording the size and

time of injections. Doctors can later use this device to

know whether the patient is actually using the prescribed

dose and how often.

Q: What is the company’s strategic advantage over other

companies?

A: One of our board members once said: “We do not think

in quarters, we think in generations.” That says a lot about

the long-term approach this company takes in each of its

businesses. Compared to other companies that are more

focused on quarterly results for shareholders, for Merck,

which is mostly a family company, this has been key. We

are in each business for the long run and decisions are

not made based on immediate results but for the long

term. We say Merck is 350 years new, because 350 years

The size of Mexico's economy represents a potentially attractive market to pharmaceutical

companies, but selling to the public institutions, some of the largest purchasers, is increasingly

difficult due to budget restrictions and drug prices. With 121 million inhabitants, Mexico

is the second-biggest market in Latin America. For pharmaceuticals, however, capturing

that potential business is not always simple, especially in the public sector. Pharmaceutical

regulations are renowned for being strict in the country and to sell a drug to the public

sector it must pass three stages. First, it must be tested and approved by the regulatory body

COFEPRIS; secondly, it must be approved by the CSG, which adds it to the National Formulary;

and finally, it must be accepted onto a list of medicines by a public institution. After the third

step is accomplished, the medicine can then be sold to that particular institution. However,

institutions face shrinking budgets and an increasingly fat, sicker population, meaning

they spend less on innovative or new medicines. “In the last 18 months, Seguro Popular cut

around MX$10 billion (US$555 million) from its catastrophic fund, which is the budget for

rare diseases and other expensive diseases such as cancer, and at the same time IMSS has

not been accepting any new molecules for rare diseases in the last five years,” says David

López, Country Manager Mexico of niche pharmaceutical company BioMarin. Pharmaceutical

companies are finding other ways to do business by focusing on preventive solutions, selling

to a different segment, creating generic versions of their products or by creating solutions

so niche there are no generic or cheaper alternatives available. “Pfizer has launched its first

biosimilar, a product for rheumatoid arthritis that IMSS is providing, and we are developing

biosimilar versions of its five most-sold biotech medicines to be launched over the next four

or five years,” says Rodrigo Puga, President & Country Manager of Pfizer Mexico.

BUDGET CUTS

FORCE BIG PHARMA

TO GET CREATIVE

68Q: How does Sanofi approach patient-centric care in terms

of products and therapies?

A: We are convinced that products by themselves are not

enough. A holistic approach that includes pathology and

solutions is required. It is essential to always take into

account that beyond every product there is a patient. This

is very important in healthcare, especially with therapies for

chronic diseases. Sanofi has a broad portfolio and we are

Mexico’s number one pharmaceutical company in number of

drugs. Chronic diseases are a social concern that are related

to lifestyle, which is why we are redefining treatment.

Q: How much of Sanofi’s R&D is conducted in Mexico?

A: We have a clinical research unit here that does research for

Mexico and for some countries in the Latin American region.

Mexico plays an important role in the implementation of

Sanofi’s clinical studies and is top-of-mind when it comes to

allocating those studies. The country is among Sanofi’s top

five emerging economies and the Mexico branch ranks 10th

among all global subsidiaries. Today, there are more than

35 active phase III and IV studies in Mexico. The country is

one of Sanofi’s most important clinical research units for

emerging countries. We also have a program with the Aspen

Institute and UNAM that is focused on native research, in

which we sponsor research by local professionals who are

venturing into projects focused on local needs.

Q: What pharma-economic solutions can you offer the

market to provide more access to innovative therapies?

A: We developed a monoclonal antibody to treat cholesterol.

This innovative therapy is more efficient than statins, which

are the usual treatment provided by public institutions.

Patients treated with statins are still prone to heart attacks,

which in the end will be more expensive than any therapy.

We are seeing this purchasing behavior start to change and

we hope that decisions begin to target innovation. We can

provide patients with a solution that can return them to an

active lifestyle, especially those with conditions like multiple

sclerosis. An oral therapy might be cheaper than our solution

but it causes more hospitalizations and is more expensive

over the course of a lifetime, while an innovative solution will

result in expenditures for only three years. We have patients

who were treated with our therapies 20 years ago and have

not needed further treatments, although we continue to

follow their progress and symptoms. There is an opening in

the healthcare system to include more innovative drugs but

we must accelerate the process for chronic diseases. Many of

our products are already included in the public system but we

need to provide access to high-tech products and treatments.

Q: How does Sanofi provide healthcare professionals with

access to innovation and how does that talent benefit the

company?

A: We offer a continuous education platform (PAEC) that

is the result of a cooperation agreement between Sanofi

and the Ministry of Health. Many Ministry of Health doctors

are certified in the programs offered through this platform.

For example, we offer certification for treating diabetes. We

do not promote any of our brands through this platform

because our main objective is to increase the number of

trained doctors. We have certified around 16,000 doctors

through PAEC in just three years. There are about 14,500

family doctors actively participating in the platform. We

want to continue developing talent in Mexico and we

want to increase our team’s diversity. We are interested in

nurturing talent in indigenous communities and we have

developed a scholarship that helps train that talent. We

also want to export talent from Mexico to Sanofi’s global

subsidiaries.

Q: What are Sanofi’s priorities in Mexico?

A: We want to continue redefining health for Mexican

patients, which means making the most of all the

opportunities we have to promote significant change in

patient health through the private or public sectors with

innovation in drugs, training, support for doctors and

through scientific research. For us it is important to bring

Sanofi’s global innovation to Mexico.

INNOVATION A KEY TO PATIENT-CENTRIC CARE FÉLIX SCOTTDirector General and Country Chair of Sanofi

VIEW FROM THE TOP

Sanofi is a pharmaceutical group founded in 2004 after the

merger of Sanofi-Sythelabó and Aventis. It is the world’s

third-largest pharmaceutical group and a leader in research in

Mexico with over 35 active studies

69Aspen has bought from other labs have allowed us to revive

products well known by doctors.

Q: What were the reasons for which 2016 was a difficult

year for the industry?

A: There was a lack of innovation in 2016. Innovation in the

industry often causes products for high specialty needs

to become increasingly expensive, but we have not seen

important advances in the health sector in accessibility.

In the private sector, access has been effective in lowering

the cost and prices for patients. At the same time, it has

shifted market dominance from manufacturers and the

main providers of the sector to commercialization and

sale points. We are seeing changes in the way clients are

approached, client convenience and of course access at

better prices. This means the industry that did not adapt

to this new model has run into problems. In Mexico, there

are no instruments to evaluate with certainty the value of

the public market. We have information from some of the

big institutions, but not an overall picture.

Q: To what extent do you plan on further expanding from

your two existing plants? What other ambitions do you

have for Mexico?

A: Over the next three or five years, we plan on further

expanding our manufacturing capacity in Mexico in the

pharmaceutical segment. In 2017, we will transfer products

to be manufactured in our Vallejo plant and we will export

them globally.

Commercially, we are launching several products that

will satisfy market opportunities we have detected, more

specifically in pharmaceutical combinations. In the nutrition

segment we will continue to innovate with new formulas

and we will launch a new product.

Q: What makes Aspen Labs stand out from other companies

in the industry in Mexico? What is its main added-value?

A: Our business model is different from that of a typical Big

Pharma company. Big Pharma companies carry out R&D,

through which they offer innovative products for certain

pathologies. In Aspen’s pharma business we do not carry

out R&D. What we do is buy products or brands that other

companies no longer want to invest in. In this way, we can

keep costs at an accessible level for patients because we

do not experience pressure to reinvest in these areas. Of

course, we are a public company listed on the Johannesburg

Stock Exchange and release our financial results.

For example, the Infacare formula was developed in South

Africa and we transferred that technology to our facilities in

Vallejo, Mexico City. As that plant produces for Mexico, Latin

America and we are beginning to produce for Australia and

the US, the additional volume added to that plant helps

us reduce our costs. This means we can offer high quality

products to Mexican patients.

Q: What growth have you seen in 2016 and what internal

and external factors are the drivers of this?

A: In 2016, the Mexican health industry saw one of its

toughest years. In that year it achieved single digit growth

in terms of value due to the introduction of new products

and price increases. At Aspen, we are seeing growth at

twice the audited market growth.

Our pharma business is witnessing healthy organic growth

in both private and public sectors. This is driven by our lines

in thrombosis, hormones and cytokines for women’s health

and men’s health.

In addition, we have a line of products that are traditionally

used in the public sector and that were not taken privately

in the past, such as our low weight molecular heparin. Since

the end of 2015, we have been taking this product to the

private sector, where it has been well received. We have also

launched Fondaparinux, a product used in the ER when a

patient has a heart attack and needs products like this one

immediately to avoid complications. Other mature brands

CAST-OFFS PROVIDE OPPORTUNITY, BENEFIT

RAÚL CAMARENAGeneral Manager of Aspen Labs Mexico

VIEW FROM THE TOP

Aspen Labs is a South African pharmaceutical company, the

largest listed on the Johannesburg Stock Exchange. Present in

over 150 countries, it specializes in OTCs, infant nutrition, male

and female health and cardiology

70Q: Generic medicines are becoming more popular in

Mexico and innovator patents are expiring. What is Pfizer’s

strategy to deal with this?

A: Access to health services is an important challenge.

Mexico spends 6 percent of its GDP on health, the lowest

expenditure of all OECD member countries, as others spend

an average of 9 percent on health. Pfizer has launched its

first biosimilar, a product for rheumatoid arthritis that IMSS

is providing, and we are developing biosimilar versions of

its five most-sold biotech medicines to be launched over

the next four or five years. Pfizer’s strategy is to participate

in attractive segments and to target growth above the

market rate. To achieve that goal, we must compete in

innovation. The company has 90 projects globally and over

US$7 billion invested in R&D. It also has a business base of

patent-expired drugs that are still successful due to our

quality prestige. We are successful in emerging markets

because, although regulations have improved, physicians

and patients do not trust all generics. However, we have also

launched a generics line, a segment in which Pfizer enjoys

an average growth of 35 to 40 percent annually.

Q: On what pathologies is your pipeline going to focus?

A: The five main areas in which Pfizer is working are oncology,

central nervous system, cardiovascular, rare diseases and

biosimilar drugs. It is hard to say where the best results will

be, because out of every 100 projects that start in the clinical

phase, only one will reach the market. We invest about US$7-8

billion per year and launch one or two new products per year.

Q: What is Pfizer’s strategy to sell innovative drugs to the

Mexican public sector?

A: The arthritis biotech product Pfizer introduced to IMSS

already existed and we developed the biosimilar version. In

innovators, the challenge is showing public health institutions

the cost/effectiveness ratio of products, starting with the CSG,

IMSS, ISSSTE and decentralized agencies. A new drug has a

patent with 15 years of exclusivity from when the molecule

is discovered. It takes eight to 10 years to gain approval and

introduce the drug into a market and in Mexico four to five

years for the product to be available to the public sector.

Q: What is Pfizer’s approach to personalized medicine?

A: Pfizer already has some personalized products in the

market; for example, our therapy for patients with ALK-

positive non-small cell lung cancer. In immunotherapy,

especially oncology, the objective is to strengthen the

immune system to combat cancer. Most cancer treatments

use biological and chemical compounds but this Pfizer

treatment could help the immune system target tumor

cells directly. In oncology, it is difficult to decide when to

launch a product because it does not follow the same cycle

as other products. Pfizer’s acquisition of Medivation will

enable us to strengthen our clinical research into prostate,

breast and blood cancer.

Q: What are Pfizer Mexico’s priorities for the rest of 2017

and 2018?

A: Along with Brazil, Pfizer Mexico is a priority subsidiary.

Pfizer Mexico’s commercial objective is growing above the

market growth of 5 percent. The company will continue

launching innovative medicines, biosimilars and high-quality

generics. We want to continue working closely with AMIIF

to demonstrate that investing in health is one of the best

investments in terms of economic impact. We also want to

work on innovative access strategies.

Pfizer Mexico will also continue innovating in clinical

research. With 121 million inhabitants, excellent professionals

and a decent level of infrastructure, there should be much

more clinical research in Mexico. This does not happen

because administrative processes and institutions delay

procedures more than they should. The company has

over 400 research centers in Mexico, although it is still an

incipient process. According to AMIIF, Mexico could be

looking at a US$500 million investment in clinical research

in the near future. Pfizer will invest US$16 million in Mexico

in research in 2017.

DIVERSE PORTFOLIO ENSURES GROWTHRODRIGO PUGAPresident and Country Manager of Pfizer Mexico

VIEW FROM THE TOP

Pfizer is a US-based global pharmaceutical company present

in over 180 countries with a strong research focus. It works in a

variety of therapeutic areas including oncology, cardiovascular

health, vaccines, ophthalmology and infectious diseases

71

INSIGHT

drugs will play a role in this, leading cancer to become

more of a chronic disease.”

To work on prevention, Janssen collects statistics

through its website from volunteer patients. “For Mexican

healthcare, prevention is still a hope but it is a challenging

area to move in. The actions, resources, programs and

initiatives are still limited across the country,” he says. In

this sense, the company is also working on a solution for

treatment-resistant depression, the stage of the disease

when people begin to have suicidal thoughts.

In Mexico alone, there are more than 6,400 suicides

each year, according to INEGI 2015 figures, many of

which result from untreated or poorly treated major

depression. “There is a critical need for drugs that can

interrupt the thought processes that can lead to suicide

in patients with severe depression, particularly as most

current antidepressants can take weeks to have an effect.

This drug blocks the neuro-transmissions and the effects

are unbelievable,” says Sturion. The WHO estimates that

depression affects 322 million people globally as of 2017.

It is the first cause of disability and is a factor in suicide.

In addition, Janssen is making strides in HIV treatment. “We

produce an inhibitor called EVIPLERA for HIV patients and we

have developed a booster, PREZCOBIX, to optimize results in

patients. It will be launched in 2017,” says Sturion, adding that

“the company is also working on the development of an HIV

vaccine that has shown promising results in primates in phase

I trials, potentially ready in a six to seven-year time frame.”

Mexico has a clear and impactful chronic disease problem

caused, among other reasons, by the lack of prevention at

primary-level care. Many are afraid to go for check-ups in

case a problem is discovered, thus worsening conditions.

There are also those that refuse to believe they are ill, shown

clearly in the results of the 2016 ENSANUT survey. Better

prevention and early detection is key to changing this

panorama, something Janssen, the pharmaceutical division

of US behemoth Johnson & Johnson, is working on.

The company is also focusing on innovation to stop

diseases in their tracks and prevent patients from

reaching critical stages. “Our vision is to have a world

without disease, including cancer. With that mindset,

we created an area for disease interception. This looks

at how we can intervene in the pathway of the disease

before it even becomes a disease,” says Mario Sturion,

Director General of Janssen. “There are many studies

that show that the best investment is in prevention.

However, preventive solutions are still in phases that

include nutrition, sports and moving around but there

are no solutions developed to test populations at risk

of developing diabetes during pregnancy. If detected

and treated in a timely manner, this problem will never

develop. It is too early to estimate the full impact, but it

will be huge. It will be a game changer.”

Prostate cancer, one of the areas Janssen is working on,

is the most common cancer diagnosed in men in Mexico,

accounting for 6,152 deaths in 2014, 13.8 percent of all

male cancer deaths in Mexico, according to the WHO.

That supports the importance of early diagnosis for this

disease: when diagnosed in local and regional stages, the

survival rate is almost 100 percent, which plummets to 28

percent when detected in distant stages, according to data

from the American Cancer Association.

“In prostate cancer, there is also a new treatment that will

be launched in one to two years. We believe it should be

prioritized at the same level as breast cancer, because

prostate is the second cause of death among adult

males,” says Sturion. “Genomics and immuno-oncology

GAME CHANGER: STOP DISEASE IN ITS TRACKS

MARIO STURIONDirector General of Janssen Mexico

Prostate cancer killed 6,152 men in 2014 in Mexico, 13.8 percent of all male cancer deaths

72Q: What challenges do transnational companies face in the

Mexican market?

A: Overall, market access poses challenges and question

marks for all players. We are a heavily regulated industry

and even more so due to our internal compliance with

government policies. In Mexico and Latin America, our time

to market for drugs is getting slower and our capability as a

transnational company versus local players at times cannot

be compared.

Registration for market authorization for new products is one

of the hardest hurdles to comply with for many companies,

especially for innovative drugs and therapies, even considering

that the authorities have simplified processes and timeframes.

Unfortunately, we have examples of novel drugs that have

been in the registration process for almost six years and

there is still no answer as to when market authorization will

be granted. This obviously generates financial and business

forecasting issues for us, plus big questions from our partners

in Europe trying to understand the situation.

Q: How are your sales divided between the government and

private sector?

A: Of our overall business, 45 percent relies on government

sales, consolidated purchases from the main health

institutions and some decentralized organizations that are

also within our business scope. This 45 percent is divided

between two branches: oncological drugs for lung and

breast cancer and Fabroven®, indicated for patients with

venous insufficiency.

The retail market drives 55 percent of our business, with our

franchise products in women’s health. Navelbine Oral and

Fabroven® are our top-selling and most prescribed products

in the Mexican market. They will continue to grow in the

institutional segments as well as in the retail market because

they have strong active promotion, investment and medical

and scientific fundamentals.

Q: How have public sector budget cuts affected your business

over the past year?

A: The pharmaceutical industry in Mexico has been impacted

in different ways from the budget cuts and constraints in

the public health sector. In our case, the impact has lacked

strength because our marketed products, such as Navelbine

Oral, are targeted at patients with lung cancer and breast

cancer, both considered top national health concerns

regarding treatment priorities in Mexico.

We are fully aware that the operational and financial

strategy of the authorities should be to lower the fixed

costs of institutions, which is the reason there is a strong

movement in Mexico to substitute innovative drugs with

generic forms.

Fortunately, our generic exposure is still limited in our

various therapeutic segments. We agree absolutely on

the need of generics in the market to make medicine

more accessible to the whole population because we

fully understand that a healthy population creates a more

productive country. But there should be an examination

of whether transnational and national companies are

competing on a level playing field, because that is not

the case in some locations.

Q: What new products has Pierre Fabre launched in the

past year?

A: Through a joint venture effort with Ferring

Pharmaceuticals, we obtained a license agreement and

distribution rights for Lysteda, a prescription product

indicated for patients with excessive menstrual bleeding

conditions. Lysteda is a key product that strongly

contributes to enhancing our women’s health portfolio.

Lysteda has been on the market for over a year and a

half and has seen great acceptance among our medical

community and patients. This development represents

an interesting approach for us because we are marketing

it as a training product for physicians and use the same

traditional sales channels as wholesalers do.

We also produce an orphan drug called Busilvex, used to

support bone marrow transplants. This is a one-of-a-kind

CHALLENGES IN THE FACE OF A CHANGING MARKETKAREL FUCIKOVSKYDirector General of Pierre Fabre Médicament LATAM

VIEW FROM THE TOP

73

A: Worldwide, mature products are our bread and butter.

They allow us to continue investing in R&D globally and

to power ourselves in joint ventures locally.

As an example of this, Pierre Fabre has signed a worldwide

agreement with Array Pharma, a big pharmaceutical

company, for the co-investment and development of two

molecules for melanoma and colon cancer.

Q: What are your expectations for the next five years?

A: We will continue to focus on our portfolio management

strategy, based on specific therapeutic areas: stay strong

in oncology, be a fundamental player in the women's

health market and grow in dermatology and oral care.

We will continue to enhance partnerships worldwide

and as an example of this, five months ago, we signed a

licensing and distribution deal with Grupo Biotoscana, a

strong and respected pharmaceutical company in Latin

America, for Navelbine Oral and our full oncology portfolio.

In our five-year strategic plan, we will focus on portfolio

management and a solid arm of our development will

be looking for strategic alliances. We have seen in

Mexico, Argentina and Brazil that many transnational

companies are suffering due to divestment strategies

on their mature portfolios. They have focused on high-

end technology and biotechnology products without

considering access barriers and the low rates of payers.

Now, some of these big companies are realizing they are

losing out but lack the resources to revive their mature

products that still have strong brand equity. We have

grasped these opportunities and started partnering with

some companies. We have been working with Janssen for

the past three years on part of its gynecology line, with

positive results for both companies.

product in Mexico, as it is the only drug available in IV form.

Busilvex has been on the market for five and a half years

and even though it does not represent large volumes for

our business it does makes a big difference in the way

procedures are managed by professionals, especially when

considering that patients need an exact quantity of product

present in their bodies to be prepared for a procedure.

Busilvex is not at the core of our business strategy, but

surely represents an opportunity to support our oncology

franchise development. I do not think the company will

migrate to an orphan drugs business model. It will be

much more oriented toward oncology, women’s health

and dermatology.

Q: What difficulties have you faced getting an orphan

drug registered in Mexico?

A: Orphan drugs have different registration processes and

“go to market” possibilities than conventional medicines.

Perhaps the registration pathway for orphan drugs could

provide faster market entry but the medication must still

meet all regulatory requirements.

Q: What challenges do transnational companies face in

the Mexican market?

A: Overall, market access poses challenges and question

marks for all players, be they national or transnational

companies, public or private. The pharmaceutical sector

is a heavily regulated industry, and even more so due to

internal compliance policies, which differ on a company

to company basis. In Mexico and Latin America, our time

to market for drugs is slowing and our ability to compete

as a transnational company versus local players at times

cannot be compared.

Registration for market authorization for new products

is one of the hardest regulatory hurdles to comply with

for many companies, especially in regards to innovative

drugs and therapies, even considering that there have

been huge improvements from our authorities and that

we are on the right path to simplifying proccesses and

time frames.

Unfortunately, we have novel drugs that have been in the

registration process for almost six years and still have no

definite answer as to when the marketing authorization

will be granted. This obviously generates financial and

business forecasting issues for us, plus big questions

from our partners in Europe trying to understand our

authorities’ processes and timeframes as we have

invested a lot of money in those products.

Q: How can your company sustain growth while relying

only on mature products?

Pierre Fabre is the third largest French pharmaceutical laboratory.

It has two main lines of business: Pierre Fabre Médicament, which

focuses on the pharmaceutical sector, and Pierre Fabre Dermo-

Cosmetics, related to dermatology and cosmetology

Mature products allow us to continue investing in R&D globally and to power ourselves in joint ventures locally

74

75

WHAT ARE THE GREATEST CHALLENGES PHARMACEUTICAL COMPANIES FACE?

KAREL FUCIKOVSKYDirector General of Pierre Fabre Médicament LATAM

VINCENZO D’ELIA Director General of Alfa Wassermann

PEDRO GALVISGeneral Manager of Merck Mexico

ROUNDTABLE

Overall, market access poses challenges and question marks for all players. We are

a heavily regulated industry and even more so due to our internal compliance with

government policies. In Mexico and Latin America, our time to market for drugs is getting

slower and our capability as a transnational company versus local players at times

cannot be compared. Registration for market authorization for new products is one of

the hardest hurdles to comply with for many companies, especially for innovative drugs

and therapies, even considering that the authorities have simplified processes and time

frames. Unfortunately, we have examples of novel drugs that have been in the registration

process for almost six years and there is still no answer as to when market authorization

will be granted. This obviously generates financial and business forecasting issues for

us, plus big questions from our partners in Europe trying to understand the situation.

We have seen significant currency devaluation, so the cost to import products

and our operational costs have increased. There are many services we have to

cover in foreign currencies. In some cases, we have to take the loss, but we must

also reduce and relocate resources. For example, if for next year we had three

projects planned, we should only go ahead with two. I remember reading a report

from a financial expert saying the value of the dollar would reach 30 pesos per

dollar. The international environment is not friendly right now and it presents

many challenges. Companies like ours have to be selective when investing and

focus on finding returns. There is a tremendous opportunity for local companies

that can be more aggressive and gain market share.

The biggest challenge we face as an industry is market access, as our innovative products

must be available to the patients who need them. Unfortunately, this situation is not good

enough at the moment and is below international standards set for a country with the

size and population of Mexico. When compared to other OECD countries and those in the

region, Mexico has one of the lowest access indexes, so we are working on this through

AMIIF. There have also been several budget cuts, the institutions were not financially

viable and they were really struggling, but this is improving. While we understand the

issues, the country needs to push for health to improve productivity. Mexico’s economic

situation is not that different to that of other countries, as budget constraints are an

issue all over the world. We have been looking at alternative contracting models and

risk-sharing options among others ideas to increase access to innovation.

In addition to the general challenges companies have

faced last year, such as fluctuating exchange rates and

insecurity, Big Pharma has seen revenues dip as both

consumers and top national and international politicians

assail the industry’s pricing methods and as patented

products come under attack from a growing generics

market. Mexico Health Review asked several relevant

players what, in their opinion, have been the greatest

challenges for the pharmaceutical industry between 2016

and 2017.

76Q: Novartis has implemented a patient-centric focus. What

impact has this had on access to healthcare?

A: This strategy has had a great impact. We are focusing

more on improving our patients’ outcomes by helping

institutions measure results and apply effective solutions,

which gives us a competitive advantage. AMIIF and IMSS

are also launching a project to prioritize a group of critical

diseases in which they create rules so that the different

companies offer shared-risk models that can provide access

to innovations.

Q: Novartis has a 2015-2020 investment plan for Mexico.

So far, how has it been allocated?

A: This plan was established in agreement with the

Ministry of Health and the Ministry of Economy and it has

five pillars to accomplish over five years. One is a US$50

million investment in clinical research in five years. Another

pillar is the creation of a Novartis Center of Operations for

Latin America here in Mexico to support all the companies

from the group and their divisions. This project is a great

opportunity for Mexico. Once completed, the team will grow

by 1,000 associates.

Q: What are Novartis Pharma’s main therapeutic areas and

how is the company targeting them?

A: We have six priority areas. The first is oncology, for

which we recently submitted to COFEPRIS a product

for monastic breast cancer that will produce disruptive

results for the management of this disease. Second, is

the cardiovascular and metabolic health segment. In

2016, we launched a product for cardiac failure that

has shown a significant reduction in mortality and

hospitalization due to this condition, which is the main

cause for hospitalization in IMSS for adults over the age

of 65. Next is immune dermatology and also in 2016 we

launched products for psoriasis rheumatology, psoriatic

arthritis and ankylosing spondylitis. We also have an area

for respiratory conditions focused on chronic obstructive

pulmonary disease, for which we have developed a

product with a new action mechanism that has been

recognized as new paradigm in the treatment of this

disease. Our fifth priority area is neuroscience. We are

focused on multiple sclerosis but we also have treatments

for Alzheimer’s, epilepsy and Parkinson’s. Finally, we have

a portfolio for problems related to both the back and

front of the eye.

We always aim to match our portfolio to the main Mexican

health concerns. Diabetes is among the diseases that

IMSS is currently prioritizing and we have a product to

manage diabetes that is supported by the largest study

done among Mexican patients. We also develop solutions

for diabetic macular edema and diabetic retinopathies

and we have the market’s most integral portfolio for

transplants.

Q: What is the strategic balance between providing the

government with access to innovative medicine and

developing generics?

A: Novartis is one of the top three global companies for

innovative and generic medicine. In terms of generics,

we believe we must respect patents, but once a

patent expires we have quality generics that open new

possibilities and reduce expenditure and that could be

used by the system to create new innovations. It is very

important that the population has access to all new

products. However, the challenge in Mexico is that the

investment in health is low: it is 6 percent, while the

average government investment in health among OECD

countries is 9 percent. Poor investment limits the capacity

to acquire new technology but we recognize that we are

at a moment in history where the development of drugs

has advanced. Therefore, in an environment of budget

constraints, we have a responsibility to help institutions

gain access to these products. We do this by introducing

pharma economic models. The role of the pharmaceutical

industry should transform from being just a seller to

becoming a partner of the health system.

WORKING TOGETHER TO IMPROVE PATIENT HEALTHALEXIS SERLINDirector General of Novartis

VIEW FROM THE TOP

Novartis is a global pharmaceutical and biotechnological

company with a history that spans over 200 years. The

company’s three main divisions are Novartis Pharma, for

innovative medicine, Novartis Oncology and Novartis Eye Care

77

PHARMACEUTICAL DEALS COMPLETED IN 3Q16 THROUGH 2Q17 OVER US$1 BILLION

In addition to the big names and deals,

investment in younger companies in life sciences

continued, with the top 10 venture capital rounds

in 2016 reaching a combined value of US$1.9

billion. One of the most notable is BlueRock

Therapeutics’ Series A Round, which raised US$225 million

in December 2016 from investors Bayer and Versant Ventures,

a biotechnology investment firm. BlueRock Therapeutics will

initially focus on pluripotent stem-cell treatments.

Global M&A activity in the pharmaceuticals sector has been

slow in the first months of 2017 and the second half of

2016, according to FiercePharma. Although many experts

predicted a pick-up in M&A activity in 2017, FiercePharma

reports that this is yet to materialize. Only 12 deals

surpassed the US$1 billion mark in the year from 3Q16

through 2Q17, compared with 16 in the same period a year

earlier. But the combined value totaled US$138.7 billion,

surpassing the US$120.3 value of the deals negotiated in

3Q15 through 2Q16.

There were two large deals completed that together account

for just over 50 percent of the value of all deals over US$1

billion, the largest of which went through in August 2016

when Teva Pharmaceuticals acquired Actavis. “Through our

acquisition of Actavis Generics, we are creating a new Teva

with a strong foundation, significantly enhanced financial

profile and more diversified revenue sources and profit

streams backed by strong product development engines.

This is a platform that is expected to generate multi-year

top-line and bottom-line growth as well as significant cash

flow,” said Erez Vigodman, President and CEO of Teva in

a press release.

A second deal also hit the US$30 billion mark when

Johnson & Johnson completed the acquisition of

Actelion in June 2017. In a company press release, J&J

announced that it expected the deal to provide value

to Actelion shareholders, extend the geographical and

commercial reach of its products while also enhancing

value for Johnson & Johnson shareholders. It will be

spun off into an R&D unit based in Switzerland that “will

have a broad portfolio of drug candidates in clinical

development across four focused therapeutic franchises:

specialty cardiovascular disorders, central nervous system

disorders, immunological disorders and orphan diseases,”

the company said in its release.

KPMG reports that oncology is a particular area of interest

for companies within the biotech sector and it expects

three of the top five selling drugs in 2017 to belong to the

sector. EvaluatePharma reports that oncology was the

top-grossing therapeutic area in 2016 with global sales

of US$93.7 billion.

ANALYSIS

M&A activity in the pharmaceutical sector has continued over

the past year, despite global fears of a slowdown due to US

elections. The combined value of deals over US$1 billion in

3Q16-2Q17 topped that of the previous year

0 10 20 30 40 50 60 70

Allergan/Kythera

Mallinckrodt /Therakos

Valeant/Sprout Pharmaceuticals

Lannett/Kremers Urban Pharmaceuticals

Concordia Healthcare/Amdipharm Mercury

Teva/Rimsa

Pfizer/Anacor

Abbvie/Stemcentrx

AstraZeneca/ZS Pharma

Merck/Sigma-Aldrich

AstraZeneca/Acerta Pharma

Shire/Dyax

Shire/Baxalta

Celgene/Receptos

Endo International/Par Pharmaceutical

Pfizer/Hospira

Galenica/Relypsa

Allergan/Tobira Therapuetics

New Huadu Industrial Group/Yunnan Baiyao Holding

Quintiles/IMS Health

Mylan/Meda

Teva/Actavis Generics

Allergan/LifeCell Corporatain

Pfizer/Medivation

Johnson & Johnson/Actelion

Sanofi/Boehringer Ingelheim

Takeda/ARRIAD Pharmaceuticals

Fresenius Helios/Quironsalud

in 3Q15 through 2Q16

in 3Q16 through 2Q17

PHARMACEUTICAL DEALS COMPLETED OVER US$1 BILLION (US$ billions)

Sources: PwC, FiercePharma, KPMG

� Acquisition

� Asset Swap

� Merger

� Mixed Ownership

� Bought 55% Share

78Q: How prevalent is depression in Mexico and to what

extent is it on the rise?

A: The prevalence of depression and other mental diseases

should be very similar in Mexico as in the rest of the

world. I do not think the number of cases has increased.

The question is whether more cases have been detected.

There is a large number of people who will get some sort of

mental disorder at some point in their life and the concern

is whether or not doctors are diagnosing them.

The world is becoming more aware of mental health and

within 10 years depression will be the most debilitating

disease, more than diabetes or heart conditions. One

reason is that depression strongly impacts productivity,

firstly due to absenteeism from work but also because of a

new concept called presentism whereby people go to work

but do not perform. They sit at their desk, unable to make

decisions or perform their work effectively.

Additionally, in the case of mental diseases, the economy

not only loses the person who is mentally impaired but

also the family member who leaves their job to take

care of this person. The annual cost of mental illness in

Europe is pegged at €798 billion. In Mexico awareness is

improving and for the first time there is a working group in

the legislative body looking at mental diseases.

Q: In 2016, the Table of Work-Related Diseases was

updated to include stress and other mental afflictions.

How does this impact awareness?

A: There is more and more information available on

mental diseases and the government, health authorities

and companies are realizing this is a big issue. We are

hearing about it more now than a few years ago because

it is something we cannot hide. Recently during a visit to

Mexico by the Danish Minister of Health, data was presented

Lundbeck is a Denmark-based Big Pharma focused on

researching and developing solutions for neurological and

psychiatric conditions that affect people of all ages, such as

depression, schizophrenia and dementia

regarding patients with depression. The results showed that

patients were first treated for depression 10 years after they

first showed symptoms. Those treated earlier were able to

recover more easily while for others the disease became

more complex. The Danish and Mexican authorities have

agreed to work together and exchange perspectives on

mental health issues. The Danish government is promoting

grants for Danish researchers to conduct research in Mexico,

generally in collaboration with Mexican researchers.

There are more people that at some point in their life

suffer an episode of depression than any other mental

disease. However, in Mexico there are many patients with

Alzheimer’s, Parkinson’s and schizophrenia, which is a very

difficult disease and patients are rarely understood.

Q: How does the demography of these diseases in Mexico

compare to that of other Latin American countries?

A: Latin America is moving in the same direction. We

are shifting from infectious disease to chronic diseases.

Before, bacteria caused illnesses but now diabetes, cancer,

depression and coronary diseases are more prevalent.

Mexico is a young country and the main driver for growth

is its large population. Therefore, it is important that all

decision-makers in this country realize that the young

population needs to be healthy to be productive.

Q: How can companies work with the public sector to

prevent the young population becoming unhealthy?

A: First, we need to understand the issue before we fix it. For

example, diabetes has been quite well researched and now

the authorities are doing something about it. We have fallen

behind in other areas and we need to calculate the impact

of mental disease. I think getting data on how many people

are absent from work due to depression would be quite

interesting and would help to understand the magnitude of

the impact these diseases have on the economy.

Q: What are the main risk factors for mental disease? How

much do environmental factors influence this?

A: Urbanization and depression go hand in hand. As an

economy develops, the population is weighed down

MENTAL DISEASES: UNDERSTANDING AND PREVENTIONOSCAR PARRAManaging Director of Mexico, Central America and Andes of Lundbeck

VIEW FROM THE TOP

79

Q: What programs are in place in Mexico to help with this?

A: There are some support programs for specific population

segments with high suicide rates such as HIV patients,

alcoholics and drug addicts. One of the main issues with

depression is that a large number of the people who suffer

from it commit suicide. If you think mental illness does not

kill, it does.

Q: Which state of the art products has Lundbeck recently

launched?

A: We launched an anti-depressant last year that is creating

a completely new way to treat the disease. It is called

Brintellix and it not only targets the feeling of depression but

also the way we think when we are depressed. Depression

not only affects a patient’s mood but also their cognitive

abilities, which prevents them from being as productive as

they could be.

Also, next year we will launch a product called Nuvigil for

excessive sleepiness. It helps patients stay awake during the

day and when it wears off they can go to sleep. It also works

for people who want to regulate sleep patterns, such as

shift workers. This new product will have a broader range of

efficiency so patients will not only be awake but more alert. In

2018, we will market a product for schizophrenia. These will be

our new products for the next three years. Lundbeck Mexico

will be the central hub for Central America and the Andes so

we are excited about the opportunities our industry has here.

Q: How do COFEPRIS’ regulations differ to those of the

FDA or EMA?

A: COFEPRIS has done a fantastic job accelerating the

processes and reducing bureaucracy. There are many

differences from the other organizations. For instance in

Europe you do not need to do local releases by repeating

clinical testing.

with heavier workloads, we spend more time in traffic

and we produce more pollution, all of which are stress

factors that can lead to depression. There is a correlation

between economic development and the development

of depression. There are other risk factors for specific

diseases.

Q: What percentage of sufferers are diagnosed and what

percentage of those receive treatment?

A: In general, you see more diagnoses in places like Europe,

the US and Canada, and less in Asia, Latin America and

Africa. In Mexico, the likelihood of being diagnosed when

going to a psychiatrist is extremely high and almost 100

percent of the patients that are diagnosed by a psychiatrist

are treated, but few people go to a psychiatrist. The

majority go to a general physician (GP) and so the process

for diagnosis and treatment could be lengthier.

Visiting a psychiatrist is a big step for many people

because mental disease sufferers are more prone to

stigmatization. For example, schizophrenia is a difficult

condition to talk about because it falls out of the common

and many people think of depression as a weakness. Many

do not recognize depression and tell sufferers to stay

calm and go to work, but this is not the right way to deal

with it. In the first two weeks, depression is just a feeling

but after two or three weeks it becomes a biological

problem. The neurotransmitters in the brain start working

differently because the body is adapting to a condition.

Q: Which demographic suffers the most from depression?

A: There is a high prevalence of depression in older people

but it is also common in the younger population aged late 20s

to 50s. It is becoming more frequent in teenagers and this is

troubling because young people should not be depressed yet

suicide in the younger population is on the rise.

80Q: Alfa Wassermann had plans to expand its gastroenterology

portfolio. How far along are you?

A: We have invested in product registration in this field but

we are a little behind schedule. COFEPRIS processes are

taking longer than we expected. In our opinion, in some

cases it is requesting more information than described in

norms. Perhaps it is trying to show a stricter profile than

the FDA. Nonetheless, we are continuing with our plan

to launch three products for gastroenterology in 2017.

Q: In the wake of the Teva-Rimsa deal, what is the appetite

for M&A in Mexico?

A: It has become a little more difficult to find M&A

opportunities due to prices. After the price Teva paid to

acquire RIMSA, many now have lofty price aspirations. But

we will keep looking for other business opportunities.

Worldwide, Alfa Wassermann is expected to expand

its presence through smart and focused geographic

investments. There is no question the pharmaceutical

sector continues to face multiple challenges on many fronts.

Despite this short-term uncertainty, I believe Mexico’s

economy in the medium and long term will do fine.

Q: Has peso depreciation affected your operations?

A: We have seen significant currency devaluation so the

cost to import products and our operational costs have

increased. There are many services we have to cover in

foreign currencies. In some cases we have to take the

loss, but we must also reduce and relocate resources. For

example, if for next year we had three projects planned, we

should only go ahead with two.

I remember reading a report from a financial expert saying

the value of the dollar would reach MX$30 per dollar. The

international environment is not friendly right now and it

presents many challenges. Companies like ours have to be

selective when investing and focus on finding returns. There

is a tremendous opportunity for local companies that can

be more aggressive and gain market share.

Q: How do government tender processes affect an

international company?

A: We do not sell to the government. It has been a

challenge for international companies to enter the National

Formulary and being accepted by IMSS and ISSSTE is a

long process. People that come to Mexico have to plan

for the long haul if they want to be in that business. It

is difficult to have access and frankly for the next two

years we do not foresee a positive environment because of

the budget cuts in healthcare. Evidently, the government

has no funds to get new technology. It is going to be

a challenge to get access to the government without a

generics division.

Q: How does the Mexican market differ from other Latin

American markets?

A: One of the main differences is getting products into

the government healthcare system. New technology

is more easily accepted into the National Formulary in

others countries than in Mexico. Also, the generics market

in other countries is more stable. Here it is too young and

is still growing. However, Mexico enjoys price freedom.

This is a positive benefit for us because price controls and

caps in other countries have been a challenge. Here, we

are also experiencing new models like those of Farmacias

Similares and Genoma Lab, which I have not seen in other

countries.

Q: What are your short-term ambitions for Mexico?

A: Our goal is to consolidate our presence here and ensure

we become a well-positionned company. We will continue

in gastroenterology, in deep venous diseases and in new

therapeutic areas. We bought a company in Italy that has a

large cardio metabolic portfolio, which we will assess after

the merger is completed. I continue to see Mexico as a long-

term opportunity. We must stay open-minded and keep an

eye open for new chances.

WAITING FOR NEW OPPORTUNITIESVINCENZO D’ELIADirector General of Alfa Wassermann

VIEW FROM THE TOP

Alfa Wassermann is an Italian Big Pharma company focused

on R&D for a population that is living longer thanks to medical

advances. The company’s strategy is based on three guidelines:

research, technology and internationalization

81

INSIGHT

disease treatments, while another 40 percent rely on the

Seguro Popular. However, public institutions are sometimes

reluctant to spend a large portion of their ever-shrinking

budgets on drugs that will treat very few patients. “In the

last 18 months, Seguro Popular cut around MX$10 billion

(US$555 million) from its catastrophic fund, which is the

budget for rare diseases and other expensive afflictions

such as cancer. At the same time, IMSS has not accepted

any new molecule for rare diseases in the last five years,”

says López. Patients at private institutions may not have an

easier time finding relief. Most private insurers do not cover

rare diseases, which are considered pre-existing conditions.

There are three steps for a drug to become available in

Mexico. The first is registration, which usually takes four

to six months, but the second and third steps are more

complicated. The second is to register the drug with the

National Health Council (CSG), which then adds it to the

National Formulary. Finally, a purchaser, such as IMSS,

ISSSTE, Seguro Popular or PEMEX, must accept the product.

Considering all the challenges to introduce orphan drugs

into the Mexican healthcare sector, regulators are trying to

simplify the process. “COFEPRIS understands very well how

orphan drugs are developed. It never asks for a long and

complex clinical trial because it knows a 50-100 patient trial

requires the same, or frequently more effort and investment

to develop and it is really open to approving these drugs,”

López says. Due to those small numbers, orphan drugs do

not need to be retested in Mexico because the country

accepts FDA or EMA certification.

The result is a faster introduction of orphan drugs into

the country, benefitting many patients. “There are about

500 patients receiving lysosomal treatment for six

different diseases and the compliance rate or adherence

to treatment is just under 80-90 percent. This is very good

when compared with that of chronic diseases,” López says.

This will also benefit orphan drug manufacturers, which are

studiously working on the development of more medicines

to treat those patients. According to López, the future of

the market depends on continued innovation.

Rare diseases are often difficult to treat because developing

medications for them is costly for manufacturers, which

can make them prohibitively expensive for patients and

insurers. To address this problem, COFEPRIS is supporting

drug manufacturers, such as BioMarin, with simpler

administrative processes.

Rare diseases affect less than five in 10,000 individuals,

but with thousands of rare diseases, millions are affected.

In Mexico, 8 million individuals are estimated to have one,

according to the Mexican Federation for Rare Diseases

(FEMEXER). Medications used to treat rare diseases are

called orphan drugs and their development can be costly

due to the nature of the diseases themselves. BioMarin, a

California-based pharmaceutical company specializing in

orphan drugs for achondroplasia, hemophilia and several

types of Mucopolysacharidosis (MPS), says there are several

factors that complicate their production and distribution.

“Gaining access to treatment is becoming more and more

complex, mainly due to three reasons: cost, availability of

government resources allocated to rare disease care and

lack of knowledge of the authorities and doctors,” says

David López, Country Manager of BioMarin in Mexico.

The correct diagnosis of a rare disease can be hindered

by a physicians’ unfamiliarity with it, complicating the

generation of a patient population for clinical trials. López

says that frequently it is only after a successful treatment

is developed that doctors increase their awareness and

know what to look for in patients. All medications must be

tested on sufferers of the condition they treat, yet for rare

diseases these patients can be scattered over countries and

continents. For this reason, clinical trials are multinational

with a handful of patients in each country, complicating

logistics and raising costs.

Providing treatment for these diseases in Mexico runs into

additional difficulties since the drugs, produced at high

cost and in fewer quantities, tend to be more expensive,

leaving a large percentage of sufferers depending on the

social security system for their treatment. López estimates

that 40 percent of sufferers depend on IMSS for their rare-

ORPHAN DRUGS FACE TOUGH ENVIRONMENT

DAVID LÓPEZCountry Manager of BioMarin Mexico

Production line at the Jadcherla facility

83

After overcoming initial mistrust from the public, generics are making inroads

in the Mexican drug market, including private institutions, as a cost-effective

alternative. A change in law requiring doctors to write the generic name of a

medicine on a prescription has greatly boosted consumer awareness of prices

and the efficacy of generics. Many companies focus on sales to the government,

which needs to stretch budgets to cover an increasing number of patients, thus

choosing generic medicines over brands where possible. In recent years however,

public sector institutions have begun a consolidated purchasing process to

increase efficiency and savings, which has driven prices so low companies are

beginning to turn away from the single largest purchaser of generics looking for

alternative business opportunities.

This chapter will present an overview of the companies that produce non-

patented medicine in Mexico, be it chemical or biotech, branded or non-branded

generics and OTCs. It will explore the challenges generics have yet to overcome

and the future that the men and women at the helm of the companies have in

mind for these medicines, especially in light of the wave of patent expirations

during 2015-2020.

GENERICS & BIOSIMILARS

4

85

CHAPTER 4: GENERICS & BIOSIMILARS

86 ANALYSIS: Price Pressures Pushing Generics to Private Sector

88 VIEW FROM THE TOP: Efrén Ocampo, Grupo Neolpharma

90 VIEW FROM THE TOP: Alfredo Rimoch, Liomont Laboratories

91 VIEW FROM THE TOP: Juan Aguirre, Grupo Bruluart

92 INSIGHT: Aristides Torres, Vanquish

93 VIEW FROM THE TOP: Felipe Espinosa, Laboratorios Collins 

94 VIEW FROM THE TOP: Américo García, Apotex

96 VIEW FROM THE TOP: Guillermo Ibarra, Teva

97 INSIGHT: Alexis Espinoza, AMSA

98 INSIGHT: Gurulinga Konanur, Hetero

99 VIEW FROM THE TOP: MS Nagendra, Zydus Pharmaceuticals

100 VIEW FROM THE TOP: Francisco Hernández, Wockhardt

102 VIEW FROM THE TOP: Sandeep Bane, Accord Farma

103 INSIGHT: Arístides Salazar, Emcure Pharmaceuticals

105 VIEW FROM THE TOP: Ricardo Ganem, Perrigo

106 INSIGHT: José Díaz, Micro Pharmaceuticals

107 INSIGHT: William Escobar, Grupo Unipharm

86

PRICE PRESSURES PUSHING GENERICS TO PRIVATE SECTOR

The government’s decision to initiate consolidated

purchasing schemes to buy generics as an access

strategy has made it one of the largest single generics

customers in the world. That purchasing power has been

a double-edged sword, however, with prices dropping to

such a point that many generics companies have stopped

seeing sales to the government as a priority.

“We hardly sell to the government because it has adopted

an aggressive price-reduction policy. This policy erodes

income at companies like pharmaceuticals, which need

to earn money to continue reinvesting in research. For

companies like us, selling to the government is not

viable. We have decided to only sell particular products

to state hospitals, so 95 percent of our sales are to the

private market,” says Felipe Espinosa, CEO of Mexican

pharmaceutical company Laboratorios Collins.

In the 2016-2017 consolidated purchases, MX$41.9 billion

(US$2.3 billion) was spent and MX$3.4 billion (US$188

million) was saved. Sixty-three percent of the total amount

spent, or MX$23.4 billion (US$1.3 billion), was spent on

generics, according to IMSS. Generics companies, those

either intent on entering the Mexican market or already

established here, are adopting alternative strategies to

boost sales and to detect new opportunities for growth.

The market, many say, is just too big to ignore. “Zydus

is a new operator in Mexico and we are interested in

expanding our operations. There are various options to

do so and to become relevant to the market. We entered

Mexico in 2013 and we want to grow both organically and

inorganically. There are few trillion-dollar economies in

the world, so Mexico is a huge opportunity. If any global

generic company wants to increase in size

and importance, it must have a presence

in the larger markets and Mexico is the 11th

largest pharmaceutical market in the world,”

says MS Nagendra, Director General of Indian

pharmaceutical company Zydus Pharmaceuticals.

According to Seale & Associates, the Mexican generics

market as a whole was worth US$3.3 billion in 2015 and

according to the latest available data from statistica.com,

generics sold to the public sector represented 59 percent

of units in 2014 but only 15.2 percent of value. Retail

brands or private labels represent 8 percent of units and

20.2 percent of value.

In the past, generics were seen as unreliable alternatives

due to cultural stigma but this has changed over the

last decade, mostly due to government purchasing

preferences and increasingly strict regulation. NOM-

220 – SSA1 – 2015 is the updated law that regulates

pharmacovigilance, a final version of which was published

in the Federal Official Journal in July 2017. Such regulation

helps guarantee the validity of medicines and stops

unreliable drugs from tarnishing the sector's reputation.

Additionally, to improve access to treatment, COFEPRIS

has begun liberating the patents of groups or packets of

drugs so that more affordable, generic versions can be

produced and commercialized. These actions from the

regulatory body have resulted in 491 new medicines that

cover 71 percent of causes of death in Mexico. “In total,

37 active substances have been liberated through our

generics strategy, producing 491 generics, which represent

MX$25 billion (US$1.4 billion) in savings while an extra 2

million people can be treated thanks to these savings. In

2017, we will continue with this strategy and more than 40

new molecule authorizations will be announced,” says Julio

Sánchez y Tépoz, Commissioner of COFEPRIS.

One alternative for those that already have manufacturing

plants in Mexico is to focus on private sector sales, as

the margins are typically higher. “At Wockhardt we are

focused on the private and semi-private sectors. Tenders

might give the perception that the government is the

biggest market but we need to realize that most of the

money is in the private sector. Most of us will never go to

an IMSS hospital. We prefer to go to a private hospital,

which means that private insurance policies are increasing

and are becoming a benefit that some companies offer

their employees in Mexico,” says Francisco Hernández,

ANALYSIS

Generics, a cheaper alternative to patented medications,

are a key government strategy to provide healthcare for an

increasingly sick population. However, pushing down prices is

pushing some companies to seek business elsewhere

Out-of-pocket expenditure dropped from 41.8% to 40.8%

between 2012 and 2014

87

Vice President Latin America of Wockhardt, a generics

company. “We want to reach the private market because

there we can promote the new model of doctor’s offices

in pharmacies that many prefer because it is cheap, fast

and closer to the point of sales,” he says. “In 2013, when I

started operations in Mexico, the government market was

70 percent of our sales and private market sales were 30

percent. This number has changed over the years and in

2016, 60 percent was private and 40 percent government.”

Another option generics companies are exploring

is to manufacture private labels for others, such as

pharmaceutical chains or retailers that market their

own-brand. “The fastest-growing sector in Mexico is the

private-label business, of which the largest manufacturer

worldwide is Perrigo. That, combined with the trend

of having doctors’ consultancies in pharmacies, so-

called “doc-in-a-box” programs, is the factor boosting

the private-label sector,” says Paul Doulton, Founder &

Managing Partner of Oriundo, a consultancy composed of

former CEOs that helps new entrants to Latin American

pharmaceutical markets.

Those without a production plant can do the exact

opposite: to look for a company to manufacture for

them. “One of the alternatives we are looking at while

waiting to gain critical mass is to associate with national

laboratories that can manufacture for us here in Mexico,”

says José Díaz, Executive Director of Indian generics

company Micro Pharmaceuticals Mexico.

Other strategies being looked at by companies include

making the most of COFEPRIS’ agreements and Mexico’s

central position in the Americas to export to Central and

South America and licensing products to well-established

companies in the Mexican market. “Mexican requirements

cover many of the demands other countries make, so if we

comply with COFEPRIS we are covering other countries’

rules too. There is also fast-track with other authorities like

INVIMA in Colombia, which makes it easier for us to export

to other countries,” says William Escobar, Director General

of Swiss-Guatemalan generics company Grupo Unipharm.

Those that are committed to selling to the public sector

plan to win on volume instead of on price by building

or buying a manufacturing plant in Mexico, thus gaining

access to an increased number of tenders. “Mexican

law states that only Mexico-produced products can

participate in the largest tenders. This is why we want

to construct a manufacturing plant,” Díaz says. “This is

what we are doing: supplying products that are out of

stock elsewhere. At the moment, we can only aim for

the crumbs of the cake, while companies that produce

in Mexico take large slices.”

Similar but not identical to

reference product

20-30% discount over reference

product

US$100M – US$200M in

development costs

8 – 10 year development timeline

No interchangeability or

automatic substitution

Sources: COFEPRIS, Deloitte, Seale & Associates

Between 2012-2016 the price of

generics in Mexico dropped 61%

37 active substances have been liberated in 14 packets

Resulting in 491 new medicines

That address 71% of total disease-related deaths

Lower prices have enabled the treatment of an additional 1,998,202 patients

And represent savings of MX$24.6 billion (US$1.4 billion)

GENERICS IN MEXICO

THOSE RESPONSIBLE FOR PHARMACOVIGILENCE UNDER NOM-220-SSA1-2015

Registration holder

Clinical research centers

Warehouses Doctors

Pharmacies Distributors

Sanitary authorities

Health professionals Patients

US$3.3billionvalue of the Mexican generics market

Bioequivalent and identical to

reference product

80 – 90% discount over

reference product

US$1M – US$5M in development

costs

3 – 5 year development timeline

Interchangeable with reference

product

KEY DIFFERENCES BETWEEN BIOSIMILARS AND GENERICS

GenericsBiosimilars

88 Q: What areas has Grupo Neolpharma targeted in the last

12 months?

A: We have just completed construction of the plant

area in which we will be producing nanotechnology. We

are moving our production capacity for pilot batches of

biotechnology products there and we are also increasing

investment so that all pilot production is carried out under

GMP conditions.

Q: What is Grupo Neolpharma and CINVESTAV’s prize for

innovation in bio-nanotechnology?

A: Biotechnology and nanotechnology are two lines in

which we are interested in stimulating research. The prize

was linked to pharmacology but it is now more open as it

has enabled the creation of new materials. The invitation to

participate is open to all the institutions and professionals

working in those disciplines and the prize is MX$300,000

(US$16,666). Half of the award is to reward the researcher

and the other half is to fund the continuity of the winning

project. The purpose of the prize is to create new talent,

provide exposure and increase the diffusion of these kinds

of scientific proposals. We are approaching 2016’s winning

researcher to ask for his help capsulating some drugs we

want to deliver to the limbic part of the brain. He could

provide us with a smaller mechanism that would let us break

through this barrier. By allying with CONACYT and using

its methods of diffusion, if something could be useful for

other laboratories they can come to an agreement with the

council. This also enables us to approach others directly.

It is much more concrete and there are fewer risks when

approaching someone.

Q: What new heights would nanotechnology enable the

pharmaceutical industry to reach?

A: Nanotechnology is a technique that can be used to

produce medicine. If a medicine that causes unwanted

side-effects is made using nanotechnology, those effects

can be reduced instead of damaging the stomach or liver.

Therefore, it is most useful for eliminating the side-effects of

already approved medicines, such as in oncology. Basically,

nano-capsules can reach cells and they enable the use of

smaller doses. Our innovation in this area is focused on

oncology and diabetes.

Q: What solutions is the group providing to the Mexican

health industry?

A: We must first develop medicines and provide it to the

greatest number of patients possible. In our case, this

PRIZE STIMULATES R&D INNOVATION IN BIOTECH, NANOTECHEFRÉN OCAMPOPresident and Executive Director of Grupo Neolpharma

VIEW FROM THE TOP

89

Q: Where do you rank Mexican talent globally? Is it

prepared for the rapid changes occurring in companies?

A: There are no problems with talent for making

biotechnological medicine in Mexico. We should look

at Denmark and Sweden, where they have recognized

through studies that biosimilars do not have more adverse

effects than innovative products and that they have the

same therapeutic benefits. We must focus on the resulting

benefits in terms of cost once the patents expire.

Q: How is the group’s growth oriented?

A: By 2020 we want to reach 100 percent growth in

comparison to where we are now. We have already achieved

a respectable size in Mexico and other strategic foreign

markets so we are confident we will be able to meet this

new expectation. Toward the achievement of this goal we

have increased our presence in the oncology and metabolic

areas with our biosimilar offer. In the future we want to grow

in therapeutic areas and begin producing patented and

high-efficiency treatments, while increasing our sales force.

Q: What is Grupo Neolpharma’s message to the industry?

A: Grupo Neolpharma wants to coordinate the efforts of the

research institutions, the laboratories and the government

to lead the Mexican pharmaceutical industry to an

international level. The industry has to keep in mind Mexican

epidemiology and which technologies could lead us to the

best medicines for the Mexican population. However, this will

only be possible with a confident attitude that overcomes

the financial challenges we might encounter in the process.

implies a national cost, which determines the price. We have

done this with our product Transkrip, the patented version

of which costs six times more. Our body is constantly

defending itself against attacks and when certain cells get

infected, they no longer work as well. Transkrip activates

our cells to better absorb the medicine and in some cases

it also reactivates the immune system. TransKrip is a drug

based in epigenetic therapy that increases the progress-

free period of patients with advanced cervical cancer.

Currently it is used for cutaneous lymphoma of T-cells and

myelodysplastic syndromes. We are completing a project

on the application of this technology for lymphoma in D

cells. In some cases it has 100 percent efficacy and there is

a fast therapeutic benefit.

Q: Where is most of your R&D being carried out?

A: I am looking to mix research by stages, to do some in

Mexico and some in the US. There is an innovation and

development research center called Cediprof in Puerto Rico,

a site that allows some of our research to be conducted in

an FDA environment. This is a strategy we want to extend

to other Mexican companies that are working on innovative

projects, so they can develop the early research phases in

Mexico and then conclude their research in Puerto Rico

without a major investment. This will create fiscal benefits

and empower research.

Q: What opportunities will IMSS opening to clinical

research bring for Grupo Neolpharma?

A: That is extraordinary because it is where the most patients

are. For example, the application of the D-cells treatment

is valid only for a small number of sick patients with those

characteristics. IMSS is where most of them are. In the INCan,

the process of incorporating the number of required patients

was long. However, with IMSS we can more quickly identify

people with a certain condition and deliver the product.

Grupo Neolpharma is a Mexican group that comprises

several pharmaceutical companies: Alpharma, Neolpharma

and Psicofarma. It specializes in R&D, manufacturing,

commercialization and distribution

90

VIEW FROM THE TOP

BIOTECHNOLOGY, THE SCIENCE OF THE PRESENTALFREDO RIMOCHDirector General of Liomont Laboratories

Q: What are Liomont’s most important contributions to the

Mexican pharmaceutical industry?

A: Liomont has about 2.7 percent market share and has

brought products to a broader range of the population.

We have created a number of alliances with academic

institutions such as the Institute of Biotechnology of UNAM

and the National Genomics Laboratory for Biodiversity

(LANGEBIO) of CINVESTAV. Liomont is an active

participant in associations such as ANAFAM, CANIFARMA

and the Mexican Pharmaceutical Council (CFM). We

have entered the field of biotechnology with the first

recombinant influenza vaccine and we are working on the

development of an anti-zika vaccine in collaboration within

an international consortium that includes companies from

Argentina, Brazil, Japan, the US and Mexico.

Q: At what stage of development is the zika vaccine and what

testing does Liomont do in Mexico?

A: Clinical trials for the zika vaccine will start soon

through a program with a partner company called Protein

Sciences. Liomont has started an important clinical trial

of its influenza vaccine in Mexico with children between

six months and 18 years. We are developing two biosimilar

products together with the company Oncobiologics.

The phase I clinical trials for those products have

already concluded. We have also developed another

monoclonal antibody in collaboration with the Institute

of Biotechnology of UNAM.

Q: What sector presents the greatest opportunity for

Liomont?

A: Liomont is mainly present in pain, respiratory,

gastrointestinal, antivirals and antibiotics. In terms of

economic sectors, Liomont is mainly focused on the private

market. Even though 40 percent of Liomont’s products

are destined for the public sector, sales in this sector only

amount to 6 percent of the company’s income. In terms of

regulations, clinical trials have become more complex and

expensive. We need transparency and support in terms of

intellectual property and regulations.

Q: What are the challenges associated with introducing

biotech medicines to Mexico?

A: It is an expensive process that we have approached

through two different routes. The first is by allying with

foreign companies such as Oncobiologics and another one

in Spain. We are also preparing some of the test designs,

while some of the protocols are being approved by

COFEPRIS. The second approach is through alliances with

local universities. Liomont creates projects with scientists

from academic institutions. The government has limited

funds but it is the main buyer of biotech and high-specialty

drugs in Mexico. Liomont must achieve accessible prices to

supply the demand for these products in the public sector.

Q: How does Liomont compete in the generic business with

pharmacy chains that develop their own brands?

A: Physicians know Liomont’s products, they trust our

brands and prescribe them. However, pharmacists often

substitute the prescribed product for a generic house brand.

A change in the Regulation of Health Inputs requires doctors

to prescribe an active ingredient, as well as a brand, which

has boosted consumer awareness of prices. Nevertheless,

Article 79 of the same regulation states that if there is a

substitution, this must be authorized by the physician who

wrote the prescription. If not, the product supplied must

be the brand as prescribed. Our main strategy to prevent

generic substitution is based on the doctors associating our

products with quality and trust, so that their prescriptions

are supplied as they are issued, and not substituted.

Q: What are your development plans in the short term?

A: Liomont will continue marketing the trivalent version of

its biotech influenza vaccine while filing with COFEPRIS for

the tetravalent version that will be sold in 2018. Liomont is

building a manufacturing and distribution site in the State

of Mexico. In the area of generics, Liomont will be launching

around six new brands in Mexico each year.

Liomont is a Mexican pharmaceutical company with high quality

products in the prescription and OTC segments, currently

occupying the 8th position in the national pharmaceutical

market in units

91A: We are working on these liberated molecules. COFEPRIS

has developed a useful strategy based on risk assessment

and this patent liberation makes the register of new and

generic products more efficient. We can now get generic

drugs to market much faster and even expect to release

between six and eight products this year from the packages

of 2016 and 2017 in hormonal treatments, some in painkillers

and anti-inflammatories.

These areas were chosen because we have noticed that

painkillers and anti-inflammatories have undergone a

similar process to that of antibiotics in the past. People

have become accustomed to consuming them without a

prescription, developing a higher tolerance to painkillers, so

we expect the new molecules to have a more efficient effect.

Q: What are your ambitions and plans for 2017?

A: We have already expanded production at our plant, partly

due to COFEPRIS’ regulations. We are complying with all

these regulations and are ready to continue our growth in

the manufacturing business through development of more

products. We are looking for new international ventures for

products we sell in large volumes, such as paracetamol or

diclofenac, which in Mexico are largely sold as commodities

and have a better margin elsewhere.

On the commercial side, Farmacias GI has a new image and

an aggressive expansion plan that includes the launching

of a new media campaign. In the distribution business, our

goal is to train independent pharmacies. Many of these are

important to rural communities and underdeveloped parts of

the country. We are also expanding our business by visiting

convenience stores and large national chain pharmacies to

address a renewed interest in our products in sectors that

traditionally were not attracted to generics but now cannot

get enough of them.

Q: How is Grupo Bruluart working to make patented

medicines more widely available?

A: One of our biggest projects has been pushing lines of

patented medicines into the impulse chain. Besides the

old big distributors, there are several pharmacies, clinics

and other retailers where patented drugs are sold. It was

thought the most economically challenged social group

would not buy patented medicines because of the high

price but some prefer to acquire medicines at their local

pharmacy.

Q: What were the advantages of being ready six months in

advance before the change in NOM – 059 in 2016?

A: It helped us get ahead and minimize the effort needed to

comply with the standards. Since we were ready, the number

of topics we had to cover once the norm was approved was

small so we did not have to dedicate many resources to it

to comply. We also founded the Instituto de Farmanegocio,

through which we provide an integral advisory service,

guiding our clients step-by-step to meet COFEPRIS, SAT and

other regulatory requirements. Some of our customers are

taxed according to the small contributor regime. As a result,

the taxes of those companies are sometimes in disarray

and they fail to meet regulations. We have convinced and

advised several customers to fix their fiscal situation so they

can access various benefits and minimize the risk of not

meeting fiscal and health regulations.

Q: To what extent do your products target specific niches?

A: We started selling generic drugs that target the general

population, such as painkillers, multivitamins and antibiotics.

Now we are specializing in the hormone niche, especially

in contraception and hormonal care, because there is

less competition and only a few can develop injectable

contraceptives and hormone drugs. There is a learning curve

with hormonal medicine so we have been focusing on these

areas for around two years. It is difficult to come up with

a market percentage but we manage three of the top 10

products in the public sector.

Q: COFEPRIS is liberating several packages of innovative

medicines. How is that affecting Grupo Bruluart?

PUSHING PATENTED MEDICINES INTO THE IMPULSE CHAIN

JUAN AGUIRRECommercial Director of Grupo Bruluart

VIEW FROM THE TOP

Grupo Bruluart includes the importer and manufacturer IM

Bruluart, Laboratory Bruluagasa, generics company Brudifarma

and pharmacy chain Farmacias GI. Its goal is to make high-

quality medicine accessible to all

92

INSIGHT

SPECIALIZED APPROACH TO ACCESS THE PRIVATE SECTORARISTIDES TORRESDirector General of Vanquish

In Mexico, the main health concerns are a national public issue

demanding attention from all players in the industry. As a

result, national pharmaceutical companies such as Vanquish

are shaping their business units to assist the Mexican needs.

“Our institutional portfolio deals with cardiovascular diseases,

CNS, some endocrine issues and antiretroviral drugs for HIV.

Our private line is specialized in women’s health and abnormal

conditions like Huntington's, Parkinson’s, and Alzheimer’s,”

says Aristides Torres, Director General of Vanquish.

The company’s current product distribution is 90 percent

generics and 10 percent innovative. However, it expects to

grow its patented medicine area. “Our initial intention was

to have a 50/50 split between the public and private market.

Probably the private is harder to reach but we expect at

least a proportion of 60-65 percent against the rest of the

market,” says Torres. Its strategies for private-sector players

include boosting its portfolio options, targeting neurology and

women’s health. Vanquish’s business objective is to achieve

growth between MX$1.5 billion (US$83 million) and MX$2

billion (US$111 million) in revenues by 2019.

Vanquish is the first pharmaceutical company to bring a patch

therapy system for Alzheimer’s to Mexico. According to the

National Institute of Geriatrics, around 800,000 people in

Mexico are suffering from Alzheimer’s. The company is also

commercializing a drug for Huntington disease, a progressive

brain disorder. “We have the only orphan drug in the country:

a product approved by the FDA to treat Huntington and

similar diseases that guarantees 85 percent efficacy,” Torres

says. According to the National Institute of Neurology and

Neuroscience, in Mexico there are around 8,000 people

suffering from Huntington's and other similar diseases.

Expiring patents offer the manufacturer another avenue to

expand its base of therapeutic alternatives. “We have recently

started a portfolio of all generics whose patents are about to

expire and we are working with a combination of products

that today are generics and could have therapeutic benefits

for the diseases we are focused on,” says Torres. Vanquish is

pursuing the patent for Tenofovir, which is a component of

Atripla, the most important product in treating HIV. “It is the

main therapy used by CENSIDA. It has the biggest demand in

the country.” According to Torres, no company in Mexico has

a complete antiretroviral portfolio. “We want to manufacture

and commercialize it, so we can offer a complete service to

institutions and create greater access at reduced prices.” The

goal is to provide a generic line that could work well with the

government’s tighter budget.

93

VIEW FROM THE TOP

expertise can refine their offering and make their businesses

more profitable. We want to make health products more

affordable for the general population so people have

options. We also expect this to help us reach the objective

of 1 percent market share.

Q: To which Central American countries are you planning

to export to and what criteria do you use?

A: COFEPRIS has done a great job becoming an international

regulatory agency, which has allowed us to open borders.

The first criterion is to select those countries that recognize

our sanitary regulations with no extra paperwork needed.

Many of our products are already available in Chile, for

example. The second criterion is the size of the market,

leading us to be interested in Colombia and Costa Rica.

Argentina and Brazil are not priorities as the latter is

protectionist and the former has economic issues. Colombia

is the second most important market after Brazil to which

we already export a little but we paused this because the

Mexican market demands our entire production; it has

grown significantly so we are 100 percent concentrated

on it. Once we have expanded industrially, we will continue

to export, which may merit us building an annex to our plant

in Guadalajara. Next to the plant there is a land plot that

we are clearing and preparing for expansion. We hope to

begin building in the first quarter of 2017.

Q: What other short-term plans do you have for

Laboratorios Collins?

A: Within the group there is another subsidiary called

Salud Natural that has a naturist focus and markets herbal

products. We hope to obtain the GMP for Salud Natural’s

plant. It would be the first natural product plant in Mexico

to obtain a GMP and would allow us to export products to

the US, which is another objective for 2017.

Q: What hurdles do Mexican generics companies face when

trying to supply the government?

A: We hardly sell to the government because it has adopted

an aggressive price-reduction policy. This policy erodes

companies like pharmaceuticals, which need to earn money

to continue reinvesting in research. For companies like us,

selling to the government is not viable. We have decided to

only sell particular products to state hospitals, so 95 percent

of our sales are to the private market. Any business on which

we do not make a 20 percent margin is not viable for us.

Q: Collins has said it is targeting 1 percent market share of

generics in Mexico in five years. What are your next steps?

A: In this changing market, five years is a long time. Beyond

that time frame is unpredictable but we plan to penetrate the

market to 1 percent and then change the type of business

we manage. We work in pharmachemical generics but in five

years we would like to enter the biosimilars market. We also

would like to enter the oncological sector because it is more

profitable and sells in greater volume. Biosimilars already

exist in Europe but many problems with sanitary regulations

remain, which has impeded biosimilars from developing

worldwide. These problems appear close to being resolved

and once they are, biosimilars will develop quickly because

many companies in Europe and the US are moving rapidly.

Here in Mexico, some companies like ProBioMed, Cryopharma

and Silanes have undertaken extensive research but have

not advanced further due to uncertainty with regulations.

There is still no fixed date for this to conclude because so far

COFEPRIS has mainly focused on revising technical aspects.

Q: What results are you expecting from your joint venture

with FEMSA?

A: FEMSA wants to enter the Mexican market with 1,000

pharmacies and began acquiring units three years ago. It

established strong relationships with commercial partners

and we were lucky enough to be selected. The relationship

is just beginning but is going well and we are working on

becoming one of their main laboratories. Our goal with all

our partners is to bring our experience and knowledge to

the table. Sometimes we can suggest a product they do not

have in their portfolio and generally our laboratories and

CAUGHT BETWEEN DEVELOPMENT

AND REGULATIONFELIPE ESPINOSA

CEO of Laboratorios Collins

Laboratorios Collins is a Mexican pharmaceutical group

with 47 years in the market focused on the manufacturing of

high quality medicine at affordable prices. Its main areas of

operation are generics and veterinary care

94 bidding process will make some distributors stronger than

they already are and that concerns me. For example, a hospital

far away in Hermosillo may request a product within 24 hours.

For this, we need to work with a distribution company that

has its own center because Mexico is five times the size of

France and we cannot deliver any given product anywhere

in the country within 24 hours. To become more efficient,

healthcare providers are ditching their warehouses and we

are becoming their warehouse. We also must have different

logistics partners because some prefer to work in certain

therapeutic areas or in specific regions. Ahead of a tender,

they want a letter of endorsement that says we will supply

them with a certain product if they win. We sign with the

minimum volume and price and if they win the tender, we sell

the product to them. Some tenders are national, international

or mixed. It is not that they actually want to bring in someone

from the outside but it happens that no local company can

meet the requirements. We participate as a national company

if the product is manufactured in Mexico and international if

it is manufactured in Canada or India. Products made in India

are more problematic because the tender process generally

does not accept these, perhaps because the government is

not confident about the quality.

Q: How is the authorized third-party system working?

A: It works well. It costs money because we have to pay for the

service but we get faster approvals. It is beneficial to us and to

patients, who get new products sooner, and puts lower-cost

generics on the market faster. Some Big Pharma companies

are trying to extend IP protection, looking for opportunities

in the legal framework. As patients and consumers, we

should not allow this. At Apotex Mexico we respect patents,

of course, but they should not be extended for reasons that

do not represent real invention.

Q: How much R&D is done in Mexico and how important is

that to the development of your business?

A: Most of the R&D is performed in Canada but our Mexican

research complements our efforts in R&D and is more focused

on local needs. Canada focuses on the big markets like itself

and the US, while in Mexico we look at Latin American

opportunities to complement them. We have developed 55

Q: What is Apotex’s strategy for launching its products

in Mexico?

A: Over the past 12 months we have been first to market

for mometasone, a nasal spray for rhinitis and allergies;

diosmin-hesperidin, for chronic venous insufficiency;

leflunomide, on the side of rheumatoid arthritis and we

are now launching tramadol-paracetamol, a painkiller for

moderate to severe pain. We are reshaping our strategy

to be more active and efficient in product launches. The

company is targeting different opportunities in the generics

segment and launching a broad portfolio in CNS products,

which comprises antipsychotics and antidepressants, among

others. We will launch over 25 products in three years through

a full portfolio with a different strategy targeting physicians,

which is unusual for Apotex. The company will also introduce

some branded products rather than simply generics to

complement our product lines. The use of generics in Latin

America is different to North America and Europe. It is still

generally a branded market. Bioequivalent products are

not available in every Latin American country for example.

Patients associate brands with quality so, despite the quality

of bioequivalents, there is still a preference for brands. We

are catering to the demands of the market.

Q: Why do generics generate this level of resistance?

A: Generics have come a long way. Initially regulation was

not so strict, so in those days there were products that

did not comply with international quality standards. This

bias still exists but regulation is now stricter. COFEPRIS is

overwhelmed with the work of auditing all manufacturers

and ensuring the stricter requirements are properly covered.

This is an issue and some will be left behind because they

cannot keep up with rising standards. They would have to

invest a lot of money to catch up.

Q: What problems do you see with the bidding process

established by the government?

A: It changes constantly. At the moment it is talking about

packages, which we are still trying to understand. Packaging

is more complex because it is not possible to have every

product. There are some requirements that are impossible

for us to meet so we need to use distributors. I think the

GENERICS FIGHT BRAND BIASAMÉRICO GARCÍADirector General Latin America of Apotex

VIEW FROM THE TOP

95

Republic, Chile, Argentina and we are about to close a deal

for Colombia. The generics segment will remain one of the

main sources of growth for Mexico. We will continue to expand

to new therapeutic areas, such as prescription. We will start

with CNS over the next three years. It will take us that time to

gain the relevance we want to have in that area and then I will

jump to another therapeutic area. Apotex has been a leader

in Mexico since it entered the country. We are celebrating

20 years here and 41 years in Canada. We are one of the few

vertically integrated companies, with two API manufacturing

sites in Mexico. For 60 percent of our products manufactured

in Canada, the APIs come from our Mexican sites. We are

committed to this country like no other company.

Q: How does the legal environment protect generics

companies from litigation in Mexico?

A: We still have to work on this. We need to get together and

be more visible to the authorities to make sure we are being

treated fairly. Being close to the US in general helps because

we want to be recognized as a highly regulated country that

can manufacture products that can be sold everywhere. As

we deliver on that, it becomes easier to build trust.

Q: How has the wave of patent expirations benefited Apotex?

A: The products I mentioned for which we will be first to

market have expiring patents and we are using the opportunity

as soon as we can. This is happening across therapeutic areas.

For the CNS line, it will be branded so we do not need to

launch the product as soon as the patent expires. For generics

however, it is vital to be first.

products in our local facilities and many more in Canada.

In Mexico, we invest 6 percent of sales revenue in R&D and

4-6 percent more in renewing equipment to improve our

technology. Canada invests a much higher percentage.

Q: What types of drugs are researched in your Mexican

facility?

A: I have been working on getting back to basics, reshaping

the organization’s main activities, and then working a

little on the strategic view of where we are going. Over

the past few years we have been focusing on doing things

better rather than on specific therapeutic areas, except for

the CNS line. What we are doing now is aligned with the

opportunities we see to penetrate segments in which we

do not yet have a presence.

Q: Has the peso depreciation affected your operations? How

do you mitigate currency risk?

A: It has affected us, of course. We try to not transfer the full

impact to our customers. The company is absorbing some

of it by developing efficiencies. Some we are tackling now,

improving efficiencies and productivity. We are also trying

to develop the export segment because we export in a hard

currency. When reviewing market figures, it is possible to see

that Apotex is not raising prices as quickly as inflation or in

line with the currency’s depreciation. My view is that we will be

depreciated, but with the fundamentals under control it will be

strategy more than a consequence. We export a good number

of our Mexican manufactured products to South America. We

negotiate most of those sales in dollars, which mitigates the

effect to a certain extent.

Q: What expansion plans do you have for the coming years?

A: We manage the LATAM region from Mexico. Now we

have three affiliates in Panama, Nicaragua and Costa Rica

and we already have partners in Guatemala, Dominican

Apotex is the largest Canadian-owned pharmaceutical company,

with over 10,000 people employed worldwide in its research,

development, manufacturing and distribution facilities. The

company produces around 300 generic pharmaceuticals

View of a blister packing and conditioning assembly line

96 to balance the products we bring from Teva Global with

the needs we see in the country.

Q: Quite a bit of your pipeline is in pain and respiratory.

What market need does this respond to?

A: Pain is the number one cause of medical consultations in

the world, including Mexico. Patients go to doctors because

of symptoms and one of the primary symptoms is pain.

Because of this, pain is something that we at Teva take very

seriously. We want to offer patients choices that include

innovative combinations to make them feel better.

Q: Eritropoyetina theta was recently brought to Mexico.

What are Teva’s expectations for this product?

A: An area in which Teva is innovating is in its oncology

supportive care portfolio. So far, we have brought

two innovative molecules to Mexico. Eritropoyetina

theta, which helps patients undergoing chemotherapy

treatments improve their levels of red cells by treating

secondary anemia that results from chemotherapy. The

second molecule is Lipegfilgrastim, which treats febrile

neutropenia (fever and low white blood cells). Both

products are extremely important for patients undergoing

chemotherapy because they allow them to continue with

their treatment without having to suspend due to negative

effects. Some state institutions have already begun using

these products, which suggests that we are on the right

track. We want to have these products included in the

National Formulary in the future.

Q: How many of Teva’s products are included in the

National Formulary?

A: We participate every year in the public tenders held

by the government through IMSS, ISSSTE and other

institutions. Regulation has resulted in many benefits

for both patients and the government. We can compete

because we have the necessary scale to offer competitive

prices, a network of pharmaceutical plants throughout

the world and we are also one of the world’s main API

manufacturers. This gives us significant power to offer

quality products at reasonable prices in government

tender processes.

Q: What are the challenges associated with operating in

so many different therapeutic areas?

A: The biggest challenge Teva faces is to follow people

through all the stages of their life. We are present in several

areas, including CNS, women’s health, pain, multiple-

sclerosis and oncology; our goal is to give patients access to

innovative pharmaceutical solutions at an accessible price

across the countries we work in. We want to contribute to

generating greater access to healthcare worldwide.

Q: How does Teva operate in both the public and private

sectors and how does it choose which areas to focus on?

A: In Mexico, we take part in the public sector by selling

products to the government and health institutions by

participating in government tenders. In the private sector

we participate through chain pharmacies, self-service

retailers, distributors and local and regional wholesalers.

Finally, a company must choose its therapeutic areas based

on its R&D capabilities. Companies must deliver products

that provide value for the payer, the institution, the patient

and the doctor.

Q: How much R&D does Teva do in Mexico?

A: Globally, we have 26 R&D centers. In Mexico, our products

undergo bioequivalence testing with patients through

authorized third parties. In addition, we have participated

in phase III and phase IV studies here in Mexico.

Q: How do you choose which products to bring to Mexico?

A: There is a selection committee in which medical,

commercial and business development perspectives

are taken into account. The country faces chronic-

degenerative challenges and there is a change underway

in the population pyramid. Twenty years ago, the common

problems patients faced were mainly infections; today, we

face chronic and chronic-degenerative diseases. We try

BRINGING INNOVATION TO THE ENTIRE POPULATIONGUILLERMO IBARRADirector General of Teva Mexico

VIEW FROM THE TOP

Teva is the world’s largest generics company, producing 120

billion tablets and capsules per year. The Israeli pharmaceutical

offers specialty medicines, generics, OTCs and APIs in CNS,

respiratory, oncology and women’s health

97

improving, updating and raising the bar for our plants. An

economist said that even if we do not want it to happen,

Mexico will be the seventh-biggest economy in the world

by 2027. There is an opportunity for us to partner with the

government, institutions, payers and doctors to provide

accessible and innovative medicinal solutions that benefit

patients and their families.

Q: What benefits have resulted from the company’s

acquisition of RIMSA?

A: It brought us a portfolio of products in the primary care

segment in which Teva did not previously have a significant

presence. These products will be relaunched after being

reformulated. They are products that have a strong reputation

and differentiation in areas such as pain.

Q: What are your ambitions in Mexico over the next five

years?

A: We have a defined 10-year plan. We want to continue

beefing up our portfolio from our pipeline and to continue

our organic growth, introducing the best talent we can to

the company while being socially responsible. We have a

portfolio of innovative products that touch lives, which is a

privilege for us because our activities transcend commercial

objectives. Our growth will be organic moving forward. We

have a generous pipeline of new products that are being

evaluated, reformulated or undergoing COFEPRIS submission.

Q: What are the advantages of manufacturing APIs instead

of buying them?

A: We do buy APIs from others but we manufacture a

large percentage of our consumption. We have three

pharmaceutical plants in Mexico: one in the State of Mexico,

another in Mexico City and the largest in Jalisco, in addition

to an API plant, also in the State of Mexico. Most of what

we produce is for Mexican consumption but we also export

to South America.

Q: How beneficial is having a Mexican office and having

COFEPRIS approval for operations in other LATAM countries?

A: Exporting is not easy. We export to Brazil, for example,

a country with strict regulations. We are glad to see that

COFEPRIS is taking the necessary steps to become an

internationally recognized agency.and has made the

decision to become a recognized and renowned agency.

Q: What is Mexico’s role in Teva’s global operations?

A: Teva has drawn up a list of countries with growth

markets and Mexico is among them. One of my jobs has

been to internally sell Mexico to our global headquarters.

It is a country that has industrialized greatly and is not

reliant on commodities; it has steady economic growth

of around 2-2.5 percent per year, which in the long term

makes Teva Global want to continue investing in the

country. We have invested many millions of dollars in

INSIGHT

The company aims to provide affordable medicines to

Mexican patients through retailers, distributors and a

range of pharmacies.

Espinoza says that although patients have begun to

recognize the quality of generic medicines, challenges

remain. “One challenge is the resistance to change by

prescribing doctors. They cling to patented medicines

as a means of identification and forget the patient’s

budget, which is what determines their decision to find

more affordable medicines,” he says. Present nationwide,

the company’s goal is to increase its sales volume and to

continue a steady pace of organic growth.

Laboratorios AMSA is the generics arm of Laboratorios

PiSA, one of the largest Mexican pharmaceutical

companies. Its main therapeutic areas are hydration,

dermatology, diabetes, cardiovascular, obesity and weight

control, pain, fever and inflammation. A particular area of

success the company has found is in its antibiotics line.

“AMSA probably has the third-largest sales volume of

antibiotics in the country. However, today we have many

products for cardiology. These two types of products

have something in common: they are generics. This is

AMSA’s most important business,” says Alexis Espinoza,

Managing Director of AMSA Laboratories.

GENERICS STILL FACE RESISTANCE FROM DOCTORS

ALEXIS ESPINOZAManaging Director of AMSA

98

INSIGHT

MANUFACTURE LOCALLY TO CREATE AFFORDABLE PRICESGURULINGA KONANURDirector General of Hetero Mexico

Generics provide a cost-effective alternative to branded

products, allowing for more accessible healthcare. This is

important as the general population is more financially able

to purchase the treatment it needs and the public sector

health institutions are able to purchase a larger quantity of

drugs. Despite initial reservations, the generics market in

Mexico is growing, mostly due to government consolidated

purchasing preferences for generics as it allows the

treatment of more patients on a shrinking budget.

Hetero Group, an Indian generics company, is one of the

main manufacturers of antiretroviral therapy drugs (ARVs)

worldwide with a third of the world’s market share. “For

every three patients, one is taking a Hetero product either

directly or indirectly as we supply APIs to other suppliers,”

says Gurulinga Konanur, Director General of Hetero Mexico.

“We want to bring all these high-tech, high-specialty

products to Mexico, manufactured locally at an affordable

price,” he says, adding that the company expects Mexico

to be among its best growth performers in Latin America.

“The generics market in Mexico is growing over 20 percent

per year and even branded generics are growing when

compared to innovative products.”

The general population is also increasing its generic

purchases as many must pay out of pocket in one of the

most privatized healthcare systems in the world. The OECD

reports that only 5.8 percent of GDP in 2015 in Mexico

was spent on healthcare, almost half of which was out of

pocket. Indeed, access to healthcare is one of the greatest

challenges facing the Mexican healthcare system. INEGI

figures show that only 62.2 million people had access to

IMSS services as of July 2016 and despite government

efforts, this figure represents only a 33.3 percent increase

in the 10 years since 2006.

The prevalence and availability of generics is important

for pandemics such as HIV/AIDS because drugs for these

diseases can be expensive and are needed by many.

HIV/AIDS treatment in Mexico is free for all, whether

registered with a health institution or not. It is therefore

important for drugs to be cost-effective. In 2015, the

National Center for the Prevention and Control of HIV/

AIDS (CENSIDA) reported around 200,000 people

living with HIV in Mexico and an estimated 100,000 new

infections. UNAIDS estimates there were 4,000 AIDS-

linked deaths in Mexico that year.

Although generics are growing at a faster rate and allow

for better access, the population continues to demonstrate

a brand bias, showing a preference for branded generics.

“I think over 70 percent of the Mexican population would

look for a good branded generic,” says Konanur. He adds

that although it took some time for branded generics to

be accepted, doctors are now comfortable prescribing

them. “Pharmacists also encourage generics. They receive

many kinds of incentives to promote the generics of the

pharmacies they belong to,” Konanur says. This is most

likely aided by the fact that many pharmacies stock their

own-brand generics and are looking to boost sales, he says.

Another main issue with access to medicine is the

growing counterfeit or black market. Many companies are

taking precautions to ensure they are not inadvertently

participating in this by ensuring both their medicine

and packaging does not fall into the wrong hands, says

Konanur. He explains that the generics sector is seemingly

less affected because the products are cheaper and more

widely available, adding that it is often the larger names

that are subject to counterfeit, just as in other sectors. “I

have not seen as many issues with counterfeits in generics

as in innovative products. The sales margins are smaller in

generics so they are not affected so much,” says Konanur,

adding that his company employs many innovative

packaging techniques that make the boxes difficult to

imitate. “We have one of the most innovative packaging

departments in the world.”

To further expand its Mexican presence, the company has

acquired land near Toluca and expects to be manufacturing

products from a custom-built factory there by the second

quarter of 2018. “We are in the planning stages and by

January 2017 we will be kick-starting construction,” Konanur

says, adding that foreign investment has aided the process.

99A: The vision established by our chairman is to make Zydus

a quality, global research-based company. Regulation

surrounding biotechnology and biosimilars is not yet

extensive. We took some time to fully understand this and

we are now efficient at handling small molecules. Officials

worldwide face big challenges in laying down the pathways

and putting systems in place for biotech. COFEPRIS is

dynamic and understands the importance of biosimilars due

to the exorbitant cost of innovators. Over the past 10 years,

the importance of biological products in terms of usage and

market share has increased, which is a clear indicator of

the future of the pharmaceutical industry. Few are capable

of producing them, which gives Zydus an advantage in

tending to this need.

Q: What will be Zydus’ priorities for next five years in

Mexico?

A: We want to consolidate our CNS business in the next five

years. We will look at how to leverage our strengths for R&D

capabilities, to look for opportunities for inorganic growth

and to fulfill our aspiration to access the tender market. We

will try to carry out some global clinical trials here to make it

easier and faster to get COFEPRIS approval. The regulatory

environment is extremely dynamic and COFEPRIS does not

depend on others to approve its decisions. It is self-sufficient

and it knows the countries’ needs.

Q: Do you have plans to build a plant in Mexico to bolster

your chances of selling generics to the government?

A: To be successful in Mexico there is no one particular

segment or style of operation. The government tender

market is worth around US$2-2.5 billion. We have the

capability to supply to it but we do not have local facilities.

However, there are ways to circumvent this: one is to

manufacture indirectly. It would be a key move from an

investor point of view.

Q: Zydus works in generics but is looking at biosimilars

and vaccines. Which strategic therapeutic areas interest

you most?

A: Zydus started as a generics company but its unique

distinction from other Indian pharmaceuticals is that it is

the first company to register a new chemical entity (NCE).

Saroglitazar, used to treat diabetic hyperlipidemia, was

launched in 2013 and we are looking to commercialize it

globally under the name Lipaglyn, starting with a handful

of countries including Mexico. The second area we are

considering entering is biosimilars and vaccines. We started

working on this as few companies will provide a portfolio to

the extent of over 20 biosimilars and around 20 vaccines.

Some of these products have already been launched in India

and they will be taken to other emerging markets.

Q: What is the company’s strategy to carve out a bigger

slice of the Mexican market?

A: Zydus is a new entrant in Mexico and we are keen to scale

up our operations. There are various options to do so and to

become relevant to the market. We entered Mexico in 2013

and we want to grow both organically and inorganically.

There are few trillion-dollar economies in the world and so

Mexico is a huge opportunity. If any global generic company

wants to increase in size and importance, it must have a

presence in the larger markets and Mexico is the 11th largest

pharmaceutical market in the world.

Q: What strategy did introducing the CNS portfolio to

Mexico correspond to?

A: We initially explored various areas as CNS is not one

of our major business lines. Overall, we have strong lines

in gynecology, respiratory, cardiology and diabology, but

not CNS. However, CNS is in the top five chronic diseases

and the area is growing. Looking at health indicators,

depression is classed among the top five, which is rare for

an emerging market such as Mexico. We found that CNS

could be important for us and our decision was the right

one, so we are confident we will continue to see growth.

Q: Zydus aims to be a research-based company by 2020.

What roles will CNS and Mexico play in this?

MEXICO PROVIDES ROOM TO GROW

MS NAGENDRADirector General of Zydus Pharmaceuticals

VIEW FROM THE TOP

Zydus Pharmaceuticals is an Indian generics laboratory, part

of Cadila Group. In Mexico, it offers solutions mostly in the

CNS area and hopes to soon commercialize biosimilars and

vaccines, becoming a research-based company by 2020

100 which means that private insurance policies are increasing

and are becoming a benefit some companies provide to

their employees in Mexico. In fact, IMSS is looking to apply

an integral model wherein private clinics participate because

it is spending too much on diabetes, cancer, CNS and other

chronic diseases.

This is the next step for the healthcare system, to look at

privatization or semi-privatization for the most concerning

diseases. Patients who need dialysis and hemodialysis

consume 45 percent of IMSS resources and they are a very

small population. Two million to three million require dialysis,

whereas the remaining 45 million IMSS beneficiaries require

other services. We want to reach the private market because

there we can promote the new model of doctor’s offices in

pharmacies that many prefer because it is cheap, fast and

closer to the pharmacy.

Q: In 2015 the private market accounted for 40 percent of

Wockhardt’s business. How did this evolve during 2016?

A: Now it is more. In 2013, when I started operations in

Mexico, the government market was 70 percent of our sales

and private market sales were 30 percent. This number has

changed over the years and in 2016, 60 percent was private

and 40 percent government. We made this change because

the government has an issue with payments, so for us it was

better to secure our income through these sales.

Q: What security measures do you use to protect the chain

of custody?

A: In the pharmaceutical industry, we must be as vigilant as

banks. It is important to assure that those who buy products

get originals, so we take protective measures with tablet

packaging. We put the batch number and expiration date on

a special foil. Also, we apply a hologram in the middle and we

want to put a QR code on the boxes so when the patients scan

it with their phone, the doctor’s name and dose should appear.

These tools are important because without them there is a risk

of medicine ending up on the black market. The authorities do

nothing about it. This personal approach is important in areas

like diabetes because you need to handle insulin carefully.

A bigger dose can put the patient in a coma and a smaller

Q: What is Wockhardt’s main area of focus for new products?

A: Wockhardt Latin America and especially our branch in

Mexico is focused on three big areas: diabetes, CNS and

antibiotics. Last year we launched two drugs for diabetes:

human recombinant insulin and oral anti-diabetics. For CNS,

we developed a product for epilepsy, which in Mexico is

increasing by 12-14 percent each year, and released a product

for depression. The third area is antibiotics. Wockhardt

performs clinical R&D of new chemical entities and we have

at least nine of these developed at our sites in India, Europe

and the US, where we have at least two products in phase

III. The others are in phase I and II but with a really good

performance, so they will probably be released in 2020 or

2022. We are now launching three generic antibiotics. We

want to first build our base with generics and then establish

our own products in the market.

Q: Is there still resistance to generics in Mexico or are they

now accepted by consumers?

A: The market penetration for generics is increasing as more

people make their own purchasing decisions. Pharmacists

can let customers choose between a brand and a generic.

People are selecting the generic because of the price but in

the generic market there are three differentiation points: price,

quality and efficacy. These are fulfilled in the Mexican market,

which gives people the perception generics are as good as

branded medicine.

Q: To what extent do you participate in government tenders?

A: For many national companies, especially those focused on

generics, the tender market is where most of the opportunities

are but at Wockhardt we are focused on the private and semi-

private sectors. Tenders might give the perception that the

government is the biggest market but we need to realize that

most of the money is in the private sector. Most of us will never

go to an IMSS hospital. We prefer to go to a private hospital,

BUILD GENERICALLY FIRST THEN ESTABLISH BRANDSFRANCISCO HERNÁNDEZVice President Latin America of Wockhardt

VIEW FROM THE TOP

Wockhardt is a pharmaceutical and biotechnology company

headquarted in Mumbai, India, providing high quality

medicines. It has relevance in the fields of pharmaceuticals

and biotechnology

101

the Andes region, Ecuador, Peru and Venezuela; from Brazil

we reach Uruguay, Argentina, Paraguay and Chile and from

here we control Mexico and Central America. We have many

customers and partnerships in these countries, all focused on

diabetes, CNS and antibiotics.

Q: How does having a COFEPRIS authorization for your plant

help you expand?

A: Definitely. Having authorizations in big countries like Brazil,

Mexico and Colombia helps because COFEPRIS, the National

Agency of Sanitary Vigilance (ANVISA) and the National

Institute of Medicine and Food Vigilance (INVIMA) are

ministerial authorities, which the rest of the region is looking

for best practices.

Q: What new products do you have in the pipeline?

A: This year we are launching a generic insulin drug, glargine,

to treat diabetes. It is long-acting and gives the patient better

control of the treatment because it provides them a 24-hour

insulin dose in one shot, eliminating the need for two or three

shots per day. We are trying to improve the performance of

the drugs and control of the disease.

The company will introduce another four generic antibiotics

and is looking forward to developing a clinical trial for two

new chemical entities at a nutrition institution and an IMSS

hospital. As for CNS, we will try to register more drugs in the

epilepsy and depression segments.

dose can cause a diabetic shock. We are trying to move to

personalized service and sell to patients directly.

Q: How can you sell directly to the customer?

A: To do that, it is necessary to create a relationship

between specialized centers and the patient, and to use

an app that can provide client information. If government

tenders become a system where patients are referred

to associations or clinics, it is possible to provide a

personalized service through a database.

Q: What time frame are you considering for this innovation?

A: This is going to take three or four years to develop.

An example of this is the Mexican antidiabetic center

in Guadalajara, which is the government’s first attempt

at a semi-private service. The government referred at

least 30,000 patients to the center for integral diabetes

treatment. Patients consult with a physician, nutritionist

and physiologist and the medicines are paid for by Seguro

Popular. This is a model the government wants to scale up

across other states early next year.

Q: What expansion plans are in Wockhardt’s future?

A: Wockhardt’s expansion in Latin America started in 2014.

Today, besides Mexico, we have an office in Brazil and are

looking to open one in 2017 in Colombia. These will be our

three LATAM offices, because those are three big countries in

the pharmaceutical industry. From Colombia we can handle

Wockhardt is a Mumbai-based global research-oriented

pharmaceutical and biotechnology organization that

manufactures vaccines, APIs and generics. It has a marketing

presence on all five continents and has plants in the US, Europe

102 will launch four patented products next year that we will

manufacture in Toluca.

Q: Accord Farma is present in over 70 countries. How

important is Mexico for its global sales?

A: Mexico contributes around 1-1.5 percent to Accord’s US$2

billion global sales. There are plans to increase this, which

is why we have invested in the biotechnology plant here. In

the next three years, we will add around 80 products to our

portfolio, from 62 now, and we expect the Mexican branch to

be a MX$1 billion (US$55 million) company by 2021. These

new products will be across generics, oncology and our

hospital line. The latter already includes 10 products and we

will be adding 20-30 products. The hospital products include

our anesthesia line and we have just launched two new

anesthetics, with three more coming by June 2017. Although

our hospital line does include some niche products, we will

be focusing on high-volume products because they will

boost our presence and help us grow rapidly. In oncology,

we focus on oral therapy and hematological injectable

products because there is less competition in this market.

Q: What are the company’s plans to enter other Latin

American markets?

A: We have already selected a portfolio of around 15 products

to be sold in Latin America. In the near future, Accord Farma

will be exporting to most Latin American countries. We will

increase our plant’s capacity in the first half of 2017 by 30-40

percent and by 2018 at least 10 molecules will be exported to

at least two to three countries. By the time this is completed,

stability studies will have been carried out and we will be fully

ready to export. We will rely more on CM but if after 2018

we require more plants then we will build them. A plant can

be built in a year.

Q: What have you learned from other generics markets and

how is that applied to Mexico?

A: Actually, many of the strategies we implemented in Mexico

were copied elsewhere. Globally, the company is known for

CNS drugs, which we did not implement here. We chose

oncology, which other countries are now copying and

globally there is now a large pipeline of oncological products.

Q: Accord Farma promotes itself as a fast-growing

generics company. What is your growth rate and how will

you sustain it?

A: We work in specialty medicines, oncology mostly.

We grew by 40 percent in 2016 in Mexico and we intend

to grow by a similar margin next year through our

biotechnology facility in Toluca, which will begin operating

in July-August 2017. We are adding new molecules,

which will ensure our continued growth and we expect

biotechnological products to boost this further, with a

30-40 percent year-on-year increase expected in that

segment. The biotechnological facility will produce mostly

oncological products. Around 15 percent of our revenue

comes from biotechnological products.

We are among the top three companies for oncological

products in Mexico in the private generics segment. We sell

seven or eight molecules to the government and oncology

is our core business here. We are not actively seeking to

increase government sales — we want 33 percent of our

business to go to the government and we are maintaining

this percentage. The advantage of this strategy is that as

government business is acquired year by year, even if we

lose a tender we will not suffer that much.

Q: What is the strategy behind manufacturing solely your

oncological line in Mexico?

A: We import around 80 percent of our products but we

know that the future also lies in manufacturing locally. We

chose to produce oncological products because those

require a smaller manufacturing facility with high potency,

while other products are sold in high volumes, requiring a

large plant, which involves high costs. Therefore, we are

choosing niche products to manufacture locally and we can

go down the contract-manufacturing (CM) route for others.

We already manufacture four oral generics this way and we

AGGRESSIVE GROWTH FOR INDIAN PHARMASANDEEP BANEDirector General of Accord Farma

VIEW FROM THE TOP

Accord Farma is an Indian-based generics company that

entered Mexico in 2006. It has three lines: Onco Care, Farma

Care and Cliniq Care. Oncological treatments are its primary

focus in Mexico

103

INSIGHT

Generic medicines are on the way up in Mexico, forcing

changes on Big Pharma that are reshaping the market,

says Arístides Salazar, General Manager of Mexico,

Central America & the Caribbean Region for Emcure

Pharmaceuticals, a company that works in R&D and

manufactures for leading companies such as Roche.

“The golden years of Big Pharma are over and the entrance

of generics has changed the game,” Salazar says, adding

that “the future of the industry besides genomic medicine

is in biosimilar drugs and generics.”

According to Deloitte’s 2016 Global Life Sciences Outlook,

generics were expected to reach 36 percent of health

spending by 2017. “In Mexico, around 80 percent of

medicines in terms of units are generics,” says Salazar, which

he attributes to the high volume purchased by the public

sector in tenders and due to their low-price points. “The

problem with Big Pharma companies is that the process of

decision-making does not take place locally, which means

decisions must be taken at higher levels of the corporate

ladder, thus delaying negotiations. Emcure’s ideal is to have

a flexible business without ruling big companies out.” Its

flexible approach allows the company, which manufactures

chiral molecules, generics, biosimilars and novel drug-

delivery systems, to adapt to the markets it enters. “The top

priority is to consolidate the Mexican subsidiary by taking

advantage of the opportunities we have here,” he says.

The company has no manufacturing plant in Mexico. With

no FTA between Mexico and India, it is licensing out the

production of its medicines to other companies. “There are

several companies with unused capacity that are looking

to manufacture for other companies,” Salazar says. Emcure

considers entering alliances with those companies, although

it may invest in building or acquiring a manufacturing plant

once it has reached sufficient critical mass in sales. “Then,

we could harness distribution to the US and the rest of Latin

America and the Caribbean,” he adds.

Emcure aims to introduce revolutionary products to the

Mexican market, to start taking part in public tenders and

to sell its products locally under its own brand name. “If

we can support Mexican health with accessible and high-

quality products, we must do it,” says Salazar.

Alliances are key to the company’s market penetration

in Mexico because they allow the company to insert its

products into the portfolios of its partners. For example,

Emcure has licensed out its gastrointestinal product

Gamo (Levopantoprazol) to Sanfer, one of the largest

Mexican generics players. “Our company has at least four

other partnerships under development,” said Salazar.

In Mexico, the most important segments for Emcure

are gastrointestinal and cardiovascular. However, it

works a series of therapeutic sectors at the global level

with distinct production lines focused on each target

country’s needs. Emcure’s global portfolio includes HIV,

oncology, biosimilar drugs, diabetes, gastrointestinal,

cardiovascular and painkillers, among other areas.

“Diversification enables Emcure to adapt to the needs

of the market and customers and to the portfolios of our

partners,” Salazar says.

The company looks forward to eventually participating in

the diabetes segment with an integral portfolio of related

products, as therapeutics for diabetics mkae up one of

the biggest sectors in the global pharmaceutical market,

especially in Mexico. Its portfolio includes modified

molecules and innovative combinations that reduce

cholesterol levels and thus the chance of cardiovascular

arrest in diabetic patients. Emcure expects to start selling

its products under the Emcure brand in three to four

years. Building a manufacturing plant is a possibility in

five to 10 years but its short-term priority is to consolidate

partnerships and to start the registration process for its

products.

ALLIANCES CREATE A PATH TO GROWTH

ARÍSTIDES SALAZARGeneral Manager of Mexico, Central America & the Caribbean

Region for Emcure Pharmaceuticals

“In Mexico, around 80 percent of medicine

units are generics”

104

Production line at Aspen Labs' Vallejo plant

105developing products and brands that best fit each of their

strategies. Even smaller pharmacies have varying strategies.

Some sell from behind a counter like traditional pharmacies,

whereas others are more like mini-supermarkets where you

could even buy groceries and other convenience items. This

is a model more often seen in the US but it is a growing

trend in Mexico.

Q: How much more receptive are Mexican consumers and

authorities to products from a US-based company than

from other countries?

A: Perrigo has a significant footprint in Mexico with four

state-of-the-art manufacturing sites. The vast majority

of our products are manufactured locally and all have

marketing authorizations from COFEPRIS. I am not sure

that consumers make any distinction between local and

imported products but both retailers and consumers have

confidence in our quality and service. The big change in

recent years has come from the growing confidence in

generics by Mexican consumers. Every day, more and

more people prefer to buy generics vs brands, with full

confidence that the quality and therapeutic effect will be

the same but at a much more affordable price.

Q: How important is Mexico for Perrigo globally?

A: Our business in Mexico is extremely important to

Perrigo's global operations. Not only do we share a very

similar business model with the US branch of Perrigo, but

we service many of the same strategic customers that have

presence on both sides of the border. We have identified

Mexico as the country in Latin America with the greatest

potential for growth as the economic and demographic

conditions are very promising for our industry. We believe

that each day there will be more opportunities to develop

significant supply chain partnerships between our countries

due to NAFTA.

Q: What does innovation entail for a company focused

on generics?

A: For us, innovation has to do with effectively developing

high-quality and affordable generic versions of drugs

whose patent has or will expire. To achieve this, we

must develop the products our customers require, file

for approval from local health authorities and do our

best to be first to market. Another source of innovation

comes from our business model, as we develop strategic

partnerships with our customers to launch their private

labels. Retailers do not have manufacturing and we are

manufacturers without stores.

Q: Perrigo now owns NiQuitin. How popular are these

tobacco-replacement products in Mexico?

A: NiQuitin is a great brand and a very effective treatment.

Unfortunately, we found that NiQuitin had been somewhat

neglected in the Mexican market and there were many

out-of-stocks resulting in many consumers not being able

to continue their treatment. However, we are correcting

those supply issues and customers are now able to stock

the products. There is a global trend to stop smoking

and Mexico is not the exception. Recent legislation is

making it harder to be a smoker and there is a growing

trend toward wellness that has made people more likely

to drop the habit.

Q: How are your products distributed between the public

and the private sectors?

A: The public sector represents around 15 percent of

our sales and we sell only through distributors and only

specific products. In the private sector, we are partners

with large and small retailers in Mexico in the development

of their store brands. Some laboratories focus more on

their own brands and others sell almost exclusively to

the government. We operate opposite to that because

most of our business, capacity and efforts are focused on

manufacturing for our retail customers.

Q: How does Perrigo develop its strategy for each retailer?

A: Each retailer is different, with distinct formats and

specific strategies. Our job is to work with them in

INNOVATING WITH HIGH-QUALITY GENERICS

RICARDO GANEMVice President and General Manager of Perrigo

Perrigo is one of the world’s largest manufacturers of private

label goods for retailers, leading the OTC sector. Founded in

1887 in the US, it has been present in the Mexican market

since 1954

VIEW FROM THE TOP

106

INSIGHT

STRICT RULES FAVOR LOCAL PRODUCTION

In Mexico, the largest single purchaser of generic

medicine is the public sector. It is no wonder then that

increasing sales to this sector is widely seen as a solid

growth strategy. In 2017, IMSS alone spent MX$41.9 billion

(US$2.3 billion) on the consolidated purchases, acquiring

1,371 types of products, 63 percent of which were

generics. However, the tender system favors companies

that have manufacturing plants in Mexico, seemingly

leaving those that do not out in the cold. That is enough

incentive to build and produce locally, says José Díaz,

Executive Director of Indian pharma company Micro

Pharmaceuticals.

“Mexican law states that only Mexico-produced products

can participate in the largest tenders. This is why we want

to construct a manufacturing plant.” There is a profitable

loophole, however: companies that do not produce in

Mexico can sell to the government when larger companies

cannot meet the tenders. “This is what we are doing:

supplying products that are out of stock elsewhere. At

the moment, we can only aim for the crumbs of the cake,

while companies that produce in Mexico take large slices,”

Díaz says.

The consolidated purchasing system often means

enormous savings for the public institutions that

participate, representing MX$3.4 billion (US$188 million)

in 2017. However, Díaz points out that this often obliges

companies to operate at a loss and is not necessarily

better for everyone. “Sometimes the health sector sets

costs extremely low and it seems impossible that the

product could be sold at a price so low it is below the

production cost,” Díaz says.

Micro Pharmaceuticals Mexico is not closed to working

with the public sector and once its manufacturing

plant is up and running, it looks forward to finding new

opportunities, Díaz says.

The Mexican generics market as a whole was worth

US$3.33 billion in 2015, according to Seale & Associates.

Although Micro Pharmaceuticals has almost 500 products

available to purchase in India, only 12 are on Mexican

shelves due to slow regulatory approval.

“We do not know how long it will take to get approval

for the other products,” says Díaz. This means that

Micro Pharmaceuticals Mexico cannot rely on its large

portfolio for sales and growth. Instead, it has created

alliances with pharmacies and national pharmaceutical

laboratories. “One of the alternatives we are looking at

while waiting to gain critical mass is to associate with

national laboratories that can manufacture for us here in

Mexico,” says Díaz.

Micro Pharmaceuticals Mexico is also looking at

pharmacies for allies because they have a great volume

of own-branded products. The company is keen to enter

this segments with the large pharmacy chains, including

those in supermarkets.

An expansion from Mexico to Central America is also in

the works. “We are on the verge of closing a deal with

a Guatemalan distributor and we are participating in a

US$12.5 million tender in Guatemala. We will continue to

look for similar opportunities across Central America,”

says Díaz. The products it takes to Central America will

not be those available in Mexico, as the company adapts

each portfolio to the country’s needs. “What sells in India

will not necessarily sell in Mexico,” he explains.

These countries are easier to enter for foreign companies

because regulation is not as strict as in Mexico. “Whereas

in Mexico we cannot sell a product that does not have

Mexican registration, in Central America a product need

only be registered once, anywhere, to be available for

sale,” Díaz says. In addition, COFEPRIS is becoming

increasingly recognized globally as a regulatory agency

that demands high standards. Díaz believes the company

can compete against the multitude of products available

in less-strictly regulated countries with its high-quality

products produced in FDA-certified manufacturing

plants.

“One of the alternatives we are

looking at while waiting to gain critical mass is to associate with national laboratories that can manufacture for us here in Mexico”

José Díaz, Executive Director of Micro Pharmaceuticals Mexico

107

INSIGHT

For generic companies, the rules of the public purchasing

system have become clearer since the establishment of the

consolidated purchase. However, the low prices paid by

the government in the process have led them to seek more

opportunities in the private sector, says William Escobar,

General Director of Grupo Unipharm, an international generics

company that is expanding to the commercialization of

branded generics in its Mexican division.

“We want to go out with a new sales projection in the

Mexican market. Our corporate structure here is still at a

low level compared to our businesses in the Andes and

Central America. Our vision is for Mexico to represent 75

percent of our operations and make the country our largest

market,” Escobar says.

The company’s main objective with this commercial change

is to go from “quality product at a very low price, to high-

quality product at a fair price,” Escobar says. To achieve this

goal, the pharmaceutical company, founded in Switzerland

and based in Guatemala, is working to restructure its brand

in the Mexican market, where the company’s operations

grew 186 percent over the past year and with growth

expected to reach 300 percent in 2017-2018.

Grupo Unipharm has been in the Mexican market for 20

years and its portfolio is composed of a primary care line,

antitussives, antibiotics, products for women’s health,

minerals and vitamins. In this context, the company is

planning a new aperture to the market with a line of branded

generics to expand private purchases and thus balance its

sales in the public and private sectors, which now represent

76 and 24 percent, respectively. “The essence of Grupo

Unipharm is to be a branded generic laboratory. Now we have

both lines, pure generics for the government and branded

for private companies,” says Escobar. Given the race to the

bottom in terms of prices in the generics industry, Unipharm’s

new line is aimed at chronic diseases, providing solutions for

patients with recurrent cardiometabolic conditions such as

hypertension, diabetes and obesity. There are also products

for CNS, depression and for neuropathic pain. According to

Escobar, this line will help the company migrate to a position

halfway between the generic and the innovative brand. “With

the quality and prices we will bring to the market we want

to create more loyalty with patients and show the medical

community that we are cost-effective.”

Besides increasing its portfolio from 36 to 54 products by

2018, Grupo Unipharm’s strategy also focuses on getting

closer to health professionals by sending sales representatives

to visit them face to face. Just like other medium-sized

companies, Grupo Unipharm is pressured by market demand

to be more efficient, faster and better. To meet this demand,

the company is developing plans for the construction of a

new plant in the State of Mexico that will manufacture solid,

liquid, semi-solids and sterilized drugs. The plant will pursue

international certifications to be more functional and dynamic

for the grup's operations in the region.

RENEWING COMMERCIAL VISION IN A COMPETITIVE MARKET

WILLIAM ESCOBARDirector General of Grupo Unipharm

Source: statistica.com with the latest information available

2014 MEXICAN DRUG MARKET SHARE

DISTRIBUTION OF MEXICAN BRAND VS GENERIC DRUG MARKET AS OF 2014 BY UNIT

Retail generic

Institutional generic

Retail brand generic Institutional

original brand

Original retail brand

DISTRIBUTION OF MEXICAN BRAND VS GENERIC DRUG MARKET AS OF 2014 BY VALUE

Retail generic

Institutional generic

Retail brand generic Institutional

original brand

Original retail brand

By value By unit � 45.2%

� 20.2%

� 15.2%

� 10.2%

� 9.2%

� 59%

� 17%

� 14%

� 8%

� 2%

� Patented brand retail sales

� Branded generic retail sales

� Non-branded generic retail sales

� Generic institutional sales

� Patented brand institutional sales

Babyleo equipment for neonatal care

109

Mexico has great potential for medical device manufacturing. Baja California has

become a cluster for many international brands attracted to the quality human

capital and low operating costs in a strategic location. According to Global

Health Intelligence, more than 4,000 people are employed in this manufacturing

hub. Technological development is driven by the aging population and the

widespread prevalence of age-related conditions such as hearing problems,

mobility issues, cardiovascular and CNS conditions. Another driver is the

burden of chronic diseases that suggest the development of devices that aid

people with cancer, diabetes and lung diseases. Innovation has mostly focused

on facilitating treatment and early diagnosis, which is key to improving quality

of life and the rate of successful outcomes.

Medical devices come in all shapes and sizes and this chapter will provide an

overview of devices big and small. From the production of MRI machines to

surgical equipment, from wound care to pregnancy tests and heart valves

to knee replacements, all will be discussed in this section. It will showcase

interviews from the companies that make these devices and will focus on their

role in the Mexican healthcare system and the regulatory challenges they face.

MEDICAL DEVICES

5

111112 ANALYSIS: Good Manufacturing Picture Helps Overcome Economic Challenges

114 VIEW FROM THE TOP: Mauricio Valero, Linet Group SE

116 VIEW FROM THE TOP: Javier Giraud, Fujifilm

117 VIEW FROM THE TOP: Juan Pablo Solís, Becton Dickinson

119 VIEW FROM THE TOP: Francisco Morales, 3M

120 VIEW FROM THE TOP: Martín Ferrari, Dräger

121 VIEW FROM THE TOP: Alejandro Paolini, Siemens Healthineers

122 VIEW FROM THE TOP: Nelson Valenzuela, Arthrex

123 SPOTLIGHT: SynergyRF System with ApolloRF Probes and SynergyUHD4 System

124 INSIGHT: Germán García, Smith & Nephew

125 VIEW FROM THE TOP: Fernando Oliveros, Medtronic

126 INFOGRAPHIC: The Medical Devices Segment in Mexico

128 VIEW FROM THE TOP: Carlos Jiménez, B. Braun Aesculap

130 INSIGHT: Ulises Bacilio, Grupo PTM

131 VIEW FROM THE TOP: Zaid Badwan, MediPrint

CHAPTER 5: MEDICAL DEVICES

TMTMTM

112

GOOD MANUFACTURING PICTURE HELPS OVERCOME ECONOMIC CHALLENGES

“The prices are also low so they are not

sustainable in the long term. We can offer

those prices for one year but not several years

running, especially with the depreciation of

the Mexican peso against other currencies.

This is not sustainable and endangers quality,” said Martín

Ferrari, Director General of Dräger Mexico. Ferrari says

the first step should be for the government to understand

the value of complete solutions and then change the

model to purchasing based on specific therapeutic needs.

He believes that government purchases of equipment

from different brands for a surgical room will then require

different maintenance teams, different guarantees and

different providers. If it buys integral solutions, there will

be more guarantees, he believes.

OUTSOURCED MANUFACTURING

Despite the economic difficulties, foreign companies

are tapping into Mexico’s strong potential as a base

for outsourced manufacturing of both medical devices

types classified by CANIFARMA: Supportive Products

for Health (PAPs) and Reactive and Diagnosis systems

(RSD). According to CANIFARMA, PAPs are widely

produced in Baja California and, based on ProMéxico

data, the northern state has become a cluster for many

international brands, mostly from the US and Europe,

attracted by low operating costs in a strategic location

and quality human capital for manufacturing. In fact, the

US provides 70 percent of the firms based in Tijuana and

Tecate and 86 percent of the top investors, according to

ProMéxico.

Mexico generates US$8 billion in medical devices exports

and 92 percent of those exports go to the US, says Edgar

Romero, President of AMID. Broken down by product,

Mexico is the third global exporter of tubular suture

needles and the fourth for instruments and devices for

medicine, surgery, dental and veterinary health, based

on ProMéxico data.

According to INEGI Mexico is home to approximately

400 exporting companies, most of them focused in the

manufacturing industry. INEGI data also shows there

are more than 2,500 economic units specialized in

medical devices in Baja California, Tamaulipas, Sonora,

Nuevo Leon, Mexico City, Jalisco, State of Mexico and

Coahuila. In addition, ProMéxico predicts that by 2020

the production of medical devices in Mexico will reach

US$25 billion.

In November 2016, the Mexican peso became a victim

of the US elections. Before voters went to the polls, the

already-weakened currency was at MX$18.5 per dollar.

By the time the votes were counted, the peso had sunk

to MX$20.74, a historic low against the US currency that

pushed up prices of imported goods. Coupled with lower

oil prices that forced government budget cuts, medical

devices companies have increasingly turned to the

private sphere to support their bottom lines.

“We gained market share and we grew above the market

but it was difficult because of the peso’s devaluation

against the US dollar and cuts to public budgets due to

the drop in oil prices. However, our growth was stable

thanks to the private market, which continued to invest

despite the fact that the public market contracted,”

says Alejandro Paolini, General Manager of Siemens

Healthineers Mesoamerica.

As the government trimmed its budget, it also offered lower

prices for products. In 2016, the Ministry of Finances and

Public Credit rolled out a series of cuts, slashing its budget

in February by MX$132 billion (US$7.3 billion), in April by

MS$175 billion (US$9,7 billion) and in September by another

MX$239 billion (US$13.2 billion). Among the top targets were

health and education, which had a direct impact on the

purchasing capacities of health institutions. The consolidated

purchase system has helped the government to continue

purchasing supplies and drugs while saving money. Since

2013, IMSS has saved MX$14 billion (US$777 million) through

the scheme, said IMSS Director General Mikel Arriola in 2016.

Companies have few qualms about the system, believing

it a good government initiative; however, they say the

purchases should be oriented toward integral acquisitions

by therapeutic areas instead of individual products that, sold

at low prices, are not profitable.

ANALYSIS

Over the last year, the medical devices industry has

faced challenges from currency depreciation to budget

cuts that have forced it to make the most of the Mexican

manufacturing industry’s capabilities

Mexico generates US$8 billion in medical

device exports and 92 percent of those

go to the US

113

will increase investment in innovation because less time needs

to be spent on other things,” says Romero.

In addition to local incentives for the medical devices industry,

Mexico still has room to boost its position in the outsourced

manufacturing sector. ProMéxico's Sector Diagnosis study for

the medical devices industry suggests the main obstacles to

development are a fragmented and bureaucratic healthcare

system, a low expenditure in health per capita and a lack of

trained staff in health institutions to use the technology. “The

medical devices market in Mexico is underdeveloped, which

means there are many opportunities to grow,” says Germán

García, Director General of Smith & Nephew, a UK company

specialized in wound management and orthopedics.

According to the study Medical Devices Outsourcing

Market 2016-2020, the global outsourced manufacturing

industry is growing at a compound annual rate of 11 percent.

A study developed by Technavio showed that the major

reasons for outsourcing are “gaining specialized expertise,

harnessing a high supply chain, avoiding issues such as high

manufacturing costs and overcoming capacity constraints.”

AMID’s Romero says the government faces the challenge

of how to evaluate the new devices and ensure that the

most innovative medical devices reach patients. “Now,

from releasing a product to releasing its next generation,

there are only two or three years and the evaluation system

for new products is not used to working with such short

time frames. Medical devices account for 70-80 percent

of sanitary registrations in Mexico. How to evaluate them

and the cost/benefit over time is a new challenge for any

government, including Germany and the US. The main

challenge is bringing these devices to the country.”

Adding to Mexico’s attractiveness is the pool of human

resources available to companies looking to establish

manufacturing sites in Mexico. According to Global Health

Intelligence, more than 4,000 people are employed in

the Baja California manufacturing hub. US-based health

technology company Becton Dickinson, which focused on

IV devices for drug administration, is among those taking

advantage of the country’s talent. “Of BD’s 45,000 global

associates, 9,500 are Mexican, or nearly 20 percent. They

are distributed throughout our operations in Mexico City, San

Luis Potosi, Sonora and Baja California. We export products

made in Mexico to the US, Asia, Europe and the rest of Latin

America,” says Juan Pablo Solís, Vice President and General

Manager of Becton Dickinson Mexico, Central America and

the Caribbean.

Mexico’s strategic location, with access to the Latin American

markets as well as the US and Canada, is attractive for

European companies, such as global supplier of hospital beds

Linet Group SE. “To ship beds from the Czech Republic to

Chile takes two and a half months. The entire Pacific coast

is far from Europe, so a Tijuana plant (which Linet plans to

build) would benefit these countries, especially Peru and to

some extent Ecuador,” says Mauricio Valero, the company’s

Managing Director in Mexico.

The process for approval of medical devices has also improved

after COFEPRIS decided to deregulate certain accessories.

AMID is responsible for 80 percent of COFEPRIS’ sanitary

registers and the association’s President believes the

decision to deregulate some items ultimately will lead to

more investment. “Deregulating these items is good because

COFEPRIS can use its time to check true technological

innovations instead of regulating these other products. This

Categories of medical devicesClassification of medical devices

according to the risk implied by their use

Medical equipment: apparatus, accessories and instruments that have a

specific use and are intended for surgical or exploratory procedures, diagnosis,

treatments, rehabilitation or for biomedical research activities.

• Class I supplies for which security and

efficacy is approved and that are

not introduced inside the body.

• Class II might have variations in

concentration of the material they

are made from, usually they are

introduced inside the body for less

than 30 days.

• Class III supplies recently approved for

medical practice that are introduced

inside the body and stay in for more

than 30 days.

Prosthetic, orthosis and functional aids: devices intended to replace or

complement a function, an organ or tissue.

Diagnosis agents: all supplies, including antigens, calibrating antibodies,

controls, reactive, reactive equipment, crop and contrast tools and any others

used as aids for other clinical or preclinical procedures.

Supplies for dental health: all tools and substances used for dental health.

Surgical and healing materials: devices and materials that with or without

antiseptics and germicides that are used in surgical practice or in treatments of

continued use.

Hygienic products: materials and substances that are applied to the skin or

cavities that have pharmacological or preventive purposes.

Source: COFEPRIS

114

Q: How is your business divided between the public and

private sector?

A: The public sector’s contribution in terms of medical

devices is much more important. As of 2016, the public

sector accounted for around 60-65 percent. Our business

model does not include direct sales; we work only with

distributors and we reach most of the public sector. This

is part of our strategy to serve the market in the best

way possible. Distributors are much better at navigating

the public market. Hospital chains, the main contributors

to the private market, know that they would not receive

a high degree of added value from local distributors so

they prefer to do business directly with a company if it is

located within the country. Private sales do happen and it

is an area of business we are looking to further develop

in the future. Our range of products is the same for both

sectors and globally. There is no difference between

developing countries or mature markets. If people need

a solution then it must be offered to them, even if it costs

a little more.

Q: What is the company’s strategy in the face of public

sector budget cuts?

A: Fortunately, our products suffer less from budget cuts.

Cuts tend to affect the entire construction of a hospital

rather than our business, which comes mostly from new

hospitals. Because information pertaining to new hospitals

is widely available, we can begin working in advance to

position our products. The past two years have not been

easy for the medical devices industry in general but they

have been fantastic for us. This is our third year of operations

here as a subsidiary and Mexico is our most important

market in north Latin America. In our first year, we sold a

little under €2 million B2B, €4 million the following year and

an estited €8 million in 2016. This is exponential growth and

we hope it continues.

Q: What is behind the company’s strong growth?

A: One factor is the product itself. It is of high quality

and produced in the Czech Republic, which in terms of

manufacturing costs has many similarities with Mexico and

both have a high-quality labor force. Manufacturing in the

Czech Republic has been recognized for many years for its

excellence in cars, trucks and heavy equipment. Beds are

no exception. There are two manufacturing centers, one

in Germany and one in the Czech Republic. The quality

control we gain by manufacturing the product under one

roof and our competitive pricing also contribute to the

product’s success. In addition, we sell in Mexican pesos,

not in a hard currency. This is an important part of our

financial work here, which improves our profitability. There

are two major global companies selling these products,

both from the US, and they are comfortable in their

positioning. Linet Group SE is surely the third biggest

producer globally. Our solid marketing, our strategy and

the experience of our employees helped us make the right

decisions when establishing our model. Picking the “low-

hanging fruit,” as the Americans say, has helped us grow

quickly. We do not have national coverage and we do not

have a presence in the most remote areas. There are many

areas yet to be explored, such as our German beds for

geriatric or chronic care. This is a market that is opening

as there are many retirement homes opening, especially

for those with greater economic resources.

Q: What is the potential in Mexico to explore this new

market opportunity?

A: The retirement-home market will grow greatly, amid

an increase in the elderly population and in chronic-care

patients and as the number of children to look after their

parents decreases. We need general guidelines for this

area and companies like ours must create the appropriate

models. The National Institute of Geriatrics (ING) is starting

to operate public centers for this type of care, but the states

are not sure what infrastructure they should offer. The private

side is developing again, although it is a little disorganized.

Some homes have high standards and are very expensive

while others only offer shared rooms with no professional

care, furniture or fittings. A multidisciplinary team with

nutritionists, a geriatrician, nurses and the adequate

equipment are required. We are focusing on geographical

areas that are agreeable to retirees, especially areas that

have a large economic capacity such as popular tourists

spots like San Miguel de Allende or Baja California.

HIGH-TECH BEDS SECRET TO GOOD HOSPITALSMAURICIO VALEROManaging Director of Linet Group SE in Mexico

VIEW FROM THE TOP

115

clients a larger range of products. Borcard specializes in

birthing beds, which is in line with our vision to provide

quality care for women in labor. I believe this is an intelligent

and logical acquisition.

Q: What are the company’s plans going forward?

A: Our growth in Mexico, Latin America in general and in

the US is good. Linet Americas sold almost US$50 million

of beds. This is the market where the world number one and

two of the sector are from so it shows promise. The beds are

shipped from the Czech Republic so we have a disadvantage

on delivery times compared to the competition. It was

decided that we will need to find somewhere to put another

factory when the time and the sales volumes are right. At

the end of 2015 we went on a commercial and diplomatic

mission to Tijuana where there is an important cluster and a

number of companies producing medical devices. There is

a well-developed logistics chain there and the possibility to

have three ports for exportation: two to Mexico and one to

the US. There are advantages that are not found elsewhere

in the Americas and so it is practically decided that Linet

Group SE will build a factory in Tijuana. Global political

uncertainties combined with the Mexican election campaign

can delay projects. We will most probably see a few years

that are not so dynamic. Although this sector is a little

more immune to these factors, it will surely be affected to

some extent.

Q: What other countries in Latin America does Linet want

to expand to?

A: To ship beds from the Czech Republic to Chile takes

two and a half months. The entire Pacific coast is far from

Europe, so a Tijuana plant would benefit these countries,

especially Peru and to some extent Ecuador.

We also hope to increase our number of technicians and

clinical specialists. Because our beds are made in the Czech

Republic, they are designed with the strictest security

standards in the world. In 2012, the previous security

standard of 1998 was updated and our competitors in the

US have not yet adopted this stricter standard. It means

the beds support a little more weight, are a little taller and

are less likely to collapse. Measures have been put in place

to ensure that a patient’s extremities cannot be trapped

by the bed. The number of accidents that occurred in beds

was high, which is why this standard was adopted. Our

competitors have bought factories in Europe to sell to that

market, instead of updating their own factories.

Q: How is innovation shaping Linet’s offering?

A: Our intensive therapy beds are extremely important

medical devices for a patient’s hospital stay. The first

challenge is making people understand that this is not

a piece of furniture. It is a medical device that can cost

up to MX$1 million (US$55,000). That is a lot of money

and technology but the goal is for a patient to have the

best quality of life possible. One of our most important

innovations with this bed is the possibility to offer

automatic lateralization therapy because its construction

allows it to move laterally and to incline. In this way, a

serious disease called ventilator-associated pneumonia

can be avoided. This disease occurs in intensive-care

patients who are immobile. It is much simpler to avoid

this disease, which is costly and prolongs the patient’s

care, increasing the burden on the public sector.

We also have a line of active mattresses built around

plastic cells filled with air. The part in contact with the

patient’s body inflates and deflates, preventing the

patient from developing pressure ulcers. These are

serious wounds that are caused by immobility and are

expensive to treat. There are protocols in place to avoid

these pressure ulcers but there may be cases in which

the nurses cannot move the patient because they are too

heavy, for example.

Q: How can this technology help address the scarcity of

beds in Mexico?

A: The idea is to reduce as much as possible the length of

a patient’s stay in more complex and expensive areas such

as intensive care. There are not enough beds in Mexico,

which has a deficit of at least 20,000-30,000 beds. If we

can free up beds in complex areas through technology,

more patients can be treated and moved to less complex

areas of hospitalization. Another trend that could arise is

an increase in home care.

Although there is much to be done, the situation is

improving. We differentiate ourselves through aftersales

services. Beds are medical devices, not furniture, and they

require maintenance. As far as I know, we are the only

company with a clear aftersales service strategy. We also

have personnel specialized in clinical applications. We

provide thorough training to all that will be in contact with

the beds. Services such as how to clean and dry the beds

seem simple, but the useful life of a bed can shrink due to

something simple being ignored.

Q: How will the acquisition of Borcard impact Linet’s

Mexican operations?

A: We were previously collaborating with the company

because it complemented our product line and now we

have decided to acquire it. It is much simpler for us to offer

Linet Group, based in the Netherlands, is a supplier of high-tech

hospital and nursing beds for over 100 countries worldwide.

The Linet range also includes accessories such as anti-pressure

ulcer mattresses, mobile equipment and healthcare furniture

116

Q: What solutions do you offer in Mexico? Who are your

key customers?

A: There are five great subdivisions in which we are

working but imagenology is the most important for us. In

this division, we sell the only 50-micron mammography

machine on the market able to perform tomosynthesis and

enhanced-contrast mammographies. Over 400 hospitals

and clinics are fully integrated through our medical IT

division, either through the cloud or individual clouds.

To this end, Fujifilm just released its newest product

globally: Vendor Neutral Archive (VNA) software, which

fully interconnects hospitals and their departments. Our

endoscopy division participates in tenders for both IMSS

and ISSSTE, because these institutions perform many more

endoscopies than the private sector. The fifth division is

ultrasound, an area in which we are highly specialized and

which produces Sonosite, our key product.

Q: What value does VNA software offer the health industry?

A: VNA interconnects hospitals within a system to produce

the complete medical profile of a patient, including the

results of medical tests, and provides it to the physician.

It would be complicated for a single software supplier to

provide all required solutions in this category to IMSS,

the second-biggest health institution worldwide. I think

the best choice is not a single unified system for every

physician but rather there should be an appropriate system

for each physician and the chance for that system to be

interconnected with the rest. Telecommunication companies

will be Fujifilm’s allies during the entrance process of VNA

and therefore we work hand-in-hand with them. We have

signed a commercial alliance with Telmex. We have the

know-how, but they are aware of the market.

Q: How will Fujifilm manage the Big Data obtained

through VNA?

A: In medicine, there is a smaller amount of Big Data than in

other industries, so we manage it differently. While there is a

high quantity of small data in other sectors useful for creating

statistics, in medical IT we have fewer files, but they occupy

much more digital memory. For example, a mammography

machine is used to produce a final image of around 40MB,

although our latest mammography machine can produce a

final image of over 200MB. If this mammography includes

tomosynthesis, the file is 10 times larger. Finally, the resulting

mammography will be a single file of one gigabyte. Thus, Big

Data must be managed differently.

Digital technology enables the making of thousands of

photographs to produce more precise diagnoses and our

imagenology system can produce four or five thousand images

per test. New technology is needed to process and manage

these images at the rate the physician needs to visualize them.

To meet this need, Fujifilm developed a visualizing platform

called Picture Archiving and Communications Systems

(PACS). This software administers the images and uses a

new platform called DICOMweb. This technology interprets

all the archives it receives and provides better test results in

less time. Mexico invests the least in health in the OECD, with

public spending at US$541 per capita yearly and US$1,052

including both private and public spending per capita per year

as of 2015. About 30 percent of this money will be used for

medicine and the portion left for medical equipment is low.

I think this has been changing lately and we are becoming

less corrective and more preventive. To prevent breast cancer,

Mexico needs to invest in early detection equipment, which in

the long-term will save more money.

Q: Fujifilm invested in cellular regeneration company

Regcell. What are the advantages of such investments?

A: Fujifilm’s value is its innovation and the company does

not want to fall behind. As part of that the company has

been investing in cellular regeneration through companies

such as Regcell. Today, it is possible to send a DNA sample

and receive a piece of skin for healing burns. The goal of

the technology is to develop a cellular 3D printer capable

of printing different kinds of tissue. Tissue and organ

regeneration is where the industry is heading.

INNOVATING IN PREVENTIVE MEDICINE: IMAGENOLOGY, SOFTWAREJAVIER GIRAUDMedical Systems Manager at Fujifilm Mexico

VIEW FROM THE TOP

Fujifilm Mexico is the local subsidiary of Japanese giant

Fujifilm Holdings Corporation. Its medical systems division

comprises the areas of imagenology, endoscopy, ultrasounds,

dry chemistry and related support services

117

Q: How important is Mexico to Becton Dickinson’s global

position?

A: Mexico has long been a successful market for the

company. The country is the second-largest market in Latin

America after Brazil. Over the years we have gone from

being a syringe company to taking up a leading position in

clinical diagnosis, molecular chemistry and flow cytometry

markets. Of Becton Dickinson's (BD) 45,000 global

associates, 9,500 are Mexican, nearly 20 percent. They are

distributed throughout our operations in Mexico City, San

Luis Potosi, Sonora and Baja California. We export products

made in Mexico to the US, Asia, Europe and the rest of Latin

America. Our success in Mexico can be explained through

our commercial and manufacturing history of over 60 years.

Q: How has Becton Dickinson permeated the Mexican

market to ensure continued growth?

A: 2016 was an important year for BD. Globally, it was the

first year we operated with the integration of Carefusion,

acquired in 2015. Carefusion has a strong portfolio of

innovative products and with this alliance, the company

widened its footprint around the world. In Mexico, BD

consolidated its market leadership, focusing on providing

solutions for the country’s main health issues. We are

relevant in key fields such as women’s health and cancer —

we produce the best technology for the early and accurate

integrated diagnosis of cervical cancer. We continue to be

an important player in healthcare worker safety, providing

a wide range of products that make clinical and medical

practices safer for Mexican professionals, and we are

becoming more relevant in diabetes management, with a

large percentage of patients using our specialized syringes

and pen needles for their daily care.

Q: How can BD technology help to improve the effectiveness

and productivity of the Mexican public healthcare system?

A: Many innovative medical device companies, including BD,

offer a set of products that in the short-term may appear

to be more expensive than traditional devices. However,

the new features, such as safety for healthcare workers

and for patients, bring benefits in the long-run for the

healthcare system. If a patient can be treated with state-

of-the-art medical devices, it is more likely he or she leaves

the hospital sooner.

Q: What business models help keep high technology

affordable for the public and private sectors?

A: We work on different axes, first generating local clinical

evidence about the benefits of our innovative products to

the healthcare system, then early adopters among public

and private institutions embed the new technologies. Once

a product is proven to work, the system tends to adopt it

en masse. At Becton Dickinson, we have a wide range of

products that are affordable depending on the need, which

is why we play at different levels of the healthcare system,

following our purpose to advance the world of health.

Q: What is Becton Dickinson doing to support the

digitalization of the Mexican healthcare system?

A: We have several technologies that support healthcare-

system digitalization. Through our solutions for lab

automation, for example, we can connect different

instruments to link clinical results to a lab and a hospital

database. Our value proposition in medication-management

systems can help with drug/patient traceability that is so

badly needed in our country to avoid medication errors.

Q: What type of technology have you developed for the

protection of healthcare professionals?

A: We have developments designed to prevent accidental

punctures. A traditional syringe has a barrel and a needle,

so when nurses give an injection, they are vulnerable to

punctures. With our system, once the injection is made, there

is a mechanism activated by a spring that covers the needle.

These security products have seen great acceptance in the

private sector and we want to show the benefits of this line

to public institutions. Our clinical evidence shows that using

these products greatly benefits the entire healthcare system.

THE ANSWER TO TOP HEALTH CONCERNS: TECHNOLOGY

JUAN PABLO SOLÍSVice President and General Manager of Becton Dickinson Mexico,

Central America and the Caribbean

VIEW FROM THE TOP

Becton Dickinson is a US-based international health

technology company focused on IV devices for drug

administration, cancer diagnosis, diabetes treatment and

cellular research

118

119

Q: 3M manages a large variety of brands. Which are the

most important in Mexico and what is your added value?

A: We divide our business into five groups, each of which

is responsible for driving brand awareness locally. We want

the same image to be projected in Mexico, China and the

US. I am in charge of healthcare. In this sector, Littmann

is one of our most recognized brands and is synonymous

with quality. Another strategic brand is Tegaderm, which has

been growing globally and is the most important brand in

Mexico in terms of sales. Both Tegaderm and Littmann will

receive strategic investments in 2017. 3M provides added-

value because although a product may be more expensive,

its positive outcome will reduce total healthcare expenditure.

Q: What are the greatest challenges 3M faces in Mexico?

A: The country’s improving life expectancy and increase in

chronic diseases present an opportunity. The more cost-

efficient solutions we can offer, the better the system

will work. One 3M solution helps to prevent infections in

operating rooms, creating savings for patients and hospitals.

An example is a patient’s temperature. The longer patients

are in surgery, the lower their temperature drops, which

puts them at a higher risk of infection and cardiac arrest. A

blood transfusion also increases risk and thus the cost. By

maintaining a patient’s temperature throughout the surgery,

risk and costs are lowered. We estimate that less than 5

percent of surgeries in Mexico happen with a temperature-

management system. This is an opportunity for us.

Q: What strategy do you employ to enter your products

onto the National Formulary?

A: We need to show a positive clinical outcome, the expected

cost and the potential savings. If we add innovation just

for the sake of it, the authorities will not be interested

because it will increase cost without improving clinical

outcomes. If the clinical outcome is positive but does not

generate savings, it will not be accepted. We offer all these

requirements through health-related economic and data

analysis tools that allow us to show an infected patient’s

hospital stay would be longer, increasing overall costs. In

addition, this person is not going to work, impacting family

life. These are direct savings.

Q: What system is in place to track the user’s experience

of 3M products?

A: We have well-established metrics. In hospitals, for

example, we can measure infection rates and their

reduction. This is hard data that can corroborate our

progress. The same goes for hand hygiene. If people

comply, infections are reduced. The same applies to food

safety because we can prove there are no pathogens or

food viruses on instruments.

Q: What are the results of 3M’s work with the Fundación

Carlos Slim?

A: We signed an agreement with the foundation to

participate and collaborate in education through the

healthcare academy, which is an umbrella for any kind

of educational activity. We worked on this with the

foundation and with IBM. Students are eager to learn

about new practices and new technologies and we struck

an alliance with Del Valle University to provide these.

Part of the university’s responsibility is to show students

not only the history of their field but also what they will

encounter on a daily basis in their practice. If students

graduate knowing the latest technology, they can jump

into the workforce right away with the necessary skills.

Q: Which are your main objectives for 2017?

A: In healthcare, we are investing heavily in coverage,

adding more resources to broaden our reach, covering more

hospitals, dentists and areas in food safety. We look forward

to greater growth, considering that the market is expanding

due to chronic diseases. We are focusing on adding more

technicians, providing more education to the market and

more sales reps to reach more people. We look forward to

identifying key opportunities to offer solutions that improve

lives every day through science and innovation. This is our

ultimate and main goal as a company.

3M is one of the world’s largest manufacturers of science

and innovation products. An American company, it is focused

on health, automobile, energy, communications, security,

manufacturing and transportation

INNOVATION SAVES LIVES, LONG-TERM COSTS

FRANCISCO MORALESDirector of the Healthcare Divison of 3M

VIEW FROM THE TOP

120

Q: What have Dräger’s main achievements been in

digitalization since last year? What are you pursuing

through digitalization in healthcare?

A: We had a lot of success with the INCan and we have

integrated five data digitalization systems with electronic

records for critical care areas and the surgical rooms that

use our equipment. At a government level, we still have

the same flows and issues in the compliance process.

However, we have seen the benefits in the institutions we

are already working with. Now, nurses have more time to

focus on patients instead of collecting data on paper. The

doctors can make better and more precise decisions with

the new tools.

Q: What are the obstacles to integrating these solutions

in more hospitals?

A: There is a budget for equipment purchases but the

problem is the way the government buys and plans

investment in the mid to long term. The purchase is focused

on solving immediate problems, so we are missing better

evaluations and long-term planning to invest in solutions

that impact problems and processes. IMSS has changed its

purchasing process greatly and we hope this filters through

to other federal institutions.

Q: What other priorities does Dräger have within Mexican

healthcare?

A: We want to change our business model and go directly

to market, without intermediaries. We have been working

on this for a long time and many doors have opened as a

result of the government’s new purchasing systems.

Q: What benefits have you had from the new purchasing

schemes?

A: We saw a great result with the IMSS’ scheme and we were

successful in the consolidated purchasing of ventilators and

monitoring equipment. This is a good initiative from the

government, but it should focus on purchasing solutions

that could be integrated and become part of a system in

the future to provide a better service instead of purchasing

individual pieces of equipment. The prices are also low so

they are not sustainable in the long term. We can offer those

prices for one year but not several years running, especially

with the depreciation of the Mexican peso against other

currencies. This is not sustainable and endangers quality.

The first step should be to understand the value of complete

solutions and then change the model to purchasing based

on specific therapeutic needs. If the government purchases

equipment from different brands for a surgical room, they

will have different maintenance teams, different guarantees

and different providers.

Q: How are Dräger’s commercial interests split?

A: Our business operations are split 50/50 between

government and the private sector. We want to increase

our business with the private sector and achieve a

split more like 40 percent government and 60 percent

private. Due to its business model, the private sector is

more dynamic in its purchasing and we can process our

sales directly with clinics. The sector is on its way to

establishing integrated solutions that we can support

with our portfolio. We are seeing some success with

Dalinde and Hospitales Star Médica. We created an

alliance with Christus Muguerza for building surgical

rooms with B.Braun and Diphsa that could bring many

benefits for private institutions.

Q: In what areas does Dräger focus its innovation activity

and what new products are in the pipeline?

A: We are focused on intensive care, ventilation, anesthesia

and neonatal care. In the specific case of neonatal care,

this year we are launching a new incubator called BabyLeo,

a crib with thermoregulation. It provides many benefits

when working with newborns, such as efficiency, a quiet

environment for the baby at 40 dB(A) and ease of care-

giving for clinicians and parents. It is also possible to

perform surgical procedures inside the incubator while

maintaining humidity, temperature and oxygen control.

BENEFITS OF DIGITAL ERA ALREADY ON DISPLAYMARTÍN FERRARIDirector General of Dräger Mexico

VIEW FROM THE TOP

Dräger is a German company established in 1889 that operates

across sectors including mining, oil and gas and health, where

it specializes in medical devices for hospitals in the surgical,

intensive and neonatal care and monitoring sectors

121

Siemens as a whole. In addition, there are many synergies

and similarities between the other parts of the business,

although not for healthcare. We can now take strategic

decisions faster. If we want to make an M&A decision, take

a new strategy or create new products we no longer need

to refer back to Siemens. The brand name is to give us a

specific identity. Not everyone understands the meaning

at first but Healthineers expresses our engineering and

pioneering background applied to the healthcare industry.

Q: In 2016 you reached agreements with hospitals in

Turkey. To what extent is Siemens interested in agreements

with hospitals in Mexico?

A: We absolutely are. At the same time as continuing

investment in new products and R&D, we want to expand

our business into new services related to our products.

That is the final goal: to be the enabler or facilitator of

healthcare providers, enabling them to perform better with

higher output and lower costs. We are not looking for any

specific types of hospitals but it would have to be at least

a midsized hospital as this is not the type of project that

could be implemented with a small hospital.

Q: In February 2017 Siemens announced a US$200 million

investment for the next 10 years in Mexico. How much of

this is going to healthcare?

A: A small part of it will go to health. There are factories

and development centers related to the other businesses

but it would be difficult to have local production for health.

The typical example is magnetic resonance, as the annual

Mexican market is probably for around 20-25 systems. This

is not mass production, these are high technology products

and manufacturing is concentrated in one or two places

across the world. This is why healthcare will only receive

a small part of the US$200 million because most of it will

go to plants.

Q: There is a trend toward deregulation of medical devices

in Mexico. How does this impact your operations?

A: This trend is good for us as long as it is done intelligently

and efficiently. Regulation is a difficult topic because our

industry is highly regulated in all parts of the world and

it has to be protecting the population. However, it must

also be efficient and not be an obstacle for the population

to have access to the latest technology. A balance must

be struck between protection and access and I believe

COFEPRIS is working on this in an intelligent way. What

is important is that COFEPRIS has maintained an open

dialogue with the industry and we need to talk with them

through our associations such as AMID and CANIFARMA.

Serious companies want a regulated industry but regulation

that is efficient enough to avoid being an obstacle.

Q: What growth has Siemens Healthineers seen in 2016?

What were the main drivers of this?

A: In 2016, Siemens Healthineers Mexico had a good year

considering the context. We had double-digit growth, so we

can say that it was a good period in terms of revenue, as we

had many orders pending from 2014/2015. In terms of new

orders, we continued to grow but this slowed down and we

ended 2016 with high-single digit growth. We gained market

share and we grew above the market, but it was difficult

because of the peso devaluation against the US dollar and

public budgets being cut due to a drop in oil prices. However,

it was stable thanks to the private market as it continued to

invest despite the fact that the public market contracted.

Q: How has rebranding as Siemens Healthineers boosted

Siemens’ image and operations? What benefits is it

bringing to your operations and clients?

A: The new brand is just the final stage of a bigger process

that began with the separation of the healthcare business

into an independently managed business. The second step

was the implementation of the new strategy. Then, a new

structure, new business principles and corporate values and

the introduction of the new brand came. The main benefit

is that we have gained speed to react to client and market

needs. Siemens is huge and diversified. Total revenue

for health is €15 billion compared to over €80 billion for

CHANGE IN FOCUS FOR MEDICAL DEVICES GIANT

ALEJANDRO PAOLINIGeneral Manager of Siemens Healthineers Mesoamerica

VIEW FROM THE TOP

Siemens Healthineers is the healthcare branch of the German

electronics giant. It is mostly known for its medical devices,

which cover a wide range of therapeutic areas, with a focus

on diagnostics, imaging and IT

122

Q: What is your view on selling through public tenders

in Mexico?

A: Due to the market niche we work in, we are obligated

to deal with huge distributors that offer integral services,

which is complicated. They consolidate several brands and

sell a complete service to the hospitals of IMSS and ISSSTE,

although PEMEX, SEDENA and SEMAR have remained

outside this model. Both IMSS and ISSSTE classify Arthrex’s

technology as minimally invasive (MI) and 90 percent of these

MI procedures are abdominal, while 10 percent is for joints.

This turns into a fight every year as the volume reduces. Being

only 10 percent of the contract, distributors do not place the

same emphasis on arthroscopy. The ideal scenario for us

would be for integral services to end or include arthroscopy in

orthopedic tenders. Ideally, we would provide services directly

to government institutions but they never have the budget

to buy everything.

Q: What is Arthrex’s strategy to expand its reach in the

private market and to stand out against its competitors?

A: We have learned we need to analyze more factors before

making the decision to launch a new product, to focus on

more profound marketing studies using a sniper technique.

Globally, Arthrex has 12,000 products, of which 2,600 are

available in Mexico, which is the right number of SKUs

based on the Mexican market’s need. This has enabled us

to see growth rates of 17-18 percent in the country. Another

key point is service: when we sell an anchor, we are also

selling the accompanying equipment and a technician to

help. For MX$25,000 (US$1,389) worth of sales, we have to

move MX$600,000 (US$33,000) of equipment, products

and personnel. We have to define our service standards

and stick to them. We go with a full set of equipment, the

instruments are in perfect condition, the technician will be

well-trained and we will be there for anything needed. This

reinforces our credibility with doctors.

Q: Which products are you bringing to Mexico?

A: We do not want to deprive Mexico of innovation, so

we work on a diversified portfolio for A and B markets as

physicians move between distinct hospitals and different

reimbursement scenarios. In Mexico, the most common

surgeries would be shoulder instability, rotator cuff tears,

anterior cruciate ligaments rupture, meniscus reparation,

syndesmosis, Achilles tendon repair and internal braces for

ankle stability. These seven surgeries all have an A and B

portfolio available in Mexico.

Q: Arthrex has an educational center in Florida. To what

extent does the education you offer in Mexico help

doctors improve their skills?

A: In addition to the Florida Center we have one in Mexico

and one in Brazil because we have the obligation to correctly

train doctors to use our products. The courses are open to

everyone, even those who do not use our products. Some

courses are available online through Arthrex’s webpage,

which puts over 4,000 videos online, and through our

Surgeon’s Virtual App, which enables doctors to first

practice digitally before moving onto dry labs. In our labs we

use imported cadaveric pieces from the US. Unfortunately, in

Mexico the culture of organ donation is poor and if we have

chance to use a Mexican cadaver, the law is clear, demanding

use of the full body. Can you imagine putting a full body on

a table just to practice on the knee?

Q: What is the most important product you will be

launching in Mexico in 2017?

A: Apollo, a bipolar radiofrequency for arthroscopy. It will

be brought to Mexico in July 2017. Arthrex has the fastest

processing times of all medical device companies in Mexico

and our products are approved within an average of 60

days. In our 2015-2016 financial year, we registered 102

products. The priorities for this year will be to maintain

operational excellence and for our sales team to begin

identifying new opportunities and to relaunch technologies

that did not have the initial impact we had hoped for. The

second priority will be human capital management. The

third point will be to continue our great work in compliance,

not as an obligation but as a way of business.

ARTICULATE GROWTH FOR MEXICONELSON VALENZUELALATAM and Caribbean Director of Arthrex

VIEW FROM THE TOP

Arthrex is a medical devices company and a leader in new

product development and medical education in orthopedics.

The US-based company is a pioneer in orthobiologics,

arthroplasty and in the surgical treatment of arthritis

123

SYNERGYRF SYSTEM WITH APOLLORF_ PROBES AND SYNERGYUHD4 SYSTEM

SPOTLIGHT

The First Biopolar RF System to integrate with an Arthroscopic

Imaging System.

The SynergyRF System with ApolloRF Probes completes the

Arthrex® Synergy arthroscopy platform with an easy-to-read

“heads-up display” of operational settings on the Synergy 4K

monitor.

The Apollo MP90 Probe with multiple suction ports is designed

for efficient ablation and coagulation, and has an ideal working

length for shoulder, knee and hip arthroscopy.

MP90 Probe

XL90 Probe

Hook Probe

Aviso de publicidad No.17330020202C3318

TM TM

TM

124

INSIGHT

FLEXING MUSCLE IN MIDTIER KNEE REPLACEMENTGERMÁN GARCÍADirector General of Smith & Nephew

to reduce the price,” García says. The company, which

specializes in advanced wound management, sports

medicine, orthopedic reconstruction and trauma, works

with both the public and private sector. In Mexico, around

90 percent of its medical devices go to the public sector,

its largest single purchaser in the country.

“Innovation can drive costs down for the system. Sometimes

an innovative product is less expensive, more efficient and

carries many benefits for patients,” García adds.

Speaking to general market trends in medical devices,

García says that “the trend is to make smaller products

and less invasive procedures for the faster recovery of

the patient.” The materials used are also relevant. Smith

& Nephew has developed highly resistant plastics that are

lighter and less expensive than metal and can be used safely

for instruments and specific parts of prosthetics. A knee

prosthetic with these plastics can last for over 20 years.

The company also develops tools to perform arthroscopy,

such as TWINFIX, used for repairing joints. “This device is

friendly for physicians and the fixation products we use are

high quality,” says García.

Despite the government being a large client, doing business

with it is not so easy. “We have to develop a tender for our

new products, it does not come automatically,” García says.

“We must first present the product then talk to doctors

and institutions so they can develop the tender and then

we can participate.”

Registering a new device can also be time-consuming,

taking as much as two years. García calls for simplification

of the registration process because the medical devices

industry evolves rapidly. He also hopes for improved

access to medical devices in Mexico. “Half the population

has Seguro Popular, which is limited because it covers

only catastrophic diseases. They do not have access to

advanced medical products,” he says. But he is optimistic

about growth in the country. “The medical devices market

in Mexico is underdeveloped, which means there are many

opportunities to grow.”

Midtier knee replacements designed with affordability and

quality in mind offer a solution for shrinking health budgets

in emerging countries like Mexico. Prosthesis and medical

devices manufacturer Smith & Nephew believes the key

clues to reducing costs can be found in the specifics of

the population.

Knee replacement, a form of arthroscopy, is a common

procedure performed daily worldwide. It is most often

done on patients over 50 years-old, with over 90 percent

experiencing dramatic pain relief after the surgery, according

to the American Academy of Orthopaedic Surgeons.

ANTHEM, Smith & Nephew’s artificial knee, was developed

in emerging countries worldwide, where the population

is typically shorter than Americans and Europeans. The

company has also simplified the replacement process, as

it requires only three trays of surgical tools rather than the

seven previously required, which also reduces the overall cost.

“This product is the combination of two innovations: it is

specifically designed for Latin American and Asian markets

due to the size of the population and we have simplified

the number of pieces required for the procedures,” says

Germán García, Smith & Nephew’s Director General

for Mexico. “During the research phase, we began by

identifying bone characteristics of patients and then we

identified the best fit for those bones, combining the skills

of researchers, physicians and marketing personnel to also

reduce the number of pieces.”

Smith & Nephew works in both medical devices and

arthroscopy, the latter of which represents around a third

of its yearly sales and between 30 to 45 percent of the

Mexican market, thanks to a focus on cost efficiency and

innovation. The global arthroscopy market was valued at

US$4.0 billion in 2015, according to Grand View Research.

“We know that in developing countries in Latin America,

Africa and Asia the public sector budget is constrained,

so we try to develop products that are affordable for that

sector while maintaining quality. We implement innovation

Q: Medtronic has said the government needs to place more

importance on the healthcare sector. What progress has

been made?

A: Over the last two years, we have reached out to the

authorities, private companies, regulators, patients and

insurance companies to create an alliance to communicate

a common message: there is a need for a health reform

in Mexico that should focus on two areas. The first is to

separate financing from service provisioning and establish

a payment system that provides finance for any medical

service. The second change should be to open access to

the healthcare system, meaning that they should be able

to choose where to be treated.

Q: What strategy could lead the system to a better use of

healthcare resources?

A: We are one of the leading companies open to the creation

of a new health financing system in which the risks are

shared between providers and clients. As providers, we are

looking to work with the client to share risk by establishing

strategies such as performance-based payments. Under

such schemes, the customer will only pay if the product

achieves the desired performance or results.

Q: What has been the government’s response to these

alternative strategies?

A: It has been very good, but it is a challenge to make

it a reality because private companies are changing from

being providers to becoming partners. We are finding

many barriers. The regulatory bodies are very price-based

and they are close-minded to ideas like payment for

performance. Inertia has ruled the system for a long time

and it is very hard to change that. Lack of transparency is

also a major problem that prevents us from moving forward.

Q: What is Medtronic’s value proposition to ensure the

productivity and effectiveness that health institutions

require?

A: In terms of portfolio, Medtronic is the largest medical

devices company in the world. We provide integral

solutions for Mexico’s main health concerns. We are

the unique provider in Mexico of insulin bombs for T1D

patients. There are approximately 200,000 people with this

condition and only 1,300 insulin pumps users. Medtronic

is also open to sharing its global experience to quantify

and identify uncover needs inside the institutions. We are

working to develop information that will provide real data

on the costs of diseases because providers cannot offer

solutions without having total knowledge about the cost

of a problem. Finally, we can offer expertise in production

and manufacturing processes to institutions like IMSS or

ISSSTE thanks to our five manufacturing plants and the

13,000 employees we have in Mexico.

Q: Does the system have access to the technology it needs

to improve?

A: Patients in Mexico do have access to great technology.

There are patients who can get an artificial pancreas

at a clinic with integral services, but the majority of

the population has no access or very limited access to

basic health services. The responsibility for companies

like Medtronic is also to make technology available for

everyone. Lagging behind on technology implies a higher

cost for the system and for patients. As an example, we

have remote monitoring of heart rates that could allow 80

percent of patients to stay at home instead of going to a

hospital. However, the level of knowledge of doctors and

patients to use the equipment and the service model are

not connected.

Q: What actions is Medtronic taking to open access to

healthcare?

A: For us, access has four definitions: education and

training of human resources, doctors and nurses; available

and useful infrastructure; promote financing and establish

efficient service models. In education, we are working

on projects to better introduce technology to doctors,

especially in cardiovascular health, diabetes and obesity.

125

OPENING THE ROAD TO A NEW HEALTHCARE SYSTEM

FERNANDO OLIVEROSVice President of Medtronic

VIEW FROM THE TOP

Medtronic is a global technology company. It is a leader in

the development of medical devices focused on solutions for

diabetes, cardiovascular health and obesity. It has been in Mexico

for more than 40 years and it is present in more than 140 countries

126

THE MEDICAL DEVICES SEGMENT IN MEXICO

It took only 12 years for Mexico to become a major cluster in

medical devices manufacturering, achieving solid participation

in the global industry and a solid growth perspective.

A growing list of international companies have

invested US$1.94 billion (from 2005 to 2015) to

take advantage of the country’s human capital,

low operating costs and strategic location.

Medical devices come in all shapes, sizes and levels of

sophistication. The growth of the sector shows no sign of

slowing down.

INFOGRAPHIC

Medical-device manufacturers have reason to be positive. A

higher life expectancy, patients with critical illness, an aging

population and increasing home-based assistance will boost

new products and services

Germany

Italy

US

TOP INVESTORS

� 86% US

� 6% Italy

� 5% Germany

TOP INVESTORS

$8.41 Exports

$3.96Imports

156,831Jobs

$1.94FDI (2005-2015)

AT A GLANCE (US$ billions)

COMPETITIVE ADVANTAGESDRIVEN BY TIJUANA

EXPORTATION OF MEDICAL DEVICES BY STATE (US$ billions)

Over 30Production plants

Over 75Medical specialties

Over 7,100Sanitary registrations

Over1,400Products released (2013-2018)

Only 30km away from San Diego, Tijuana’s medical devices hub

impacts both Baja California's GDP and the US market (the biggest with

a global 38% market share).

• Top exporter in LATAM• Eighth exporter worldwide• Low production costs• Qualified talent • Export platform• Special federal programs • Next to the world’s top producer

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Mexico’s relevance for the US

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Sources: ProMéxico, El Economista

� Number of companies

127

0 10 20 30 40 50

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AustraliaAustria

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AustriaIndiaBrazil Russia South KoreaSingaporeMexicoSpainSwitzerlandAustraliaCanadaItalyUKFranceJapanBelgiumChinaNetherlandsGermanyUS

MEXICAN MEDICAL DEVICE MARKET (US$ billions)

TOP 20 COUNTRIES FOR MEDICAL DEVICE IMPORTS AND EXPORTS (US$ billions)

EXPORTS: MEXICO'S GLOBAL RANKING

MEXICAN MARKET OF MEDICAL DEVICES

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*Sales FY2014. Figures in US$ billions

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MEDICAL DEVICE PRODUCTION BY

REGION

MEDICAL DEVICE PRODUCTION BY

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� 41.0% North America

� 30.9% Asia Pacific

� 19.2% Europe

� 1% South/Central America

� 7.9% Other

� 38.2% US

� 22.1% China

� 6.5% Germany

� 4.2% Switzerland

� 4% Japan

� 25% Other

AMID’S AGENDA

AMID is the sector’s top association of companies; it has 30 Mexican and global firms as members.• For the health sector: simplify access to

innovative technologies.• For tax authorities: encourage investment

and improve transparency in acquisitions.• For economic promotion: build public

policies to boost competitiveness and exports.

MAIN COMPANIES WORLDWIDE*

Johnson & Johnson 27.50

GE Healthcare 18.29

Medtronic 17.00

Baxter International 16.67

Siemens Healthcare 15.77

Philips Healthcare 11.17

Cardinal Health 11.00

Covidien 10.66

Abbott Labs 10.11

Stryker 9.66

US$663 billion in 2015

US$894billion expected for 2020

PROJECTED GLOBAL GROWTH

128

Q: What were B. Braun’s growth numbers in 2016 and what

challenges did it overcome?

A: We grew 25 percent in 2016 between the two divisions,

while Aesculap alone grew by over 30 percent. This

growth was achieved despite the government’s budget

cuts and new purchasing habits. We participate in few

categories in the public tenders as the National Formulary

is increasingly targeting generalized products, which hurts

us. Sometimes, products with current technology and

quality compete against products with old technology

that are cheaper to produce, which limits our chance of

successful participation in certain areas. Of the 600 or so

categories in medical devices, we participate in only seven.

It is not that all our products are state-of-the-art, but a

10-15 year-old product is also at a disadvantage because

the required specifications for the product may be 30-40

years old. I do not believe this will change anytime soon

because the public sector is working on a reduced budget.

Q: What impact do you expect hemodiafiltration will

have in Mexico? How does it differ in performance from

hemodialysis?

A: Hemodiafiltration – a technology that combines

hemodialysis and hemofiltration – was launched here at

the end of 2016. Compared with hemodialysis, the machine

purifies the blood of urinary toxins and also filters out

B. Braun is 178-year-old German medical devices giant. It

operates in four main areas: hospital care, out-patient, aesculap

and atvium, which are concentrated in two divisions in Mexico.

Medical encompasses the first two, Aesculap the latter two

COMMITTED TO THE FUTURE OF HEALTHCARLOS JIMÉNEZDirector General of B. Braun Aesculap

VIEW FROM THE TOP

There are between 80,000 and

100,000 people in Mexico that

are undergoing peritoneal dialysis

smaller particles. The speed of flow can be modified to

better respond to patient needs. This is an easier therapy

for patients than hemodialysis and the results are better.

This technique could help around 65,000 people in Mexico

that are being treated with hemodialysis. However, there

are between 80,000 and 100,000 more people that are

undergoing peritoneal dialysis.

Although the associated costs are higher because more

advanced equipment is required, at the moment neither

insurers nor the public sector recognize a distinction

between hemodialysis and hemodiafiltration, so hospitals

are bearing the extra costs themselves and to provide

better care to patients. It is covered separately for patients

in private care because the supplies are billed separately.

Six clinics are now using hemodiafiltration equipment. We

do not sell the equipment but loan it as the machine is

much more expensive than hemodialysis technology.

Q: What are the main surgical trends permeating Mexico’s

operating rooms?

A: There is a strong focus on integral services and on cost-

reduction in public centers. Previously, criteria stated that

to offer integral services, one had to provide equipment of a

certain technological level and age but these specifications

have been removed to reduce costs. Now, devices can be

reused but the regulation does not specify how to reprocess

certain pieces, such as disposable devices. We are still

waiting on standards: how to wash them, for how long, with

which substance and which chemicals and how to perform

functionality controls. This has led to uncertainty regarding

cost. For example, if a service costs MX$100 million (US$5.5

million) one year and MX$80 million (US$4.4 million) the

next, ostensibly that means MX$20 million (US$1.1 million) in

savings. But if products are reprocessed, the internal costs

generated to do so should be taken into account. We do

not know what the true savings are.

As for the private sector, insurers are putting pressure

on hospitals to not pay high increases in the cost of

medical care. Hospitals are allowing for increases of 3-4

percent due to inflation but most products are imported

129

in US dollars or in euros. The increase in prices hospitals

negotiated with insurers was a maximum 8 percent, so

we are reaching a point where they cannot absorb these

costs. Possible solutions might be found by having more

efficient processes and through innovations, products and

patient treatments.

Q: Innovation has always been at the forefront of B.

Braun’s operations. What is next for the company?

A: We have many product lines to launch, including a

prosthetic that helps maintain bone structure. It will be

available in 2017 and will enter the National Formulary so

that public patients can have access. We will also launch

products intended for intensive care. Our technology of

continual therapy is connected to a patient for a few days

to slowly clean the blood and requires little effort from the

patient. This was a key theme in the World Nephrology

Conference, held in Mexico City in April 2017. We are also

building an auditorium for the Aesculp Academy and

B. Braun will participate in over 40 congresses in 2017,

demonstrating our commitment to the industry.

Q: How do solutions such as B. Braun Knowledge Center

and the Academy help you manage a more successful

business?

A: The Aesculap Academy is a foundation that was created

20 years ago and is independent of B. Braun. The concept

is to bring health professionals, specialized education and

knowledge to execute patient treatment in a safer manner

and to achieve better patient outcomes. B. Braun supports

the Academy through donations. The Academy has a grant

system and offers paying courses, which helps it maintain

its autonomy. B. Braun started the Academy but now it has

other partners such as the Mexican Academy of Surgery,

which has developed programs with the Aesculap Academy.

The Knowledge Center responds to a need to better train

our staff members in understanding processes, knowing

products and learning about authorization processes. This

is the basic platform for teaching B. Braun employees how

to work well in the company.

Q: To what extent are you impacted by COFEPRIS

deregulation of medical devices?

A: It is vital that deregulation happens, because it

makes no sense that a medical spatula used to hold

down a tongue has such high registration requisites.

Technically, it is not dangerous in use nor complicated to

manufacture. Deregulation is needed for these types of

products. However, B. Braun would see no benefit from

such deregulation because our product portfolio is much

more precise and more impactful on patients. We do not

manufacture a single product on COFEPRIS’ huge list of

deregulated products.

130

INSIGHT

MEXICAN HEALTHCARE INCHES INTO THE DIGITAL FUTUREULISES BACILIOCEO of Grupo PTM

are afraid they will not be able to see the image in as much

detail. “They are a dogmatic profession; they are not used

to changing their ways. This is true worldwide, not only in

Mexico.” The X-card is in use in four hospitals in Mexico:

two in Toluca, one in Puebla and one in Cuautla. “Millions

of radiographic sheets are still used every year in Mexico.

ISSSTE alone spends MX$30 million (US$1.7 million) per

year on these sheets,” Bacilio says, adding that eliminating

the radiographic sheet has been the company’s motto and

mission from the beginning.

The company has also digitalized its internal processes,

shortening its operating cycle by asking for immediate

payment and resolving cash flow issues. This has allowed

PTM to further invest in its technology and to provide

its customers and ultimately patients with newer, better

products and services. PwC predicts the global value of

connected health to reach US$61 billion by 2020.

Another product on offer is the Invox, a voice recorder

designed especially for medical professionals that speak

Mexican Spanish. It uses linguistic analysis to automatically

register keywords and categorize the recording, allowing

users to easily search through voice albums at a later date

and retrieve data. “We provide updates to the software

almost every month, constantly improving the product,”

says Bacilio, who believes that digitalization will also

allow companies and public-sector institutions to begin

collecting data on the services they offer and that they

will be able to analyze it and put it to good use, to better

serve patient needs.

Grupo PTM works with over 400 clients in every Mexican

state, ranging from small clinics to large hospitals. As of

December 2016, over 100,000 mammograms and 7,000

cancers had been diagnosed through PTM’s technology. The

volume of clients it works with has allowed the company to

begin compiling statistics. “The data we collect could be

useful for clinical research. For example, there are many

gastrointestinal cancers, in particular in Hidalgo,” says

Bacilio. “We also realized that Tuesday is the busiest day

of the week for medical appointments in Mexico.”

Digitalization is making its way across every sector of

the health industry. In addition to being environmentally

friendly, these solutions save costs and are practical, says

Ulises Bacilio, CEO of Grupo PTM adding the biggest

obstacle is not patients. “Doctors are the greatest resistance

we face,” he says.

Working in conjunction with global medical imaging giant

Phillips, Grupo PTM, a leader in technology solutions for

hospitals, provides interpretations of radiographs that are

delivered digitally in a matter of days. That compares with

the months it previously took to get an interpretation to

a patient, especially those in remote areas. The company

also provides cloud storage for the interpreted radiographs.

The X-card, its key product, allows patients to have their

medical history and images on hand at any point in time,

no matter where they are in the world.

The patented invention consists of a credit card-sized

plastic card that bears a unique code. The patient can scan

this code or enter it into the Grupo PTM website to instantly

access their medical images and share them with their

specialist of choice. In addition to being environmentally

friendly, these solutions save costs and are practical. “A

patient can load all his studies onto the card and it can

be read with a simple QR scanner on a cellphone,” says

Ulises Bacilio, CEO of Grupo PTM. If a patient loses the card,

he only needs to inform the company, which cancels the

code and reissues a new card and code. Despite the many

benefits, implementing digital solutions is not always easy.

“Patients rapidly accept innovations such as the X-card.

They find it amazing,” says Bacilio, explaining that doctors

PTM technology has diagnosed over 100,000

mammograms and 7,000

cancers

131

that market will be in healthcare. This makes sense to me

because although there are applications for the automotive

and aerospace sectors, they usually work B2B. None of

them are B2C. Health is probably the only market that

requires printing to be B2C, which is why it will grow a

lot. Also, we have made many improvements. We can print

hydroxyapatite, the material that makes up between 50

and 60 percent of human bones. If we print this material

and implant it into a person using stem cells, the body will

react to its foreign shape as if it were made of bone cells

and real bone will form around it. This is something that

could be possible in the next few years. The problem is

that certification for something of this kind is extremely

complicated. It requires a cleanroom that costs millions

of pesos. It is complicated for startups to fund elements

such as cleanrooms and big companies do not do it yet

because they are not sure about entering this B2C 3D

printing market. It is complicated but I think it will happen.

Q: How is the 3D printing industry regulated in Mexico?

A: There is no effective regulation for 3D printing around

the world. The FDA has just started thinking about

regulating it differently from other devices but technology

will always advance faster than regulation. 3D printing

can make almost anything but you need to regulate every

product that comes out of the printer. If the product is

sufficiently different from another, there must be another

piece of regulation. That is why people are only producing

one product and why regulating institutions such as the

FDA are thinking of implementing a special scheme. It is

complicated though. How will you know that someone

printing casts but who also wants to do brackets will do

them correctly? That is why I think regulation is there for a

reason, to protect people. So far in Mexico we do not have

a specific regulation or norm for 3D printing and we have

to comply with the general norms regulating casts.

Q: What are the benefits of creating new products in

Mexico and how open is the country to innovation?

A: Mexico is an interesting market. It is a country with a

large population with different problems, so there are

plenty of fields in which we can innovate. The creation of

innovative products should be aligned with national needs.

But it is important to understand that the distribution chain

for the healthcare sector is different in Mexico than in other

countries. The government, the private sector, integrators

and distributors interact based on different interests. Also,

there is a strong regulatory environment here and if you are

a startup, raising resources for a product you are not yet

selling can be complicated because it needs to be certified.

One of the advantages in starting with innovative products

is the possibility of being recognized in other ways, such

as through published papers or giving keynote speeches

in hospitals and medical congresses. Entrepreneurs can be

recognized through competitions. We have won some in

Mexico and Europe and that was our main source of funding

in the beginning. We also received some government aid

and now we are closing our first round of investment. Most

of our money goes to R&D and the government helped

us through programs offered by the National Institute of

Entrepreneurship (INADEM).

Q: How much is 3D printing used in healthcare and what

are the technology’s main advantages?

A: In Mexico not very much. Aside from MediPrint, I have

only seen some instances in which disabled people are

given or sold prosthetics that have no regulatory approval.

That is illegal but there is a need that has to be satisfied,

which wasn’t happening at an adequate market price point.

Besides that, 3D printing is not something broadly used yet.

This technology is available and used around the world but

not as much as it should be. 3D printing has been around for

30 years but many patents held by big companies expired

just a few years ago.

Q: What are the potential healthcare uses of this

technology?

A: McKinsey says the 3D printing market will reach around

€500 billion by 2020. Deloitte has said that 60 percent of

CASTING A 3-D APPROACH ZAID BADWAN

Director General of MediPrint

VIEW FROM THE TOP

Mediprint is a Mexican start-up dedicated to the research,

development and creation of personalized medical solutions

using 3-D scanning, modelling and printing technology. Their

product ambitiously aims to replace the traditional plaster cast

Magnetic resonance

133

Technology is developed with the objective of making lives easier and better

lived. This has specific potential in healthcare, in which technology has become

an opportunity to save lives and optimize patient comfort. The need to become

more efficient in patient care and to manage the large amount of data generated

has made the adoption of technology necessary to automate processes and highly

standardized and repetitive tasks. Recording patient data has become a priority in

itself to guarantee the existence of a broad database to offer the best treatment

and follow-up for patients, but this also represents a security challenge. The digital

world has been rocked by several high-profile international breaches and healthcare

institutions and companies must ensure the confidentiality and protection of the

data they collect to earn patient trust. The effectiveness of Big Data is a result of its

veracity, velocity, variety and volume. This information will help guide doctors and

policymakers on the efficiency of medicine and research, among other trends.

This chapter will give an overview of the companies that deal in Big Data and digital

applications for smartphones that have a health focus. In addition, those designing

wearable health technology will shed light on the impact they have had on the

Mexican market and mindset.

BIG DATA & HEALTH APPS

6

135

CHAPTER 6: BIG DATA & HEALTH APPS

136 ANALYSIS: Digitalization Advances But Pace Remains Uneven

138 VIEW FROM THE TOP: Xavier Valdez, QuintilesIMS

139 INSIGHT: Antonio Carrasco, Grupo PLM

140 VIEW FROM THE TOP: Guillermo Ferrari, Eseotres

142 VIEW FROM THE TOP: Guillaume Corpart, GHI

143 VIEW FROM THE TOP: Enrique Martínez, IIIFAC

 José Ferreyra, IIIFAC

144 VIEW FROM THE TOP: Alejandro de la Parra, Astrum Salud

146 VIEW FROM THE TOP: Santiago Ocejo, Salud Cercana

148 VIEW FROM THE TOP: Mario Amadio, GE Healthcare

149 INSIGHT: Maciek Drejak, Northcube

150 VIEW FROM THE TOP: Benjamín Villaseñor, Uhma Salud

Roberto González, Uhma Salud

151 VIEW FROM THE TOP: Melanie Chase, Fitbit

152 INSIGHT: Javier Cardona, 1DOC3

153 VIEW FROM THE TOP: Federico Casas-Alatriste, T-Systems

154 INSIGHT: Julián Ríos, Higia Technologies

155 VIEW FROM THE TOP: Xavier Ordoñez , Deloitte

Horacio Peña, Deloitte

136

DIGITALIZATION ADVANCES BUT PACE REMAINS UNEVEN

Well-designed and effectively used information

infrastructure has the potential to become the lynchpin

of quality for successful healthcare systems globally,

according to the OECD. However, the industry lags

other sectors in adopting the tools that could elevate its

management and delivery of care. In Mexico, where budget

cuts to the public health system have hampered spending,

it is critical that Big Data and high-tech solutions begin

playing a greater role in the sector.

The OECD report, Mexico’s Health System Review 2016,

highlights some of the core uses of well-managed health

data: evaluation, monitoring, personalization of care,

ensuring of continuity, support provision, purchase and

prediction of care needs. Consulting firm Deloitte says

connected health or technology-enabled care (TEC),

which refers to the merging of health technology, digital

media and mobile devices, is capable of providing cost-

effective alternatives at a time of increasing demand in

health and social care.

Unfortunately, the health industry is behind other

sectors in terms of digitalization, not just in Mexico but

internationally. Research from the McKinsey Global Institute

(MGI) looked at digitalization in different economic sectors

in the US. The results showed the workforce of companies

in leading sectors are 13 times more digital than the rest

of the economy. An article written by McKinsey partners

and published in the Harvard Business Review in 2016

pointed to the disparity between the sophisticated use

of high-tech in specialized health areas and the lack of

digital fluency in others: “Many healthcare organizations

use incredibly sophisticated technology in diagnostics and

treatment but substantial parts of their workforce use only

rudimentary or no technology. Fewer than 20 percent of

payments to healthcare providers and their suppliers are

done digitally, for example.”

In the case of Mexico, it has been almost 15 years since

the implementation of NOM - 024, which requested the

application of electronic medical record systems in health

services providers. A decade and a half later, the pace of

digitalization at healthcare institutions remains uneven. The

OECD discovered that data is generated only at various

points in the Mexican system, creating a fragmented

approach. According to Guillermo Ferrari,

General Manager of Eseotres, which provides

digital-imaging solutions, IMSS carries out

between 19 and 20 million image studies

every year, using 1.5 million square meters of

Eseotres’ analog film. “The vast majority of imaging studies

done by public health institutions is archived in boxes.

Through digitalization, the studies’ archives can be easily

retrieved and shared and become a source of Big Data

to develop useful information for the creation of health

policies, efficient resource allocation and productivity

measurement,” says Ferrari.

EMPOWER PEOPLE

Gathering the data is only the first step and making it

available and shared is among the top challenges Mexico’s

public healthcare institutions have faced. Technology

companies recognize this and are creating solutions.

Five years ago, IMSS would have more than two medical

records for patients who had visited different institutions.

This increased the out-of-pocket expenditure whenever a

patient had to re-take a test or analysis. Businesses like

GE Healthcare have worked to develop common systems

of shared information. For example, GE Health Cloud is a

product designed by GE Healthcare to integrate clinical

workflows while managing the volume, velocity and variety

of healthcare data. According to Mario Amadio, President

and CEO of GE Healthcare Mexico, “the cloud will be

capable of connecting to more than 500,000 GE medical

imaging machines and more than 1.5 million imaging

machines worldwide, linking to millions of other healthcare

devices, including patient monitoring, diagnostics,

anesthesia delivery, ultrasound, mammography and various

data sources. The future is not about having an application

in a machine, it is about getting the information produced

by the machine in a cloud and working with it.”

The public sector is also making progress. In October 2016,

Mikel Arriola, Director General of IMSS, and Ángel Gurria,

the Secretary General of the OECD, signed a cooperation

agreement to apply a digitalization and simplification

program for the institution´s procedures. Early in 2017,

Mikel Arriola announced during a press conference that

IMSS has saved MX$5.5 billion (US$305 million) through

the digitalization of 78 percent of its procedures. Processes

that before took 40 days, now take three.

Patients themselves have a role to play by adopting the

solutions digitalization offers, such as apps, to take control

of their health. IMSS’ success is in part thanks to the design

ANALYSIS

Digitalization is key to ensuring access to healthcare. Industry

players and public organisms must overcome technological

barriers to make the most of the possibilities offered by Big

Data for better management of institutions and patient health

137

of a mobile and web application available to patients,

but awareness and knowledge are essential – and

unfortunately, lacking. The Health Future Index developed

by the global technology company Philips evaluates

how well companies and governments are overcoming

health challenges through connective technologies.

The study discovered there is a clear need to empower

the population so they can play an active role in the

management of their health. It was conducted through

interviews and surveys with healthcare professionals,

insurers and members of the public to evaluate how

connectivity is oriented toward access to healthcare,

integration of health systems and adoption of oriented-

care technology. The data collected by Philips shows that

24 percent of the population feels no ownership at all

over their medical records and 23 percent of the users

of connected health technology do not know how to

interpret the results delivered by the technology.

STARTUP OPPORTUNITIES

According to Deloitte, mobile technology can empower

patients by giving them more control over their health

and making them less dependent on HCPs for health

information. Deloitte’s data show that the number of health

apps for iOS and Android in the world has doubled in the

last two years to almost 100,000. The opportunities in the

sector have empowered startup companies attracted by the

possibilities of technology in changing health management

for a population of 121 million. “The startup healthcare sector

is very active for innovation in biotechnology, strategies

for healthcare access and home monitoring,” says Vincent

Speranza, Managing Director of Endeavor Mexico.

Given these trends, many entrepreneurs have focused on

the development of apps that promote preventive care

and empower healthy lifestyles through fitness control,

fertility follow-up and sleep tracking. That is the case

of Salud Cercana, a Mexican digital service providing a

platform focused on the management of patients with

chronic diseases to reduce costs. “Ninety percent of the

population has access to public health but 50 percent of

expenditure in Mexico is out-of-pocket. […] Our long-term

goal is to achieve an integrated healthcare sector and

we want to be the platform from which we can manage

patient health and integrate services around them,” says

Santiago Ocejo, Director General of Salud Cercana.

SUPPORT FROM AI

Many entrepreneurs and medical devices companies

also have jumped on the artificial intelligence (AI)

bandwagon, which through the gathering of Big Data can

assist professionals and patients with decision-making.

One example is 1DOC3, an online platform that provides

answers to health-related inquiries for users. According

to Javier Cardona, Co-Founder and Director General

of 1DOC3, through a series of algorithms, inquiries are

processed in fractions of seconds. Typed questions are

compared by the AI with previous inquiries. If a match is

found, the user is directed toward that answer. “Ninety-

nine percent of inquiries match previous answers,” says

Cardona. Another is Higia Technologies, an AI startup,

created a high-tech bra that helps detect cancer through

bio-patches that capture temperature data that is sent

to a mobile app, which keeps a record of the information

received.

Source: Top 10 Healthcare Innovations: Achieving More For Less, Deloitte Center for Health Solutions, 2016

DIGITAL INNOVATIONS TO ACHIEVE MORE FOR LESS IN HEALTHCARE

3D-printed devices To create highly customized, low-cost medical technology products that can be tailored to suit the physiological needs of individual patients.

Artificial intelligence (AI)AI, the ability of computers to think like humans, is anticipated to transform health care by completing tasks currently performed by humans with greater speed and accuracy, and using fewer resources.

Virtual reality (VR)Virtual reality can engage patients in low-risk, artificially generated sensory experiences that could accelerate behavior change in a way that is safer, more convenient, and more accessible to the consumer.

Leveraging social media to improve patient experience

Social media offers health care organizations a potentially rich source of data to efficiently track consumer experiences and population health trends in real time, much more efficiently than current approaches. Organizations have the ability to track consumer experience and population health trends in real time.

Biosensors and trackersBiosensors included in rapidly shrinking wearables and medical devices allow consumers and clinicians to monitor and track more aspects of patients’ health, enabling earlier intervention—and even prevention—in a way that is much less intrusive to patients’ lives.

Telehealth Telehealth offers a more convenient way for consumers to access care while potentially reducing office visits and travel time. This convenient care model has the potential to increase self-care and prevent complications and ER visits.

138

manufactures and the benefit and cost to the customer. We

also analyze the product portfolio strategy to understand

where the laboratory should filter its resources to achieve

a better market result. In addition, we customize research

to understand why doctors prescribe a specific drug.

Q: What new product launches is the company planning

for 2017?

A: We are launching the Prescription Based Service (PBS), a

database of over 45 million prescriptions built by pharmacy

chains, our commercial partners. With this system, our

laboratory clients can see how they are positioned with

doctors, based on the prescriptions those doctors write.

They can also see what a doctor prescribes and what each

doctor uses for certain diseases. We are also interested in

developing a platform to provide doctors with information

and we want to do observational studies to see what

happens with patients after drugs go to market.

IMS Health also bought a company that provides certifications

for clinical and patient services in hospitals. The company

uses a series of indicators to evaluate the different services

a hospital offers and the institution receives feedback

showing where it must improve. We are planning to extend

the operations of this new company to Mexico and offer the

certification. It will help patients rate hospitals, allow insurance

companies to be aware of who they are working with and give

hospitals information on areas for improvement. We are also

working with COFEPRIS to develop a platform where doctors

can receive embargoed news releases.

Q: Digital health trends include digital interventions, data

integration and analytics and behavioral health. What are

the key innovations in Mexico?

A: In Mexico, we are talking a lot about Big Data. However, we

are still in the early stages because to make Big Data work

we need solid information, visualization and capture systems.

In Mexico, some hospitals should have a system to manage

information on chronic diseases that can feed indicators that

track the evolution of these conditions. It is important to

establish the foundation that will keep the system fed. If we

do not have that ready, we could fall behind other countries.

Q: Last year, IMS Health merged with Quintiles to become

QuintilesIMS. What are the resulting benefits and what new

services have been integrated into your portfolio?

A: We inherited clinical research services from Quintiles and

today we can offer its clinical studies portfolio for phases II

and III and our own for phase IV on observational studies.

Thanks to the merger, we have a stronger capacity to offer

follow-up services when launching a product. Of course, we

are still in the process of completing the merger.

Q: What role does Mexico play in QuintilesIMS’ global

strategy?

A: The country has the potential to become a pioneer for

clinical research and for launching new products. The world

invests around US$162 billion, Latin America captures

US$6-8 billion in clinical research and Mexico could attract

a bigger slice of that pie. The goal is to make this innovation

available to the medical community by integrating it into

institutional purchasing.

Q: Which of your areas of operation attract the most focus:

information, technology or consulting?

A: Before QuintilesIMS, IMS Health participated in the

information segment and later it developed additional

businesses, with a consultancy department, technology

and design. With all the recent possibilities in information

management, the next step is to take advantage of the

technology tools that allow us to do analysis and answer

more questions about the effectiveness of treatments,

disease management and the efficiency of sales force

resources.

Q: How does QuintilesIMS approach its solutions to offer

added value for its clients?

A: Almost all our projects are tailor-made. We analyze the

efficacy and efficiency of the products each laboratory

EASING ACCESS TO INFORMATIONXAVIER VALDEZDirector General of QuintilesIMS

VIEW FROM THE TOP

QuintilesIMS is an American multinational company

offering intelligence solutions for clinical research and

commercialization services to help companies reach the

market in a faster and more cost-effective way

139

INSIGHT

No one can predict the future but Big Data provides

professionals with the kind of specific information needed

to make fairly accurate projections. In the healthcare sector,

Big Data can help detect dangerous trends and provide the

necessary knowledge to allow for decisive action that could

save lives. How effective it is relies on the velocity, volume,

variety and veracity of the information collected.

“Big Data is mobile, analytics, cloud computing and social

networks,” says Antonio Carrasco, CEO of Grupo PLM,

which specializes in Big Data for the healthcare sector

in 13 Latin American countries.

The company, which started 75 years ago as an editorial

house for the medical segment, collects medicinal

information from manufacturers and publishes the data

on its website, which visitors can search. In 2016, over

100 million health professionals clicked on Grupo PLM’s

Mexico website, Carrasco says. The site can handle over

2,500 searches per second and receives a variety of

information over its 35 digital channels.

“When talking about Big Data, it is necessary to include most

users in the sector, which is what PLM does. We have over

200,000 physicians working with our information on a daily

basis,” says Carrasco. The sheer number of doctors searching

the site’s resources gives the company ample data to analyze

and detect trends. “We are like a small Google because people

search for very specific medical information through us.”

PLM is also working with artificial intelligence or semantic

analytics. “We teach IBM’s Watson to understand what

is written on paper. This is semantic analytics. Artificial

Intelligence (AI) can begin reading a page and give you the

remaining information,” says Carrasco. Among its applications,

AI can recommend a dosage, inform a doctor if the prescribed

drugs will interact with each other or if there is a certain type

of food or environmental element the medicines will react to.

By detecting trends, Big Data can be used to improve

healthcare. Carrasco points to the 2017 flu H1N1 season as an

example. During the 2016 flu season, Grupo PLM noticed a

hike of 1,113 percent in searches for Tamiflu in February 2016 in

comparison with the previous month. “We knew there was an

epidemic because general doctors were desperately looking

for Tamiflu. Normally, this trend should be relatively steady but

the spike in searches was due to thousands and thousands

of patients coming down with the flu,” says Carrasco, adding

that in 2016, there was a scarcity of Tamiflu. “It was sold out

in all drug stores in Mexico because they were not expecting

an epidemic. The increase in searches for the drug was

atypical.” Carrasco adds that H1N1 was responsible for over

6,000 deaths in Mexico in early 2016. Sharing such data

could improve the detection of trends and ultimately improve

healthcare for patients. It would also enable companies to

improve treatment and their cost-efficiency.

Big Data helped identify the epidemic and action was

taken, Carrasco says. The patent for Tamiflu was expired

by COFEPRIS in March 2016, leaving the way open for

other companies to use the medicine’s active substance,

oseltamivir phosphate, to create generic versions of

the drug. In addition, the Mexican Ministry of Health ran

preventive campaigns throughout the country in winter

2016 to remind people to get their flu shot.

The flu is not the only trend Big Data can reveal. Carrasco

says PLM’s data has uncovered a number of surprising

results. One example illustrates his point: the majority

of specialists searching for erectile dysfunction drugs

are gynecologists. “Erectile dysfunction is a couple

problem, not a man problem,” Carrasco says. “That is

the advantage of Big Data: discovering something you

never would have thought of.”

SPECIFIC INFORMATION UNVEILS GENERAL TRENDS

ANTONIO CARRASCOCEO of Grupo PLM

Grupo PLM noticed a hike of 1,113 percent in searches for Tamiflu in February 2016 compared to January

140

can be of two months or more; digitalization can reduce

that. This allows other savings, such as with fees related to

incapacitations, which can be lowered as a result of having a

patient diagnosed more quickly. A timely diagnosis can save

lives. Doctors can see more details on digital images, zoom

in, analoguely track changes, change contrast, brightness

and carry out a faster and more precise diagnosis. If needed,

a doctor can ask for a second opinion from a colleague

who can access the image remotely, avoiding the need to

transfer patients between hospitals.

Q: What is the next step to expand healthcare digitalization

in Mexico and what role does Eseotres want to play in this

process?

A: Image digitalization opportunities are infinite and

we have seen this on our mobile devices. Soon, our

medical history will be on the cloud. What will change is

the selection criteria of patients because we will prefer

institutions that can upload our clinical information to a

shared platform. For these solutions to be as effective

as possible, these platforms should be cross-institutional,

private or public, and cross-manufacturers. Eseotres

wants to be the platform where these changes happen.

We want to develop a cloud without institutional, brand or

manufacturer barriers. The vast majority of imaging studies

done by public health institutions is archived in boxes.

Through digitalization, the studies’ archives can be easily

retrieved and shared and become a source of Big Data

to develop useful information for the creation of health

policies, efficient resource allocation and productivity

measurement. Public health institutions are doing what

they can but it is important that we as business do our

part to facilitate the adoption of these solutions. It is unreal

to think that one company can satisfy the entire public

demand alone and the same goes for other public health

institutions; this is why the technical standardization of

these solutions is a priority. We need to make sure that any

solution that we install anywhere in Mexico can connect

to any other solution in the market.

Q: You are a former Walt Disney Home Entertainment

executive. How do you apply that expertise to healthcare?

Q: What process does a clinic undergo once it hires your

digitalization services?

A: The success of these kinds of solutions relies on how

well they are designed according to each customer’s

specifications. There are many variables to take into account

that will define the optimum design: the existing medical-

imaging equipment, its operating status, a hospital’s

infrastructure, human resources, current volume of studies

per type and its growth projection. We begin by sending

an engineer to do a survey of the situation and assess what

growth may look like for the following one to two years

in terms of demand, new equipment, specialties and new

health units. This will determine the type of hardware, its

capacity, infrastructure adjustments, software and tools that

will better suit today’s needs and those in the medium term.

Part of our added-value is the ability of our engineers to

design a custom-made solution ready to scale up to the

client’s future plans. Another differentiation factor we offer

is service. We train all a customer’s staff that will operate

or interact with the solution. We continue to provide

training over the term of the contract to compensate for

employee rotation and natural knowledge loss and we focus

on preventive maintenance to anticipate system failures,

new needs and to avoid operating downtimes. This is also

empowered by our expertise, which is our biggest strength.

Q: What can digitalization mean for a company in terms

of savings?

A: When technicians take an image with analog film, they

check the image’s clarity with a radiologist and decide if

the image should be retaken. Twenty-five percent of analog

studies have to be repeated, which means that patients

have to be irradiated twice, 25 percent of films are wasted

and the x-ray tube is used 25 percent more. Appointment

deferrals for image studies are another big problem of

analog technology because in some cases these deferrals

DIGITALIZING THE FUTUREGUILLERMO FERRARIGeneral Manager of Eseotres

VIEW FROM THE TOP

Eseotres is an engineering company that provides

diagnostics solutions. It is a former x-ray film provider now

focused on providing services for the digitalization of x-rays

in medical institutions

141

their own budget and government. We have applied our

solutions in 19 hospitals in San Luis Potosi and 29 in State

of Mexico, where we want to finish the digitalization of the

units that still use analog film processing. The results in

these clinics have been great, they have radically increased

their productivity as a consequence of the technology itself

and the reduction of service downtimes, and there is an

impact on the diagnosis quality as well.

Q: What are the challenges of digitalization in Mexico?

A: The first challenge is to achieve a cultural acceptance of

change, to break the barrier of resistance to install solutions

whose end product is digital and not tangible. Our clients

have been working 15 to 20 years in the same way so it

is not easy to make them embrace change. Working with

public institutions presents other challenges. Budgets

need to be reassigned, to adjust to service contracts.

Tenders often do not have a proper budget to contract

the needed digitalization services. Some budget items,

such as those assigned to the maintenance of old film-

developing processors, should be assigned to the digital

imaging services. In addition, the process of tenders

is complicated as there is a lack of standardization and

technical specifications often do not match the real

customer’s needs, they also require the presentation of

past contracts with public institutions to demonstrate the

company’s expertise; this is a bit contradictory when we

consider the few contracts for this kind of service that the

public institutions have signed.

This is why we received with great anticipation the IMSS

Innovation Olympics, an event that IMSS launched in

March 2017 for the first time. We see this competition as

a key aspect that was missing for IMSS to properly adopt

innovation; a space where the public and private sectors can

transparently team up to develop innovative solutions that

are tailor-made to fit the reality and needs of the institution.

A: The shift from home entertainment media to medical

imaging was drastic. However, sometimes there are

similarities within seemingly very different industries.

When I started working at Disney, movies were sold in VHS

and DVD before digital arrived. Video on demand, digital

download, streaming and other forms of digital distribution

generated changes within the company and at an industry

level; new and different partners, business models, different

pricing, marketing, operations as well as a different meaning

of product ownership to the retail and to the end customer.

Something similar happens in the medical imaging industry.

We went from selling X-ray films to offering digital-

imaging services, from selling a consumable to selling an

intangible digital image. Therefore, this similarity with the

industry I come from helps me understand how important

this change is for the industry, how deeply it affects the

different stakeholders and what can we do to be prepared

to embrace and take advantage of that change.

Q: How has the adoption of digitalization in the health

sector evolved in Mexico?

A: IMSS carries out between 19 and 20 million image studies

every year. We are still its providers of analog films and

they still buy around 1.5 million square meters. We believe

that only between 25-30 percent of its imaging studies

are digitalized, so there still is an important opportunity to

broach. However, it has to standardize their process. There

are around four or five companies offering solutions similar

to ours. The most digitalized countries are looking for, or

have already adopted, a digitalization solution where the

images can be shared among different institutions. IMSS is

the biggest health institution in Latin America and it will

be a great advantage if at some point it could have the

information of all its patients in the same platform available

for all its clinics, and moreover, such a platform should also

be shared across health institutions. The High Specialty

Medical Units (UMAES) are already digitalized; they have

142

institutions. Laboratories and diagnostic centers are also

evolving. INEGI indicates there are over 13,000 laboratories

and diagnostic centers, with Chopo and Laboratorio Médico

Polanco being the largest.

Q: How can various levels of the healthcare sector help

combat chronic disease in Mexico and Latin America?

A: We are no longer in the era of large infrastructure

ownership. Contemporary economic models such as

Uber, Airbnb, Instacart and Rappi demonstrate that

specialization, sharing and collaboration are valued

and sought by customers. The first step in generating

efficiencies lies in the ability to measure actions in a

standardized manner across systems. This means, for

example, measuring the number of procedures conducted

by hospitals with the same codes, preferably ICD-9 or -10.

Only once this is accomplished will the various healthcare

systems be able to communicate effectively and efficiently

among themselves.

Q: What steps have been taken to prepare for the future

burden of senior citizens in Mexico and Latin America?

A: Private institutions are the most active and dynamic in

seizing such opportunities. Furthermore, medical device

and equipment manufacturers continue to develop

homecare solutions, giving the elderly the opportunity

to receive care in their home and from their loved ones.

Payers should soon recognize that such solutions help

reduce the financial burden of care and present viable

alternatives to improving their margins.

Q: Last year you said that investing in hospitals is not a

solution to the burden of an aging population. What are

the alternatives?

A: As it pertains to the aging population, we will see two

major trends play out: expansion of private care facilities

that focuses on enabling an aging population to maintain an

active lifestyle and live with dignity. There is a growing interest

in homecare solutions that enable the aging population to

receive care within the comfort of their home surroundings. A

third and underlying element will be the organic growth and

expansion of laboratories and diagnostic centers.

Q: How are GHI’s sales divided between intelligence and

consulting services? Which services are most in demand?

A: GHI has three business lines: its hospital demographics

database, which is the world’s largest hospital database

focused on Latin America and covers 14 countries and

over 15,000 hospitals regionwide; assessing market size

and share for medical devices and equipment in Mexico,

Colombia, Brazil, Argentina, Chile and Peru, among others;

and customized consulting assignments, the design and

execution of consulting research specific to the needs of any

client, including strategy definition, competitive intelligence,

customer profiling and interviews with key opinion leaders.

In 2017, the business was well-balanced between these three

service lines and we expect this to continue in years to come.

Q: How does GHI handle the big data it gathers to develop

market analyses and databases? How does it ensure data

protection?

A: We have invested in creating proprietary IT systems and

platforms to meet our unique data-gathering needs, which

enables us to validate previously collected information as

well as collecting new data points. Our systems also enable

us to scale horizontally to other countries and regions, as well

as expand vertically into other fields of application, such as

laboratories and diagnostic centers. So far, we have not heard

of any other company in Latin America with such robust,

time-tested tools.

Q: How are hospitals adopting information technology

infrastructure and what specifically is of interest?

A: Generally, hospital IT is a hot topic. Hospitals are

increasingly interested in electronic medical records, system

integration and the move toward digital equipment. Hospital

adoption of such technology is growing from a small base,

starting in the private sector. In the public sector, efforts

are being made to standardize systems across the multiple

PROPRIETARY IT SHINES LIGHT ON HOSPITAL DEMOGRAPHICSGUILLAUME CORPARTFounder and Managing Director of GHI

VIEW FROM THE TOP

Global Health Intelligence (GHI) is a US-based business

intelligence firm focused on healthcare analysis in Latin

America and Asia. GHI developed the world’s largest hospital

demographics database focused on Latin America

143

NEW TOOLS TO ACCESS THE PUBLIC

MARKET

José Ferreyra President of the Pharmaceutical

Research of IIIFAC

Enrique MartínezDirector General of IIIFAC

Q: What have been IIIFAC’s biggest challenges and

opportunities over the last year?

JF: We worked to create a database of Big Data on

purchasing behaviors in the public pharmaceutical market

and we developed a multiplatform business-intelligence

system covering over 70 million unitary registries. The

database contains information about each drug available

in the market, such as the contract value, the consumption

and inventories, as well as the number of prescriptions, in

more than 100 public-sector institutions. Today, more than

45 pharmaceutical companies in the country are using it.

Q: In what areas is innovation more prevalent in the

Mexican pharmaceutical industry?

JF: We believe that our business intelligence system

enables our clients to predict market movements.

For example, we saw last year that ISSSTE requested

approximately 237,000 units of duloxetine but we saw in

our business intelligence that months before, ISSSTE had

decreased the authorized consumption of duloxetine to

practically zero. We are committed to working with our

clients to resolve these inquiries. We also launched market

research on the consolidated tender results published

in June 2017 in which we were able to recognize which

product categories IMSS is over-purchasing and predict

which of these categories will not reach 100 percent

consumption over the year.

Q: What advantages can this system provide regarding

the provision of healthcare in Mexico?

JF: The access to this information will raise awareness

about the current model of health administration. For

example, we all know the advantages of early insulinization;

however, IMSS continues to treat patients with Metformin

because it is cheaper and reaches a wider range of the

population, although its continued use causes pancreatic

insufficiency. The institutions have to choose between

purchasing expensive drugs that delay the progression

of a disease or cheap medicine that can only help send

patients home. Article Four of the Mexican Constitution

says that citizens have the right to medical care but does

not state that their life is above an assigned budget.

The Institution for Pharmaceutical Research and Innovation

(IIIFAC) offers information and educational services for the

pharmaceutical industry in the public Mexican healthcare

system through in-person courses and digital applications

Q: IIIFAC offers a certification in access to public health

institutions. What training needs have you recognized?

JF: There is a dramatic need for specialization. Pharmaceutical

companies have recognized that there is not much growth

with private clients and one representative in the government

can be as rentable as 17 in the private sector. Therefore, most

of our students are representatives of the pharmaceutical

companies who we are helping shift from the concept of

medicine based on experience to medicine based on existence.

Government physicians do not have freedom of prescription

but they are subject to the authorized basic chart of what is

available at the time of prescription. Therefore, executives

should be able to sit down with the directors of the public

institutions and talk about costs and benefits.

Q: What are the main objectives for your institution in 2017?

EM: Increase our client base and continue our certification

program to strengthen our presence as a research institution

in the healthcare sector. We expect that in five years the

public sector will represent 60 or 70 percent of the units in

the market in Mexico and that, at that point, there will be a

health reform that insists on the regulation of data, which is

very important to health economics models.

Q: What are the industry’s expectations for current

pharmacoeconomic strategies?

EM: The industry is focused on the consolidated purchase.

This is an interesting initiative because it allows better prices

and fewer processes to acquire medicines. However, there

are some issues. Consolidated purchasing does not mean

access to drugs for the population. The purchases only

represent between 50 and 60 percent of the market and the

main institutions, such as IMSS and ISSSTE, do not reach 70

percent. In the end, the consolidated purchase is focused only

on saving money and not better service because the prices

demanded of the laboratories are not sustainable for them.

VIEW FROM THE TOP

144

medicinal treatments in Mexico through the use of our

telemedicine solutions.

Q: To what extent will the courses be adapted to other

Latin American countries?

A: The courses themselves are to be presented in Spanish

and include localized mentions of technologies used in

the region for professional opportunities. As we connect

education and labor, we trigger the pragmatic learning

path and refocus on action. We combine our efforts with

other institutional organizations and take several factors

into consideration, including connectivity, local access to

the technologies mentioned in each course and the rate at

which these technologies are prospering locally to create

an effective impact on local communities.

We firmly believe that to incite foreign investment in

Latin America it is our responsibility to fully engage in

the development and expansion of our own infrastructure,

culture and society. We face a challenge to mitigate the

current brain drain situation as well as the flight of capital

and it is entirely in our hands to assemble a proper Latin

American industry to advance. We are able to accomplish

this as the local education level rises with a globalized

vision in various industries with the use of technology but

we need to pay attention to the rate at which these and

other efforts echo across communities and see to their

implementation.

Q: What methods are you implementing to maintain

high follow-through rates and what tools will you use to

encourage people not to give up?

A: As we learn from our development, we come to

understand that e-learning deals not only with the quality

and variety of the educational content provided but also

with how education itself is made available to the users.

Having access to on-demand online education is not a

choice but a necessity in our current lifestyle because it

allows students to have a malleable management of time

while being able to move forward with their academic

enrichment. As education shifts to a more personalized

experience, we are inclined toward versatility for

Q: How is Astrum Salud positioned to take advantage of

advancements in global connectivity?

A: We have formed solid commercial and academic

alliances with various organizations across the globe to

offer better solutions to our users in health, education

and communication services. This has further improved

our overall service quality by giving it a globally

competitive edge. We have recently allied with CloudVisit,

a prominent New York-based IT development company

with vast telemedicine experience, to create a reliable

and integrated videoconferencing CMS implementation,

exponentially empowering our secure IT development with

pristine tropicalized services at competitive prices.

Our alliance with the New York-based organization Life

Extension Advocacy Foundation has developed new and

better ways of providing educational and informative

content in Spanish, closing the gap for Spanish-speaking

communities and enabling them to learn, engage and

support other prominent organizations in the life sciences

industry. We emphasize that education is a prime concern

in improving healthcare in the modern world and it must be

addressed correspondingly to be offered in an accessible

and effective manner. This is the reason we have focused on

malleable digital implementations for education, allowing

us to adjust accordingly to technological advances.

Q: What are the goals of your latest project Astrum

Educación?

A: We have established a coalition with the World

Academy of Medical Sciences, an inspiring institution

based in the Netherlands, that allows us to provide online

services in Spanish for continued medical education and to

cooperate on congresses and seminars. We can also offer

our videoconferencing platform to the academy’s medical

members. This will extend access to novel treatments to

Latin America, allowing the region to move forward in

clinical science as e-learning consolidates and knowledge

spreads. Astrum Salud has also formed relationships with

cutting-edge biotechnology entities such as RegenerAge

Clinic in Mexico City and Bioquar in Philadelphia. The

goal is to expand the reach of revolutionary regenerative

MODERNIZING HEALTH TECHNOLOGYALEJANDRO DE LA PARRADirector General of Astrum Salud

VIEW FROM THE TOP

145

the future. Our dedication and focus will teach us the

best way to coincide with the government for the sake

of our communities.

Q: Astrum Social has been live since June 2016. What

results have you seen so far?

A: Astrum Social is a social network platform that involves

the sharing of knowledge, emotions and experiences that

reflect the current Latin American view of health and

wellness around the world while also directing the vision

of where it is going in the future. The platform allows users

to interact with content provided by other users and to

communicate with each other with the ability to create

personal profiles, groups, dedicated pages, and also be

able to play games, listen to music and watch videos,

all focusing on promoting a healthy lifestyle between

its users. All users see the Astrum feed on their home

page, which offers diverse, educational and informative

content related to health and medicine to stay updated

while interacting with other users. Users can create bonds

and meet in person while being collaboratively proactive

about their health.

After we launched phase one of the platform, we received

productive feedback from our limited user database and

have redesigned certain features, fixed minor bugs and

reconditioned our news feed according to comments.

Additionally, we have implemented an enhanced music

store that allows users to purchase content from different

artists and therapists focused on mindfulness, music therapy

and meditation. As we expand these features and include

products and services from our other branches, such as

Astrum Educación and Astrum Móvil, we aim to deliver an

integrated social ecosystem that encompasses both the

social and commercial value that digital infrastructures often

provide. We are in production release, as we say in the IT

development sector, but we are always fine-tuning to focus

our global vision on how to provide access to better health,

better education and to push social development forward.

Q: What are the main projects you will be focusing on

this year?

A: In healthtech, we will be acclimatizing our telemedicine

services for particular conditions and diseases to be able

to extend the benefits of our platform. We are proud to

serve an all-encompassing digital solution for diabetes

patients as well as a program for obesity, both of which

we will be launching during 2017.

knowledge acquisition which, in turn, means we enjoy

better follow-through and retention rates as students

have a chance to complete studies at their own pace. This

approach involves simplifying how each student is able to

enroll in a course, interact, acquire knowledge and how the

student gets certified. The process is being structured to

allow automated operations for a fluid and convenient way

to benefit from online education. As we also focus on basic

education, our content is provided with a gamified spirit,

allowing younger audiences to be introduced to medical

science in a fun and energetic manner.

Q: How are people receiving new online-education

platforms and how are they adapting to e-learning?

A: The efficacy of online education is a proven fact as it

encompasses a more immersive and interactive experience.

It has been restructuring society for over a decade now.

Online education has been disruptive and repercussions

are seen worldwide in formal e-learning and also with

non-formal, concomitant knowledge acquired from mixing

modern entertainment content with access to global

information. As larger segments of society organically

adopt these new information channels, we believe that

this is the perfect time for LATAM to invest and harness the

power of a broadened and more pragmatic approach to

resolving our needs with the use of both formal and non-

formal online education. The technologies we use have

been in use in the e-learning community for decades, but

we are always looking to combine new and more effective

alternatives with our current development.

Not only does the student need to adapt to e-learning

but so does the instructor. In our experience, instructors

have had a harder time embracing these new ways of

providing access to knowledge; they are increasing

their own adeptness at the same time as the student.

This is the reason we invite LATAM academics to dive

deeper into globally available online education. As the

intercontinental mission to better educate society is

rapidly being redefined, providing the lens through which

each community interprets information requires even

more direction and objectivity. We are always excited

to strategically address these issues in conjunction with

other entities and open our doors to innovative education

initiatives around the world.

Q: The largest education and healthcare provider is the

government. Do you have plans to work with it?

A: Indeed, the government sector has a categorical role

in both education and healthcare. Combined efforts with

the private industry have helped to build the foundation

of our government infrastructure. On that account, we are

and will continue to be active in undertaking collaborative

initiatives with governmental bodies to plan and act for

Astrum Salud is a Mexico-based company specialized in digital

solutions for the Latin American community in communication,

measurement and health. It has designed and runs dozens of

health-related apps, bringing services to the wider community

146

of service. In addition, we give them a lower cost so that

they can access the same platform. We have attended over

3,000 walk-in patients in our physical office and around

200 have acquired the program for the management of a

chronic disease. We are also working with two companies

through our B2B model, one with 6,000 clients.

Q: What is the added value Salud Cercana brings to the

Mexican healthcare system?

A: In dealing with chronic diseases, patients need

behavioral changes, so we help those patients find

the right professional to treat their condition. We are

managers of chronic diseases. This is our priority and we

would like to work with the public sector on managing its

population with chronic diseases. We also want to reduce

out-of-pocket expenditure on medication and coverage

of chronic disease complications. Ninety percent of the

Q: What is Salud Cercana’s role in the Mexican healthcare

system?

A: Salud Cercana is a digital platform that integrates health

services. We are a patient-management system especially

focused on patients with chronic diseases that enables middle

and low-income patients to find doctors who are certified by

Salud Cercana and who belong to our network. In addition,

our patients can interact with nutritionists, psychologists and

a special figure we call a care coordinator, a wellness authority

and supportive mentor who motivates individuals to cultivate

positive health choices. The lack of care coordination is one of

the biggest issues in the Mexican healthcare system and there

is a large amount of money wasted on the public system and

out-of-pocket expenditure due to bad coordination.

Q: Salud Cercana is the first prepaid healthcare system

in Mexico. What is the protocol when a client acquires

the service?

A: Once patients download the app and accept our terms

and conditions, they can go to any convenience store in

our network or any payment center and prepay the service.

After verifying the payment, the care coordinator connects

with the patient and explains how the platform works

and the benefits of the acquired service. The coordinator

also schedules the first interview with a doctor in our

network to create a clinical record. The first appointment

is covered by the initial payment and after that the care

coordinator will schedule a phonecall with a nutritionist

and a psychologist to design a personalized plan that will

then be monitored by the coordination team. Additionally,

the care coordinator will be in charge of tracking all

customer contacts, clinical records, doctor appointments

and prescriptions, as well as laboratories and required

prescriptions. Our platform has an embedded chat that

patients use to ask questions, participate in forums, read

relevant content and follow up on notifications with their

nutritionist, psychologist and care coordinator.

Q: Who are the specific beneficiaries of Salud Cercana?

How many people are already using it?

A: Right now, most of our users belong to C and D

socioeconomic strata because they cannot afford this type

MANAGING HEALTH THROUGH DIGITAL AIDSSANTIAGO OCEJODirector General of Salud Cercana

VIEW FROM THE TOP

SALUD CERCANA'S COORDINATED HEALTH PROGRAMS (PCS)

The purpose of the PCS offered in the application is to help patients adopt healthy habits. Through these programs, users have access to a community of hospitals and pharmacies that help them save money and to certified specialists, providing all the tools to optimize health and save on expenditures. The platform offers five PCS:

Basic for people with specific health goals who wish to improve their success with the support of a coordinator.

Nutrition

for people who wish to change their eating habits to reach their ideal weight, maintain it, increase their satisfaction and welfare and reduce the chances of developing a chronic disease.

Mind

for those who seek better emotional health and need support to control stress, effectively overcome grief, reduce anxiety, overcome a chronic disease or episodes of depression.

Equilibrium for those who want to change their lifestyle with the help of a nutrition expert, a psychologist and a physician.

Medichatfor people who do not require an urgent diagnosis or treatment but who wish to receive advice from certified professionals.

Source: Salud Cercana

147

Q: How is Salud Cercana’s initiative contributing to the shift

to preventive medicine?

A: We are focused on secondary prevention, which

means we help patients who are already diagnosed

with a chronic disease to access care more quickly and

avoid complications. However, our platform is focused on

preventive care. We also know that companies suffer when

their employees get ill so we are developing preventive

strategies with our B2B clients.

Q: What regulations do you follow?

A: Dealing with health data requires following regulations

closely. We are careful with our terms and conditions and we

have invested heavily in protecting information. COFEPRIS

has also set specific guidelines for primary doctors to

provide consults, so we help our doctors comply with the

requirements of having a physical office, an exploratory area

and gathering patient information. As a healthcare company,

we are aware of legal requirements and we know how to

monitor them.

Q: What are your growth expectations for 2017?

A: First, our target is to expand our network of doctors and

our geographical coverage. Secondly, we want to reach

10,000 app users with PCS. Third, we will grow our network

of other providers such as laboratories and pharmacies,

integrating our services with theirs. We are working on

agreements with labs so when our patients go to them, the

labs send us the results. In the end, that follow-up is the value

we provide. Our goal is to work with at least 10 companies by

the end of 2017, managing both clients and patients.

population has access to public health, but 50 percent of

expenditure in Mexico is out-of-pocket. Lastly, our main

long-term goal is to achieve an integrated healthcare

sector and we want to be the platform from which we

can manage all patients health and integrate services

around them.

Q: What business models are you using for your operations?

A: Salud Cercana has a B2C and a B2B channel in which it

works directly with companies. Both have the same goal: to

manage patient health. In the B2C model, single users pay

for coordination, nutritional and psychological support and

patients can have access to doctors at discounted prices. They

pay MX$900 (US$50) for our basic plan for a three-month

process, MX$1,700 (US$94) for psychology and nutritional

support and MX$2,300 (US$128) for the complete service.

The price is around MX$150 (US$8) and MX$250 (US$14)

a month for receiving all these services. In the B2B channel,

the price varies depending on what type of coverage the

company wants to offer to its workers; it might vary from

MX$75 (US$4) to MX$150 (US$8) a month.

Our business models adapt to every type of company, but

our main source of revenue is the care coordination program

(PCS), which is the added-value we bring to the market. In

the future, we want to work with insurance companies and

government institutions through this service.

Q: How do you recruit talent to Salud Cercana and how

do you establish the relationship with doctors?

A: We have used traditional recruiting platforms and located

doctors through word-of-mouth. We have also attracted

talent by networking with doctors in the private and public

sector and with nutritionists and physiologists. We have to

be careful in this selection process because we need to train

the talent we attract on how to use our platform and how

to deliver quality through the service we offer.

Salud Cercana is a Mexican company founded in 2015 that

provides a healthcare app for people with chronic diseases.

It is focused on simplifying access to health services from

the cell phone

0

20

40

60

80

100

Oth

er p

ublic

serv

ices

Pri

vate

Fed

eral

heal

th s

ervi

ces

ISSS

TE

IMSS

7064

91

32

42

AVERAGE WAITING TIME PER MEDICAL VISIT (minutes)

Source: ENSANUT 2016

2,529 PATIENTS SURVEYED

BY ENSANUT 2016

MEXICO - FREIGHT MODE BREAKDOWN 2017 (%)

air

Rail

Road

DISTRIBUTION OF PATIENTS WITH A PREVIOUS DIAGNOSIS OF DIABETES, HYPERTENSION, AND DYSLIPIDEMIA IN MEXICO’S HEALTH SERVICES

Source: ENSANUT 2016

� 33% IMSS

� 32.7% State health services

� 26% Private

� 5.6% ISSSTE

� 2.7% Other public services (PEMEX, SEDENA, SEMAR, etc.)

148

performance. We are in an era of change and GE is planning

on leading that change. We used to talk about IT, now we talk

about operation technology, a step further than IT because

it is the way to understand how to manage information for a

determined operation.

Q: What benefits could GE digitalization bring to the

healthcare system?

A: We try to bring more efficiency and productivity to our

portfolio through our new platform. The value of our digital

proposition is focused on service provision and control and

maintenance of our clients’ assets. For example, GE Health

Cloud is a product designed to integrate clinical workflows

while managing the volume, velocity and variety of healthcare

data. It will be capable of connecting to more than 500,000

GE medical imaging machines and more than 1.5 million

imaging machines worldwide, linking to millions of other

healthcare devices including patient monitoring, diagnostics,

anesthesia delivery, ultrasound, mammography and various

data sources. The future is not about having an application

in a machine, it is about getting the information produced by

the machine in a cloud and working with it. We have launched

the application of Predix internationally, while in Mexico and

Latin America we are taking the first steps in healthcare. GE’s

main engineering IQ research center is in Queretaro with a

multidisciplinary team for healthcare development. The

platform has been developed under standards that address

GE policies and each country’s regulations.

Q: What are your main objectives in Mexico for the

coming years?

A: There are three main targets for the next three years. First,

we want to be acting and delivering as a digital healthcare

company. Then, we want to ensure profitability for our

shareholders through healthy growth. Next, we want to make

GE Healthcare Mexico an opportunity for talent. We want the

best people for a better understanding and performance.

These three objectives meet because if we are profitable,

we can focus on innovation and think about developing

talent. Talent leads to a better development, which leads to

possibility for innovation. There is a lot of talent in Mexico and

we need to attract it to our company.

Q: Mexico must shift to preventive medicine, which is GE’s

main focus. What are you doing to guarantee patients

access to it?

A: Prevention is fundamental to us and the public sector

should be spending on this. Expenditure will never be

enough but this only requires us to be more effective and

find a way to optimize the value of our offer. Our portfolio

is focused on diagnosis and includes different modalities:

magnetic resonance, computed tomography, ultrasound,

mammography, x-ray, life-care solutions, life sciences and the

information systems that support this. Our strategy is focused

on diagnosis and there are three pillars for us: first, we aim

to provide accessible costs and quality by creating products

affordable for each country to reach coverage; second, we

work on the client-provider relationship, we never work

alone and we always need the support and confidence of

our partners and third, we support PPPs, which will help us

reach more patients.

Q: Last year you mentioned that projects for GE will be

focused on the digital realm. What advances have been made

in the shift to digital?

A: The main leaders of the company and business areas

are committed to transforming GE into a digital industrial

company. GE Store is our name for the company’s competitive

advantage. There is no other company that has the ability to

transfer intellect and technology across industries and around

the world as GE can; from advanced technology, materials,

software and analytics, to commercialization, process,

and business model best practices. We also have our own

operative system for the industrial internet, Predix, that is

transversal for all GE businesses, including healthcare. The

platform enables us to manage the information we gather over

the years and make it available to our clients. By connecting

industrial equipment, analyzing data and delivering real-time

insights, Predix-based apps are unleashing new levels of

MEXICO READY TO SHIFT TO DIGITALMARIO AMADIOPresident and CEO of GE Healthcare Mexico

VIEW FROM THE TOP

GE Healthcare is the pharmaceutical and medical devices

division of the US-based company General Electric. It is a

world-leader in services in medical imaging and information

technology for diagnostics

149

INSIGHT

A decade ago, the arrival of smartphones also introduced

the world to the app. Today, millions of apps permeate

mobile platforms and among the most popular are those

related to health. Maciek Drejak, CEO of Northcube and

Founder of Sleep Cycle, an app that wakes users during

their lightest phases of sleep, says the increased use of

technology and the advances of Big Data can help improve

a variety of conditions, including those related to sleep.

“[Health apps] help users quantify their sleep data. They

give users all the information they need to find ways to

improve their sleep and follow up on progress,” says Drejak.

Sleep tracking has become a world trend and with millions

of users worldwide, Sleep Cycle, developed by Swedish

company Northcube, is among the most popular. Sleep

Cycle alarm clock has been available for download since

2009 and is used to track sleep patterns. Users can add

sleep notes such as “drank coffee” or “worked out,” to figure

out what habits improve their sleep quality and which ones

are detrimental.

“Sleep Cycle alarm clock iOS features a patented state-

of-the-art sound analysis technology that records sleep

patterns. During sleep, our movements vary with each

sleep phase. Sleep Cycle alarm clock uses the phone’s

microphone to identify sleep phases by tracking movements

in bed,” Drejak says. The app then analyzes sleep, records

its findings and wakes up users during their lightest sleep

phase, using a predefined 30-minute alarm window.

In the modern on-the-go world, getting the right amount

of adequate sleep can be difficult. A study carried out by

UNAM shows that 35 to 40 percent of Mexicans have sleep

problems that have been linked to further health problems

such as overweight and obesity.

In addition to looking for the specific sound-fingerprint of

bed sheets moving, several other filters are deployed in

the app. It detects and filters rhythmic, reoccurring sounds

such as breathing and snoring, in addition to certain specific

sounds that are problematic for the fingerprinting system

like those of Continuous Positive Airway Pressure (CPAP)

machines, a breathing apparatus used by those who suffer

from sleep apnea.

Sleep Cycle can help detect differences in the population’s

sleeping habits due to its bank of sleep notes and due to

the feeling of happiness users input upon waking. “Men

sleep less but wake up happier and have higher sleep

quality. Women sleep more but wake up in a worse mood,”

says Drejak.

SLEEP RIGHT: IMPROVING HEALTH WITH APPS

MACIEK DREJAKCEO of Northcube and Founder of Sleep Cycle

Source: https://www.sleepcycle.com/how-it-works/

01:00 02:00 03:00 04:00 05:00 06:00 07:00

Awake

Sleep

DeepSleep

DISTURBED SLEEP

Source: https://www.sleepcycle.com/how-it-works/

EXAMPLES OF SLEEP GRAPHS GENERATEDBY SLEEP CYCLE ALARM CLOCK: REGULAR SLEEP

Awake

Sleep

00:00 01:00 02:00 03:00 04:00 05:00 06:00

DeepSleep

Regular Sleep Disturbed sleep

Source: Sleepcycle

EXAMPLES OF SLEEP GRAPHS GENERATED BY SLEEPCYCLE ALARM CLOCK (time of day)

150

Q: Uhma Salud’s goal is to change life habits, a major

challenge. How do you achieve this target?

BV: We look to hack habits, for which there are three steps.

The first is imitation. We think that every decision we make

is based on an analysis of all the data we have available, but

many decisions are imitations of what is happening around

us. What we do at Uhma is institute policies such as not

allowing sugary drinks. We also promote the use of stairs

instead of elevators and we replace biscuits in meeting

rooms with vegetable snacks. Although Mexicans drink

many sugary drinks, by putting water coolers in the office

and handing out bottles of water we generate behaviors

that workers start imitating. Second is the theme of co-

responsibility. We build dynamics in which we ask people

to generate changes with the help of their co-workers.

When planning to run a marathon, the first step is not to

buy running shoes but to sign up and tell all your friends

so that you cannot back out. This engagement is known

to be effective in acquiring healthy habits. The third part is

gamification. During the first biometric assessment, we give

individuals an objective. People who achieve these goals

receive a prize, such as an extra paid day off work or they

get to leave work early or arrive later. Of all the methods, that

linked to punishment saw the greatest results and, although

at first participants were the least happy, after three months

they were the most satisfied with their wellbeing program.

RG: On average, they lost 1.5kgs per person in three months,

which multiplied by the number of participants is a huge

amount of burned fat. The theme of work culture is clear and

this will generate much value in the future. The demographic

bonus in Mexico is about to explode. This will impact

companies as talent will become scarce and more expensive.

Not everyone will choose jobs based solely on salary. These

intangible benefits will attract talent to companies and will

help with retention rates. A company with happy, healthy

employees is a better place to work and will attract the very

best talent, which will directly impact its results. We have seen

people’s perspective changing greatly. Previously, certain

directors saw our services as a cost. Not anymore. They see

them as an investment because they can check certain metrics

that generate a return. Once this is measured, they notice

the savings, including in recruitment costs. Retaining talent

will become a key and these programs will be a must-have

for companies.

Q: There are several startups that offer a similar service to

Uhma. What puts Uhma above the rest?

BV: We have invested greatly in technological development.

Our online platform, which enables us to perform a thorough

biometric assessment in five to 10 minutes, is the result of

eight years of work. There are other companies that offer

similar services but having invested in technology allows us

to operate more inexpensively and swiftly. Our competitors

operate manually, rather than having an automated process

like ours and their nurses take blood pressure, for example and

hand out the results written on a paper, which participants

then enter into a health-risk assessment manually. Their

participation rates are lower and the costs are higher.

Fortunately, our market is growing greatly. There are lists

showing that all the Fortune 500 companies have a wellness

program. Especially those in the top 10 or 20 take great care

of employee wellness and they attribute the success they see

to these types of programs.

Q: Of your three solutions, which has witnessed the most

effective results in improving employee healthcare?

BV: The portal enables us to follow an employee’s progress

remotely. It enables us to reach a large, geographically

dispersed population. Each person that enters the portal

has access to two telephone sessions per month with the

professional of their choice. Annual access to this service costs

MX$95 (US$5.20) per employee. The biometric evaluations

are what reveal the most information about the individual. In

2016, we performed 30,000 evaluations, all standardized. By

automating the process, we eliminate the risk of human error.

As a company we have performed more evaluations than even

the government through its ENSANUT survey.

VIEW FROM THE TOP

Uhma Salud develops wellbeing programs for the individual

employees of a client company. It measures their current

health status and potential risks to offer personalized

wellbeing plans

CREATING INCENTIVES TO IMPROVE WELLBEING

Roberto González CFO of Uhma Salud

Benjamín VillaseñorCEO of Uhma Salud

151

up, our devices are designed for all-day wear to show how

the small steps users take each day can have a big impact on

their health. We also know social connections help provide

the motivation and support that is fundamental to a user’s

health and fitness journey. For example, we have found that

Fitbit users with one or more friend connections move more,

taking on average 700 more steps than users without friends.

Based on aggregated and anonymous data from over 1 million

Fitbit users, we found that, on average, some users can be

sedentary for up to 90 minutes at a time throughout the day,

which is a significant amount of time for the typical 9-to-5

office worker. Getting up to move for even just two minutes

every hour can help chip away at those sedentary periods and

we have made it a point to encourage that with our Reminders

to Move feature. We know that every user has a unique set of

needs that requires different forms of guidance. With Fitstar

by Fitbit and Personal Goal Setting we are delivering a more

personalized experience with unique insights and guidance

to empower users to achieve their goals.

Q: Fitbit has partnered with Qualcomm and UnitedHealthcare

(UHC). What projects will these alliances develop?

A: We are thrilled with these new partnerships. In the US we

partnered with UHC to offer the top-selling Fitbit Charge

2 to members of UHC’s Motion program, an employer-

sponsored wearable device wellness program that rewards

participants with up to US$1,500 in reimbursements for

achieving specific health goals. This is the first time Fitbit

has designed a custom feature on a device and Qualcomm

played a role in providing technological capabilities and

horsepower. In the future, our two companies will focus on

new UHC health programs and services that incorporate

the latest generation of wearables, medical devices and

home diagnostic tests that utilize Qualcomm Life’s 2net™

Platform for medical-grade connectivity.

Q: How does Fitbit create user engagement? What makes

the company a fitness social network?

A: Fitbit has one of the largest online communities in the

world and the Fitbit app helps users find and engage with

family, friends and coworkers, creating positive network

effects that reinforce user engagement and increase

retention. As of the end of 2015, we had 16.9 million active

users worldwide, up 152 percent year on year. Our growing

user base has increased activity, taking 50 percent more

steps YoY in 3Q16. Over the past year, there has been a 98

percent increase in the number of users who have at least

one friend on the Fitbit platform and, on average, Fitbit users

have more than six friends, a 23 percent increase from 2015.

We are continually looking for new ways to encourage our

community to engage with Fitbit and each other. At CES

Las Vegas we introduced Community, a new section in

the Fitbit app that offers more ways for users to connect

with others to build on and inspire them on their path to

better health. Within Community, users will have access to

Feed, Friends and Groups, all with the goal of providing a

more appealing social experience. Feed is a new feature

that provides an engaging way to connect with friends,

family and groups of like-minded individuals so users can

find added support and inspiration to reach their health

and fitness goals. Friends easily connects users to others

across the globe where they can stay encouraged to climb

the leaderboard, as well as cheer, taunt and direct message

friends and family as they compete to get the most steps.

Groups lets users discover and join communities of like-

minded people to help support and inspire them on their

journey. They can choose from over 20 groups related to

fitness, nutrition, wellness and weight loss. Community will

be available later this year to all Fitbit users.

Q: How important is technology in creating a state of

health consciousness?

A: It is undeniable that technology helps us to be connected,

which is why Fitbit is introducing new tools that deliver

inspiration, personalization and smarter guidance to help drive

behavior change and maximize positive health outcomes. To

provide a complete picture of how a user’s daily activity adds

CONNECTIVITY INSPIRES FITNESSMELANIE CHASE

Director of International Product Marketing at Fitbit

VIEW FROM THE TOP

Fitbit is a US-based company that has been a pioneer and

leader in the connected health and fitness category for nearly

10 years, helping millions of people across the globe reach

their health and fitness goals

152

INSIGHT

AI PROVIDES DIGITAL ANSWERS TO TECH-SAVVY GENERATIONJAVIER CARDONACo-Founder and Director General of 1DOC3

Despite the efforts of the main health institutions, some

Mexicans are still falling through the cracks of the universal

healthcare system. E-health services, such as 1DOC3, are

helping to fill the gap as an easy alternative to face-to-face

doctors’ appointments, fueled in part by improved artificial

Intelligence (AI) and the rise of a tech-savvy generation.

Services such as Colombian start-up 1DOC3 deliver answers to

simple medical inquiries for free, providing basic, specialized,

medical information. “We have become a family doctor to

whom young people ask questions from their phones,” says

Javier Cardona, Co-Founder and CEO of 1DOC3. The e-health

company entered Mexico about three years ago and provides

tens of thousands of users with free medical information daily.

“1DOC3 has grown incredibly. The potential of the health

industry is large in terms of efficiency and savings and

increasing people’s access to services over the internet,” says

Cardona. According to Statista, revenue in the e-health market

worldwide amounts to US$9.8 billion in 2017, of which only

North America accounts for US$3.3 billion and Mexico US$147

million. Thus, Mexico comprises 1.5 percent of the global

e-health revenue and 4.4 percent of the regional. Statista

forecasts that by 2020 the Mexican e-health market volume

will increase to US$265 million.

Mexico has the highest rate of adolescent mothers in the

OECD, with a teenage fertility rate of 65.7 births per 1,000

women in 2014, according to the National Population

Commission (CONAPO), while the National Center for

Prevention and Control of HIV & AIDS (CENSIDA) reported

706 new registered cases of AIDS in 2016, so it is not surprising

that sexual and reproductive health are the most requested

topics. Diabetes, the second-most common cause of death

in Mexico, at 98,521 in 2016, according to INEGI, is the second

topic on which Mexicans inquire. The inquiries made on 1DOC3

fit the Mexican demographic and epidemiological profile. The

app allows low-income people aged between 17 and 27, the

main users of this service, to solve some health inquiries.

The success of 1DOC3 is a consequence of a solid investment

in developing AI, which has helped the app’s user platform

triple between 2016 and 2017, up to a million users a month.

Through a series of algorithms, inquiries are processed in

fractions of seconds. Typed questions are compared by the

AI with previous inquiries. If a match is found, the user is

directed toward that answer. “Ninety-nine percent of inquiries

match previous answers,” says Cardona. If no matches are

found in the database of solved inquiries, the user sends

the question and waits between 40 and 90 minutes for the

answer from a professional physician.

Questions presented by Mexican users are answered directly

by one of the 10 Mexican physicians employed by the

company, a strategy that aims to provide the best possible

answers to users of each nationality and to provide a better

user experience. Answers follow what Cardona calls the

ABC Protocol: confirming and clarifying the user’s problem,

providing medical grounds for the answer physicians provide

and concluding what recommendation is most suitable for

the user. 1DOC3 does not provide diagnoses but rather, gives

basic recommendations and insights on common diseases.

The company also offers a series of services that include

publishing articles related to the most consulted topics

in each country, providing insurance companies with

statistics on different diseases and developing on-

demand awareness campaigns for UN agencies, public

health institutions, laboratories and NGOs. 1DOC3’s main

strategy is to strengthen its technological development as

AI enables the most efficient allocation of resources. The

company expects to strengthen relations with all clients,

continue growing its user platform and make new alliances

with insurance companies and public health institutions.

It is also working on providing users with quicker answers

in case of an emergency. “The opportunity to impact the

health industry through new technologies and digital

channels is increasingly greater,” says Cardona.

Mexico comprises 1.5 percent of the global e-health revenue and

4.4 percent of the regional

153

Healthcare is a strategic industry for T-Systems, with a

very important market penetration in Europe but with

a low participation in the Mexican market because the

digitalization of the Mexican health sector is slow. However,

we have high growth expectations for it. We are investing

heavily in the sector.

To push and accelerate a change in the digitalization of

the Mexican healthcare system there are two verticals:

one comes from the government through the National

Digital Strategy and the other from the industry itself.

The digitalization of health services is a race against time.

Digitalization is something that is not being questioned,

it either happens or companies will not have a chance of

survival. Regardless of what politicians may say, the world is

already digitally connected. It is imminent and it needs to be

done now, we cannot think of doing it in the coming years.

Q: In terms of human capital, is the country’s workforce

prepared to face the challenges the digital era will bring?

A: Human capital is a critical issue that deserves to be a

top priority. Mexican technicians are extraordinarily good

and competitive worldwide. The fact that we provide

services from Mexico to more than 30 countries means

that our human capital can perform world-class services.

Universities are producing professionals and technicians

with competitive levels. While the technical skills of

graduates are at a good level, an element to improve is the

students’ English level. Especially in the telecoms industry,

people must be able to at least read in English and interact

with clients in English. However, besides this and given the

transformation dynamic of the industry, companies must

invest a lot of money in training, which is understandable

given the characteristics of our business. We invest heavily

in training and certifications. It is a matter of creating a

processes culture, which requires time and effort.

Q: What role does Mexico play in your global strategy?

A: We have been in the Mexican market for over 20 years.

When we first started in the country, we operated under the

name Gedas, providing services to the automotive industry.

Our focus is now on providing services to the premium

segment of companies and public-sector entities.

Mexico has contributed heavily to our global growth. In

2015 and 2016, we grew in revenue on average 30 percent

annually in the country. Repeating this growth in coming

years will be complicated but we expect to continue growing

at an accelerated rate. We have a strong presence in the

industrial sector and we have an important but selective

presence in the public sector. In the health and financial

sectors we have a very small presence. However, we expect

to increase this in both and thus continue growing.

Q: How has digitalization been received in Mexico?

A: Companies are already undergoing the transformation

of the digital revolution but it is a change that needs to

be accelerated in the country. At first, it was hard for

the Mexican business community to understand certain

concepts such as the cloud. However, the cloud is like

the entry ticket to digital transformation. It is impossible

to conceive this transformation without a model such

as the cloud.

Up until a few years ago, companies in Mexico thought that

having control or exclusivity of their technological resources

was of extreme importance since it belonged to their core

business. Today, few companies have their own data center,

since it makes no sense for them to have one. From a cost

perspective for IT, instead of being a fixed-cost model as it

used to be, it has now become a variable cost, which has

viability repercussions, particularly for investment projects.

One of the most common concerns for the business

community regarding the use of the cloud was security.

The truth is that the level of information security

companies can have when using our services versus the

security level they can have in an in-house data center with

limited conditions cannot be compared.

DIGITALIZATION UNDERWAY BUT ACCELERATION NEEDED

FEDERICO CASAS-ALATRISTEManaging Director of T-Systems Mexico

VIEW FROM THE TOP

T-Systems is a global IT Services and Consulting company.

It specializes in providing cloud services, M2M solutions and

communication services, among others, helping companies

construct a digital platform

154

INSIGHT

APPROACHING EARLY CANCER DIAGNOSIS WITH AIJULIÁN RÍOSDirector General of Higia Technologies

Breast cancer mortality is on the rise in Mexico and early

detection can be a strong tool to combat the disease. Self-

examination has traditionally been the first line of defense

but it is far from ideal. After watching his mother survive

two battles with the cancer, 17-year old entrepreneur Julián

Ríos thought artificial intelligence could provide a better

approach and the result of his work is attracting serious

attention both in the public and private spheres.

Ríos’ company, Higia Technologies, produces Eva, a bra

Ríos says can detect breast cancer through the use of

bio-sensory patches. He believes the detection methods

currently available are more for diagnosis, mammography

and biopsy, while there are few effective early detection

processes. Ríos hopes to meet this need with Eva.

The high-tech bra’s bio-patches capture temperature data

that is sent to a mobile app, which keeps a record of the

information received. “Cancer increases blood flow due

to the abnormal production of cells that could produce

a tumor. This leads to an uncommon temperature in the

affected area.” The app’s algorithms analyze the collected

temperature data to produce a thermal conductivity curve

that is compared with a database of 2,000-3,000 curves

of data from women from different parts of the world who

have been diagnosed with cancer. “Different tumors have

different thermic fluids. If there is a curve similar to a case

from the file, the probabilities of having breast cancer are

between 93 and 94 percent,” says Ríos.

Eva will be available early in 2018 in Mexico and Latin

America through online platforms and convenience

stores. The project is awaiting approval from COFEPRIS

and the team recently signed an agreement with IMSS

to carry out trials.

According to the Ministry of Health, in 2015, 6,252 women

died in Mexico due to breast cancer, almost 5 percent

more than the previous year, figures that Ríos wants to

reduce. According to Ríos, a women with cancer in phase

III costs IMSS MX$5 million (US$277,000) every year and

MX$250,000 (US$13,888) if she is in phase I. That is a

high expenditure for the government and a main concern

given the lack of an effective early diagnosis test. “The

government will be one of our main buyers because this

product will help rural clinics, associations, universities,

insurance companies and hospitals reduce costs.” Eva will

initially sell for MX$2,000 (US$111) without government

support, but Ríos says its business model will enable the

company to reduce the price.

Higia Technologies works with a team of 10 people made up

of engineers and oncologists and the company has received

an invitation to work at investor Y Combinator in Silicon

Valley. “It will help us formalize the business part. It receives

7 percent of the company for a very small investment.

However, the real value of this opportunity is to be part of

an ecosystem in which we can gather important contacts

that could lead us to higher investment,” says Ríos.

Ríos began researching breast cancer when he was 13

and locked onto the idea that changes in temperature

could lead to a correct diagnosis. He then gathered his

high-school friends to create Higia Technologies with an

investment of less than US$250. By 2017, the company

had raised US$75,000 from awards and donations,

US$33,000 from investors and it is about to close a round

for US$300,000 from an investment fund. Ríos believes

the Mexican entrepreneurial ecosystem is talented but

lacks support. “Many projects are changing the world

but not in Mexico. The industry of risk analysis is very

small, which restricts investment.” He also thinks many

entrepreneurs in the country have good ideas but poor

execution. “We have often seen how in Mexico ideas are

adjudicated without evaluating whether they can be

executed,” he says.

Higia Technologies is in the process of developing new

products, including a device to detect testicular cancer

through men’s underwear. Ríos says information is the

key component of his company. “Higia Techonologies is

moving from a company that develops medical devices

to an information company. Our value is in the amount of

information we have.”

155

THE CASE FOR STRONGER

DIGITAL SUPPORT

Q: What challenges in digitalization is the healthcare

system faced with?

A: By pushing digitalization you often lose a physical

interaction, which in Mexico and other Latin American

countries makes a huge difference. The visual contact and

dialogue with a physician makes the commercial process

more effective. There was a moment when companies

tried to become more digital, using tools such as iPads as

a mechanism for communicating with the physician, but in

many cases the physician refused to see them. Mexico is a

country where interaction is still important and that presents

a challenge to companies that want to be more innovative.

Many laboratories have reduced the number and size of their

sales teams, which is a trend seen in Big Pharma over the

past 10 years. National laboratories still have larger sales

teams but there are fewer companies with these numbers.

Perhaps, the most important challenge we have in Latin

cultures is making the digital become more human.

Making use of it with the purpose of increasing the quality

and content of our interactions instead of reducing or

eliminating them.

Ten years ago, laboratories enjoyed double-digit growth

rates. Many top labs had a large portfolio for general

practitioners and general medicine and a smaller portfolio

for highly specialized drugs. Over time it has become

impossible to maintain the same growth rates in the primary

care sector, where many national companies are competing

and where generic products are gaining important market

share. Many Big Pharma laboratories are not willing to go

into generics with the same resources. Instead, they venture

into highly specialized areas, where you need to educate

physicians and provide consulting and advice. Training is

now undertaken in many ways not possible before. There

are webcasts and online events in which people interact

across the world, physicians want to have access to more

digital information rather than mountains of paperwork

and commercial representatives are also asking for this.

Laboratories are implementing digital ways of reaching

them while keeping human interaction alive. For example,

speaking tours that used to be only in-person experiences

are now web events that become physical when the expert

reaches the participant’s city.

Technology has developed greatly and has decreased direct

sales to producers but they have strengthened innovative

tools that allow for better follow-up with an increased

chance of achieving a drug’s purpose.

Q: What are the main challenges regarding cybersecurity

in healthcare?

A: Deloitte has a department specialized in cybersecurity

although this branch has not yet developed much at

an industrial level in Mexico. Cybersecurity allows the

verification of information veracity and a better follow-up

on patient health and on a drug’s effectiveness. Companies

have not yet reached the point where they feel they need

cybersecurity for health-related issues. They focus more

on financial issues and economic risks, where there is

tangible and confidential information management. Health

companies in Mexico have not placed as much importance

on cybersecurity concerning drugs or services as they have

on information management and patient communication.

Q: How can you use data analytics to track and eliminate

epidemic viruses in Mexico?

A: There are technological support tools available during

epidemic periods but they are uncommon because the

difficult epidemics are usually centered in low-income

communities, which have less access to technology.

For segments of our population with access to electronic

media, advanced analytics that are available today would

allow a web search and would become a predictor of possible

diseases depending on the nature of the questions and

information searched. This constitutes a great opportunity

in prevention, an area in which we have a long way to go.

Horacio Peña Senior Manager in Strategy and

Operations Consulting at Deloitte

Xavier Ordoñez Partner in Strategy and Operations Consulting at Deloitte

VIEW FROM THE TOP

Deloitte is one of the world’s leading audit, consulting,

tax, financial advisory and risk advisory brands, with about

245,000 people at member firms in 150 countries and

territories

Research on growth disorders

157

For years, many have spoken of Mexico’s clinical research industry as a boom

waiting to happen. The country has an ideal geography, ethnical diversity and the

sanitary installations, but it still only accounts for an insignificant proportion of the

number of clinical trials carried out worldwide, at just over 1 percent, according

to clinicaltrials.gov. Its northern neighbor has a hefty 42 percent of global trials,

despite the US being more costly. According to ProMéxico, conducting clinical

trials in Mexico is 46.2 percent cheaper than in the US. Most of the testing

performed here is retesting, as required by local sanitary regulations. Authorized

third parties have helped enormously in this area, speeding up processes and

efficiency. According to a COFEPRIS 2014 press release, authorized third parties

had reduced authorization wait times from an average of two years to 20

business days.

Clinical research is vital worldwide for drug companies, regulatory bodies and

consumers alike. Mexico has all the attributes to become a hub for research in the

Americas. This chapter will present interviews with the labs and contract research

organizations that undertake the research and will examine the obstacles and

opportunities for Mexico to attract more investment in this area.

CLINICAL RESEARCH & TESTING

7

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Mexico Business Events organizes high-level conferences

where business and political leaders meet to discuss the

key topics that are defining Mexico’s economic future. By

connecting each industry’s key stakeholders, our events

are accelerating the exchange of vital industry information

that is crucial to capitalize on Mexico’s economic potential,

and create new business opportunities in an unparalleled

networking environment.

Mexico Business Events organizes high-

level conferences where business and

political leaders meet to discuss the key

topics that are defining Mexico’s economic

future. By connecting each industry’s key

stakeholders, our events are accelerating

the exchange of vital industry information

that is crucial to capitalize on Mexico’s

economic potential and create new

business opportunities in an unparalleled

networking environment.

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159

CHAPTER 7: CLINICAL RESEARCH & TESTING

160 ANALYSIS: Demographics Among Keys to Clinical Research Success

162 VIEW FROM THE TOP: Arturo Rodríguez, Infinite Clinical Research and ACROM

164 INSIGHT: Israel Vega, PRA Health Sciences

165 VIEW FROM THE TOP: Ciro García, Accelerium Clinical Research

166 VIEW FROM THE TOP: Cecilia Moreno, PPD

José Viramontes, PPD

167 INSIGHT: Annette Ortiz, Epic CRO

168 VIEW FROM THE TOP: Melissa Rosales, RM Pharma

169 VIEW FROM THE TOP: Karen Hahn, ICON

170 VIEW FROM THE TOP: Héctor Ávila, Cecyc Pharma

Mezly Rodríguez, Cecyc Pharma

Diego Ávila, Cecyc Pharma

172 VIEW FROM THE TOP: Abel Hernández, ANCE

Yoloxóchitl Macías, ANCE

173 VIEW FROM THE TOP: Carlos Pérez, NYCE

174 VIEW FROM THE TOP: Sonia Pérez, UDIBI

175 VIEW FROM THE TOP: Andrés Ferrara, Analitek

176 ANALYSIS: Authorized Third Parties Ease Registration Backlog

177 ROUNDTABLE: What Must Mexico do to Become a Clinical Research Hub?

160

DEMOGRAPHICS AMONG KEYS TO CLINICAL RESEARCH SUCCESS

With its diverse demographic profile, a vast pool of

potential volunteers and widely recognized regulatory

arm that is bent on speeding up processes, Mexico

has all the ingredients to become a hub for global

clinical research and drug testing. Despite its numerous

advantages, the country remains on the outside looking

in. It carries out just 1 percent of global clinical trials,

about 2,850, according to clinicaltrials.gov.

To move Mexico up the ladder, the government is working

with regulators and industry associations to promote

improved protocols, speed up processes and boost

recognition of the country’s strong attributes, including

a skilled but economical labor pool, to attract investment

and help establish itself among the sector’s elite hubs.

While there remains a long way to go, the establishment

of a framework agreement in 2017 to promote clinical

research and the clear emergence of authorized third

parties, established in 2014 and now coming into their

own, has created an air of optimism.

“The creation of the authorized third-party system was a

great decision. The fact that the government accepted that its

internal structure could not deal with the volume of demand

was a good move,” says Carlos Pérez, Director General of

NYCE, an authorized third party that works across sectors.

Mexico already has a foothold, standing

with the leaders in health sector R&D

among the countries participating in KPMG’s

Competitiveness Alternative 2016 Study.

In clinical research, it is strongest on T2D,

landing the top spot on the KMR Group Index and among

the top three for arthritis.

According to a report by Zion Market Research, the CRO

market was worth US$34 billion in 2014 and is expected

to be valued at US$59 billion in 2020. Pharmaceutical

manufacturing companies in emerging countries in Asia-

Pacific, Latin America and Eastern Europe are responsible

for most of the outsourcing activities due to the large

population of treatment-naive patients, low labor and

manufacturing costs and a skilled medical workforce, the

report states.

PATIENT RECRUITMENT OPPORTUNITIES

Mexico has a diverse population of 121 million inhabitants

and has more than 10 cities with over 10 million

inhabitants, providing a large pool for recruitment. “The

big international pharma companies have demonstrated

their interest in the available patient pool, which offers a

substantial opportunity to accelerate their research,” says

Francisco Corpi, Latin North Regional Director of Elsevier.

To take advantage of this favorable demographic, President

Peña Nieto signed a collaboration agreement in January

2017 with COFEPRIS, SAT, CANIFARMA, IMSS, ANAFAM

and AMIIF to promote the development of protocols for

health research, opening the door to new opportunities

for the industry. According to the Ministry of Health, this

agreement will make the most of the potential available

of more than 83,000 doctors, 459 researches, 155 nurses,

1,786 medical units and about 62 million IMSS members

and 487,000 registered with ISSSTE.

According to Corpi, the possibility of finding volunteers

in Mexico has been considered a key factor for bringing

clinical research to the country, although, he believes there

is a concern from regulatory agencies and policymakers

regarding the safety of patients. “While both Big Pharma

corporations and policymakers here in Mexico are still

figuring out the most adequate formula for success, we

see many clinical trial opportunities lost to other countries

in the region. The challenge is not just the bureaucracy of

policy but it is even at the infrastructure, personnel and

information level,” Corpi adds.

ANALYSIS

Mexico is trying to scale up its clinical research by taking

advantage of its natural traits: a large and diverse population,

supportive regulatory authorities and competitive

operational costs

R&D services- International results (US=100.0)

0

20

40

60

80

100

Mex

ico

Can

ada

Net

herl

and

s

Fra

nce

Aus

tral

ia

Ital

y

Ger

man

y

Jap

anUK

US

88.1 87.2 8479 77.9 77.6

74 72.3

55.3

THE COST OF R&D SERVICES COMPARED TO THE US (US=100.0)

Source: KPMG

161

EASING APPROVAL TIMES

In May 2017, Julio Sanchez y Tépoz said during a forum

with AMIIF that COFEPRIS is working very closely with the

industry to create incentives for investment. New research

protocols allow product approvals within 45 days, making

the sector more competitive. José Viramontes, Director

of Remote Site Management and Monitoring of PPD,

said 2016 was an excellent year for Mexico in terms of

clinical research since regulation became more consistent

with the company’s internal processes. “The year closed

with a meeting between the authorities and associations

during which a few changes to the law were proposed.

For example, Mexican law requires the involvement of

three committees: ethics, research and biosafety. One

proposal seeks to include only one committee, which is

an approach comparable to the rest of the world. Another

consideration is to run processes in parallel rather than

sequentially, which can help shorten approval times.” He

added that the purpose of these changes was to support

industry efforts to bend both costs and the time required

for drug development.

Authorized third parties, companies certified by

COFEPRIS to support authorities with sanitary control

and vigilance, have also played a significant role in

speeding up approval times. There are 122 authorized

testing laboratories, 62 units of interchangeability and

bio-comparability and 26 verification units. “We have

authorized a series of third parties to be much faster in

clinical authorizations, which will allow Mexico to become

a center of clinical research,” said Rafael Gual, Director

General of CANIFARMA.

STRATEGIC LOCATION

It helps to have the world leader in clinical research as

a next-door neighbor. The US conducts about 103,000

studies, says data from clinicaltrials.gov. According

to ProMéxico, the Mexican population suffers chronic

conditions similar to those of Americans, which helps

conduct studies.

For these reasons, among others, Mexico could become

a reference for the evaluation of biosimilars worldwide

due to its geographical location and the fact that many

countries are seeking to access other markets, says Sonia

Pérez, Executive Director of UDIBI. “The knowledge we

gather when we perform a detailed evaluation might

be useful in developing innovative molecules. Mexico

has great potential but our innovation system is not

articulated,” says Pérez. Similarly, Ciro García, Director

General of Accelerium Clinical Research, believes

conducting early phase clinical research could result in

significant opportunities for Mexico, although there are

constrains that are impeding the arrival of these types of

studies. “There are not many international phase I studies

brought to Mexico, in part because the research process

requires higher quality standards and a higher degree of

sophistication and organization,” García says.

INDUSTRY TRENDS

While overcoming obstacles, the country must also keep

up with prevailing trends such as biotechnology, an area

that has captured the attention of many industry players.

According to ProMéxico, there are 406 companies in

Mexico that develop or use modern biotechnology

and 33 percent of those operate in the health industry.

“It used to be that only 20 percent of diseases were

healed with biotechnology, but now pharmaceutical

companies want to treat other diseases like diabetes and

cardiovascular with these types of drugs,” says Annette

Ortíz, Director General of Epic CRO. The main benefits of

this technology are personalized treatments, reduction

of adverse effects and higher control of the disease

for both patient and physician, she adds. Nevertheless,

companies are concerned that although the new

pharmacovigilance standard developed by COFEPRIS

controls the chemical medicine, it does not respond to

the need for biotechnology.

Another industry trend is the need for e-services to

manage information that can be used for preventive

medicine or the development of biotechnological drugs.

As mentioned by Carlos Oviedo, Director General of

Grupo Diagnóstico Aries (GDA), Big Data applications

should translate into timely disease prevention. “In this

area, we would like to cooperate with local governments

and companies by sharing all the information we gather

to increase prevention. The Ministry of Health is the

appropriate entity to use this information for the benefit

of Mexican citizens,” he says.

Mexico’s attributes demonstrate it has great potential to

develop research. Some companies, such as Sanofi have

already taken advantage of the local opportunities. The

leading pharmaceutical company has 35 active studies in

Mexico, making it the second-most important clinical research

unit after India for Sanofi’s emerging economies markets.

The global contract research organization market is expected to reach a value of US$59 billion by 2020

162

back into the country because that amounts to importing

tissue. Covering all these elements under one umbrella would

increase security, productivity and reduce response times.

Q: Regarding pediatric care, in which main therapeutic areas

are you concentrating research?

A: In pediatrics, our studies are mostly in vaccines and

developmental or growth conditions that require growth

hormones. The challenges we face are that the researcher’s

profile must be much more focused on the therapeutic

area involved, while patients are seen in more specialized

institutions and finally there is not much availability of these

medicines. Also, children are under the protection of their

parents and, because babies and children are fragile, parents

do not allow them to participate in research protocols. Our

main strategy to convince parents is to explain the benefits

of the medicine for the patient. The most important point

is to be clear and open, explain that trials are not black and

white and highlight the possible downsides in addition to

the opportunities. This can make a difference in a patient

participating or not.

Q: What are the advantages of performing clinical research

in Mexico over other Latin American countries?

A: Mexico has long wait times but not as long as other Latin

American countries. In Mexico, in line with FDA rules, if an

efficient rescue medicine is available, trials can be held with

groups taking placebos. This is not the case in some Latin

American countries. The Helsinki Declaration states that a

placebo should not be given to patients but that a drug

should always be compared to what is available on the

market. The downside of this is that researchers will not know

the base state of the patient or the efficacy of the product.

Researchers will know the percentage of how efficient it is

compared to the available treatment but that treatment itself

is not 100 percent effective, therefore you may be getting a

false positive: believing the product works well but in reality,

providing a lesser level of efficacy than that needed by the

population. There are cases such as CNS, cancer or high-risk

diseases in which it is not possible to give placebos because

the patient’s treatment would be unbalanced and their lives

would be put in danger.

Q: How is Infinite Clinical Research (ICR) fulfilling its mission

to be an outsourcing leader in the pharmaceutical industry?

A: To meet an objective it is necessary to understand the main

requirements of the industry, including regulation. We are

continually attentive to possible changes or lines that could

be worked on to achieve these updates and improvements.

We do this by participating in all the regulatory events held

by COFEPRIS and the National Commission of Bioethics

and International Commerce in combination with our day-

to-day experience in working with the authorities. Any alert is

immediately communicated to our clients and we implement

it in our processes. Through a corrective and preventive

action plan we remodel our activities and strive to always

be at the vanguard of what is happening. With the advantage

of working hand in hand with ACROM, which participates

directly in the revision and elaboration of process guides,

we are ready when new laws come into force.

Q: What particular regulation is ICR lobbying to establish

or change?

A: It is not that we want to change a point but we want

to homogenize regulation and see what processes can

be carried out simultaneously. When a research center

or country is chosen, companies look at the time elapsed

between sending in the first documents and recruiting the

first patient. This is what has left Mexico out of the market

because we have time frames of over 300 days. Sometimes

this is due to the authorities, sometimes ethics committees

while other times it could be due to internal processes. The

internal processes element is what we need to optimize

because we realized that many days are added to processing

times due to internal delays. Running things simultaneously

will allow us to reduce this.

We are also working with the Ministry of Foreign Affairs to

achieve greater flexibility for products brought in and out

of the country. At the moment, medicine is brought in on

exceptions but it then becomes a struggle to import any

supplementary products. We are asking to be able to bring

everything in together through the approval service rather

than taking out licenses for each one. Samples taken for

analysis are another issue because they cannot be brought

LEADING THE CLINICAL RESEARCH CHARGEARTURO RODRÍGUEZDirector General of ICR and President of ACROM

VIEW FROM THE TOP

163

Another advantage is that doctors here are closer to the

information available in the US and are more up to date

on what is needed. They are also better informed about

new medicines and can thus achieve better results. Central

and South America often receive more medicine from

Europe, which is closer in terms of flying hours. The work

methodology in Europe is different. They work with less time

pressure than in the US, which gives them the ability to work

with Central and South America’s processing times.

Mexico’s main obstacle was that it did not have access to

public hospitals, whereas in 2016 and 2017 an agreement

was reached with IMSS and COFEPRIS to open the doors

to clinical research. The same will happen with ISSSTE and

other public institutions. This dramatically increases our

chances of recruiting patients. In 2016, 80 percent of trials

were carried out in private institutions. We hope to attract

more trials to Mexico, maintaining the amount carried out

in the private sector but increasing the amount in the public

sector to achieve a 50/50 balance.

Q: COFEPRIS Comissioner Julio Sánchez y Tépoz told MHR

he hopes to triple investment in clinical research in Mexico

in two years. Is that possible?

A: I agree with his actions. We are working hand in hand with

COFEPRIS. One of the problems seen in Mexico was the lack

of certitude. For example, when Mexico first implemented

certifications, operations and processing times were

forgotten and they multiplied, which caused clinical research

to move away from Mexico. Before this, the number of trials

entering Mexico was extremely high. The commissioner’s

vision is progressive because he is looking at facilitating the

arrival of trials and not at implementing obstacles, which

gives us a great opportunity to support him.

In addition, the links between Mexico City and the other

states allow fluid communication. To get to Monterrey takes

the same amount of time as getting to the south of Mexico

City. By going to other states, clinical research is spread

throughout Mexico and capacity is increased although

41.4%

7.1% 6.9% 6.4% 5.5%2.3% 1.1% 0.9% 0.5% 0.4%

0

5

10

15

20

25

30

35

40

45

OtherColombia ChileArgentinaMexicoBrazil ChinaUKGermanyCanada FranceUS

4.0%

23.5%

CLINICAL TRIALS CARRIED OUT IN JUNE 2017 (percentage of global trials)

Source: www.clinicaltrials.gov

around 60 percent of research takes place in the capital.

The following two states are Nuevo Leon and Jalisco and

others such as Durango and Chihuahua are beginning to

develop their centers and facilities. Mexico has several types

of climate: forest, dessert and tropical, which enables the

research of tropical and rare diseases, further boosted by

our large population and our urban/rural split.

Q: ACROM is still a young association. What have been

its greatest challenges and how has it approached its

relationship with the authorities?

A: The first challenge was to create ACROM as it involved

bringing together companies that were competitors.

Finally, the alliance was created and we worked on

creating respect between the partners as what benefits

one will benefit the other. The hardest challenge has been

credibility, having both the industry and the authorities

believe in us. We are trying to work with CETIFARMA

to certify companies as ethically responsible, which

complements the credibility of the association in front

of the authorities and the industry. We are interested in

them seeing we have no issues in covering ethical issues.

Q: What will your priorities for 2017 be in ICR and in

ACROM?

A: ICR has been working hard on developing

pharmacovigilance and risk management. One of the points

of new norms, a global movement, is the need to create

risk management plans. We require much more specialized

people than other CROs, this is an opportunity to develop.

The vision of ACROM is to promote that Mexico has

credibility, opportunity and could move from being an

emerging zone to a country of primary decisions.

Infinite Clinical Research (ICR) is a Mexican CRO that has

15 years of experience in clinical trials in Mexico and in Latin

America. ACROM is the Mexican association of CROs, which

promotes quality in clinical R&D in Mexico

164

INSIGHT

PROCESSING TIMES SLOWING MEXICO DOWNISRAEL VEGAClinical Operational Manager of PRA Health Sciences

The paradigm is set: Mexico has the correct infrastructure

in place, an ideal mix of ethnicities and research talent

and a privileged location close to the US and relatively

easy to reach from Europe, but despite the hopes

expressed by industry insiders in previous Mexico Health

Review editions, the percentage of global clinical trials

carried out in Mexico is decreasing rather than increasing,

according to clinicaltrials.gov.

However, the sentiment in the industry remains optimistic

and Israel Vega, Clinical Operational Manager of PRA Health

Sciences, believes that the trend will pick up. “We should

have more than 1 percent of trials. We are close to the US,

so we could act as a hub for processes that

are currently being done in Panama,” he says.

PRA Health Sciences is a US-based CRO with

41 years of expertise in clinical research, phase

I-IIa, phase II-III, post-approval, safety and risk

management, biosimilars, rare diseases and

oncology. It operates in over 80 countries and

is one of the largest CROs in the world.

According to clinicaltrials.gov, Mexico performs only 1 percent

of global clinical trials, whereas the US carries out 42 percent

and Brazil 2 percent. Asia performs 15.4 percent compared to

5.5 percent in Central and South America and the Caribbean.

“Mexico usually does very little phase I testing, that is done

elsewhere. We concentrate on phase II and phase III,” says

Vega. He explains that despite faster timelines in Mexico

over the past few years, there is yet work to be done.

“Although timelines have been improved, it still takes us

six to seven months from receiving the protocol to begin

enrolling subjects in the first site. In the US, this can be done

in two to three weeks. In Guatemala or Panama, it can be

started in three to four months,” Vega says.

It is not just the timelines, Vega adds, it is the system.

Brazil, for example, remains an attractive destination

because although it takes 11 to 13 months to set up a

trial, due to the health system working differently it is

possible to enroll 100 subjects in just one day. “That’s

something we cannot compete against.”

The Mexican government is stepping up its efforts to attract

further clinical trials. In addition to speeding up processing

times to become more attractive against other countries.

In December 2016 the IMSS modified its terms and

conditions for conducting clinical trials, which has sparked

widespread interest among the private sector as the IMSS’

large population of beneficiaries is an ideal patient base for

carrying out sponsored clinical trials. IMSS, the country’s

largest health institute, reports that as of May 31, 2017, it

had 19.04 million affiliated workers. “Over

the past year the agreements we have with

public institutions have changed: we are

now able to work with IMSS,” Vega says.

He explains that the CRO will work

through the department of research at

IMSS, contacting researchers centrally.

Researchers will not be able to carry out

more than two active studies at a time.

IMSS clinical trials will mostly focus on treating the

conditions that weigh down a large proportion of the

population and thus the institute, such as diabetes,

cardiovascular diseases and cancer. “They also have the

potential to conduct rare disease trials,” Vega adds. “I

think that starting to work with IMSS in 2017 will be a

big boost to the sector. We will get a lot of patients and

quick results. If we focus on not losing quality, then it

could be the first step toward opening up the market.”

He adds that the industry has seen increased interest

in Mexico from Big Pharma and that negotiations have

already begun to conduct clinical trials with ISSSTE.

Vega also does not believe that the general economic

fluctuations of 2016/2017 will keep the industry down. “Peso

depreciation will probably not impact the attractiveness

of Mexico as a destination for clinical trials because most

budgets are still negotiated in US dollars,” says Vega.

1.1%the proportion

of global clinical trials

Mexico performs

165

jettisoned even faster. Any failure of this process may

represent potential losses for pharmaceutical sponsors.

We are trying to attract early phase studies to our state-of-

the-art phase I unit and show that Mexico is now capable of

delivering results comparable in quality with the other phase

I units in the world. In fact, we are pioneers in conducting

international phase I trials in complex therapeutic areas

such as oncology. We are one of the few centers in Mexico

that has the infrastructure and organization to hold phase

I or first-in-human studies sponsored by the international

industry. One of our strategies is to bring more phase I

trials to Mexico. We have been moving forward and we are

now working with multinational CROs to create enough

confidence to bring this process to the country.

Q: What system do you use to protect patient information?

A: We have designated restricted areas with high-security

digital access controls to protect physical records and

any patient-related information. Each system requires

a validation to store the patient data. We comply with

the Code of Federal Regulations Title 21 for electronic

information, which requires us to use a validated system

that meets those regulations. We must understand that

research is not something random. It requires attention

and consideration of local and international regulations.

Q: What results did you see in 2016 and what are your

plans for 2017?

A: 2016 was an important year for Accelerium. We saw

significant growth in the number of projects we worked on

across therapeutic areas. We recently started operating

our second phase II – IV research center south of the

state of Nuevo Leon. We plan to focus on leveraging

technology to enhance the productivity and efficiency of

our operations, while overall helping the industry increase

access to larger patient populations.

Q: Given the speed of innovation across sectors, what is

the state of clinical research today?

A: There is a new trend in biotech drugs and personalized

medicine. Biotechnology has made it possible to create

therapies focused on specific mutations or biomarkers. In

addition, it is also now common to evaluate participant

genotypes in clinical trials because drugs have different

interactions depending on genetics. A drug dosage that

works well for the Asian population might have different

results for Latin Americans. The trend is to understand the

effect of a drug among different groups.

Q: What is Accelerium Clinical Research doing in line

with this trend?

A: As we increase our work in more complex clinical

trials, we are able to assume the level of sophistication

demanded by the industry. The international requirements

for conducting clinical trials are becoming increasingly

stringent. Consequently, we have had to enhance our

own infrastructure and organization to stay in line with

these trends. Previously, clinical research could have

been easily performed in a small doctor’s office with

basic equipment. To keep up with quality and safety,

regulators now require more complex infrastructure

and controls. The new generation of drugs is inherently

more complex, warranting more thorough studies and

increasingly stringent procedures.

Q: To what extent is it possible to start developing phase

I research in Mexico instead of focusing on solely phases

II and IV?

A: Early phase clinical research is another important area

of opportunity in Mexico. There are not many international

phase I studies brought to Mexico, in part because the

research process requires higher quality standards and

a higher degree of sophistication and organization. The

strategic and tactical work done in phase I has a greater

impact on downstream phase II and phase III costs than

any other factor, and has the greatest impact on drug

development success. This is a critical point in the research

process. Drugs that should go forward need to move ahead

quickly and drugs that should be abandoned should be

MOVING BEYOND THE BASICS OF CLINICAL RESEARCH

CIRO GARCÍADirector General of Accelerium Clinical Research

VIEW FROM THE TOP

Accelerium is a Monterrey-based research center dedicated

to the pharmaceutical and biotechnological industries. It

operates trials from phase II to phase IV and aims to contribute

to scientific research and development in Mexico

166

EXPANDING TO REACH PUBLIC AND PRIVATE ENTITIES

Q: In 2016, you told MHR you had plans to open more centers

in Mexico. To what extent have you fulfilled these plans?

CM: We are opening an increasing number of centers in

Mexico to work with the private and public sectors and in

new therapeutic areas, such as vaccines. Additionally, IMSS

is modifying its internal processes to allow more interaction

with pharmaceutical companies and has changed its

contract template to better support the industry. We

already have started working with the agency in oncology,

allowing patients with less prevalent diseases to be enrolled

in clinical trials. We are also working with IMSS on vaccines

for infectious diseases.

Q: What are the specific challenges in working with

vaccines?

CM: One of the main challenges of working with vaccines is

the number of patients who have to be recruited. Studies can

include hundreds or thousands of patients, so centers have to

have the necessary infrastructure and personnel to support

those needs. Also, vaccines are often for endemic diseases,

many of which are tropical like zika and dengue and occur in

Mexico, so there is an area of opportunity for these studies.

JV: Another challenge is finding healthy volunteers and

conducting the follow-up to ensure the vaccine is effective.

The informed consent applied to healthy volunteers is

different than that used to invite patients who are conscious

of their disease. An additional factor to be considered is that

in many cases vaccine clinical trials include children.

Q: What impact has NOM-220 had on your Mexican

operations and what changes do you expect from future

modifications?

CM: We have not seen much impact but we are waiting to

see what new follow-up activities result from the vigilance

plans. The reporting of adverse events in clinical trials

is still very similar to what it was before. Also, we will

probably participate in more risk-management studies

or observational studies going forward.

JV: Although the section of the NOM that deals with

the reporting of adverse events in clinical trials has seen

a few slight modifications, it has not had a substantial

impact. It has more of an impact on the spontaneous

adverse events for medicine already commercially

available. Most of the industry is working on how to

implement these changes in their internal processes.

There is a Mexican association of pharmacovigilance that

holds regular meetings in which the details of the new NOM

are discussed. They are in contact with the authorities.

Q: Looking to the future, what are PPD’s goals for

Mexico?

CM: Our goal is to continue growing. National regulation

has been beneficial to our industry and over the past few

years we have seen an improvement in approval times and

greater willingness to strengthen and improve regulatory

processes, which has made Mexico more competitive

when compared to the rest of the world. COFEPRIS

continues to improve its processing time frames and

research sites continue to operate at increasingly higher

standards, which improves overall recruitment times.

JV: 2016 was an excellent year for Mexico in many ways.

The regulatory authorities have brought much greater

consistency to their internal processes and they have

greatly expanded their interactions with companies.

The year closed with a meeting between the authorities

and associations, during which a few changes to the

law were proposed. For example, Mexican law requires

the involvement of three committees: ethics, research

and biosafety. One proposal seeks to include only one

committee, which is an approach comparable to the rest

of the world. Another consideration is to run processes in

parallel rather than sequentially, which can help shorten

approval times. The purpose of these changes is to

support the industry’s ongoing efforts to curb the cost

and time curve of drug development.

José ViramontesDirector of Remote Site

Management & Monitoring of PPD

Cecilia MorenoAssociate Director of Clinical Management of PPD

VIEW FROM THE TOP

PPD is a US-based contract research organization present

in 47 countries and working in early development, clinical

development, post-approval studies and consulting, among

other areas. It has been present in Mexico since 1998

167

INSIGHT

The development of a biotechnology drug industry is

setting up a panorama of innovation in the country that

could provide personalized treatments and better disease

management. However, without strict data collection and

regulation, patient health could be endangered.

“It is not easy,” says Annette Ortiz, Director General of Epic

CRO. Companies like Epic CRO are offering clinical research

solutions to anticipate the changing terrain. The company,

which works in pharmaceuticals, nutrition and medical

devices is also highly interested in the biotech industry and

in acquiring clients that want to start clinical trials for drugs

with a biological basis.

Epic CRO has 10 years of experience conducting clinical

trials in Latin America, providing integral and tailored

services to local and foreign clients looking for clinical

development to take their products to market.

“It used to be that 20 percent of diseases were healed

with special chemistry, known as biotechnology, but now

pharmaceutical companies want to treat other diseases like

diabetes and cardiovascular with these types of drugs,”

Ortiz says. The main benefits of this technology are

personalized treatments, reduction of adverse effects and

higher control of the disease for both patient and physician.

Epic CRO clinical research focuses on vaccines, diabetes,

respiratory and gastric disease medication. The company

has developed trials for influenza and hepatitis C vaccines,

in addition to a formula for chromate testing to detect

lymphatic cancer. However, Ortiz recognizes this traditional

clinical research process completely changes when dealing

with biotechnological drugs. “Data collection becomes a

new challenge when we need to consider more factors

because any patient behavior can vary the molecule’s

effects. During regular clinical trials we have two patient

groups to observe, now we have to control every patient

separately,” she says.

Given the complexity of the trials and their cost,

pharmacovigilance and techno-vigilance become a main

concern for clients. As a solution, Epic CRO has a two-

server protection system.

A large obstacle for this industry is the lack of regulation.

Ortiz says that COFEPRIS was expected to prepare

regulation on this subject for 2016. However, “companies

that were supposed to start clinical research realized

COFEPRIS was not yet ready to answer many of the

questions they had.” She says that there is a big difference

between traditional pharmacy and biotechnology, which

requires an understanding and new technology that is not

common in the Mexican pharmaceutical context.

Ortiz believes it will take at least one more year to complete

the regulation. Meanwhile, the company’s plan is to

gain as much knowledge as they can from each of their

biotechnology trials and get a full understanding of how

each molecule works to sharpen each protocol, so when the

time comes they will be prepared to explain to patients the

benefits of this new technology.

Epic CRO's priority is to push the industry to do clinical

research. “The challenge I find is that Mexican companies

want to bring products onto the market as fast as they

can so they try to take shortcuts to get approvals,” she

says. CROs could help prevent this issue by analyzing the

studies before they are performed and suggest potential

modifications in case a more complete trial is required.

This could be an issue for local companies. Epic CRO has

done clinical development for companies from Spain and

the US that want to enter Mexico and are taking the right

steps to perform trials for their products here. “Mexico

is one of the countries in Latin America that is trying to

speed the authorization process without cutting steps and

reviews” although international companies are more open

to these requirements.

“Biotechnology represents a strong commitment for us.

What we are doing in research right now will show results in

10 years and all the data you are accumulating will probably

save lives,” Ortiz concludes.

INNOVATION BLAZES TRAIL TOWARD PERSONALIZED

TREATMENTSANNETTE ORTIZ

Director General of Epic CRO

168

the profiles to see who has the best potential for the study

and we call them. We also advertise in newspapers and

we hold talks with first-contact doctors to provide them

with information on new molecules and to see if they are

interested in participating or in referring patients. For

pediatric studies, most of the recruitment is achieved by

referral from specialists so we distribute brochures among

pediatric associations, explaining the type of conditions

we are looking for. It is hard to find the ideal patient for

every study, which is why we have to work every day to

expand our database.

Today, inclusion criteria is increasingly complicated,

so when we need samples of 10 patients with certain

characteristics, we need to contact at least 300 patients

from our database because there will be criteria most

of them do not meet. However, we always keep those

patients in the database and continue to perform follow-

ups because we know that at some point they may be

the patients we need for a study.

Q: What added value does RM Pharma bring to the health

industry over other companies?

A: Based on our client feedback, one of our values is the high

quality of data we provide to the industry, rapid recruitment

and our high rates of patient retention in studies, which is

around 93 percent. Some of our studies have lasted four

years and the patients are still participating. This is achieved

through the quality of the medical service we provide and

the experience of our doctors.

Q: What are your goals for 2017 and how will you reach them?

A: Our goal is to start providing more CRO services, such

as monitoring of clinical studies, capturing electronic

databases and protocol reporting. We will start reaching

out to national labs that require more local studies,

especially with the new pharmacovigilance norm. We

have plans to open operations in Queretaro next year, a

region that is growing rapidly due to the automotive and

aerospace industries and we know there will be a need for

more studies because national and international hospitals

are settling there.

Q: What advances has RM Pharma made in its operations

over the past year?

A: Our main achievement over the last year was the

establishment of an alliance with Bio Clinica, an American

company, which enabled us to be part of a global network

of research sites focused on making clinical trials a success

and to diversify our activities in different therapeutic areas.

This year, we will launch a protocol for dyslipidemia that

could help prevent heart attacks, based on a new model

to reach a large number of participating patients. We are

also starting to work with children for a local allergic rhinitis

study and with an international study on pediatric psoriasis.

Q: How has the new pharmacovigilance NOM impacted

RM Pharma?

A: We are focused on pharmacovigilance follow-ups and we

report side-effects and serious adverse events and submit

real-time reports. We provide training to our doctoral staff

on the norm’s updates so they can be aware of patient

progress and report any changes to COFEPRIS.

However, we will need at least another year to completely

integrate the norm, because we have to invest more in

educating patients so they know there is a line they can

call if they have an unusual reaction and we need to train

first-contact doctors and laboratory staff to register all the

important data when patients call.

Q: What strategy does RM Pharma employ to recruit

volunteers and how difficult is it to find the ideal patient

for studies?

A: Our database grows mainly through references from

existing patients. To keep them engaged we provide free

check-ups. A specialist evaluates them and creates a

patient profile, so when we start a new protocol we check

SUCCESSFUL RECRUITMENT FOR MORE SPECIALIZED STUDIESMELISSA ROSALESDirector General of RM Pharma

VIEW FROM THE TOP

RM Pharma is a Mexico City based CRO that performs

clinical research in the fields of rheumatology, cardiology,

nutrition, pediatrics, endocrinology, otorhinolaryngology

and ophthalmology

169

Q: What has shaped ICON’s evolution over the past year?

A: It has been a successful year for the company. We

received recognition for the second time as the Best CRO

at the Vaccine Industry Excellence Awards. Last year, we

invested a lot in recruiting the best professionals and

in having a bigger footprint for our private and public

customers through our Vaccine Center of Excellence.

Through this center, we lead research on vaccines for

infectious diseases and global pandemics. We also

received the Outstanding Partner Award from Amgen for

a Functional Service Provider partnership we established

a year ago for global project management.

Q: What is Mexico’s role in ICON’s global operations?

A: In Mexico, which is ICON’s biggest office in Latin

America, followed by Brazil and Argentina, we employ

211 people and have high growth expectations. However,

while Mexico and Latin America have a lot to offer, they

lack exposure. The region represents just 6 percent of

the global clinical research market, as attention is usually

given to the US, Europe and Asia, but we are investing

in strategies and working with associations such as

ACROM, AMIIF and the Association of Clinical Research

Professionals (APEIC) to make us more visible to the

rest of the world. Fortunately, the new administration

in COFEPRIS is maintaining continuity, bringing in new

and good ideas and they are studying models from other

countries’ regulatory organisms to see what could be

useful for Mexico.

Q: What is Mexico’s value proposition as a potential

clinical research hub for international companies?

A: The IMSS now allows clinical studies, which will provide

great opportunities for the sector. The institution has a

huge patient population and is also a good source of

patients with rare diseases that are hard to find in other

institutions. In addition, Mexico has a lot of potential

in pediatric clinical studies due to the large population

of children and the good relationship between doctors

and parents we have identified in previous recruitments.

Therefore, ICON has already developed expertise in

pediatric studies.

EXPOSURE NEEDED TO MAKE MEXICO A RESEARCH HUB

KAREN HAHNDirector of Clinical Trial Management for ICON

VIEW FROM THE TOP

Q: What techniques can be applied to increase patient

recruitment and take advantage of the possibilities offered

by the Mexican population?

A: We have a close relationship with patient-recruitment

sites and provide quality training to professionals so they can

understand their target population. We perform a close follow-

up and we ensure we choose the right sites through a site

selection system. There are many recruitment opportunities

across the country, so we are expanding to reach a population

we could work with and which is not receiving treatment.

Q: Many people do not know the benefits of receiving

treatment through a clinical study. How are you taking this

message to more patients?

A: We are designing a campaign with ACROM to explain the

benefits of clinical research to patients. A few years ago, we

did this for doctors who were not aware of the benefits of

working in clinical research. ACROM also approaches many

patient associations to inform them about the research we

want to conduct. The effort to recruit patients is shared

among all players in the sector.

Q: Where is technology development oriented at ICON?

A: ICON is committed to developing technology for monitoring

based on risk. Our goal is to reach real-time analysis of what is

going on in each site, so we do not have to wait till the end of

the study to discover there were problems in measurements.

Thanks to real-time analysis, we can assess trends and

determine which resources each site needs.

Q: Which are the main therapeutic areas in Mexico that are

driving the efforts of CROs?

A: There is a global focus on research in oncology and cardio-

metabolic areas. However, we are investing to gain terrain in

late-phase studies through ICON’s new Commercialization

and Outcome hub in Mexico.

ICON is an international clinical research company founded in

Ireland in 1990 and present in 37 countries. It operates as an

outsourced developer for the pharmaceutical, medical devices

and biotechnological industries

170 Q: What mix of drugs does Cecyc Pharma test?

DA: As an authorized third party for COFEPRIS we are

focused on generics but we also test new combinations of

drugs, which is becoming more common in the industry.

We offer the pharmaceutical industry registry renewal

and elaborate new registers with the development of

bioavailability studies.

Q: What are the main regulatory issues companies

registering generics face and how are those overcome?

MR: COFEPRIS has fixed the processes for each type of

drug. We are a third party authorized by COFEPRIS and we

are its experts on clinical research. The biggest challenge is

when COFEPRIS regulation does not specify which study

should be undertaken for a certain drug. That is where we

intervene and propose which study should be undertaken

to obtain registration. We mostly deal with generics but as

a research center we offer advice on other types of drugs

like new registrations or combinations, anything that goes

in a category that COFEPRIS has not yet determined.

HA: In 1998, the Mexican government launched a program

to create interchangeable generics. There was a great need

in the healthcare sector for affordable and high-quality

drugs so the federal government started a drug evaluation

program and created NOM - 177 for bioequivalence tests.

In 2005, an agreement was reached to re-register all drugs

in Mexico. This forced laboratories to guarantee good

practices and quality providers. Also, registered drugs

that were not a reference product or an innovative drug

had to comply with a bioequivalence test. From 2005

there were also changes in the manufacturing practices:

NOM - 059 made producers comply with new regulations,

NOM - 220 demanded pharmacovigilance and NOM - 177

regulated bioequivalence. All three had a regulatory impact

on manufacturing and commercializing drugs in Mexico.

Cecyc Pharma is in the medical research area, in which we

evaluate the efficiency of drugs. Laboratories may not have

much clarity on the steps they have to follow or the type

of studies they must undertake, especially now when there

is a larger variety of studies available, so our mission is to

help them run the right study.

Q: Do laboratories need more regulation or more clarity?

HA: The regulatory aspect is more than covered. When

COFEPRIS was born, regulation became a headache for

many companies in the industry. However, because of

it, companies became better and Mexican laboratories

gained the option to export because they complied with

international regulations. Laboratories should make a

greater effort to adapt to the rules. Sometimes, it can be

complicated, but at Cecyc Pharma we keep in close contact

with COFEPRIS to always propose the right study for each

case. As an authorized third party, we help companies

when they need regulatory advice, we become their

channel to register new drugs. We do the clinical research

that companies need to show COFEPRIS their products

are safe and efficient. We are also in charge of dissolution

profiles, clinical phases, protocol creation and analytical

methodology. We specialized in this to offer our clients an

efficient solution.

Q: Previously, a generic could rely on the safety and

efficiency results of the innovative drug. Is this still the case?

MR: When a company develops an innovative drug, the

drug must pass through the phases of medical research

to prove safety and efficiency. What the Mexican authority

asks of generics is that they prove their bioequivalence

with the innovative drug. COFEPRIS asks the manufacturer

for studies done on humans to see if the medicine is

absorbed and eliminated by the body in the same manner

as the innovative drug. There is no need to do all the

VIEW FROM THE TOP

Cecyc Pharma is an authorized third party located in Mexico

City. Its goal is to provide integral outsourcing solutions

and services to the pharmaceutical industry in the clinical,

analytical and regulatory areas

Mezly RodríguezOperations and Strategy Director of Cecyc Pharma

Héctor ÁvilaDirector General of Cecyc Pharma

Diego ÁvilaCommercial Director of Cecyc Pharma

AUTHORIZED THIRD PARTIES PROMOTING MEXICO’S RESEARCH POTENTIAL

171

phase studies. What has changed is that there are new

combinations between drugs that are not innovative and

drugs that already exist. We prove safety and efficiency

for drugs that already exist or we prove they do not

interact between them.

Q: How do you determine that two drugs are

bioequivalent?

HA: It would be absurd for a national or international

laboratory to repeat the preclinical test that the laboratory

that approved the molecule already did. There is an efficient

international scale to prove that a drug is as efficient as the

original. If I get the same profiles from a manufacturer, I

assume it will have the same effect. Bioequivalence proof

takes between five and eight months. All we do is reduce

it to a graphic. The graphic shows the relationship between

the time and quantity of absorption of the drug. With all

those who participate we show a drug was absorbed in a

certain quantity in a certain amount of time. The product

we are evaluating should behave similarly and within

the parameters of 125-80. This is an internationally used

number that determines if drugs work equally or not.

Q: How do you recruit volunteers for testing, especially

given advertising restrictions?

MR: We have a recruitment department in charge of

attracting people to participate in our studies and once they

get involved, we follow their progress. All our trials must

be done on healthy volunteers because we need to start

with a group of people who present similar characteristics

but who have no illnesses that would influence the result.

Internally we have many filters to ensure they are healthy.

When testing physiotoxic drugs, those that are dangerous

or affect health, volunteers should be patients suffering

from the illness the drug is designed to treat. We have

developed a database of volunteers who are constantly

participating. We perform lab tests on them, compile

a clinical history and perform a checkup. If they have a

condition like high cholesterol, we offer them treatment

and a follow-up. By testing our volunteers we can also take

a look at the population in general.

Q: Is it difficult to find healthy volunteers given the

burden of chronic diseases in Mexico?

HA: Yes, regularly many people come without antecedents

but when tested we discover they sometimes have high

cholesterol or conditions of this type. In those cases,

we recommend a diet and ask them to come back at a

future date. For our studies, we interview around 2,500-

3,000 people and every year we can see by their studies

how the population’s health has changed. The products

we tested 10 years ago, now have a different impact on

the population because people have also changed. It is

important to consider that the Mexican population has

particular characteristics given the local diet. That is why

COFEPRIS asks for tests for imported products to be

performed on the Mexican population.

Q: What are your objectives for the next five years?

DA: It is important to keep expanding our services. We are

always looking to give more to the industry and become

a unique company in the sector. We have authorizations

from COFEPRIS and the Institute of Public Health in

Chile. They are for dissolution profiles, clinical units and

clinical analysis. We also provide APIs for the industry,

pharmaceutical development and advisory, and we are

working with biotechnological companies. We have

clients in Chile, Colombia, Puerto Rico and the Dominican

Republic. However, we want to work with more foreign

companies that will soon arrive in Mexico because this

is an interesting market for them. Also, we want to gain

more certifications because it would allow us to reach

more countries so our clients would be able to sell to more

countries with a single study.

172

TECH ADVANCES MAKE HEALTH INDUSTRY HIGHLY ATTRACTIVE

Q: What percentage of ANCE’s activities is in the health

sector? Which segment offers the greatest potential?

AH: We are mainly focused on security and risk management

but our key operations are in electro-technology, which

accounts for about 60 percent of our activities, while a

bit over 35 percent is in rational use of environmental

resources and 2.73 percent is in the food and the health

sectors. We entered the health industry with expertise on

intelligent regulation. The state must regulate the liberties

of economic players – the possibilities for producers

and the needs of consumers – in order to improve the

quality of life of its citizens. Mexico is a big consumer of

health products like medical devices and drugs. ANCE is

betting on medicines because the growth of the health

industry is highly attractive in terms of technological

development. Moreover, Mexico’s quality of life is improving

and the country is among the most attractive regarding its

economic and social growth potential.

Q: Of the services ANCE offers, which attract the most

demand?

YM: ANCE is an authorized third-party. Medical devices

represent the largest segment of our health market, about

80 percent of applications we receive. The most in-demand

service is sanitary registration of innovative technologies.

Q: What benefits can ANCE offer its clients that other

authorized third-parties cannot?

AH: We focus on differentiating ourselves from our

competitors through high-multidisciplinary expertise, as

multidisciplinary analyses can reduce response times while

increasing service effectiveness. Our value proposition

is reliability, IT and institutional strength. ANCE also

implements best practices regarding testing, inspection

and certification from its experience with international

compliance-evaluation systems.

Q: How much does ANCE’s technology innovation

center in Nuevo Leon contributes to the health sector?

YM: We have experience in test laboratories and look

forward to applying this experience to the health sector.

ANCE is defining which products will be the first to be

tested in our labs, because we expect significant growth

in validations, inspections and tests in Mexico and globally.

By the end of 2017 ANCE will be performing lab tests for

the food and health sectors.

Q: What will be the focus for health innovations in the

coming years?

AH: Innovation for hospitals is directed toward intelligent,

interconnected medical devices that monitor vital signs,

administer medicine or perform medical interventions. This

is in line with a global trend called assisted life environment.

YM: Biotechnological products are going to be the medicine

of the future. Pharmacogenetics will prevent diseases by

addressing genetic deficiencies that predispose people

to certain diseases. Nanotechnologies will also be an

important area. Small robots will target tumorous cells

and administer antitumor medicine directly instead of

administering it in general and damaging both the tumor

and healthy cells as some oncologic medicines do.

Q: What is ANCE’s contribution to Mexico’s health industry?

AH: We attract attention to the required regulations.

Health is a dynamic sector with expected growth of

50 percent between 2015 and 2020 in the pharma

segment. If COFEPRIS is saturated with requests for

sanitary registrations as of 2017, it will be overwhelmed

by 2020. We are in an era of disruptive innovation

and new technologies and developments will require

a flexible legal framework. ANCE is part of several

regulation and standardization associations such as the

National Commission on Normalization (CNN) and the

Normalization Commission of the Industry Chambers

Confederation (CONCAMIN). We try to make private

initiatives more pro-active regarding the development of

regulations. The private sector will be required to propose

solutions and options as COFEPRIS becomes inundated.

Yoloxóchitl MacíasChief of Health Area of ANCE

Abel Hernández Director General of ANCE

VIEW FROM THE TOP

ANCE is an association founded in 1992 that provides

support by certifying industry standards and compliance with

regulations in industries such as automobile, energy, health

and construction

173

while medicines were ignored. In 2015, we did not reach our

pharma goals. Therefore, in 2016 we changed our strategy

and focused on medicine rather than medical devices. It

was a challenging decision because drugs require much

more responsibility and capacity than the other business

line. We are working with Pfizer and more organizations

are considering our services, mainly because we provide

additional benefits. This has given us the opportunity to

register several specialized operating cells during 2016.

Q: What does NYCE need from COFEPRIS to improve

its operations?

A: The creation of the authorized third party system was

a great decision. The government’s acceptance that its

internal structure could not deal with the volume of demand

was a good move. We have 22 years of experience as a

standardization organism, 21 as certification institution and

20 as a verification unit. However, we recognize some third

parties are facing operational constraints. The new NOM-

057 regulates the pharmaceutical industry but authorized

third parties are not allowed to provide certificates under

this standard. NYCE is allowed to verify food content labels

for the alimentary industry but is not authorized to verify

nutritional information, despite the fact that we operate

in the health industry. If we want integral solutions for the

market, we should be able to offer both services.

Q: What are NYCE’s plans for the near future?

A: We want to grow our market access by regionalizing our

services. We can help organizations export their products

to other countries of the Pacific Alliance. Hypothetically

speaking, if COFEPRIS closes an agreement with the

regulatory authorities of the Pacific Alliance countries,

authorized third parties would be able to provide services

to the whole region. It is an idea that may help many players

in the system.

Q: What aggregated value does NYCE offer that gives it a

competitive advantage?

A: Third party organizations create standards for the

industry. NYCE has an 18-year-old quality system that

relies on the constant improvement of our activities. In

our healthcare division, we have three elements to achieve

this. First, our management system must control and define

metrics to improve our efficiency. Second, we have an

internal program called Unifying Hands and Efforts through

which collaborators suggest initiatives. Our third element

is the satisfaction surveys we send to our clients, where we

measure market perception and receive feedback. These

three improvement tools have helped us achieve an average

of 97 percent customer satisfaction.

All 330 of our staff members have been trained in client

service. In fact, we trained COFEPRIS staff on the same

subject because it is one of our strengths. Our last COFEPRIS

audit was excellent, which motivated us to participate in the

National Quality Price. Those are elements that give us a

competitive advantage against other companies.

Q: How can you improve processing efficiency for your

clients?

A: In January, we launched an online system to assist clients.

We have already implemented electronic tools for many of the

other industries we work with. In oil and gas, electronics and

communications we have a secure online depository to protect

information. If an industry accepts our security measures, a

confidentiality agreement and responsibility for information

management, companies will not have to be present physically

for every procedure they need. They will save time and money

with us. We are an organism that certifies information security

through ISO 2700. We are certifiers of personal data security,

giving us another competitive advantage.

Q: What type of healthcare companies are you focused

on certifying?

A: When we first started our activities in healthcare, we

noticed a large need for medical devices. We focused

on that but then we realized that the existing number of

authorized third parties fully covered the devices sector,

DIVERSIFICATION KEY TO GROWTH

CARLOS PÉREZDirector General of NYCE

VIEW FROM THE TOP

Normalización y Certificación Electrónica (NYCE) is an

authorized third party that certifies electronics, medical

devices, medicines, information security and food labels. It is

looking to further expand its operations

174

Q: What challenges in implementing the pharmacovigilance

NOM in biotech is UDIBI helping overcome?

A: The law in Mexico is not designed to provide security for

biotechnological drugs because it does not consider relevant

aspects related to their nature. The regulations demand

reports of adverse events but they do not control the post-

marketing phase to prevent them from occurring. In biotech, it

is necessary to know what happens when the drug reaches the

open population because patients might present therapeutic

failure or develop antibodies against the drug, which is

not reversible. Once the organism has produced antidrug

antibodies, the patient cannot take the drug or another related

drug because the antibodies would neutralize its effect. There

should be active vigilance in testing patients taking biotech

drugs, which would help pharmaceutical companies gauge

when to intervene or when to stop administrating the drug.

This is a totally different concept to pharmacovigilance.

Therefore, we must make recommendations to COFEPRIS

and other health institutions about the pharmacovigilance of

proteins because it is conceptually different.

Q: What more can regulators and companies do?

A: Regulatory institutions and manufacturing companies

should take greater responsibility. In other countries, regulatory

agencies also monitor the market. They do not solely rely on

the information provided by manufacturers. They have fixed

verification measures, which is lacking in Mexico because

there is not enough infrastructure to handle the demand.

Mexico also needs a more consolidated pharmacovigilance

culture. From the beginning of a drug’s life onward we should

be checking the patient’s reaction to the drug.

Q: How can Mexico overcome its biotech development

limitations?

A: Our regulatory system is rigid, pyramidal and based on

the political constitution, the general health law, the ISOs,

VIEW FROM THE TOP

NOMs and pharma regulation. To modify something, we have

to work from basic issues. Unfortunately, in Mexico science

moves faster than law. Everything has to go through a legal

process in which the different chambers have to approve it

and by the time this happens, science has already moved on.

A few years ago, the concept of biotechnology did not even

exist in the law. It took us two years to establish NOM-177,

which is already obsolete. Trying to change it will take us two

more years and by then it will be outdated. We have a real

issue with this regulatory path because we cannot produce

guidelines easily. There is a group of researchers like me who

are trying to speed up the process for updating guidelines.

Usually, we follow what is already published by international

agencies such as the FDA and EMA, but sooner or later our

normativity must change because we operate differently

from other countries. The WHO is also asking for it and

COFEPRIS is becoming a more concrete regulatory agency

with a strong group of experts but we lack the dynamism

to improve it. Without clear guidance, we will have to check

every case individually. If we do not have an established

metric for evaluation, the process becomes complex.

Q: What are your expectations for the future of biotech

in Mexico?

A: If we become more competitive, Mexico could be a

reference for evaluation of biosimilars worldwide due to

its geographic location and because many countries are

looking to access other markets. Furthermore, laboratories

like UDIBI could continue supporting the authorities since

they do not have the infrastructure required to evaluate new

molecules. The knowledge we gather when we perform a

detailed evaluation might be useful in developing innovative

molecules. Mexico has great potential, but our innovation

system is not articulated. In other countries, the academy and

the industry have been working hand in hand for years, while

in Mexico the science and technology law was implemented

just last year. This will advance technology but laboratories

like ours that already know the path of elemental testing must

provide an opening to innovative Mexican drugs. We will also

start attending technology summits in the US because we are

now working with US companies that have reached out to us

due to our high-quality service at lower costs.

CHALLENGES, OPPORTUNITIES EMERGING IN BIOTECHSONIA PÉREZExecutive Director of UDIBI

The Unit for the Research and Development of Bioprocesses

(UDIBI) is a part of the National School of Biological Sciences

of the National Polytechnial Institute (IPN) and is an authorized

third party

175

create awareness about the creation of new calibration and

accreditation laboratories.

Q: What ratio of sales in your biomedical business is destined

for the public sector?

A: We have only recently entered the biomedical business

in Mexico and we mostly cater to the private market. In the

future, we will venture into the public sector to ensure growth

because the public sector is the main client for these products.

In our analytical business, our sales are split 50/50, which

is where we will probably end up in the biomedical market.

Q: What new areas will you look to expand to and what will

be your focus in 2017?

A: There is still a long way to go in Mexico in health and

in the medical segment, so focusing new investment in

health and life sciences research makes good sense. It

fits with our mission to change and improve the world

through the work of our clients. When they reach their

goals, we have contributed to future generations having

better care and quality of life. Perhaps we will expand

our horizons to the north and to the south of Mexico, as

we have done for analytics. In the medical area, I think

we will first expand to the north of Mexico and then go

nationwide. We are also opening an office in Texas for

analytics and offer services in Central America.

Q: What is the impact of the security environment on your

logistics operations?

A: Our logistics are specific, not massive, so we are little

affected by insecurity. What may impact us is the coverage

of our clients in certain territories where we need to be more

careful. What we need to look after most is not the products

that we move, because those are unlikely to be impacted by

insecurity, but ensuring that our people can come and go

in safety. This impacts us a little, but it is not a major issue.

Q: Analitek has a national presence. What is the company’s

strategy to maintain, or even accelerate growth?

A: Internal growth occurred because our markets and

territory were becoming saturated. We looked for new areas

to work in such as life sciences, which is a much larger

market. In the biomedical field, we want to be a company

that medical service providers can rely on, knowing that

their equipment functions properly and precisely. We

connect international manufacturers to national customers

and we offer services to ensure the products, equipment

and instruments always provide the correct results. In this

way, our clients can ensure their patients they are receiving

medical services that will improve their health.

All equipment requires a continuous maintenance program.

This should happen several times per year, depending on

the piece of equipment. Through use and time, all analytical,

electronic, mechanical and medical equipment may lose

their accuracy and calibration, which makes well-designed

maintenance programs a must.

Q: To what extent do you have to convince clients that

your products represent an investment rather than a cost?

A: That is the challenge we face. I believe the authorities

ensure that all clinics and hospitals are providing

services correctly. Our challenge is to help our clients

appreciate that calibration and correct functioning is

elemental in healthcare. In many cases, this makes the

difference between a patient being cured or not. Foreign

companies develop the technology and the innovations,

new products, devices and treatments, but we ensure that

in Mexico all these devices work at peak performance 100

percent of the time.

Q: Which norms regulate the calibration and maintenance

of devices in Mexico?

A: We are working with the authorities to elaborate such

norms. Stricter regulations and control in this field would

ensure better treatment for patients. We are participating

in forums and working with EMA and COFEPRIS regarding

the shaping of these norms. We are also working with the

Mexican Society for Biomedical Engineering (SOMIB) to

FINE-TUNING HEALTHCAREANDRÉS FERRARA

Director General of Analitek

VIEW FROM THE TOP

Analitek, founded in 1994 in Monterrey, supplies analytics

solutions for a variety of industries including academia, life

sciences, pharmaceuticals, research and development and

chemistry. It is further expanding into biomedics

176

AUTHORIZED THIRD PARTIES EASE REGISTRATION BACKLOG

Only a few years ago, it could take up to two years for a

company to register a new drug product in Mexico. Today,

that wait time has been reduced to 20 business days.

Behind this turnaround is a decision by COFEPRIS to allow

private parties to do the leg work and put products on

a fast track to approval. These private parties, known as

authorized third parties (ATPs), perform testing and grant

acceptance of a certain category of product, although the

regulatory agency does reserve the right to reverse any

decision an ATP makes.

“As an authorized third party, we help companies when

they need regulatory advice; we become their channel

to register new drugs. We do the clinical research that

companies need to show COFEPRIS their products are

safe and efficient and we are also in charge of dissolution

profiles, clinical phases, protocol creation and analytical

methodology,” says Héctor Ávila, Director General of

Cecyc Pharma, an authorized third-party in Mexico City

that specializes in bioequivalence testing.

The appearance of ATPs has helped to clear the backlog of

pending authorizations. Products are now registered much

faster, albeit with the same level of security and testing

before being allowed onto the market. The system has

been widely praised by industry insiders. “Speeding up

processes through authorized third parties helped make

the regulatory procedures more efficient and thus increased

the attractiveness of Mexico as an investment destination

for health,” says Geraldine Rangel, Director General of

Healthlinks, a Mexican firm that provides market analysis

to companies wishing to enter Mexico.

Between 2005 and 2014, US$1.7 billion was invested in

Mexico in the medical devices sector, mostly in Guadalajara,

Tijuana, Nuevo Laredo and Matamoros,

according to ProMéxico. Investment in the

pharmaceutical sector in the same period

almost doubled that at US$3.2 billion,

according to government figures, and in

January 2017, COFEPRIS signed an agreement with industry

players hoping to boost investment in clinical research from

under US$200 million to US$600 million per year in the

next two years.

According to a COFEPRIS 2014 press release, ATPs had

reduced authorization wait times from an average of two

years to 20 business days. “The creation of the authorized

third-party system was a great decision. The fact that the

government accepted that its internal structure could not

deal with the volume of demand was a good move,” says

Carlos Pérez, Director General of NYCE, an authorized third

party that works across sectors.

To become an ATP, there must be no conflict of interest,

the lab must have the technical, human, financial and

infrastructure capacity to carry out its function and comply

with the respective norms of the three classifications of

ATPs: testing laboratories (NMX-EC-17025-IMNC-2006),

units of interchangeability and bio-comparability (NOM-

177-SSA1-1998), and verification units (NMX-EC-17020-

IMNC-2000). As of May 2017, there are 122 authorized

testing laboratories, 62 units of interchangeability and bio-

comparability and 26 verification units. Each authorization

is valid for a period of two years and must then be renewed,

ensuring standards are kept. In the first five months of 2017,

four ATPs lost their status, which can be regained once

conditions are met again.

But challenges remain. As science and medicine advance,

regulation sometimes struggles to keep up. “The biggest

challenge is when COFEPRIS regulation does not specify

which study should be undertaken for a certain drug. That

is where we intervene and propose which study should be

undertaken to obtain registration,” says Mezly Rodríguez,

Operations and Strategy Director at Cecyc Pharma.

The next step, many hope, is for other countries to recognize

Mexico’s authorized third parties to improve exporting

conditions to Central and South America. “Hypothetically

speaking, if COFEPRIS closes an agreement with the

regulatory authorities of the Pacific Alliance countries,

authorized third parties would be able to provide services

to the whole region,” says NYCE’s Pérez.

ANALYSIS

All drugs sold in Mexico must be tested by COFEPRIS, which

led to a backlog that has since been solved by the creation of

authorized third parties. This has helped the regulatory authority

speed up processes and clear the bottleneck for new products

There are 122 authorized testing laboratories, 62 units of interchangeability and bio-

comparability and 26 verification units

WHAT MUST MEXICO DO TO BECOME A CLINICAL RESEARCH HUB?

CIRO GARCÍADirector General of Accelerium Clinical Research

KAREN HAHN Director of Clinical Trial Management of ICON

ARTURO RODRÍGUEZ Director General of Infinite Clinical Research and President of ACROM

ROUNDTABLE

Mexico has strong potential to become a clinical research leader worldwide. We

have all the elements, such as population, disease profile, ensemble of trained

investigators and the local representation of the international bio-pharmaceutical

and CRO industries, as well as the support of COFEPRIS and the most recognized

agencies worldwide. However, we need to assimilate all the elements together

in the most synergistic manner to significantly elevate the total number of the

active trials in the coming years. Research sites should orient their activities to

quality and performance to attract more research projects. Mexico accounts for

less than 1 percent of all clinical research worldwide, a very low rate compared

to other countries.

IMSS now allows clinical studies, which will provide great opportunities for the

sector. The institution has a huge population of patients and is also a good

source of patients with rare diseases that are hard to find in other institutions.

In addition, Mexico has a lot of potential in pediatric clinical studies due to the

large population of children and the good relationship between doctors and

parents we have identified in previous recruitments. Therefore, ICON has already

developed expertise in pediatric studies.We have a close relationship with patient-

recruitment sites and provide quality training to professionals at each institution

so they can understand their target population. We perform a close follow-up and

we ensure we choose the right sites through a site selection system.

Mexico has long wait times, but not as long as other Latin American countries.

In Mexico, in line with FDA rules, if an efficient rescue medicine is available, trials

can be held with groups taking placebos. Mexico’s main obstacle was that it did

not have access to public hospitals, whereas in 2016 and 2017 an agreement was

reached with IMSS and COFEPRIS to open the doors to clinical research. The same

will happen with ISSSTE and other public institutions. This dramatically increases

our chances of recruiting patients. In 2016, 80 percent of trials were carried out in

private institutions. We hope to attract more trials to Mexico, maintaining the amount

carried out in the private sector but increasing the amount in the public sector to

achieve a 50/50 balance.

Mexico has a strategic geographical location, a large and

diverse population and competitive operational costs

— all the essential elements to become a global hub

for clinical research. In addition, in early 2017, President

Peña Nieto signed a collaboration agreement with IMSS,

COFEPRIS, CANIFARMA, SAT, ANAFAM and AMIIF to

promote the development of health research protocols.

A greater appreciation of these tools could increase

national investment in research and attract international

companies. Mexico Health Review spoke with three CROs

about the best strategies that can help Mexico become an

international hub for clinical research.

177

The Genium X3, developed for sporting activities

179

Imagine that after losing a limb, a patient is fitted with a prosthetic that can be

moved at will. This is the magic that bioelectronics are bringing to the world.

The future of health is now and the main challenge these companies will face is

making their advanced technology available to the wider public. These advanced

prosthetics will perform wonders but will be proportionally expensive and it is

unlikely that public institutions will provide them to patients, especially in light

of budget cuts. As new disease trends emerge, new vaccines also are needed.

A dengue fever vaccine was released in Mexico in September 2016 and many

companies are working on zika vaccines.

Another area explored in this chapter is stem cell procedures. Although they are

still subject to case-by-case approval in Mexico, research is ongoing and is led

by private companies who extract and store the cells for patients as a way of

funding their R&D. Mexico is considered a regional hub for stem cell research as

it is subject to less stricter regulations than its northern neighbor.

This chapter will feature interviews from these cutting-edge companies and will

feature technology spotlights that highlight their state-of-the-art innovations.

BIOELECTRONICS& BIOTECH

8

181

CHAPTER 8: BIOELECTRONICS & BIOTECH

182 ANALYSIS: Medicine, Devices of the Future

184 VIEW FROM THE TOP: José Benziger, Ottobock Group

186 VIEW FROM THE TOP: Luis Bravo, Probionics

188 VIEW FROM THE TOP: Francisco Soberón, INMEGEN

189 ROUNDTABLE: What are the Most Relevant Applications for Stem Cells in Mexico?

190 VIEW FROM THE TOP: Jeimy Pedraza, Instituto Ingenes

191 VIEW FROM THE TOP: Martha Luna, RMA Mexico

192 EXPERT OPINION: Rosa María Del Ángel, CINVESTAV

Enrique Villegas, ABC Medical Center

194 VIEW FROM THE TOP: Francisco Kuri, Landsteiner Scientific

195 VIEW FROM THE TOP: Félix Scott, Sanofi

196 ANALYSIS: The Black Hole of Black Market Medicine

197 VIEW FROM THE TOP: Maarten Pouw, DSM Sinochem Pharmaceuticals

198 VIEW FROM THE TOP: Abraham Franklin, Grupo Franklin

199 VIEW FROM THE TOP: Jesús Esparragoza, Biostem Technologies

200 VIEW FROM THE TOP: Victor Saadia, Bioeden

201 ANALYSIS: The Rise of the Superbug

182

MEDICINE, DEVICES OF THE FUTURE

three diseases from the WHO 2017 priority list

it considers could be the next epidemics: Lassa

fever, Middle East respiratory syndrome (MERS)

and the Nipah virus. According to clinicaltrials.

gov, as of July 2017 there were two ongoing

Lassa fever trials, 10 for MERS and one for the Nipah virus.

Stem cells are another promising area but here too, the

segment is embroiled in controversy. Private companies

that extract and store stem cells for patients as a way of

funding their R&D are leading the way in research; however,

procedures are still subject to case-by-case approval in

Mexico. Easier regulations than in the US have made the

country a regional hub for this research for applications

as varied as preventing wrinkles and curing cancer. But

here too, outdated laws and lack of awareness despite

an abundance of information are keeping the sector from

reaching 100 percent potential. “Processes are limited by

laws that are 10-15 years old and policymakers are slow to

react to innovation. Mexico is a pioneer in this area so there

are fewer countries to copy from and thus more fear, which is

normal. This can be solved by reading scientific information,

which is available for all, and there are many aspects that

have already been tried and tested. It is a waste of time

and money to repeat those tests here, since that money

could be used for further research. Regulation of dental

stem cells in particular is scarce and mesenchymal cell

regulation is tied to that of hematopoietic cells. COFEPRIS

is conscious of these things and is moving forward. We are

not completely blocked by legislation,” says Victor Saadia,

CEO and Founder of Bioeden Mexico and LATAM and CCO

Bioeden USA, a company dedicated to stem cell research.

Like stem cells, fertility procedures are the subject of debate:

for some, these procedures go against God’s will or interfere

with nature, while for others they represent hope, either to

conceive or to do so without passing on a genetic condition.

Mexico offers state-of-the-art technology in this field, with

some clinics such as RMA Mexico working closely with the

US. Research and Markets puts infertility and obesity as the

main factors driving demand globally.

In addition, genomic or precision medicine was pegged as

a global medical technology trend for 2017 by the World

Economic Forum. Markets and Markets estimated the value

of the global genomics market at US$12.5 billion in 2015

and expects it to hit US$20 billion by 2020. Mexico’s public

institute dedicated to genomics, INMEGEN, is collaborating

with international institutions to advance science and with

government-owned oil giant PEMEX, that provides health

services to its workers, to begin implementing precision

Biotechnology, from the development of vaccines to the use

of stem cells, has opened a range of possibilities for medicine

and health, including the use of genomics to pinpoint the

appropriate medicine for a particular disease and improving

fertility or ensuring a baby does not suffer from a genetic

condition. But strict regulations, high costs and even personal

viewpoints stand in the way.

Despite recent debate over the use of vaccinations, they

remain among the most significant advances in preventive

medicine of the past century and a half. As new disease trends

emerge, new vaccines are required. Inovio began trials for its

second zika vaccine in June 2017, while Sanofi Pasteur with the

US Army; Fiocruz, Takeda and Moderna with Barda; and GSK

with the NIH are working on their own vaccines for the virus.

A dengue fever vaccine was released in Mexico in September

2016, although it is only available privately in Mexico.

"Mexico was the first country to register the dengue vaccine.

We are leaders in emerging economies because we work to

meet the specific needs of patients in those countries. Mexico

played a key role in the investigation of the dengue vaccine

because, among the 15 countries included in the research

program, it was one of only two countries, along with the

Philippines, that participated in the phase I clinical studies.

That is why Mexico became the first country to obtain the

sanitary registry: it was a collaborative approach with the

country’s health institutions that allowed us to establish

the necessary processes to comply with the many strict

requirements of the authorities and to provide them with

solid local data. It was not an easy process but it was also

the first time that COFEPRIS had certified a new vaccine

before agencies such as the FDA and the EMA," says Félix

Scott, Director General and Country Chair of Sanofi. "We are

developing research within our global operations for other

vaccines, including one for zika. We have a collaboration

agreement with the US Army to conduct research into this

type of infection and we believe we are in the best position

to achieve a fast and efficient solution for zika after our

experience with the dengue vaccine. We must apply this

know-how to achieve answers as soon as possible."

Unfortunately, these medicines take years to develop. In an

attempt to pre-empt the lag between the emergence of an

epidemic and the development of a vaccine, the Coalition

for Epidemic Preparedness Innovations (CEPI) has selected

ANALYSIS

Biotech and bioelectronics are at the forefront of medical

innovation. Ranging from vaccines and stem cell research,

to robotic limbs connected to the central nervous system,

this is the medicine of the future

183

PRIORITY 1: CRITICAL

1. Acinetobacter baumannii, carbapenem-resistant

2. Pseudomonas aeruginosa, carbapenem-resistant

3. Enterobacteriaceae, carbapenem-resistant, ESBL-producing

PRIORITY 2: HIGH

4. Enterococcus faecium, vancomycin-resistant

5. Staphylococcus aureus, methicillin-resistant, vancomycin-intermediate and resistant

6. Helicobacter pylori, clarithromycin-resistant

7. C ampylobacter spp., fluoroquinolone-resistant

8. Salmonellae, fluoroquinolone-resistant

9. Neisseria gonorrhoeae, cephalosporin-resistant, fluoroquinolone-resistant

PRIORITY 3: MEDIUM

1. Streptococcus pneumoniae, penicillin-non-susceptible

2. Haemophilus influenzae, ampicillin-resistant

3. Shigella spp., fluoroquinolone-resistant

medicine. Private companies are also working in this area

such as Mexican company Landsteiner Scientific. “We have

recently opened a new platform in genomic medicine focused

on oncology. Landsteiner is starting with colon cancer, a

common disease among men in Mexico and the US,” says its

Vice President, Francisco Kuri. “The genetic information of

a population is used to identify genetic traits that can help

either control or cure the prevalent diseases. Our industry

evolved into personalized medicine but now the discourse has

evolved into precision medicine. We know that some drugs

do not work equally well in different populations. Genomic

medicine could show what medicines work best according

to common Mexican genetic traits.”

Imagine that after losing a limb, a patient is fitted with a

prosthetic that can be moved at will. This is the technology

that bioelectronics wants bring to the world. Probionics,

the first Mexican company to build prosthetics, is seeking

approval for its upper artificial limbs that use myoelectric

technology to detect a pulse through the chest muscles to

control movement. Össur, an Icelandic company, is working

on developing upper and lower limb prosthetics that connect

to nerve endings and thus the brain. “Bionic products are

intelligent pieces with microprocessors. In the case of knees,

the microprocessors communicate with ankles and feet, so

if the patient trips, the knee locks, preventing the patient

from falling. This is automatic once a sudden movement is

detected. Our most advanced hands are the Michelangelo

hands. They have sensors so that when grabbing a cup, the

hand grasps with the correct amount of strength not to break

it and not spill the contents. If the cup is made of glass, the

hand will not shatter it, if the cup is made of plastic, the hand

will not squeeze it so hard that it distorts and the contents

spill down the sides. It also has a rotating wrist like a real

hand,” says José Benzinger, Director General of German

market-leader Ottobock. Analysts at Future Market Insights

pegged the value of the global orthopedic prosthetics

market at US$1.6 billion in 2015, 56 percent of which is lower-

extremity prosthetics. Amputations caused by diabetes in

Mexico are also increasing the need for prosthetics. “In 2017,

emphasis should be placed on the prevention of diabetes and

its complications. Data from [ENSANUT 2016] show there has

been a 175 percent increase in diabetic foot amputations,”

says José Campillo, Executive President of FUNSALUD, a

private foundation dedicated to improving community health.

The future of health is now and the main challenge these

companies will face is making their advanced technology

available to the wider public, as Benzinger notes. “As we are

a cost-sensitive market, price is an issue for bionics in Mexico.

Most private insurance companies may cover these types of

products if specified but the majority of patients pay out-

of-pocket. Their cost means they are only available to some

segments of the population.”

• Arenaviral hemorrhagic fevers (including Lassa fever)

• Crimean Congo haemorrhagic fever (CCHF)

• Filoviral diseases (including Ebola and Marburg)

• Middle East respiratory syndrome coronavirus (MERS-CoV)

• Other highly pathogenic coronaviral diseases (such as severe acute respiratory syndrome (SARS)

• Nipah and related henipaviral diseases

• Rift Valley fever (RVF)

• Severe fever with thrombocytopenia syndrome (SFTS)

• Zika

Source: WHO

Source: Mordor Intelligence 2015

REVISED LIST OF PRIORITY DISEASES, JANUARY 2017

WHO 2017 PRIORITY PATHOGENS LIST FOR R&D OF NEW ANTIBIOTICS

THE GLOBAL BIOPHARMACEUTICAL MARKET (percent)

Intro Chapeter 8

� 37.32 Monoclonal antibodies

� 21.37 Synthetic immunomodulators

� 20.06 Vaccines

� 0.59 Recombinant growth factors

� 2.39 Recombinant enzymes

� 2.32 Purified proteins

� 0.48 Recombinant proteins

� 0.12 Others

184

Q: What is the current size of the Mexican prosthetics

market and what is Ottobock’s share?

A: Our prosthetics division is our core business worldwide

and also has the most sales in Mexico. Eighty percent

of our sales are basic products. Diabetes is prominent

in Mexico and as a result, lower limbs are the most

common amputations. According to the Mexican Diabetes

Association, about 75,000 amputations are performed each

year because of this condition. Of those, 90 percent are

lower limbs, so foot, below the knee and above the knee

prosthetics are the most commonly required.

It is difficult to approximate our market share but based

on the number of tenders we have won and our B2B, we

estimate it to be 45-50 percent. Of the total number of

amputees in Mexico, we estimate that 7-10 percent receive

a prosthetic. Of those, only three quarters will continue to

use the prosthetic. The other quarter stops because the

prosthetic is badly made and causes the patient pain.

Q: What is Ottobock Group’s relationship with the public

and private sectors?

A: We participate in both tenders and direct purchases with

the government. In addition, we support our customers that

participate in tenders. We do not sell directly to patients

in the private sector. The company has a B2B segment

through which we sell to orthotic and prosthetic stores that

in turn sell to patients. We also sell to private insurance

companies and thus patients. Generally, 90 percent of

our business is B2B. When we win a tender, we provide

education to the institutions and ensure continuous visits

to revise the process. Twice a year, and we hold an event

with staff and experts from Germany, the US and Brazil to

teach new techniques and revise current techniques. We

visit most of our customers at least twice a year.

Q: What hurdles do your products face in the Mexican

market and how can that be overcome?

A: The public market is price sensitive and our competitors

from South Korea and China have lower manufacturing

costs and quality. Although some purchasers from public

tenders can relate to quality, most relate to price. This is

our main concern because there is no established regulation

for importing and selling. COFEPRIS regulations for our

medical devices are not excessively complex; we need only

give notice of import and commercialization. We do not

need to do any further studies or background checks and

it is relatively easy to import both high-quality and low-

quality products.

Our customers have established statu quo operations, but

they are also facing other competitors arriving from China

that say they can implant at a lower cost. This threatens the

credibility of the procedure, not the brand. Many patients

say they do not want a prosthetic because they think it

hurts, or because they think they will not be able to use

them or walk. This reputation emerged due to the bad

experiences some have had with low-quality products.

Q: What are Ottobock group’s protocols for rehabiliation?

A: The protocol we are trying to build handles three

rehabilitation schemes: preprosthetic, postprosthetic and

using the limb with the prosthetic. None of these happen in

reality. When a patient requires an amputation, the patient

is taught to bandage the remains and it is important for

the limb to gain form and then start the prosthetic process.

After amputation, the greatest challenge a patient will

face is the size of the remaining limb as it swells and then

reduces but once the rehabilitation process begins it will

swell again and then reduce to its final size.

We first work on the socket. We create a test socket,

which is what the patient will use while they get their limb.

After 30 to 60 days the socket is resized because the limb

changes and an oversized socket will cause injury. The

socket needs to be checked every year. The patient should

go to rehabilitation but usually they do five to 10 sessions

and then are left to their own devices.

High-tech bionic prosthetics need yearly maintenance and

checkups because they have microprocessors and software

that need upgrading to function fully. Depending on the

type of prosthetic, necessary maintenance can vary. The

basic mechanical leg is the most common in Mexico. These

PROCEDURE, NOT BRAND, THE ISSUE FOR PROSTHETICSJOSÉ BENZIGERCommercial Director for Mexico and the Caribbean of Ottobock Group

VIEW FROM THE TOP

185

by an orthopedist, an endocrinologist, a vascular surgeon

and a psychologist, which is what usually happens in other

parts of the world. In Mexico, the approach is separate. A

knowledgeable patient may go to the orthopedist or the

vascular surgeon by themselves but they are not sent there.

Our growth would be based on getting these physicians to

agree on a protocol for patients facing amputation.

The actual amputation is usually performed by a surgeon

or an orthopedist. Afterward, nothing happens. In the US,

the following day a prosthetics team is sent to evaluate

the patient. It may not result in an immediate prosthetic

but psychologically the patient experiences a 180-degree

turnaround in mindset, instead of having them wake up

every morning with only half a limb.

Q: What other challenges does Ottobock face here?

A: Budget is the greatest challenge because institutions have

limited funds for prosthetics. Those that offer them are social

security, Integral Family Development (DIF), the military

hospital and PEMEX in some cases. Many people go to the

National Institute of Rehabilitation (INR), which also operates

on a limited budget. The foremost solution is for the public

health system to realize that diabetes is a public health issue

in Mexico, so complications of that issue are going to arise in

the near and not-so-distant future. If they ignore this, it will

bite back later. If those 75,000 yearly diabetes amputees are

to have a productive return to working life, the system will

have to invest in their treatments.

The Ottobock group consists of four units, including Otto Bock

HealthCare (medical technology). The prosthetics division is the

largest business unit of Otto Bock HealthCare GmbH, which has

distribution and service companies in 50 countries

are low maintenance, with a lifespan of five to 10 years.

Maintenance is required only every two to three years

because they are sturdy.

Q: What advantages do bionics have and what are your

top products in this area?

A: Bionic products are intelligent pieces with microprocessors.

In the case of knees, the microprocessors communicate

with ankles and feet, so if the patient trips, the knee locks,

preventing the patient from falling. This is automatic once a

sudden movement is detected. Our most advanced hands

are the Michelangelo hands. They have sensors so that when

grabbing a cup, the hand grasps with the correct amount

of strength not to break it and not spill the contents. If the

cup is made of glass, the hand will not shatter it, if the cup

is made of plastic, the hand will not squeeze it so hard that

it distorts and the contents spill down the sides. It also has

a rotating wrist like a real hand. The Michelangelo hand and

the X3 knee are the most technologically advanced pieces.

The X3 knee was developed alongside US Navy Seals and

it is the knee they use to return to active duty after injury.

As we are a cost-sensitive market, price is an issue for

bionics in Mexico. Most private insurance companies may

cover these types of products if specified but the majority

of patients pay out of pocket. Their cost means they are

only available to some segments of the population.

Q: What is your growth strategy for Mexico?

A: We decided on a basic approach. We need to create

protocols that get patients to institutions and help them

receive a prosthetic limb. There is a lack of awareness

on the part of patients about how to get a prosthetic. A

diabetic patient, for example, is handled by a doctor or an

endocrinologist. A lower limb complication should be treated

The Genium X3 being used in water

186

Q: Which of your products represent the biggest

opportunity for Probionics?

A: We founded the company in 2006 with a core R&D

business in prosthetics for amputees. We began by developing

technology for a prosthetic hand, then a wrist, a forearm and

then an elbow and a shoulder. We have modified the electronic

base of the device and we work with myoelectric technology,

an electronic principle that registers the electric flow of the

skin when the patient contracts a muscle. This electric signal

goes into an electronic chip, on which we perform a procedure

to digitalize it, making the muscle the control tool for the

patient. We also make rechargeable batteries with a biological

shape that powers the whole system. We now have a mature

technology that we are working to commercialize. However,

our products are medical devices that require COFEPRIS

certification, which is proving to be complicated because

there is no Mexican law regulating this type of device. We

are the first Mexican company doing it and are seeking

classification for these products.

Q: What are you doing to help COFEPRIS establish a

regulation and reach the next step?

A: We submitted a petition for classification, requesting that

COFEPRIS inform us which classification for medical devices is

right for our products because medical devices worldwide are

usually classified into three categories based on the risk they

represent for health. Class 1 is a device that is worn outside

the body; class 2 is for mechanisms that penetrate the body

for a short period, like a catheter, and class 3 are devices

that penetrate the body long term, like a hip prosthetic. Our

devices are class 1 because the prosthetics are external and

the patient can remove them at will.

We are cooperating with COFEPRIS by providing a detailed

description of the materials that make up the product, the

way the materials are handled when transformed from

raw material to prosthetic and on how the prosthetic is

activated. One of our main obstacles is that our prosthetics

work with a battery and an electron that registers the

body’s pulse and COFEPRIS does not regulate this

directly. The electric and electronic part of the prosthetic

arm is already certified by NYCE. We have presented the

information to COFEPRIS and now it has to work on it and

request more information from us if needed.

Q: When do you think you will have this certification?

A: We need to have a facility with certain characteristics.

The entire production line must be certified by a NOM or an

ISO and we need an operations manual. Therefore, once the

plant is ready, the auditors will evaluate it and then it takes

from eight to 12 months to get the certification. During

this time, we need to prove to them that we can produce

without selling, so it is our responsibility to assume the

cost of salaries, services and manufacturing for a year with

no income. It is incomprehensible that COFEPRIS would

evaluate our production without allowing us to sell.

Q: What are you doing to raise money?

A: We have been to different forums and our project has

garnered acclaim for its technological and social impact.

However, investors do not know the market and they would

rather invest in cheap, crude products. Our investors will not

help us until we are certified by COFEPRIS because they are

afraid of the risks this business might imply. We appeared

on Shark Tank Mexico in March 2016 and our project raised

US$1 million, the most money of the season. Nonetheless,

the money will be handed over upon meeting the conditions

for COFEPRIS certification.

Q: What are the biggest technological challenges you face

when designing and manufacturing prosthetics?

A: Patients have different degrees of injury. There are patients

who have had a wrist amputation while others are at the

middle of the forearm or at the shoulder. Therefore, the

key was designing flexible technology that could adapt by

units like Lego pieces to give each patient the module he

or she requires. It took us four to five years to understand

this because we started working on a fixed model and had

to adapt to each patient. We had to do a complete redesign

and we came up with a modular prosthetic model. Thanks

to this technology, we will go to market with 34 products, 17

modules for the right arm and 17 for the left. Additionally, we

are working on developing prosthetics for children using the

same technology and modules on a smaller scale.

MYOELECTRIC TECHNOLOGY: THE NEXT STEP FOR PROSTHETICSLUIS BRAVODirector General of Probionics

VIEW FROM THE TOP

187

Probionics is a Mexican startup founded in 2006 that designs,

produces and commercializes prosthetics. Originally starting

with hands, it has moved up the upper limb to the shoulder and

uses myoelectric technology

they do not have the money to pay for European prosthetics.

Besides innovating in technology, we will innovate in a

business model that will allow us to sell prosthetics with

deferred payments. The prosthesis will be programmed to

power down if the monthly payment is not received. This

will help us give clients easier access to prosthetics.

In 2015 we began developing fingers. We believe it will be

easier getting this product to market because globally, fingers

are the most frequently amputated limbs. At Probionics, the

amputations we more frequently see are the arms or hands

of employees who have suffered work-related accidents

or people who were in car accidents. However, finger

amputations are the most common because they do not only

happen to workers but are also caused by domestic accidents.

Q: How and who do you plan to sell and distribute your

products to?

A: Patients come to us and we manufacture the prosthetic.

We work with an orthopedist who creates the mold from

the patient so we can provide personalized prosthetics. We

manufacture the device and train the patient on how to use

it but when we get into the market we will focus on R&D

and will have a division that manufactures the products

and delivers them to our clients. We will reach the public

sector by competing in government tenders and the private

through partnerships with select orthopedic houses.

We have six patents: two in Europe, two in the US, one in

Mexico and one in South America. This is very important

because it is a negotiation tool we have with the investors.

We have 20 years of exclusivity and commercial exploitation.

We obtained our first patent in 2011 so we still have time.

However, there are countries that take longer than others.

The US issued a patent within four years and, although we

simultaneously asked for the same patent in Brazil, we are

still waiting. However, it is important for us to enter the

Brazilian market because it has one of the highest industry

indexes among South American countries. There is a direct

correlation between industry and working accidents.

Producing prosthetics is not just about being a design

engineer, we have to look at patents, read about state-of-

the-art technology, raise capital and comply with regulations.

Q: What are your expansion plans?

A: We have offers from orthopedic houses in South

America, the US and Germany. I think we will start with

South America because COFEPRIS approval is valid in those

markets. However, to enter the US we need an equivalency

with the FDA and for European markets we need one with

the European Commission.

Q: What will your strategy be to compete with international

companies?

A: We are going to compete with a good product that

meets the quality expectations of an amputee. Also, we

will compete on price. American and European prosthetics

are very expensive. An upper-elbow prosthetic in the US

costs US$150,000 and very few people have that amount

of money. There are Syrian refugees entering Europe with

missing arms and legs. They represent a large market but

NUMBER OF ORTHOPEDIC TECHNOLOGY CLINICS/WORKSHOPS

Mexico City

0 2 4 6 8 10

Zacatecas

Yucatan

Veracruz

Tlaxcala

Tamaulipas

Tabasco

Sonora

Sinaloa

San Luis Potosi

Quintana Roo

Queretaro

Puebla

Oaxaca

Nuevo Leon

Nayarit

Morelos

Michoacan

State of Mexico

Jalisco

Hidalgo

Guerrero

Guanajuato

Durango

Chihuahua

Chiapas

Colima

Coahuila

Campeche

Baja California South

Baja California

Aguascalientes

NUMBER OF ORTHOPEDIC TECHNOLOGY CLINICS AND WORKSHOPS PER STATE

2,000the approximate number of prosthetics/orthotic clinicians in Mexico

3.5million people in Mexico have mobility issues

Source: US Aid 2015

188

Q: How effective would a 4P (prevention, prediction,

personalization and participation) approach be in Mexico,

where prevention is so low?

A: Prevention should be analyzed not only through old

paradigms but by thinking through new ones. Prediction,

the second of the 4Ps, is weaker when based on general

recommendations rather than personalized predictions

generated from genetic traits, the third P. The fourth of

the 4Ps is participation. It is also necessary to consider

the role of insurance companies. Imagine them inserting

themselves into personalized medicine and prevention,

managing differentiated premium costs and even complete

health-service provision systems not based on the scheme

of a hospital for sick people but based on health-promotion

systems entailing some elements of precision medicine.

Detection and analysis methods of personalized medicine

will be decreasingly invasive and increasingly automatic. This

transition will be a matter of lustrums, not even decades.

Q: What obstacles stand in front of this transformation?

A: There is a technological barrier. Technologies and

knowledge must mature and be applied. The lag is not often

in technological advancement, but in the application of

molecular diagnoses. There is a regulatory barrier too. The

FDA now will no longer approve the use of drugs for cancer

exclusively in the original organ but in any cancerous organ

with the same gene as an impeller, which is a complete change

because now the basis for cancer treatment is not the organ

but a biomarker indicative of several cancers. In Mexico, where

physicians prescribe more freely, physicians use molecular

diagnosis to prescribe for a cancer in another organ. There

is also a cultural barrier because health professionals have

not yet assimilated genomic medicine and medical faculties

still follow study programs that lack a genomic medicine

component. With cancer, it is impossible for an oncologist

to ignore genomic issues. In pharmacogenomics, precision

The National Institute of Genomic Medicine (INMEGEN) is

a institute belonging to the Ministry of Health. It is in charge

of developing projects of genomic medicine for the Mexican

population based on its genome

medicine will increase drug effectiveness and reduce adverse

effects. Soon, when a novel or unusual drug is prescribed or

a person is born, a pharmacogenetics test will be performed

and a patient’s genetic profile will last forever.

Q: Can INMEGEN train medical professionals in genomic

medicine?

A: The researchers of INMEGEN are both generating

knowledge and involved in educational programs. We

offer between four and five courses each semester for both

graduate studies and as continuous education. INMEGEN is

also putting the final touches on plans for an integral course

in genomic medicine and a series of specialized modules

on the applications of genomic medicine and is involved in

some undergraduate courses with the School of Medicine

at UNAM, but they are insufficient. An obstacle we face is

that specialists cannot do their main residence in genomic

medicine. Physicians must conclude their main residence

before moving on to study an advanced course in genomic

medicine at INMEGEN. Since INMEGEN cannot offer

scholarships at that level, students who take that course

are usually specialized physicians with a solid income.

Q: What are INMEGEN’s priorities for the next two years?

A: Continuing and finishing the characterization of Mexican

genetic diversity, applying this knowledge to the most

advanced areas of genomic medicine and finding more

correlations between genes and diseases, especially

chronic diseases. INMEGEN has a joint project with PEMEX’s

health services to develop a series of precision-medicine

services and to study rare, psychiatric and metabolic

diseases. INMEGEN will correlate genetic parameters with

these diseases in the areas of pharmacogenomics and

predisposition diagnoses to create prevention programs.

INMEGEN’s Genomic Diagnosis Laboratory will continue

offering a series of genetic tests, including an advanced

version of genomic molecular cancer tests. There will be an

incursion in the area of infectious disease through research

and data collection of common diseases constituting public

health issues. INMEGEN expects to provide specific services

in the most mature areas of genomic medicine: cancer,

pharmacogenomics and infectious disease.

MEXICO, WORLD LEADER IN GENOMICSFRANCISCO SOBERÓNDirector General of INMEGEN

VIEW FROM THE TOP

189

WHAT ARE THE MOST RELEVANT APPLICATIONS FOR STEM CELLS IN MEXICO?

VICTOR SAADIACEO and Founder of Bioeden Mexico and LATAM and CCO of Bioeden USA

JESÚS ESPARRAGOZADirector of Biostem Technologies Mexico

ABRAHAM FRANKLINDirector General of Grupo Franklin

ROUNDTABLE

The potential applications are still being researched, but in Mexico they have mostly been

used for orthopedics, lesions in articulations such as the knee, hip and shoulder or for

diabetes. We are running an interesting protocol on autism and stem cells also can be

used for neuro-degenerative diseases such as Parkinson’s. There are also intravenous

applications to help regenerate tissues and cells, as stem cells have anti-aging properties

that are popular with athletes. Stem cells help our cells regenerate. The next five years

will be very interesting. Legislation has to change and if the authorities understand that

Mexico could become one of the most innovative and leading countries in the area we

could make rapid advances. Regulation would need to be more flexible to allow R&D,

because in other countries much of the R&D is financed through bursaries and the

academic world. We are limited in this regard in Mexico.

Some studies on spine lesions have provided positive results on the implantation of

stem cells in comparison to cases where none were applied. Thus, patients prefer to

use these products with the expectation that they may work. This treatment can also be

used to treat T1D, which involves an inflammatory process that damages the pancreas.

The application of stem cells in this situation can help partially revert the damage to the

pancreas and reduce the amount of insulin that a patient will require. These cells are

injected in the pancreatic artery to slow down the inflammatory processes. It is theorized

that applying them even earlier would even have a better result. However, there are no

indications that this treatment is useful for T2D as this is not an inflammatory process

but a degenerative one. T2D must be handled through a multidisciplinary approach that

involves the government, health systems, schools and families.

We are developing cardiac cells for regenerative medicine and working with 3-D printing

to replace foot bones. We can print skin for burns and produce cells for laboratory tests,

thus avoiding animal testing. Additionally, our experts are developing beta pancreatic

cells that produce insulin, taking steps toward treating T1D. Also, we are trying to help

people who suffer from macular edema and retinitis pigmentosa by producing cells

found in the eye’s rods and cones. From MSC, we can fabricate fibroblast to produce

a serum that helps reduce wrinkles and our partners in Spain have already treated 20

patients, 18 of which saw positive results. MSC also have immunomodulating properties,

meaning the cells can reduce inflammation and rejection rates. We injected MSC into

eight paralyzed rats and after six weeks four started walking again. Parkinson’s and

Alzheimer’s are other diseases we want to treat.

Hailed by some as a wonder-cure, shunned by others due to

ethical concerns, stem cells and their research applications

are subject to great debate across the globe. In Mexico,

practical applications for stem cells are still granted on a

case-by-case basis by the authorities. During the wait for

regulation to change, companies are researching potential

applications that could be commercialized at a later date.

Mexico Health Review asked industry players to explain

which potential applications they are researching and

foresee for the Mexican market.

190

Q: What are the main fertility issues in Mexico?

A: Approximately, 15 percent of the Mexican population has

fertility issues. Among the infertile population, we include

couples who have tried for one year to conceive a baby

through sexual relations without success. Fifty percent

of the causes of infertility among couples are due to the

woman, 30 percent are related to the man and 20 percent

are a result of combined factors between the two. Among

women, polycistic ovary syndrome (PCOS) is the leading

cause, which is common in Mexican women due to genetic

or environmental factors. It expressed with irregular cycles,

propensity to overweight and obesity and it is associated

to diabetes and cardiovascular diseases. The second most

common cause is endometriosis and the third is infertility

caused by age. Other women look for our solutions because

they have previously undergone a tube ligation surgery

and wish to have children afterwards. As for men, the

main causes of infertility are genetic conditions such as

Klinefelter syndrome, testicular cancer and environmental

factors such as tobacco, drug and alcohol use or high

exposure to radiation or chemicals.

Q: What is Ingenes’ added value compared to other clinics?

A: Any laboratory can buy technology, but without

adequate experience investment means nothing. Through

the correct education of our staff, we will be able to acquire

the technology and provide professional expertise. We

are always looking to participate in international-learning

opportunities and every year we are seek to be audit by

international entities, one of the experts that audit us is Dr.

Juergen Liberman, director of the Fertility Center of Illinois.

We invest a lot in infrastructure, technology and training

to prepare the best specialists in assisted reproduction, to

provide the best services in all of our branches and we

follow strict security measures regarding the protection of

the identity of the gametes and embryos for our patients.

Instituto Ingenes is a fertility center providing services in assisted

reproduction in Mexico through in vitro fertilization, gametes

preservation and egg and sperm donation bank. It has clinics in

Mexico City, Guadalajara, Mérida and Monterrey

Q: What is your client profile and which services do they

require the most?

A: Most of our patients are infertile women with a history

of failed treatments in other centers and older patients

that seek for our services not only due to their difficulty

to conceive, but because they want to avoid the risk of

having a baby with a genetic disease. We also help couples

who are not sterile but who want their baby to be of a

certain gender to create a gender balance in their family.

Instituto Ingenes also provides solutions for people who

want to preserve their fertility and choose to store their

eggs or sperm. Currently, Ingenes develops around 4,000

treatments in its plant of Santa Fe, in Mexico City; however,

we also offer integral solutions in our sites of Guadalajara,

Monterrey and Merida. Our goal is to establish more offices,

so we can reach the entire the Mexican population.

Q: Fertility solutions are luxury procedures. What can be

done to make them available for more people?

A: There is not much public health investment in fertility

and what is available is not very complex. The technology

in the public sector does not compare to that offered by a

private institution. Fertility treatments might seem expensive

but you have to put in perspective all the investment in

infrastructure, technology and human capital behind these

types of services. At Ingenes, we offer a variety of financial

options to patients. One is BEC Facil, in which the patient

first pay only part of the program, while we prepare the

embryos to avoid any further problems associated to the

maternal age during that time. When the patient has the

economic resources to pay for the rest of the program we

proceed to transfer the embryos that were previously saved.

We also have a category of product called BEC Plus, insured

programs that were to guarantee that if the couple or patient

is not able to get pregnant, we return the investment.

Q: What would be the right preventive approach?

A: Delayed maternity is among the most important factors

affecting the fertility of women due to the deterioration of

eggs caused by age. Therefore, we must raise awareness

and inform women about the existence of technologies that

help them prevent the aging of their gametes.

VIEW FROM THE TOP

ACCESS TO FERTILITY SOLUTIONSJEIMY PEDRAZALaboratory Director of Instituto Ingenes

191

Q: What are the main trends you see in Mexico in infertility?

A: During the past couple of decades, there has been a clear

increase in the mean age of patients who undergo fertility

treatments worldwide and Mexico is no exception. Age is one

of the most important variables associated with prognosis and

outcome. As women age, there is a significant decline in the

number and in the quality of the oocytes or eggs found within

the ovary. We need to keep in mind that women are born with

an established number of oocytes and that there is a constant

loss and programmed cell death of these eggs that begins

before birth and continues until the end of the reproductive

lifespan. Around 40 percent of the patients we treat have a

significant diminution of their ovarian reserve. However, other

factors such as endometriosis, multiple ovarian surgeries,

autoimmune disorders, chemotherapy and genetic mutations

have been associated with premature ovarian insufficiency.

Q: To what extent do environmental factors impact fertility?

A: Environmental factors are often accounted for as

contributing causes of unexplained infertility. However,

there has been no clear data regarding environmental

factors affecting fertility backed up by medical evidence.

This causal relationship between such factors and the

infertility of a couple are seldom well-established. We

are told someone with a healthy lifestyle will most likely

have less difficulty getting pregnant but no scientific data

proves that. In that respect, it is important to point out

that nutrition can definitely impact fertility prognosis as

clear evidence demonstrates that being overweight and

having metabolic disorders can affect fertility potential

and obstetrical outcome.

Q: What percentage of your clients has a genetic disease

they hope to avoid passing on to a child? How can RMA

Mexico help them?

A: When we talk about genetics, we have to categorize.

There are chromosomal abnormalities that are associated

with oocyte age. Nature is wise so abnormal embryos will

not usually implant in the womb, a common phenomenon

seen as all women age. There is a second part to genetics,

which are genetic diseases. These are not associated with

age and represent a possibility of carrying and passing

a mutation onto their offspring. Being a silent carrier for

these mutations means that the given disease will never

develop; however, this person can pass on the mutation

to the next generation. If it turns out that the partner is

also a carrier for the same mutation, then the couple will

have a 25 percent chance of having an affected child if

the offspring inherits both mutations. This same couple

will have a 50 percent chance of having carrier offspring

and a 25 percent chance having a mutation-free child.

We use a genetics laboratory in Mount Sinai Medical Center

in New York, capable of detecting 281 autosomal recessive

mutations. We do not obligate our patients to undergo this

testing, although we recommend it, especially if they are

planning to undergo In Vitro Fertilization (IVF) because

through pre-implementation genetic diagnosis (PGD) we can

analyze the embryos and identify those that are not affected

by the analyzed disease.

Around 70 percent of our patients decide to get tested;

around 50-60 percent of patients are carriers of at least

one mutation and approximately 1 percent of couples tested

find out they are carriers of the same mutation. We have

had many patients who seek our services to request PGD

because their naturally conceived child was born with an

autosomal recessive disease. One current patient, whose

baby was born with spinal muscular atrophy, found out they

were both carriers and now are undergoing an IVF cycle

with PGD, precisely to ensure the embryos we transfer are

either noncarriers or only carriers but crucially not affected

by the same mutation. Some of the most common in the

Mexican population are cystic fibrosis, thalassemia, spinal

muscular atrophy and among the Jewish population we

see familial mediterranean fever. However, there is no over-

riding trend as we often see patients test positive for a

variety of extremely rare mutations.

BRINGING HOPE TO THE FIGHT AGAINST GENETIC DISEASES

MARTHA LUNACo-Director of RMA Mexico

VIEW FROM THE TOP

Reproductive Medicine Associates Mexico (RMA Mexico)

is widely recognized as a national and international leader in

state-of-the-art reproductive medicine, led by an integrated

team of doctors and scientists

192

VACCINES AGAINST VIRAL DISEASES: MYTHS AND REALITIES

countries to guarantee public health through prevention

measures, as well as the proper and timely diagnosis and

treatment of patients, epidemiological monitoring for

detection and control of epidemics caused by viruses.

The strategies for the control of viral infections are initiated

with the development of diagnosis methods, design and

preparation of vaccines. Should the virus have an animal

reservoir or be transmitted by vectors, a strategy designed

for vector control is required. All control strategies should

be based on the knowledge of the virus’ structure, the

nature of its genetic material, mechanisms to enter the

organism and replicate within the target cells and the

pathogenesis mechanisms.

For those viral infections that have been present among

the human population for a longer time, such as rubella,

mumps, measles and chickenpox, health systems have

developed not only efficient monitoring systems but also

vaccines to prevent the disease. Vaccination against some

viruses such as polio have been so efficient that the last

poliomyelitis case in the Americas was recorded in 1991.

Vaccines are no more than a biological mix containing

virus' proteins or a virus’ genetic material that allows the

generation of acquired immunity (protection) against a

disease. The first vaccine generated was against smallpox

and used the cowpox virus, a smallpox variant that

generated a slight infection in humans but that could

induce protection against the lethal human smallpox.

The experience of the vaccine against smallpox led to

the generation of other vaccines against diseases such

as rabies, yellow fever, polio, measles, mumps, rubella,

chickenpox, papilloma, hepatitis A, hepatitis B and

influenza. Countries like Mexico entered the 21st century

with a national vaccination scheme of wide coverage that

includes hepatitis A, hepatitis B, poliomyelitis, rotavirus,

measles, rubella, mumps, papilloma and influenza viruses.

Unfortunately, not every country guarantees vaccination

compulsion nor offers them free of charge. This has led

to the continued appearance of a number of preventable

diseases in the population.

Viruses are responsible for a number of diseases that

constitute significant public health problems in Mexico

and in the world. It is easy to pinpoint these infections

as responsible for creating the most harm to humankind

throughout history. Such is the case of smallpox, which

until 1980, the year in which it was eradicated, was one of

the deadliest and most feared viral diseases, according to

the article The Rediscovery of Smallpox. However, there

are a number of other viral diseases, such as poliomyelitis,

that generated thousands of deaths and led to paralysis in

children, or influenza, a viral disease responsible for the 1918

European pandemic that caused a significant decrease in the

continent’s population. More recently, AIDS, which prior to

its identification caused the deaths of thousands of young

people in several parts of the world.

In the past couple of years, new viral infections have captured

the attention of different national and international health

organizations. Such is the case of the ebola outbreak in three

different countries in Africa, the Middle East respiratory

syndrome coronavirus (MERS) and the chikungunya and

zika viruses in the Americas. Without going too far, the zika

virus generated a global health alert, according to the WHO,

due to its association with microcephaly in newborns and

with Guillan-Barré syndrome in adults.

It is important to note that the wide geographic spread of

high pathogenic types of viruses that infect birds, such as

the H5N1 and H7N9 influenza viruses, represent a constant

threat to global public health. In addition, the possibility of

facing new zoonotic events increases due to the accelerated

growth of the world’s population and its expansion. Climate

change, environmental changes and the destruction of the

habitat of several species generate new opportunities for

disease transmission. The prior has led to the creation of

the One Health Concept, in which direct connections are

made between people’s health and the wellbeing of animals

and the environment.

There are a number of viral infections that usually present

themselves in human beings, such as measles, chickenpox,

rubella and papilloma, among others. It is the duty of all

Enrique Villegas Resident in Traumatology and

Orthopedics at ABC Medical Center

Rosa María Del Ángel Chief at the Department of Infectology and Molecular Pathogenesis of CINVESTAV

EXPERT OPINION

193

of recombinant proteins, which only use certain proteins

from a virus to generate immunity. The organism generates

antibodies against the virus’ proteins and is thus protected

against them. These vaccinations are fairly safe because

they do not generate the disease in order to protect the

body from it. An example of this sort of vaccination is that

used against human papillomavirus. DNA vaccines are the

fourth type, in which organisms are immunized through a

DNA sequence that can replicate the virus’ proteins. When

the DNA sequence enters the body, it introduces itself within

certain cells that will generate the viral proteins against which

antibodies will be created. Though this type of vaccinations

is still in an experimental phase, results have been promising.

Unfortunately, there are a number of viral diseases for which

there are no vaccines. This is due to the fact that viruses

have a high mutation rate, which means that whenever a

vaccine is ready for a certain virus, a new variant of the virus

appears and the antibodies created are unable to avoid

the infection of the mutant virus. This has been, among

others, one of the reasons why we still do not have a vaccine

against the AIDS virus, though it has been in the works for

the last three decades.

Although Mexico has done a good job in terms of public health

to battle virus-generated infections, the country still faces

millions of annual cases of respiratory infections different from

influenza, calicivirus gastroenteritis or dengue epidemics. Even

now, the country faces viral infections such as chikungunya

and zika for which no vaccine has been developed. That is the

reason why, within public health budgets, the mortality and

morbidity rates associated with viral infections, continue to be

considerable. We should not let our guard down regarding the

prevention of those diseases that have an available vaccine.

Misinformation can contribute to misguided decisions and

hurt the population most susceptible to being affected by a

serious disease, such as children.

Another aspect that has contributed heavily in the

last years to the appearance of vaccine-preventable

infections has been the misinformation surrounding

vaccines as a leading cause of autism. Even though the

report that once related vaccination with autism has

been totally refuted, as mentioned in the article Safety of

Vaccines used for Routine Immunization of US Children,

a significant number of parents have decided that it is

more natural to permit their children to immunize through

the infection. These decisions have resulted in significant

consequences, such as the presence of measles and

mumps among college students in the US or in children

visiting Disney parks.

Misinformation regarding vaccination can have important

global consequences. If a population is protected with a

vaccine, the virus will not multiply in that specific population

and vaccinated individuals can travel to any part of the

world without the risk of getting sick. Nevertheless, if some

members of the population choose to not vaccinate, there

will be individuals susceptible to the disease, which will

allow the virus to incubate in certain locations. Hence the

importance of not straying from the efforts that have been

made to overcome these diseases.

Vaccines can be of several types. Attenuated vaccines

are made up of live viruses that will not generate serious

infections in human beings but which can help the body

to produce antibodies that will prevent the infection from

occurring. For instance, an attenuated vaccine is the oral

vaccine against polio or yellow fever. A second type of

vaccines is made of deactivated viruses, in which viruses

are treated with chemical compounds that destroy the virus

but not its proteins, allowing for the creation of antibodies

that protect against the virus but that do not cause the

disease. These vaccines are very safe, such as the Salk

vaccine against polio. A third vaccination type is made

Quality analysis of ovules obtained by ovarian puncture to determine which will be implanted via IVF

194

VIEW FROM THE TOP

Q: What are Landsteiner Scientific’s key product lines?

A: Our pipeline includes biotechnological drugs, genomic

medicine, injectables and oral solids. We have several

research lines but the most advanced is related to obesity.

We started phase I clinical trials for this line in Spain,

although phase III will eventually take place in Mexico. We

have recently opened a new platform in genomic medicine

focused on oncology. Landsteiner is starting with colon

cancer, a common disease among men in Mexico and the

US. The company currently has a line of semi-solids such

as creams, a line of injectables and a line of immuno-

suppressants, high-specialty drugs whose production

must be separated from others.

Q: What opportunities does Landsteiner Scientific see in

genomic medicine?

A: Besides Landsteiner, there is no research being done by

Mexican companies in genomic medicine. If we continue

on this path, we could be one of the first to launch a

drug obtained from genomic medicine. There are many

diagnoses and studies in genomic medicine but no

medicines yet. As an example, 23andMe, a genetics lab,

genotypes its clients’ DNA samples and informs them of any

genetic predispositions. For a while, the FDA had banned

the company from doing that because people did not know

what to do with this information.

Q: How can genomic medicine help improve the health

of Mexicans?

A: The genetic information of a population is used to identify

genetic traits that can help either control or cure the prevalent

diseases. Our industry evolved into personalized medicine but

now the discourse has evolved into precision medicine. We

know that some drugs do not work equally well in different

populations. Genomic medicine could show what medicines

work best according to common Mexican genetic traits.

Q: What support does Landsteiner Scientific receive from

academic institutions?

A: We have received support from the Metropolitan

Autonomous University (UAM), the National Institute

of Genomic Medicine (INMEGEN) and UNAM through

the Institute of Biomedical Research. There are only a

few countries where this kind of research is being done,

including Mexico, Spain and the US. Landsteiner’s Spanish

subsidiary GENMED is focused on projects in genomic

medicine in several therapeutic lines.

Q: What kind of medicines are you developing against

colon cancer?

A: When colon cancer develops, there is a metabolic

component that makes colon cells go rogue. Landsteiner

aims to interrupt the signal that orders cells to continue

reproducing, which is possible through genomic medicine.

Once the factors that enable cancer to appear are discovered,

our researchers look for the best place and moment to stop

the cancer from growing. There are two alternatives: one is a

medicine that interrupts the uncontrolled cell-reproduction;

the other creates memory in the human body so that

cancerous cells can be recognized and eliminated regardless

of where they are or whether there is metastasis.

Q: How are your sales distributed among the public and

private sectors?

A: 90 percent of Landsteiner’s sales used to go to the

government, but we started changing that in 2016 by

strengthening our private sales division. Our target is a

70-30 sales ratio.

Q: What is Landsteiner doing to reduce the cost of

medicine and improve access?

A: To achieve this, the company works with generic and

biosimilar medicines. However, to reduce prices and make

access to drugs easier it is necessary to make drug registration

simpler. COFEPRIS has done a great job, yet these normative

changes are difficult to apply and the industry is struggling.

We restructured our medical division because we set the goal

of submitting 15 new medicines for registration per year to

keep our pipeline from becoming obsolete and unprofitable.

INTRODUCING NEW OPPORTUNITIES THROUGH GENOMIC MEDICINEFRANCISCO KURIVice President of Landsteiner Scientific

Landsteiner Scientific is a Mexican pharmaceutical company.

It is focused on the manufacturing, distribution and

commercialization of biotechnological, genomic medicine,

injectables and oral solids. It recently open a plant in Toluca

195

Sanofi is a pharmaceutical group founded in 2004 after the

merger of Sanofi-Sythelabó and Aventis. It is the world’s

third-largest pharmaceutical group and a leader in research in

Mexico with over 35 active studies

Q: As a leader in insulin supply, what innovative solutions

are you developing for diabetes?

A: Sanofi was the first pharmaceutical company to create

glargine insulin, the first analogue insulin that improved

a patient’s quality of life. Recently we launched a new

generation of insulin to redefine control of the disease. It is

a safer insulin because the patient now has a range of up to

36 hours between doses, instead of 24 hours. The solution

is complemented with a platform that provides support

to patients in terms of nutrition, exercise and everything

related to changing habits.

In a wider context, diabetes and obesity might also lead to

other complications that can result in the need for further

treatment, such as knee replacements. For these cases,

we developed an injection that helps delay the need for

a knee replacement. The treatment restores the cartilage,

providing pain relief in the knee and allowing the patient

to continue walking. The cost of knee replacement surgery

is very high and this product, which is already available

through public institutions, helps reduce costs.

Q: What makes Sanofi unique in Mexico?

A: We are a company focused on people, the development

of talent, inclusion, diversity and gender equality. What

makes us different is the human dimension in everything we

do, whether working with patient associations, authorities,

doctors or our own employees. This includes, for example,

helping our employees and their families. Children in Mexico

do not have school on the last Friday of every month, which

can be an issue for parents. We established Kids Office Day,

an initiative in which all our employees can bring their children

to work on that Friday. We organize activities for the children

and in so doing, we help our employees comply with their

parenting responsibilities. So far, we have received a great

response from our employees and their children.

Q: How is Sanofi and its biotechnology addressing Mexico’s

main health concerns?

A: We are redefining treatment for cardiovascular

diseases. Sanofi was the first company in Mexico to

launch a monoclonal antibody for controlling LDLC, a

solution that revolutionized the industry. The monoclonal

antibody inhibits a protein called PCSK9, which hinders

the receptor that clears cholesterol from blood. In Mexico,

cholesterol is a critical topic. The burden of cholesterol

as a cardiovascular risk is due to ethnic features and

unhealthy lifestyles. Usually, diabetic patients have

problems with their lipid levels. Previously, patients were

treated with statins, but eventually they reach a point

where the statin becomes ineffective. This new therapy

provides patients with an alternative.

Q: What role did Mexico play in the development of the

dengue vaccine?

A: Mexico was the first country to register the dengue

vaccine. We are leaders in emerging economies because

we work to meet the specific needs of patients in those

countries. Mexico played a key role in the investigation

of the dengue vaccine because, among the 15 countries

included in the research program, it was one of only two

countries, along with the Philippines, that participated in

the phase I clinical studies. That is why Mexico became

the first country to obtain the sanitary registration: it

was a collaborative approach with the country’s health

institutions that enabled us to establish the necessary

processes to comply with the many strict requirements of

the authorities and to provide them with solid local data. It

was not an easy process but it was also the first time that

COFEPRIS had certified a new vaccine before agencies

such as the FDA and the EMA.

Q: What other vaccines is Sanofi developing?

A: Our global operations are developing research for

a zika vaccine, among others. We have a collaboration

agreement with the US Army to conduct research into this

type of infection and we believe we are in the best position

to achieve a fast and efficient solution for zika after our

experience with the dengue vaccine.

BIOTECHNOLOGY DESIGNED TO MEET LOCAL NEEDS

FÉLIX SCOTTDirector General and Country Chair of Sanofi

VIEW FROM THE TOP

196

ANALYSIS

THE BLACK HOLE OF BLACK MARKET MEDICINE

In Mexico, El Universal reports that between

Jan. 1, 2007 and Dec. 31, 2015, the Attorney

General’s Office seized 945,152 fake medicines,

just under 942,000 of which were seized in

Mexico City. Industry reports on how much

medicine in Mexico is false varies wildly from as little as

4.5 percent of the total to 60 percent. Reasons for the

discrepancy include insufficient controls and the expanse

of the supply chain across borders, where one country’s

health authorities cannot survey operations in the other.

Although some countries have anti-counterfeit measures in

place and are actively seeking and destroying fakes, one of

the main issues in the fight is the lack of global coordination

against this international plague. Countries have yet to

agree on a standardized term to be used and even Big

Pharma companies have an opinion on what should be

included within the definition of illegal medicine. They

insist that counterfeits, which are defined as functioning

copies of a patented drug, be included while NGOs protest

that although violating intellectual property, they pose little

or no health risk. Interpol has several ongoing operations

in the pharmaceutical field, including Operation Pangea,

which targets the online sale of illegal medicines. The

European Council has drafted the MEDICRIME convention,

“a binding international instrument in the criminal law field

on counterfeiting of medical products and similar crimes

involving threats to public health,” according to its website.

As for Mexico, Algaba says that “COFEPRIS is working on

eliminating these health risks by increasing inspections and

visits. It also has an open dialogue with companies to agree

on proper measures for suspending and recalling a product

and also in finding those responsible.”

In some industries, counterfeit products can lead to

financial losses. In the medical sector, it can lead to death.

Fake medicines can be destructive and even devastating

but the lack of global coordination is impeding the fight

against these illicit drugs despite local efforts to curb their

use. In Mexico, trade on the black market is on the rise.

“Counterfeit, altered or contaminated drugs are an

issue several clients of ours have faced recently and the

prevalence of this occurrence is growing in Mexico. There

are several reasons for this, including organized crime,”

says Ernesto Algaba, Partner of the Life Sciences Practice

at Hogan Lovells BSTL.

The issue is neither new, nor particular to Mexico. China’s

state-controlled Shenzhen Evening News newspaper has

reported that in 2001, 192,000 Chinese patients had died

due to the use of fake drugs.

Globally in 2015, there were 3,002 incidences of counterfeit

medicine involving 1,095 pharmaceutical products,

according to the US-based Pharmaceutical Security

Institute. The three categories of drugs most targeted by

counterfeiters are genito-urinary, anti-infectives and CNS.

Cardio-vascular medicines, an important category for

the Mexican population, saw a 29 percent increase in the

number of fakes from 2014 to 2015 and dermatologicals, a

category few think to question, experienced a 57 percent

rise in the same period.

Selling fake medicine is an opportunity for counterfeiters to

make money, but the results for patients can be damaging or

fatal. Mexico has cracked down on this problem in recent years

but issues remain

HIDDEN POISONS IN COUNTERFEIT MEDICATIONS

Heavy metals PoisonsCommon household

itemsDrugs you

did not ask forNo drugs

at all

HiddenIngredients

Mercury, aluminium, lead, cadmium, arsenic, chrome, uranium, strontium, selenium

PCBs, benzopyrenes, rat poison, boric acid, antifreeze

Road paint, wall paint, brick dust, floor wax, sheet rock, paint thinner

Aminotadafil, homosildenafil, xanthoanthrafil, pseudovardenafil, hongdenafil, sibutramine, haloperidol

Dextrose, dextrin, lactose, starch, saline, salt

ImpactCarcinageric or toxic to CNS kidney, liver, skin, bones or teeth

Kidney damage, kidney failure, cancer and developmental defects

Vomiting, abdominal pain, dizziness, blurred vision, respiratory difficulty, nervous system disruption, coma, death

Difficulty breathing, muscle spams, muscle stiffness, high blood pressure, stroke

Harm or death

Source: safemedicines.org

197

Q: What solutions does DSM Sinochem Pharmaceuticals

propose to the growing anti-microbial resistance (AMR)

problem?

A: There is increasing evidence that API manufacturers that

do not adequately treat waste products contribute to the

problem. Releasing high concentrations of antibiotic active

ingredients into the environment creates “reservoirs” of

antibiotic resistant bacteria that can be easily propagated

due to increased global travel. At DSM Sinochem

Pharmaceuticals we strongly believe in producing APIs

in the most responsible and sustainable way. Regulation

concerning wastewater disposal is definitely needed but

its implementation can take several years. In October 2014,

we launched our sustainable antibiotics program, which

initially targeted our in-house wastewater treatment. We

have already implemented basic requirements for clean

and sustainable antibiotics production at all our sites.

These include the use of technology with the lowest

environmental impact throughout our supply chain,

dedicated wastewater treatment plants at every antibiotic

manufacturing site and antimicrobial activity testing.

Q: How are private companies pushing forward on this

issue? What dangers does AMR pose to global health?

A: DSM participated alongside 12 leading biopharma

companies in the generation of the UN General Assembly’s

Roadmap to Combat AMR. The AMR Industry Alliance

was established in May 2017 to review progress on the

commitments made by the Roadmap. This alliance is

chaired by the International Federation of Pharmaceutical

Manufacturers & Associations (IFPMA) and warns that

700,000 people worldwide die from resistant bacteria

annually. Of those, 50,000 die in the US and Europe

alone. Furthermore, 58,000 newborn babies die each year

in India as a result of drug-resistant infections and almost

every minute a child under five dies from pneumonia,

for a total of 410,000, according to the NCDC India. In

the US, two million people contract a serious antibiotic-

resistant infection every year, of which 23,000 will die.

By 2050, over 10 million people will die from resistant

bacteria every year, costing the global economy US$100

trillion per year.

Q: What does Mexico represent for DSM Sinochem

Pharmaceuticals within LATAM and globally?

A: In terms of size, Mexico is our second-largest market in Latin

America after Brazil, followed by Colombia and Argentina.

We truly believe in the strong potential of the Mexican

pharmaceutical industry, as the country is the 11th market for

pharmaceuticals in the world. In addition, it is important to

mention that Mexico is considered a gateway to the rest of

the countries in Latin America and the US due to its location.

Q: What are the main challenges DSM Sinochem

Pharmaceuticals face in the Mexican health sector? How

does it overcome them?

A: DSM Sinochem Pharmaceuticals is the only producer of

antibiotics in Mexico so we are in the spotlight of Mexican

regulators. The sense of urgency in Mexico is entirely

different from that of countries with a larger antibiotics

industry, such as India or China, but the commitment exists

and there is significant debate nationally and regionally

on the regulation of antibiotics. We actively communicate

all information related to AMR to our public and private

stakeholders in Latin America. We know it will be difficult

to solve such a large challenge by ourselves so we are

constantly communicating with the sector. I am proud to

say that the response has been positive so far and we are

glad to be leading such a process in the region because it

ensures that DSM Sinochem Pharmaceuticals will be able

to anticipate any regulatory change in this area.

Q: What products will be game-changers in the next year?

A: We have well-established products in our portfolio

that have been commercialized for a long time. These

products enjoy a stable and steady sales performance.

As part of our corporate business development strategy,

we also expect strong growth in cardiovascular and anti-

fungal product sales.

GLOBAL LEADER IN ANTIBIOTICS PRIORITIZES RESPONSIBILITY

MAARTEN POUWCEO of DSM Sinochem Pharmaceuticals

VIEW FROM THE TOP

DSM Sinochem Pharmaceuticals, founded in 1869, is one of

the oldest fermentation companies in the world. It develops,

produces and sells intermediates, active pharmaceutical

ingredients and drug products

198

Q: What advantages do dental mesenchymal stem cells

(MSC) have over those extracted from bone marrow or

the umbilical cord?

A: Bone marrow contains a small portion of mesenchymal

stem cells and extracting the cells is invasive. They also cannot

be taken from cancer patients because they are already sick,

although milk teeth have cells that can be used to treat direct

family members. The umbilical cord contains hematopoietic

cells, which can only produce blood and not tissue. Those are

useful for certain blood diseases but they cannot be multiplied.

Additionally, hematopoietic cells can only be used in children

under 16 pounds because the procedure requires a certain

number of cells per pound and more cannot be produced.

MSC can convert rapidly into any tissue. We are developing

cardiac cells for regenerative medicine and working with

3-D printing to replace foot bones. In the US, scientists are

3-D printing human hearts and putting them in pigs. We can

make and print skin for burns and we can produce cells for

laboratory tests, thus avoiding animal testing. Additionally,

our experts are developing beta pancreatic cells that

produce insulin, taking steps toward treating T1D.

At the same time, we are trying to help people who suffer

from macular edema and retinitis pigmentosa by producing

cells found in the eye’s rods and cones. From MSC, we can

fabricate fibroblast to produce a serum that helps reduce

wrinkles and our partners in Spain have already treated 20

patients with this product, 18 of which saw positive results.

MSC also have immunomodulating properties, meaning

the cells can reduce inflammation and rejection rates.

We injected MSC into eight paralyzed rats and after six

weeks, four started walking again, which means the neuro-

transmission is perfect. Parkinson’s and Alzheimer’s are

other diseases we want to treat.

Q: What process is used to extract the cells?

A: The ideal process is for children to go to the dentist

when a tooth is loose but not out. If the child waits until

the tooth falls naturally, the mature tooth behind the milk

tooth may have eaten the entire root, from which the

stem cells are extracted. The dentist will put the tooth

in a fluid we provide that will preserve the tooth exactly

as it is. We work with a network of dentists who have

the necessary boxes to preserve the teeth, which can be

preserved for up to four days, although we should receive

it within 24 to 48 hours. We then freeze and expand the

stem cells.

Q: How does current regulation govern the use of stem

cells in Mexico?

A: We cannot use them openly right now because they

are still in trials. We need to apply to COFEPRIS on a

case by case basis, with a specific patient and a specific

treatment in mind. The ethics committee assigned by

the government will then decide if what we are doing is

proper and whether there will be any harmful effects for

the patient. Also, patients can only use their own stored

cells for the treatment. If they want to do something else

we need to repeat the process.

Q: How can regulations be improved to take advantage

of this technology?

A: We know these cells can do a lot of good and regulatory

bodies are trying to move faster regarding regulations.

But this technology develops more quickly than the law,

as evidenced by the fact the FDA is granting permission

today for procedures invented in 1985. Everything in this

field is new and people can be afraid, so we need the

scientific basis to justify new techniques.

The government asks us for advice on how to handle new

cases. It is remarkable that COFEPRIS is recognizing the

need for support in areas it is unfamiliar with and that

they are willing to integrate this support. Social security

is also burdened because of the money required for long-

term treatments. We want patients to have access to

these opportunities as soon as possible.

PROMISE OF MSC LIES IN FLEXIBILITYABRAHAM FRANKLINDirector General of Grupo Franklin

VIEW FROM THE TOP

Grupo Franklin operates in diverse sectors, including health. It

owns a chain of dental clinics, a stem cell bank and a research

center, distributes medical equipment and runs a biohazard

waste disposal company

199

Q: What led you to use stem cells to treat injuries?

A: We decided to research and develop stem cell treatments

after performing a heart transplant 16 years ago in San

Javier Hospital, Guadalajara. The process was extremely

complex and expensive both for the doctor and for the

patient, who ran out of money after a month in recovery.

This motivated us to look for an alternative solution that

could help patients with a certain level of heart failure avoid

the need for a transplant. We researched the role of stem

cells in cardiac failure and we allied ourselves with groups

that were already investigating it. This research led us to

develop a comprehensive approach to treating heart failure

that involved the injection of stem cells and significant

changes in the patient’s habits and diet. Afterward, we

started researching the impact of stem cells in spinal, joint

and muscular injuries.

Q: How do you extract the cells?

A: We extract the stem cells from the patient’s iliac crest

bone marrow. These cells are purified and cultivated. They

are then implanted in the damaged tissue or wherever there

is a mobility problem. While umbilical cord cells can also be

used for these purposes, COFEPRIS only authorizes us to

use stem cells from a patient’s bone marrow. These are also

much easier to obtain and equally good for our purposes

as cells from the umbilical cord. Cells from teeth can also

be used but they require more purification and cultivation

because they are in shorter supply than bone marrow cells.

After cultivation, we isolate mononuclear stem cells, which

are implanted in tissues including the heart, lungs and

other damaged areas autologously. We are planning to

store these cells to create a bank. We will also isolate

mesenchyme cells, which can be implanted in any

individual because they have no antigenic receptors.

During the replication processes, it is necessary to

closely monitor samples to ensure cells do not deteriorate

or mutate, which could lead to tumors. We have been

developing these projects for over eight years as the

generation of research protocols entails a long process.

Our goal is not just to store the cells but to study their

applications and curative potential. There are many studies

due on the efficacy and applications of these therapies

that could define which cases can use such applications.

Q: What are the short and long-term goals for Biostem

Technologies?

A: We have a team comprised of certified researchers from

Guadalajara studying how many changes can be performed

before a cell is damaged and monitoring existing cultures

for signs of damage. Our goal is to generate a cell bank,

which will include adult autologous and mesenchyme cells

for anyone who may need them. This bank is already in

progress and now we are fulfilling the requirements for

regulatory data so the bank can be approved by COFEPRIS.

To get the approval, all hospital and laboratory infrastructure

has to be certified by the council. We have been developing

these projects for over eight years because generating

research protocols is a long process.

Our goal is not just to store the cells but to study their

applications and potential to cure diseases. There are many

studies to be made on the efficiency and applications of

these treatments and that could indicate which specific

patients could benefit. We have a research laboratory in

Miami but our ultimate goal is to create one in Mexico.

Q: Which new products are you developing?

A: In 2017, we will branch into different areas. Our goal

will be to generate wellness products including food

supplements, which contain omega-3 and other nutrients

and pure water. We are also developing nutraceuticals

targeting patients who suffer from obesity and diabetes. We

are looking at developing products that can neutralize the

negative effects of inflammation, which could help patients

with autoimmune diseases such as lupus and scleroderma.

Mononuclear stem cells and mesenchyme cells can also be

used as anti-inflammatory agents.

EXPENSIVE PROCEDURES SPUR STEM CELL INNOVATION

JESÚS ESPARRAGOZADirector of Biostem Technologies Mexico

VIEW FROM THE TOP

Biostem Technologies focuses on research and development

of stem cell therapies for Mexico, a pharmaceutical line that

provides high-quality products and a wellness line focused on

anti-aging and rejuvenation products and services

200

Q: What are the advantages of using dental stem cells over

those of the umbilical cord or bone marrow?

A: The cells from the umbilical are hematopoietic and they

are mainly used to treat blood conditions such as lymphoma,

leukemia and anemia. Dental stem cells are mesenchymal;

they form tissue and can differentiate into bone, cartilage,

heart, liver, etc. The other fundamental difference is that

umbilical cord cells cannot be multiplied and often there are

not enough cells for treatment. Mesenchymal cells can be

used several times for different applications. Finally, there

is only one opportunity to collect umbilical cord stem cells

but there are many opportunities to obtain cells from teeth.

Bone marrow is a rich source of both mesenchymal and

hematopoietic cells. Their collection is much more painful

as a thick needle is inserted into the bone several times.

It is invasive and hospitalization is required. In addition,

the cell quality is not as good because they are prone to

environmental damage. This is a good option for those who

have not persevered cells in another form.

Q: T2D is affecting Mexico and consuming the public health

budget. How can stem cell research help?

A: Many auto-immune diseases are inflammatory, so stem

cells can help with their anti-inflammatory properties. In

addition to becoming tissue, over the past five years it has

been discovered that stem cells have additional properties:

anti-bacterial, anti-inflammatory and regenerative. They

also recruit other cells to help with repair and protect cells

by stopping apoptotic processes, which is programmed

cell death. Stem cells are also immune-regulating. These

are environmentally responsive therapeutics. Applied

intravenously, these cells will do what you need them to.

As for T2D, the immune regulating aspect helps because it

is an auto-immune disease; the anti-inflammatory function

helps with the inflamed pancreas and the regenerative

element helps to regenerate pancreatic function. For the

best outcome when treating chronic diabetes, several

sessions are advisable for the cells to work. In addition to

pancreatic malfunctioning, T2D causes a great number of

problems such as blurred vision, glaucoma, poor circulation

in the extremities and liver, kidney and heart issues. There

is a protocol in Monterrey under research that is aggressive

but efficient, which involves submitting the patient to

chemotherapy to destroy their immune system because it

has been attacking itself. After it is killed off the patient is

given a new immune system with stem cells. This is done with

hematopoietic cells collected from bone marrow. This is also

helping allogenic transplants achieve lower rejection rates.

Q: Although authorization is granted on a case by case

basis, what are the main uses of stem cells in Mexico?

A: The potential applications are still being researched. In

Mexico, they have mostly been used for orthopedics, lesions in

articulations such as the knee, hip and shoulder or for diabetes.

We are running an interesting protocol on autism and stem

cells also can be used for neuro-degenerative diseases such

as Parkinson’s disease. There are also intravenous applications

to help regenerate tissues and cells. Stem cells have anti-aging

properties that are popular with athletes.

Q: What regulations are stem cell clinics like Bioeden

lobbying for in Mexico?

A: Processes are limited by the laws that are 10-15 years

old and policymakers are slow to react to innovation.

Mexico is a pioneer in this area so there are fewer countries

to copy from and thus more fear, which is normal. This

can be solved by reading scientific information which is

available for all, and there are many aspects that have

already been tried and tested. It is a waste of time and

money to repeat those tests here, since that money

could be used for further research. Regulation of dental

stem cells in particular is scarce and mesenchymal cell

regulation is tied to that of hematopoietic cells. COFEPRIS

is conscious of these things and is moving forward. We

are not completely blocked by legislation. I hope there

will be greater openness in the next two years.

STEM CELLS DO WHAT YOU NEED THEM TO DOVICTOR SAADIACEO and Founder of Bioeden Mexico and LATAM and CCO of Bioeden USA

VIEW FROM THE TOP

Bioeden, a US-based tooth stem cell bank, collects and stores

dental stem cells using cryopreservation. It is present in 30

countries and has three laboratories: one in the US, one in the

UK and another in Thailand

201

Practice at Hogan Lovells BSTL. “[…]Key

provisions will need to be amended to provide

guarantees products are safe for human

consumption. I do not think we have the detailed

provisions that may exist in other jurisdictions,”

he says, adding that “the regulatory framework needs to

take best practices from other jurisdictions into account. We

know that in Europe and in the US there are more specific

provisions and limitations. Fortunately, products are mainly

coming from these jurisdictions into Mexico. Even though

we have complex labeling requirements, this is an area that

could potentially be improved.”

By 2015, over half of the world’s countries did not have

relevant antibiotic legislation. Ensuring food chain security is

vital for human health. Over 60 percent of human pathogens

are of animal origin and over 20 percent of animal losses

are caused by disease. In addition, the OIE reports that five

new human diseases are reported every year. For this reason,

maintaining animal health is a vital public health issue.

“We also need a more developed legal framework regarding

organic products or those free of antibiotics. We need to

know if the animal consumed the legal amount of antibiotics

or if it is completely drug-free. General regulations in food

products need to be connected with organic food and animal

antibiotic consumption requirements. Ensuring the quality

of meat containing antibiotics and the effects of that meat

on humans is vital,” says Cecilia Stahlhut, Senior Associate of

the Life Sciences Practice at Hogan Lovells BSTL.

Because bacteria develop resistance so quickly, there

is little incentive for pharmaceuticals to search for

new antibiotics. McKenna says that a new generation

of bacteria develops every 20 minutes, whereas drugs

take years to develop. She calls for more incentives for

pharmaceuticals to continue the fight.

THE RISE OF THE SUPERBUG

Before antibiotics were accidentally discovered by Sir

Alexander Flemming in 1945, an infection of a small cut

could kill. For the past 70 years, the discovery of an

increasing number of antibiotics has prevented millions of

deaths but this is under threat. Resistance or immunity to

antibiotics, known as antimicrobial resistance, is emerging

and such resistant bacteria are known as “superbugs.”

How superbugs developed is simple to understand. In

the words of CDC researcher and superbug expert Maryn

McKenna: “Bacteria compete against each other for

resources, for food, by manufacturing lethal compounds

that they direct against each other. Other bacteria evolve

defenses against that chemical attack. When we first made

antibiotics, we took those compounds into the lab and

made our own versions of them and bacteria responded

to our attack the way they always had.”

The Review on Antimicrobial Resistance, funded by the British

government, pegs the annual death toll caused by infections

no drug can help at 700,000. It estimates that this number

will rise to 10 million by 2050 if no action is taken. The WHO

estimates that every year 480,000 people are infected with

multi-drug resistant tuberculosis. Extensively drug-resistant

tuberculosis had been detected in 117 countries by the end

of 2015, including Mexico, and it kills 50-70 percent of those

infected. The global health body also says that between 2000

and 2015, 49 million lives were saved due to diagnosis and

treatment of tuberculosis, which consists of four antibiotics.

The use and prescription of antibiotics for humans is

heavily regulated. In Mexico consumers cannot purchase

antibiotics without a prescription, which is kept by the

issuer. However, the CDC estimates that upto 50 percent

of antibiotics prescribed for people and most of those

used in animals are unnecessary or not as optimally

effective as prescribed. Unfortunately, the CDC also

estimates that “1 in 5 resistant infections are caused by

germs in food or animals”. “COFEPRIS tightly controls

the human consumption of antibiotics but animal meat is

the greatest source of antibiotics for humans,” says Felipe

Espinosa, CEO of Laboratorios Collins.

In Mexico, tighter regulations that take their cue from other

countries could help limit the impact from a contaminated

food chain, says Ernesto Algaba, Partner of the Life Sciences

ANALYSIS

Antibiotics have saved many lives over the past 70 years

but the rise of the “superbug” threatens this. Bacteria

is developing resistance to antibiotics, leaving experts

scrambling for a new solution

ANTIBIOTIC RESISTANCE TIMELINE

DISCOVERY RESISTANCE IDENTIFIED

Penicillin 1943

1945 (2 years)

Vancomycin 1972

Imipenem 1985 1988 (16 years)

1998 (13 years)

Daptomycin 2003 2004 (1 year)

Source: Maryn McKenna TED 2015

Functional training classes

203

Wellness is the key to prevention, which is vital for lowering the chronic

disease burden in Mexico and improving the general health of the population.

Improving healthy eating habits can make an enormous difference to health

and to the amount spent on health matters. This is nowhere more relevant

than Mexico, which holds one of the top spots worldwide for both adult

and child overweight and obesity. With Mexican nutrition being largely

insufficient, companies are capitalizing on this opportunity to provide vitamin

supplements or complements to the market. With the trend of eating healthy

comes the trend of avoiding chemical medicine, leading to a resurgence in

natural remedies or herbal medicine. Although COFEPRIS has cracked down

on these sectors in recent years to guarantee the safety of patients, it is now

emerging as a viable alternative for public institutions with budgets bursting

at the seams. People are also increasingly turning to dermatological and

surgical solutions to meet their aesthetic needs.

This chapter will provide insight into the national wellness market and how it is

looking to develop. It will feature companies devoted to improving nutrition,

innovative skin care products and fitness alternatives that best meet Mexican needs.

NUTRITION & WELLNESS

9

204

205

CHAPTER 9: NUTRITION & WELLNESS

206 ANALYSIS: Change of Habit Required for Wellness

209 VIEW FROM THE TOP: Javier Luna, Nestlé

210 VIEW FROM THE TOP: Raúl Camarena, Aspen Labs

211 VIEW FROM THE TOP: Víctor Anaya, Merz Pharma

212 INSIGHT: Geraldine Waked, Sesderma

213 VIEW FROM THE TOP: Alejandro López, IM Natural

214 VIEW FROM THE TOP: Adriana Azuara, Agave Spa

215 VIEW FROM THE TOP: Ricardo Spínola, Farmapiel

216 VIEW FROM THE TOP: Cédric Ertlé, Expanscience

217 VIEW FROM THE TOP: Fabián Bifaretti, Sports World

218 VIEW FROM THE TOP: Miguel Marín, Industrias Sintoquim

220 INSIGHT: Ignacio Luna, Biofarma

221 ROUNDTABLE: What Factors Impede Skin Care and What are Some Protective Measures?

206

CHANGE OF HABIT REQUIRED FOR WELLNESS

trend toward healthy eating also often avoid

chemical medicines, leading to a resurgence

of natural remedies and herbal products.

Although COFEPRIS has cracked down on

these sectors in recent years to guarantee

the safety of patients, it is now emerging as a viable

alternative for public institutions with budgets bursting

at the seams.

The OECD reports that in 2012 over 71 percent of the

Mexican population was either overweight or obese.

It also reports that in 2013 Mexicans were consuming

3,072 kilocalories per capita per day. “Behavioral change

is the key to reducing the disease burden of obesity and

diabetes, the leading cause of disease and healthcare

spending,” says Paul Doulton, Founder and Managing

Partner of Oriundo, a consultancy composed of former

CEOs that helps new entrants to Latin American

pharmaceutical markets.

Obesity is a risk factor for T2D, which in turn is caused

partly by poor nutrition. Maintaining healthy eating habits

can make an enormous difference to health and to the

amount of money spent on health matters.

“ENSAUT 2016 was representative of how people see

themselves versus how they are. The health side is more

complicated, as often people do not feel ill. By posing

overweight and obesity solely as a health problem,

people do not identify with this. We have therefore

Maintaining general wellness is the key to prevention,

a vital issue for lowering the chronic disease burden

in Mexico and improving the general health of the

population. Accordingly, improving eating habits can

make an enormous difference to health and to public

expenditures. This is increasingly relevant than Mexico,

which holds one of the top spots worldwide for both

adult and child overweight and obesity.

“Overweight and obesity in children is more serious

than these issues in the general population. However,

children suffering from these problems almost certainly

will continue to do so in adulthood. Childhood overweight

and obesity are also more difficult to solve. They are still

growing, so restricting nutrition is not as simple as in

adults,” says Carlos López, Director General of Medix, a

company dedicated to fighting overweight and obesity

since 1940.

The 2016 ENSANUT report shows that Mexicans are not

only overweight, they are unaware of it and do not know

correct alimentation or exercise requirements. With

Mexican nutrition being largely insufficient, companies

are capitalizing on this opportunity to provide the market

with vitamin supplements or complements. Those who

ANALYSIS

Nutrition and exercise are key to fighting overweight and

obesity, conditions prevalent in Mexico. However, most

patients see this as an aesthetic issue, not a health problem,

in the same way as they view skincare

ADULTS OVER 20 THAT CONSUME EACH FOOD GROUP DAILY IN MEXICO (percent)

Source: ENSANUT 2016

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ses

Veg

etab

les

Fru

it

0

20

40

60

80

100

PERCENTAGE OF ADULTS OVER 20 THAT CONSUME EACH FOOD GROUP

� Rural � Urban

207

taken a different approach, focusing on aesthetics and

wellbeing. We ask patients if they would like to change

their image,” says López.

Another area of health often associated with aesthetics

is dermatology. A person’s skin condition is also greatly

impacted by the food consumed and is an external show

of wellbeing. With many Mexican cities plagued with high

levels of pollution, protection from such external damage

is vital. A 2015 MicroMarketMonitor report pegs Mexico

as the fastest growing country in the North American

dermatology devices market with a compound annual

growth rate of 9.8 percent from 2014 to 2019.

“People need to protect their skin against pollution, even

indoors where it can sometimes be more polluted because

people are crowded into a room or working long hours

under artificial lighting, among other factors. It is necessary

to use anti-oxidants to protect the skin against this,” says

Adriana Azuara, CEO of All4Spas and Agave Spa.

Another major wellness factor is physical fitness, vital

for keeping obesity in check. “Gyms are able to link

sedentary people with a more active life, not only through

strength and cardio equipment but with a robust wellness

orientation that includes group classes, meditation, yoga,

Pilates, steam rooms, saunas, massage services, nutrition

experts, facilities for kids (and) swimming pools,” says

Fabián Bifaretti, CEO of Sports World.

El Financiero reports that there are 1.9 sports clubs in

Mexico per 100,000 inhabitants, compared to 8.8 in Brazil

and 12.4 in Argentina. However, experts argue that there

is no access issue to physical fitness because, although

top-end gyms are few and out of the average Mexican’s

LIFE EXPECTANCY AT BIRTH (years)

—US —Mexico —Japan —Colombia —China —Chile —Brazil

Source: OECD

price range, walking and running in the street is free.

In addition, many state ministries of health have been

implementing free outdoor gyms in cities, although their

use is not recommended when pollution levels reach

excessive heights.

Despite these issues, life expectancy in Mexico has increased

steadily in recent years, reaching an average of 75 years in

2016, 72.3 years for men or 77.7 years for women.

70

75

80

85

2015201420132012201120102009200820072006

Source: aire.cdmx.gob.mx

Leve

l

Ult

ra-v

iole

t in

dex

According to skin type, the maximum time of exposure, without protection, should be (in minutes)

Very pale

PaleLight brown

Dark brown

Dark Very dark

1 112 140 175 219 274 342

2 56 70 88 109 137 171

3 37 47 58 73 92 144

4 28 35 44 55 68 86

5 22 28 35 44 55 68

6 19 23 29 37 47 57

7 16 20 25 31 39 49

8 14 18 22 27 34 42

9 12 16 19 24 30 38

10 11 14 18 22 27 34

11 10 13 16 20 25 31

12 9 12 15 18 23 29

13 9 11 14 17 21 26

14 8 10 13 16 20 24

15 8 9 12 15 18 23

Low

Mod

erat

eH

igh

Ver

y hi

ghEx

trem

ely

high

209

DIFFERENT ISSUES REQUIRE DIFFERENT APPROACHES

JAVIER LUNASenior Manager in Health Nutrition and Wellness at Nestlé Mexico

VIEW FROM THE TOP

Nestlé is a leading nutrition, health and wellness company present

in more than 197 markets with around 2,000 brands. Nestlé also

executes local philanthropic and awareness campaigns in Mexico

to battle the main nutrition problems in the country

Q: What are the main nutritional issues in Mexico and how

is Nestlé approaching these?

A: Our research has highlighted several issues in Mexico.

We have conducted a series of studies we developed

(Kids Nutrition and Health Study and Feeding Infants and

Toddlers Study) and we have performed R&D with our

partners at Nestlé Research Center in North Carolina,

and Nestlé Mexico has worked with different national

research institutes, such as the Public Health Institute

(INSP). The first study relates to hydration among

children. They consume a large quantity of sugary drinks

but lack regular water intake. Second, in Mexico around

17 percent of children and teenagers skip breakfast every

day, which is very serious in nutritional terms. Many of

those who do have this meal eat sugary bread in addition

to sweetened beverages, while the intake of grains is

very low. Finally, a third trend is a shortage of fruit and

vegetables in infant diets.

To battle these issues, we have established different

approaches. Nestlé has pledged to reduce ingredients

such as sugar and salt in all its products globally.

Locally, we have different action plans. Among these

there is a program called Portion Guidance, which

includes suggested portions in a product’s label.

Another campaign related to our water lines promotes

water consumption and we have also been improving

our cereal brands (no artificial flavors, whole grains as

a first ingredient and reduced sugar). Mexico Gerber

has reformulated its infant cereals to eliminate added

sugar. Gerber has also launched a new organic product of

fruits and vegetables for babies and preschoolers that is

presented in pouches. Regarding all the diabetes issues in

the country, in 2017 we will launch a new line of products

under the Boost brand called Boost Glucose Control. This

product specializes in nutrition for diabetics.

Q: What new technology are you pursuing in children’s

nutrition?

A: Infant nutrition is a constant topic for our research

budget and we are now focused on low-protein infant

formulas in response to excess protein intake around the

world, which is known to cause illness, especially in infants.

Through our process called OPTIPRO, we are trying to

make the milk we use for our infant formula as close as

possible to breast milk, which will make it easier to digest.

Q: How are Nestlé’s programs encouraging healthy eating

habits in Mexico?

A: Nestlé has reorganized its business vision to focus on

three areas: the person and the family, the community

and the planet. In the first category, the goal of our full

portfolio is to provide better nutrition and nutritional

options for consumers. Toward that goal, we also have

three philanthropic programs: United for Healthier Kids,

Healthy Kids and Start Healthy, Stay Healthy. These three

programs promote nutritional orientation, the prevention

of child obesity and healthy pregnancy and baby health.

The second category includes: Cocoa Plan, Nescafé Plan

and Dairy Commitment to ensure a stronger value chain

and to help local agricultural entities become certified

providers for Nestlé. Finally, for the planet, Nestlé has

made a water-usage pledge and implemented a waste-

reduction initiative. In Mexico we even have one factory

that operates with zero water.

Q: How important is Mexico to Nestlé’s global operations?

How much of your manufacturing is done here?

A: Mexico is an important location. Within Nestlé’s global

operations, in terms of sales, it is ranked seventh generally

and number three worldwide for infant nutrition. Nestlé

also has 17 factories in the country. In 2016, we opened our

infant nutrition factory called Nantli with an investment of

more than US$245 million. This factory will supply markets

in Mexico, Latin America and Asia. In 2013, Nestlé Mexico

exported more than 86 tons of locally manufactured

products to 29 countries and imported more than 29 tons

from 14 countries.

210

Q: What products did Aspen Labs launch in 2016 to

address the needs of the Mexican population?

A: In the nutrition segment, we launched our Infacare formula,

which complies with all requirements established by the

WHO. Our installed capacity at Aspen Labs’ Vallejo plant

in Mexico City gives us the ability to offer this product at a

competitive price compared to what is traditionally available

in the Mexican market. Our product is superior in quality to

the dominant market equivalent and costs 10 percent less

than that of our competitors. For those that require an infant

formula, it is a great advantage to have a product that is not

only accessible but of the best quality and efficacy.

Q: Is this formula designed for both healthy babies and

those with complications?

A: This product would be suitable for healthy babies

who require formula because their mothers cannot

breastfeed, for example. Infacare is part of a portfolio

that we acquired in 2013. Infacare 1 is for babies aged

0-6 months, Infacare 2 for those aged 6-12 months and

Infacare 3 for those over 12 months. We have another line

for children who have a medical complication. However,

we always emphasize the importance of breastfeeding

as part of our core values and principles.

Mexico has made great advances in promoting maternal

milk, which we support. A few years ago, for example,

mothers had to take their maternity leave 45 days before

the birth of the baby and return to work 45 days after. In

2016, the labor law was changed and now a mother can

take her leave from the day before giving birth and up to

90 days after. This encourages mothers to breastfeed, to

be closer to and spend more time with the baby. To give

mothers even more time with their babies and to deal

with any situation that might arise, Aspen Labs provides

its employees an extra 30 days maternity leave.

Q: What are the main issues in infant nutrition in Mexico?

A: The main issue with babies is undernutrition or

malnutrition, which becomes obesity later in childhood

and which is a major problem. There are also allergy

issues that present during the lactation period and as

babies begin to consume solid food such as mash or

juices. Mexican families quickly acclimatize babies to the

family diet, which causes serious obesity problems. The

health system ends up dealing with the fallout from that.

Q: To what extent do you carry out R&D in Mexico for

specific formulas and conditions?

A: We launched a significant project in the second half

of 2017 to develop a new formula that addresses the

needs of Mexican babies and toddlers. The project is

being developed with renowned players in the public and

private sectors that are dedicated to this matter.

Q: What factors are driving growth in your infant nutrition

sector and what are your expectations for 2017?

A: We saw significant growth in our nutritional segment

due to the fact that, for the first time in many years, we won

a public tender to provide nutrition for babies aged 0-6

months and 6-12 months. This broke paradigms because for

20 years the tender had been won exclusively by one firm.

Our milk sales are not growing in the private sector due

to complicated market conditions, although we hope that

the launch of the new versions of Infacare will help us

resume growth in this sphere in 2017.

BABY FORMULA: THE CASH COW OF NUTRITIONRAÚL CAMARENAGeneral Manager of Aspen Labs Mexico

VIEW FROM THE TOP

Aspen Labs is a South African pharmaceutical company, the

largest listed on the Johannesburg Stock Exchange. Present in

over 150 countries, it specializes in OTCs, infant nutrition, male

and female health and cardiology

Labor law changes in 2016 allow

mothers to take maternity leave

from the day before giving birth and up

to 90 days after

211

Mexican market. We acquired a patch in 2016 that helps

remove tattoos quickly and with fewer inconveniences for

patients and doctors. The process for removing a tattoo

is long, painful and requires many sessions but this patch

reduces the time, pain and number of sessions. This is one

of the areas we are entering.

Q: What possibilities are there for Mexican and Latin

American companies to benefit from the Merz Corporate

Venture Capital Initiative?

A: We are incentivized to look for new opportunities

for development, not only globally but also locally. We

are working with a local company that may become an

opportunity for Mexico and, if it works, we will later make

it a global opportunity. Our company invests through the

venture capital fund and through other channels as the

Merz family has different businesses.

Q: What is Merz’s strategy for growth in Mexico?

A: We believe we still have great organic growth potential.

The aesthetics market in Mexico is just starting to develop.

The country’s economic situation has slowed the aesthetic

market down a little, but we believe that growth will resume.

We are interested in growing through new products and

offering new options to patients. This represents a great

opportunity as we have several product lines in aesthetics

in the US and in Europe that are not yet available in Mexico

and that would be attractive to the Mexican consumer.

Q: What are Merz Mexico’s plans for 2017?

A: The deceleration of the Mexican economy has created

a greater challenge to continue growing at the same rate.

During 2017 we want to continue bringing new options to

doctors and patients and to see growth in the markets in

which we already participate.

Merz Pharma is an international pharmaceutical company

focused on aesthetic medicine and neurotoxin solutions. Its

main therapeutic areas are medical dermatology, liver diseases,

Parkinson’s and Alzheimer’s

AESTHETICS TO OVERCOME ECONOMIC DOWNTURN

VÍCTOR ANAYACEO of Merz Pharma

VIEW FROM THE TOP

Q: Merz Pharma enjoyed 13.2 percent revenue growth in

Latin America in 2015-2016. How important is Mexico to

Merz’s regional strategy?

A: Mexico is Merz’s most important market in Latin

America and the fourth most important worldwide.

Latin America is a young region for us: our Argentinian

subsidiary was opened in 2016 and our Colombian and

Brazilian units just before that. Merz’s financial year

runs from July to June, so the 13.2 percent growth is for

the second half of 2015 and the first half of 2016. Our

aesthetics division saw the most growth in this period.

Globally, the company is focusing on the aesthetics and

neurotoxins markets. The rest of our portfolio consists of

what we call regional products.

Q: What is Merz Pharma’s strategy to expand its portfolio?

A: Merz Pharma invests part of its profit annually in R&D,

mostly in aesthetic medicine but also in research on

neurotoxins, an important element in the study of the

nervous system. Merz is working to find new applications

for this compound. The company is also expanding its

portfolio through strategic acquisitions such as Ulthera, a

medical devices company that develops applications for a

therapeutic ultrasound platform technology, and Anteis, a

manufacturer of biomedical products. In 2016, we closed

the purchase of ON Light Sciences, a US company.

Q: What solutions does Merz Pharma offer in the area of

personalized medicine?

A: Our personalized solutions involve neurotoxins and

have specific medical uses, with applications in spasticity,

dystonia and blepharospasm. We have also published

the results of an important clinical study called Tower.

These results show that Xeomeen, our toxin, can provide

personalized options for patients, allowing doctors to adapt

treatments to each specific patient, including higher doses

and different intervals. The toxin is available on the National

Formulary and through the private market.

Q: Which aesthetics products will be introduced to Mexico?

A: We have an extensive global line and we are analyzing

options to see which can be adapted to the needs of the

212

INSIGHT

September 2016 shows the extent of air pollution globally: 92

percent of the world’s cities breathe polluted air, and so does

much of Mexico with the worst rates seen in Monterrey, Toluca

and Salamanca, according to a WHO 2016 report.

The male population is another segment that is often

overlooked, Waked says. “Men are beginning to use solar

protection more and more,” says Waked, explaining that

men suffer from the same skin diseases and conditions as

women, although skincare is mostly perceived as a female

market. “Publicity is always focused on women, but really, the

purchasing level is similar between men and women,” she says.

The Mexican Society of Oncology (SMeO) reports that

the number of malignant melanomas doubles every

decade and that 5-10 percent of skin-cancer patients

have a family history of the disease. “Skin cancer is the

worst skin affliction. It is becoming increasingly common,

especially in Mexico,” says Waked. One of the main issues

faced in Mexico is the lack of awareness around skin

protection. Many people do not wear sun screen, even

though Mexico City sees an average of 200-270 hours

of sun per month. “The dermatology industry’s eyes are

set on Mexico as the country with the most potential in

Latin America,” says Waked.

Skin diseases are varied and although skin-care advertising

often targets women, men and particularly children are

vulnerable groups that are often overlooked. “We need to

learn to have healthy eating habits but also to keep our

skin healthy. Skin cancer is not an adult disease,” says

Geraldine Waked, Director General of Sesderma, a Spanish

dermatology laboratory founded in 1989.

“We have to raise awareness among the population and

among mothers that they should not send children to school

without sun protection,” Waked says. She points out that 100

percent cloud coverage only blocks 20 percent of UV rays.

Also, SPF only blocks UVB rays, responsible for sunburn, but

not UVA rays, responsible for premature aging and cancer. In

addition, these rays are stronger at higher elevations, a factor

to be considered in mountainous Mexico that sits at a mean

elevation of 1,111m. Add in pollution that is prevalent in cities like

the country’s capital and there is a double threat to children’s

health. “Children in cities like Mexico City often are not taught

about pollution and even when an emergency contingency is

in place, there is never talk of protection,” Waked adds. The

WHO notes that children are more at risk of suffering from

side-effects of air pollution due to the immaturity of their

respiratory organs, and that those in middle-income countries

are among those most impacted. A map the WHO released in

BE AWARE: SKIN CARE NOT JUST FOR WOMENGERALDINE WAKEDDirector General of Sesderma

213

Q: What are your distribution channels?

A: We have two levels of self-service partners in Mexico:

regional, such as Casa Ley in Sinaloa and Operadora

Futurama in Chihuahua, and national, such as Walmart,

Chedraui, Soriana, H-E-B, Farmacias Guadalajara and

Farmacias Benavides. We started in naturist retailers and the

market pulled us toward new distribution channels. IM Natural

then started exporting, assembling for foreign companies,

licensing its products and finally developing private labels

for national companies such as ISSSTE-marts, Farmacias

Benavides and Almacenes García.

Q: How would you describe IM Natural’s success in entering

foreign markets?

A: We have had mixed results. IM Natural exports its

products and also negotiates licensing representations and

manufactures for foreign companies. The company has

entered new foreign markets thanks to our distributors and

the support of ProMéxico. We have exported our products to

Europe and South America and recently we started selling our

products in the US, performing especially well in states with

a high concentration of Latinos, such as California, Texas and

Illinois. IM Natural is negotiating with new distributors such

as Walmart, CVS and Walgreen’s to enter other markets but

these processes are lengthy.

The company has faced various levels of market openness in

countries that recognize COFEPRIS. For example, we have

already entered Colombia. Argentina is more difficult but

easier than Chile, while Brazil is virtually impossible. In other

markets such as Peru and Ecuador, IM Natural is deciding

whether to export or produce for local companies. The

company has received sanitary registrations in Bolivia to

produce mascara. IM Natural produces for a Mexican-owned

company in Australia and we are about to grow its cosmetics

line with new creams and facial products.

IM Natural has been focused on the naturist segment and

cosmetics industry since its foundation in 1989. This company

uses natural colors and pigments and has never tested on

animals. It promotes environmental protection

Q: What is IM Natural doing to accomplish its expectations

for 11 percent growth in the cosmetics industry by 2019?

A: The company is changing its internal structures so it

can procure the necessary merchandise to supply national

demand. Competition is also growing daily, so we update

all our resources constantly because the Mexican cosmetics

market can be unpredictable. Although trends may vary on a

daily, weekly and monthly basis, in general when the economy

contracts it is reflected in lower demand but sometimes the

market does the contrary and our main customers place

bigger purchasing orders than usual. We must be wary of

transnational companies noticing this bipolarity. L’Oréal, for

example, whose products are meant for a wealthy, high-

income market, may notice that our products, destined for

the middle and lower-income segments, have higher demand

strength in terms of volume and bulk, so it turns its focus

to our market. Those companies retain their prestigious and

high-end market while also producing products to compete

with midlevel companies.

Q: What is your focus in terms of internal corporate changes?

A: The goal of these corporate changes is to enhance

efficiencies in product delivery, quality, replenishing delivery

reach and general operational effectiveness. This internal re-

engineering entails a commercial re-engineering.

IM Natural is a traditional company known for its mamey seed

oil mascara. However, we sell a great variety of eye mascaras

made of different ingredients, which provide different

benefits and different presentations. We also have a wide

range of face creams and lotions that will be affected by the

re-engineering of our operations. We are changing the image

of our face creams, creating new creams and formulating

new lotions. IM Natural is known for using a variety of natural

ingredients like chamomile, snail slime, argan and marrow

in its cosmetics. This company was the first to use mamey

seed oil, which enhances eyelash growth, and traditionally

employs national ingredients. It is important for some of

our customers that animal ingredients are not used in our

products while other countries require that our mascaras

contain no parabens. One of our policies is not to test any of

our products on animals.

SHIFTING MARKET DEMANDS ADAPTABILITY

ALEJANDRO LÓPEZFounder and CEO of IM Natural

VIEW FROM THE TOP

214

Q: To what extent is the demand growing for the natural

products Agave Spa produces?

A: Everyone wants natural and organic products but the

consumer needs to be aware because nothing is completely

organic or natural. Talking about natural ingredients means

that we do not use chemicals that damage the skin or

lifestyles. Many people now want natural products that

produce tangible results, which is why we combine the

ancient with the modern. We use ancestral remedies and

the knowledge of the Mayans combined with European

technology, dermatological tests and exact combinations

to ensure it provides accurate results for the body and

skin. We want to create rituals that are suited to a person’s

lifestyle so that the effect of the treatment not only lasts for

a moment but actually changes energy points. We choose

23 points on the body that energy flows through and

these can be opened and closed. If those points hurt when

pushed, they are blocked. We unblock these energy points

and with obsidian stones we loosen the energy left in the

body and then use massage oils containing tepezcohuite, a

Native American plant, and other ancestral herbs.

Q: What factors are driving your growth?

A: When people come to Mexico, they want to try Mexican

products and this company meets that need. In March 2017

we launched an unscented line that can be mixed with

natural herbs and fruits, allowing spas to create their own

scents like alchemists. There is also a new tepezcohuite

line combined with blue agave for the face. This is what

will make it a success: everyone wants to mix and play and

create their own unique products.

Q: What are the main skin care needs you have detected

in Mexico?

A: Dryness and the resulting wrinkles are a common

concern, as are hyper pigmentation and lifting. Due

to pollution, the skin gets thinner due to pollution and

people want face-lifts to appear younger. Our after-sun

treatments are also popular because the sun can be

extremely damaging and we need to not only protect

ourselves at the beach but afterward as well.

Q: How aware is the population of the need to protect

skin against pollution?

A: People need to protect their skin against pollution,

even indoors where it can sometimes be more polluted

because people are crowded into a room or working long

hours under artificial lighting, among other factors that

produce free-radicals that damage and destroy skin. It is

necessary to use anti-oxidants to protect the skin against

this, and also wrinkles and acne.

We have discovered that the blue agave plant is full of

active ingredients that are good for the skin and hair.

It contains a powerful antioxidant, a moisturizer and

stimulates the collagen in skin. The latest research shows

that there is a fungus on blue agave leaves that has the

same properties as hyaluronic acid. It is a powerful plant.

Q: What alliances allow you to source your ingredients?

A: I work directly with agave farmers. We choose our agaves

and then create our phyto-complex and other products

from the agave leaves, plant, cooked plant, fermented plant

and other parts. This is because each part of the blue agave

has different properties for different things. We source

coconut oil from Guerrero and we have recently launched

a massage candle without paraffin. The clay bases were

created by Mexican artisans, each handmade and dried

in the sun. We work directly with Mexican farms for all

ingredients, such as those that make up our four blends of

essential oils. They contain San Juan herbs, passion-flower

and hibiscus. These ingredients are unique and require

cooperation with Mexican farmers.

We will soon launch videos on how we work with

communities that have four generations of experience in

what they do. Instead of growing our lines uncontrollably,

we prefer our products to be exclusive and luxurious.

ANCESTRAL REMEDIES, EUROPEAN TECH, MEXICAN-MADEADRIANA AZUARACEO of All4Spas and Agave Spa

VIEW FROM THE TOP

Agave Spa is a luxury Mexican cosmetics range created with

natural and traditional Mexican ingredients, the main one

being agave. All4Spas is a retailer of every piece of equipment

needed for spas

215

Q: How has Farmapiel’s expansion plan impacted its business

operations and what is the end goal?

A: Since changing stockholders around three years ago,

we have been expanding quickly and are engaging in an

aggressive growth strategy to become a big dermatology

player in Mexico. We have enjoyed triple digit annual growth

over the past year. This is a good result but it also increases

the need for cash, changes in business processes and new

people. We are now building the organization for the future.

We launched 12 products in 2016, split between the Rx

segment, dermo cosmetics and a new line of aesthetics and

we have made advances on our manufacturing plant in San

Juan del Rio, Queretaro, which we acquired from GSK two

years ago. It has been remodeled and has received approvals

from COFEPRIS. At that plant, we manufacture for local and

international companies, which is the reason we undergo

many audits. We are also working on getting FDA approval

for next year. We have been reorganizing the company and

we are close to seeing positive financial results. Measuring

market share can be complicated so we use QuintilesIMS and

ATV as yardsticks. Three years ago, we were ranked 84th for

dermatology in Mexico. We are now 15th.

Q: How will the company use the extra income generated?

A: We will be paying off our debts first, since the

management of the company and the complexity of rapid

growth can be difficult. The demand for working capital is

high with triple-digit growth, so we need to manage the

cash cycle closely. A steep sales curve is nice to see but is

costly. Products need to keep moving but distributors will

not risk buying something that will not sell.

Q: What is the company’s best-selling product?

A: We have many best-selling products such as our

prescription products for acne and whitening products for

fighting dark spots on the skin, which can be caused by sun

exposure. We also have products from Europe that treat

hair loss, such as Bioscalin, a top-selling product in Italy

and France, high-tech-enhanced shampoos and lotions and

psoriasis products. All our solar protection products are

hypoallergenic and contain no perfume or color while our

anti-aging products contain topical vitamins for the skin.

These products are used at night after washing the face and

neck and hydrate and replenish the skin with vitamins.

Q: To what extent is the Mexican population focusing on its

dermatological needs?

A: The market has grown significantly and, as the economy

grows, people take more care of themselves. For example,

more people go to gyms and because they are exercising

more, people are more aware of their image. Twenty years

ago, teenagers with acne treated it by using soap. Now,

they go to a physician and then a dermatologist, who also

looks at the accompanying parent and might point out un-

diagnosed diseases such as rosacea, dark spots or adult

acne. Innovations in dermatology mean treatments no longer

irritate so much while the combination of ingredients provides

better treatment. We have an acne product, for example, that

combines an antibiotic and a retinoid. The latter helps the

skin regenerate while the antibiotic fights the infection. The

general derma market grows on average 5-7 percent per year.

This covers OTCs, Rxs and cosmetic products.

Q: What is Farmapiel’s strategy for expansion?

A: We want to consolidate the company, export products

and establish subsidiaries outside Mexico, in the Latin

American region. Ideally, we will start with Central

America and the Caribbean, due to proximity. We will

then move to selected countries in South America. If

we have confidence in Mexico, good things can happen.

Our factory is generating employment opportunities, the

economic benefits of our production chain trickle down

and the company can grow with the right people, products

and confidence. With backup and investment from the

international private equity fund we work with, we have

managed to grow exponentially. Hopefully many other

Mexican companies will follow this rapid growth route.

SUCCESS BREEDS NEED FOR CASH, TALENT

RICARDO SPÍNOLADirector General of Farmapiel

VIEW FROM THE TOP

Farmapiel is a Mexican pharma laboratory with 24 years of

experience that is focused on dermatology. It has innovative

and quality solutions in therapeutic derma areas such as acne,

dermatitis, depigmentation and hair loss

216

Q: What are Expanscience’s main business lines in

Mexico?

A: Our Mexican business leans on two pillars. First is

the Mustela brand, which includes products for babies,

children and new and expecting mothers. The second pillar

is our osteoarthritis solutions portfolio, with medicines

and medical devices for the elderly. We put the same

effort and a similar investment into both business lines.

Q: What is the company’s R&D focus in Mexico?

A: Expanscience has three R&D goals for Mexico. First, we

want to launch our Mustela products designed for specific

skin types. It was previously believed that environment

caused skin to become dry or atopic but we recently

discovered that all babies are born with a certain skin

type. We are in the process of bringing to the market

specialized products for babies who have either dry or

normal skin types, in addition to a product for babies who

have a higher probability of developing allergies.

The second priority is to become stronger in the diaper-

cream market and to introduce Mexican parents to

this product, as many still use powder. The volume of

this market is 9 million units per year, led by Bayer’s

Bepanthen, which sells 3 million units per year. However,

the market could be even bigger as 2.3 million babies are

born annually in Mexico. Our diaper cream is designed

to prevent, calm and repair rashes and it is registered

as a medical device by COFEPRIS and recommended by

the Mexican Organization of Dermo-Pediatrics. When we

first entered Mexico in 2002, we sold around 250,000

units annually. Now we are focused on reaching 1 million

units. Our third development area is skin care for mothers.

Most pregnant women fear stretch marks, so we have

developed a daily cream and oil that guarantee the

reduction of stretch marks by 96 percent. Few women

are doing anything about their skin during pregnancy in

Mexico, so we want to create this new market.

Q: How is Expanscience’s osteoarthritis portfolio

addressing the new challenges brought about by Mexico’s

aging population?

A: We have a drug called Piascledine 300, a solution

designed to reduce pain and the progression of

osteoarthritis. It is a leading treatment in the rheumatology

pharmaceutical market and it was also developed to lower

the use of nonsteroidal anti-inflammatory drugs, which

usually have secondary effects. Our Euflexxa TA treatment

can help prevent surgery in advanced cases. It consists

of injecting hyaluronic acid into the damaged articulation

for six months. This will create a buffer solution that

replaces cartilage lost due to osteoarthritis. We expect

to become leaders with this drug – so far it became the

second best-selling product in Mexico. We are seeing

significant growth from prescription drugs, representing

35 percent of our sales. We have included a collagen

supplement called Orangel in our osteoarthritis portfolio,

a product that produces a great effect with just 40mg of

active ingredient. Although our competitors have similar

products, those need 10g or 20g to produce the same

effect. Also, we can offer capsules of this supplement

while others offer dissolvable medicine, so we expect

great success with this product.

Q: How important is the Mexican market for

Expanscience’s global business?

A: Mexico is important for Expanscience because it is

one of the company’s four strategic subsidiaries, along

with Brazil, Russia and the US. In 2016, Expanscience saw

30 percent growth in Mexico, 56 percent of which was

provided by the osteoarthritis business and 26 percent

by the Mustela line. Mexico is also the manufacturing base

for the Orangel OTC brand. The raw material comes from

the US and the product is manufactured in Mexico with

a partner company, Salutary. Euflexxa in Mexico is also a

result of a partnership with Ferring, the pharmaceutical

company in the US that holds the license for Euflexxa in

every country except Mexico, where we have exclusivity.

Expanscience is a French pharmaceutical and dermo cosmetic

laboratory focused on wellness solutions for newborns,

teenagers and the elderly. Its main lines, Mustela and

Piascledine 300, are present in almost 100 countries

R&D GOALS FOCUS ON HEALTHIER SKIN, ALLERGIESCÉDRIC ERTLÉCEO of Expanscience

VIEW FROM THE TOP

217

VIEW FROM THE TOP

Q: How important is it for Mexican companies to work

together, such as Sports World does with Grisi?

A: One of the major advantages is the direct contribution

to the national economy via the increasing quality of goods

and services that can be attained through joint efforts.

These alliances also foster competition and consumers

reap the benefits of a bigger and more balanced market.

Q: Membership also comes with access to Dentalia. What

is the strategy behind this?

A: In line with our wellness strategy, we keep adding

different services and products related to enhancing

our customers’ health and wellbeing. Dentalia offers

our customers two free-of-charge dental cleanings per

year as well as significant discounts on all their services.

Some of our additional health benefits are yearly blood

tests, nutritional and 24-hour medical phone assistance,

two ambulance services per year and special medical

insurance discounts.

Q: To what extent has Sports World incorporated activities

for children?

A: At Sports World we have an area of approximately

400m2 named FitKidz that is designed exclusively for

children. They can join more than 30 different activities

such as SafeSplash, aerial dance, indoor climbing, tae-kwon-

do and baby gym, among others. The goal is to start the

habit of exercising from a very early age and introduce

children to a wellness lifestyle.

Q: How can gyms inspire more people to be active and help

lower the chronic disease burden in Mexico?

A: Gyms are able to link sedentary people with a more active

life, not only through strength and cardio equipment but with

a robust wellness orientation that includes group classes,

meditation, yoga, Pilates, steam rooms, saunas, massage

services, nutrition experts, facilities for kids, swimming

pools and a Feel Healthy Program (for people with T2D and

hypertension), as well as many other special activities.

Q: As new gyms appear, how is Sports World prepared to

rise above the competition?

A: New gyms and studios are constantly appearing and

innovating with new forms of exercising. The competitive

advantage we have is that we can easily adapt to new

trends and offer those new activities within our facilities

at a very low or zero cost. We have a comprehensive offer

that we are constantly innovating and adapting to new

trends in the market.

Q: How many new clubs do you expect to open in 2017 and

how will you finance that expansion?

A: During 2017, we have opened four clubs and four more

are under construction with the pre-sale of memberships

ongoing, so we are in line with our expansion plans for

the year. Most of these openings have been and will be

financed with debt.

Q: Last year, Sports World mentioned wanting to expand

outside of the capital. What growth and results has it

seen from this?

A: We have 15 clubs outside of Mexico City and its

metropolitan area. We have had a very good acceptance

and positive results in the states we are present in and we

plan to expand to other states. In 2017, three of our eight

new clubs will be outside of Mexico City. In the coming

years, most clubs will be opened outside of Mexico City

but we will continue to look for opportunities in the

capital.

Q: What are your overall revenue expectations for 2017 and

are there any plans to expand internationally?

A: Our objective is to open eight clubs during 2017,

achieving 19-21 percent growth in revenues and an

EBITDA margin over revenues of more than 17 percent. In

terms of international expansion, we do not have specific

plans yet but we are open to opportunities that might

come either through organic expansion or acquisitions.

Sports World is a chain of high-end gyms in Mexico that

aims to promote a well-rounded healthy life, going beyond

providing a space to exercise with classes, nutritional advice

and other health services

ACTIVE AND EXPANDINGFABIÁN BIFARETTI

CEO of Sports World

218

Q: Sintoquim turns 40 this year. What are the company’s

most important achievements in these four decades?

A: One of the biggest achievements has been consolidation

and remaining a 100 percent Mexican company. We began

with focused distribution for food, pharmaceuticals and

cosmetics and afterward we entered manufacturing. We

produced aluminum clorohydrate for over 20 years and

during this period we started with the distribution of other

raw materials. That is our current business model. We are

venturing into nutritional supplements, particularly those

that benefit skin, hair and nails.

Q: How will you ensure your supplements stand out from

those already in the market?

A: Mexico is a virgin market for supplements and there

is a lower culture of prevention here. We believe there

is a great market niche and we are bringing specific

ingredients that will add value. One of the most important

elements of these supplements is organic and bioavailable

silicon. Part of Sintoquim’s contribution is ensuring the

product will be absorbed upon digestion. “In and out” is

a trend we have seen in other countries and that we want

to bring to Mexico: products taken orally and applied

topically that will act in synergy to achieve more visible

results in less time.

Q: In Mexico there is little culture of prevention. What is

your strategy to achieve your sales goals in supplements?

A: Data show it is more expensive to treat an illness

than to pay for prevention. It is better to convince

people who may become diabetic to change their diet

and to exercise. The government has realized this and

is promoting prevention. Mexico tends to copy more

advanced countries and what was launched around five

years ago in Japan or the US is now trending in Mexico.

There are many people that go to gyms, consumers have

begun wearing make-up from a younger age and adding

sun protection.

Q: How aware is the Mexican population that it must care

for its skin against the sun?

A: I think skincare is more a theme of vanity than health.

As a result, skincare is much more about avoiding

wrinkles, blemishes, pigmentation, cellulitis and stretch

marks because these are the issues that people worry

about. Sun care is not growing at the pace it should but

it is improving. We need to get into the habit of doing

this every day.

Q: What are the greatest challenges and opportunities

you have seen in skincare and cosmetics?

A: There are two macro trends in the cosmetics industry.

The first is multifunctionality. People prefer one product

that does many things, which is where the success

of BB creams stems from. The second main trend is

personalization. Products are increasingly specialized and

consumers want a cream adapted to their skin type. There

are now devices that measure skin type, evaluating which

type of make-up is best for that person. This technology

enables such personalization. If companies can find a

way to make these two trends complementary, they will

achieve great success.

Q: What type of technology are you implementing in

your products?

A: The cosmetics industry is one of the most dynamic because

it follows fashions and the color of the year, the ingredient of

the year, or the new claims that arise. Some concepts that

were previously unheard of are now fundamental. Consumers

are increasingly informed and aware of the ingredients in

their products and the benefits. We are bringing new

technology propositions to the Mexican market. We work

with ingredients houses that are researching today what will

be launched in five to 10 years. There are now many products

that aim to energize mitochondria in cells, or prevent the

accumulation of proteins, or promote collagen and elastin,

for example. These products promote certain functions

directly in skin cells.

VIRGIN MARKET A POTENTIALLY GREAT NICHEMIGUEL MARÍNCEO of Industrias Sintoquim

VIEW FROM THE TOP

Industrias Sintoquim is a Mexican family-owned company

focused on the commercialization of prime materials and other

specialties for the cosmetics industry. It operates in sun care,

skincare, make-up, hair and color

219

Q: Where do you source your ingredients?

A: We use ingredients from different parts of the world,

such as the US, Monaco, Germany, Brazil and Japan. We

have just signed an agreement with an Indian company

and we also work with Chinese sources. Our goal is to

have a broad portfolio to offer complete solutions to the

market so a client can buy everything they require from

us without needing to look elsewhere. Much of our added

value lies here.

Q: How have you achieved your current market presence?

What strategy will you employ to boost it?

A: We are the strongest player in hair color and make-up

color and we are also strong in skincare. Our main virtue

is that we have suppliers and commercial partners that

are classed among the top three players of their specialty.

We have a good mix between global and local companies.

We sell to L’Oréal, Avon, Unilever, Jafra, IM Natural, Grisi

and Genomma Lab, in addition to catalogue sellers such

as House of Fuller, Zermat and Arabela.

Q: What is the added value Sintoquim offers that retains

customers?

A: We have a marketing division that researches trends

from around the world. In addition, our applications

laboratory generates complete proposals or formulas for

clients to use as a base. For larger companies, we can offer

the product within the timeframe and in the quantity that

they require. We are also able to offer a safety stock to

cover any eventuality. The other two fundamental drivers

are the quality of products and price. These elements make

Sintoquim a market-leader and persuade clients to work

with us instead of the competition. Should a client wish to

develop any type of cosmetic, they can find almost every

ingredient with us, except for the very simple ones, such

as mineral oil, ethylic alcohol, etc. Clients do not have to

waste time looking for 10-15 suppliers.

Q: What strategy will you implement to continue

growing?

A: The main challenge is adapting to change. Companies

that subsist and are successful are those that identify new

niches and trends, advancing and changing faster than

others. We are in the midst of many changes: replacing

our operating system, obtaining ISO certification and

redesigning our commercial model to be more efficient

and more agile. The market is also demanding lower prices

as big companies in particular are looking to improve

cost-efficiencies. A final challenge will be to generate

alternative markets. I am confident that supplements

combined with topical products will be among the most

important market niches in coming years.

An athlete from the swimming academy SAFESPLASH

220

INSIGHT

REGULATORY CRACKDOWN CREATES HERBAL OPENINGIGNACIO LUNACEO of Biofarma

He explains that the herbal medicine industry is

experiencing a boom that would not have been

thought possible 25 years ago, when the company was

established. “It has grown significantly in monetary terms

and in numbers,” he says. This does, however, bring its

own set of problems because herbal medicine is copied

and sold on the black market as much as pharmachemical

medicine. “NOM-059 dictates that companies have to

ensure packaging does not fall into the wrong hands,”

says Luna, explaining how Biofarma helps reduce the

opportunities for counterfeit medicine by ensuring its

packaging remains safe and its products cannot be

tampered with.

In addition to adherence to strict regulatory standards,

certification from the FDA, the National Safety in Food

(NSF), strict quality control and GMPs reinforce Biofarma’s

strong position in the market. The company will continue

to release new products including a herbal remedy for

menopause, vitamin gummy bears and an anti-obesity

product. “We have noted the same opportunity in the

obesity market as the joint product market,” says Luna.

Biofarma operates four lines of business, namely OTCs,

herbal medicine, remedies and supplements. Its best-

selling product is glucosamine, which provides pain

relief for joints with osteoarthritis, where it claims over

40 percent market share. While figures for that particular

segment are hard to come by, Euromonitor estimated in

September 2016 that the herbal and traditional products

market in Mexico would be worth MX$9.5 billion (US$527

million) by 2021, not including vitamins and supplements

which it pegs at a potential MX$23.2 billion (US$1.3

billion) for the same year.

With a presence in Mexico, the US, Peru, Guatemala,

Colombia and Costa Rica, Biofarma has plans to expand

to Panama, Brazil and Chile in 2017 — large markets that

offer opportunities and consumer behavior similar to

that of Mexico. “These consumers appreciate Mexican

products and view us with respect, which is good for

us,” says Luna.

The authorities charged with regulating health matters

have launched a war on so-called “miracle” products. In

2015, COFEPRIS removed 5 million products from sale and

a further 1.4 million in 2016. This extra vigor in regulating

Mexico’s herbal medicine market has left few competitors

standing — and created an opening for companies like

Guadalajara-based Biofarma.

“In terms of herbal supplements, Mexico is much more

advanced in regulation than the US,” says Ignacio Luna,

the company’s CEO. He explains that in the US, companies

are free to manufacture their products but need to self-

regulate because a bad product will quickly be the subject

of litigation. “Mexico has done an incredible job. It has very

strong regulations,” he adds.

Due its strong regulations, COFEPRIS is recognized as a

reliable sanitary authority in many Central and South American

countries. The same agreements that enable pharmachemical

medicine to be exported to those countries also apply to

herbal products. “I believe Mexico’s regulation is increasing.

The treaties we have with different countries include herbal

medicines with GMPs and NOM-059-SSA1-2015. We receive

the same treatment as a generic or any other kind of

medication,” Luna says.

The National Association of the Nutritional Supplements

Industry (ANAISA) is working to further improve regulation

surrounding nutritional supplements. The appellative for

the products is one of the first objectives. “In Mexico our

products are known as nutritional supplements but they do

not supplement. They are more complements, as our diet is

rich in vitamins and minerals. Our products fill the gaps in our

diet,” Luna says.

NOM-059-SSA1-2015 regulates the

manufacturing and distribution of

medication

221

WHAT FACTORS IMPEDE SKIN CARE AND WHAT ARE SOME PROTECTIVE MEASURES?

ADRIANA AZUARACEO of All4Spas and Agave Spa

RICARDO SPÍNOLADirector General of Farmapiel

MIGUEL MARÍN CEO of Industrias Sintoquim

ROUNDTABLE

People need to protect their skin against pollution, even indoors, where it can

sometimes be more polluted because people are crowded into a room or work

long hours under artificial lighting. These are factors that produce free-radicals

that damage and destroy the skin. It is necessary to use anti-oxidants to protect

the skin against this, and also to protect against wrinkles and acne. We have

discovered that the blue agave plant is replete with active ingredients that are

good for the skin and hair. It contains a powerful antioxidant and a moisturizer

and stimulates the collagen in skin. The latest research shows that there is a

fungus on blue agave leaves that has the same properties as hyaluronic acid. It

is a powerful plant.

The market has grown significantly and people are taking more care of themselves

as the economy grows. Twenty years ago, teenagers with acne dealt with it by

using soap. Now, they go to a physician and then a dermatologist, who also looks

at the accompanying parent and might point out un-diagnosed diseases such as

rosacea, dark spots or adult acne. Innovations in dermatology mean treatments

no longer irritate so much while the combination of ingredients provides better

treatment. We have an acne product, for example, that combines an antibiotic

and a retinoid. The latter helps the skin regenerate while the antibiotic fights

the infection. The general derma market grows on average 5-7 percent per year.

I think skincare is more a theme of vanity than health. People want to stay

young. As a result, skincare is much more about avoiding wrinkles, blemishes,

pigmentation, cellulitis and stretch marks because these are the issues that people

worry about. Sun care is not growing at the pace it should but it is improving.

People now use sun block but they still have the idea that this should be done only

at the beach; we need to get into the habit of doing this every day. The cosmetics

industry is one of the most dynamic because it follows fashions and the color of the

year, the ingredient of the year, or the new claims that arise. Some concepts that were

previously unheard of are now fundamental. Consumers are increasingly informed and

aware of the ingredients in their products and the benefits.

Prevention is the key to good health but action usually

derives from awareness. Today, a greater percentage of

the population is cognizant of the dangers posed by

headline-grabbing conditions such as cardiovascular,

diabetes and obesity. There is much less mindfulness

regarding the impact and subsequent consequences

of environment on the skin from a daily onslaught of

pollution, sun and dirt from the outside and poor

nutritional habits from the inside. Mexico Health Review

asked relevant players in the dermatology industry about

the level of awareness of the general population of their

dermatological care needs.

A robotic arm sorts blister packages according to the number of blisters it contains

223

In a growing pharma and medical market such as Mexico, efficient logistics are

vital for healthcare businesses. Companies are moving products and devices

nationally and internationally while looking for the fastest and safest way to do

it. In Mexico, the challenge of access to medicine is not only economical, it is

also geographical. Some states are difficult to access due to rough terrain, long

distances or security concerns. Many companies have also commented on the

rise of the black market in Mexico, which makes guaranteeing the authenticity

and chain of custody of a product all the more vital. The greatest challenge for

Mexican logistics and components providers is thus ensuring the supply chain in

this expansive and sometimes dangerous environment.

This chapter explores the strategies of logistics companies for dealing with and

preventing these security problems, in addition to the high-tech innovations

they have implemented in their fleets. While some are implementing

apps and designing temperature controlled trucks, others are working on

electromagnetic locks to prevent merchandise theft and putting systems in

place to chase down thieves.

LOGISTICS & SUPPLY CHAIN

10

225

CHAPTER 10: LOGISTICS & SUPPLY CHAIN

226 ANALYSIS: Rough Terrain: Navigating Mexico’s Logistics Segment

228 VIEW FROM THE TOP: Víctor Soto, Levic

229 VIEW FROM THE TOP: Rafael Figueroa, Aeroméxico Cargo

230 VIEW FROM THE TOP: José Alberto Peña, Grupo Marzam

232 INSIGHT: Daniel Pardo, Medistik

233 INSIGHT. José Aedo, SINGREM

234 VIEW FROM THE TOP: Mario García, GNK Logística

236 VIEW FROM THE TOP: José Eric Delgado, Sicamsa

237 VIEW FROM THE TOP: Ingrid Ritter, UPS

238 VIEW FROM THE TOP: Erick Jiménez, Majicarga

239 VIEW FROM THE TOP: Sergio Chabolla, ANADIM

240 VIEW FROM THE TOP: Alberto Wicker, Signufarma

241 VIEW FROM THE TOP: Alonzo Autrey, DVA Mexicana

242 VIEW FROM THE TOP: Manuel Sánchez, Diphsa

243 VIEW FROM THE TOP: Abraham Franklin, Grupo Franklin

244 VIEW FROM THE TOP: Ángel De Vecchi, VECO

245 VIEW FROM THE TOP: Edgar Arteaga, Inframedica

246 VIEW FROM THE TOP: Guillermo Martorell, Grupo RFP

247 VIEW FROM THE TOP: Antonio Pascual, ANAFARMEX

248 ROUNDTABLE: How are You Overcoming the Logistics Hurdles in Mexico?

226

Mexico can be a tough place to navigate. The country

is the 14th territorially most expansive in the world,

according to the CIA Factbook, with a mean elevation

of 1,111m above sea level. It is no surprise then that

transporting goods through rugged mountains, low

coastal plains, high plateaus and deserts is no easy feat,

especially when the goods are as sensitive to temperature

as in the healthcare industry. The distances also represent

a challenge: Mexico’s 1,943,945km2 of land extend from

the US in the north, to Guatemala and Belize in the south.

KEEP COOL

To overcome such logistical hurdles, distributors travel

by land, sea and air employing the latest technological

advances. Temperature control has become a basic-must

among Mexico’s varied climates, ranging from tropical

to desert, so companies are innovating to provide the

smallest thermal variation possible during transportation.

In addition to maintaining huge cold chain infrastructure,

creating strategic alliances is a key strategy.

"We own thousands of square meters of refrigerated

space throughout the world and we have agreements

with suppliers such as vaQtec and Envirotainer, which

enable us to maintain the cold chain throughout the entire

process. The most difficult products to transport are those

that require a controlled temperature because they are

shipped from the factory to conservation warehouses and

then to our customers or final consumers," says Rafael

Figueroa, Director General of air freight market-leader,

Aeroméxico Cargo.

HIGHWAY ROBBERY

Other challenges include navigating the security

environment, as the vast and sometimes remote expanses

traversed by fleets increase risk. There were around 1,000

assaults on cargo vehicles on highways from January to

November 2016, according to the National Public Security

System (SNSP). “[Insecurity] has impacted us significantly,

especially during times of strikes and demonstrations. During

a period of countrywide protests in January 2017 (following

a hike in gas prices), our deliveries were delayed, sometimes

up to a week, because there was no way to get through,”

says Mireya García, Director General of Distribuidora Alpilo.

ROUGH TERRAIN: NAVIGATING MEXICO’S LOGISTICS SEGMENT

To combat this, trucks are fitted with GPS,

cameras, electromagnetic locks and many

have an alarm system to quickly alert local

authorities who can then track down the

thieves. In certain cases, transports are sent

with private security at the request of the client, often

for high-value cargo.

In addition, in January 2017, the Mexican government

eliminated gas subsidies from most Mexican states,

which meant an increase in the costs of logistics

providers and provoked protests throughout the country.

However, companies are already working on strategies

to counteract this. “2017 will be a challenge from an

exchange-rate perspective,” says José Alberto Peña,

Director General of Grupo Marzam. “For us, another key

component is gasoline, which has a direct impact on

our expenses. The exchange rate will have an impact on

the industry as a whole because 90 percent of material

used to produce medicines is imported. Before, perhaps

businesses did not focus as much on driving efficiency

in all areas but it is about the details now. For example,

we have almost 500 vehicles and we have decided that

whenever we change a vehicle, it should be at least diesel.

We want to move to hybrid or electric in the future.”

HIT THE ROAD

Despite its challenges, Mexico still presents many

opportunities for logistics and companies expect growth

in the country. In June 2017, PwC forecast road freight to

grow by 3.2 percent in Mexico in 2017, rail by 4.9 percent

and air by 1.2 percent. Overall, the report states that road

remains the most used mode of transport in Mexico,

accounting for 80.8 percent of transportation.

“Five or six years ago, two-thirds of the global healthcare

market was in the US and Europe. Now, those are mature

markets and, although they are significant in size,

emerging markets are growing at faster rates. The number

one region for growth in healthcare is the Asia-Pacific

Economic Cooperation (APEC) region, mostly driven by

China and India and followed by Latin America,” says

Ingrid Ritter, Healthcare Strategist Latin America of UPS.

Factors pushing growth in the logistics area are many,

including the expansion the generics market has

seen in recent years, mostly due to the government’s

consolidated-purchasing schemes. “Information has also

pushed growth because people are increasingly aware

ANALYSIS

Mexico presents a great number of logistics challenges but just

as many opportunities. Geography, gas prices and insecurity

fall on the minus side of the ledger while increased demand

for transportation and storage are on the plus side

227

and have access to more information. People now know

that patented and generic medicines are the same. The

difference is only in the cost to patients. As Mexico is

an emerging economy, people need medicines and need

to be able to obtain it. This theme of accessibility has

boosted growth for us,” says Víctor Soto, Director General

of Levic, a Mexican logistics provider.

Additionally, NOM-059-SSA1-2015, which regulates

good practices for medicine manufacturing, came

into effect in February 2016, impacting national and

international logistics companies. “It stipulates that

to transport pharma goods within Mexico, a company

must use vehicles specifically for this purpose and

cannot transport anything but pharma goods. As we

are already dedicated to this and have a cold chain in

place, this norm has benefited us,” says Mario García,

Vice President of Operations at GNK Logística. “It is

excellent because it eliminates foreign companies from

providing transportation between states and also benefits

the security and safety of goods because they could be

contaminated by other goods and supplies in the cargo.

I am sure that within two years, labs will be working

only with logistics operators dedicated 100 percent to

pharma.”

E-COMMERCE

Pharmacies are working to improve their position in

the market, grouping together in associations such

as ANAFARMEX or Grupo RFP. They share a desire to

modernize their operations and venture into e-commerce

with logistics companies. “We are hoping for aggressive

growth, because we are still small. We need to more

than double our revenue from home deliveries in 2018,

reaching around 150 percent growth as we are starting

from a small base. We expect to see growth of around

300-400 percent in our online services,” says Guillermo

Martorell, Director General of Grupo RFP, which brings

together small and medium pharmacies. In 2016, Milenio

reported that although independent pharmacies were the

greatest in number at 22,000 across Mexico, the 7,500

branches of pharmacy chains dominate the market with

65 percent of sales.

In addition to implementing e-commerce, several logistics

companies have also highlighted the trend of increasing

demand for storage and just-in-time services from

hospitals and pharmacies. “I see this every day. Those

wanting to work in this sector understand their main

markets will be Brazil and Mexico and that they will need

to establish a presence in these high-consumption areas.

Mexico itself is a significant consumer market so there

is significant need for our customers to find the right

logistics provider,” says Ritter.

MEXICO - FREIGHT MODE BREAKDOWN 2017 (%)

air

Rail

Road

SECTORS THAT CONTRIBUTED TO MEXICO'S COMPETITIVENESS 2016-2017

SCORE OF CATEGORIES THAT CONTRIBUTED FOR MEXICO COMPETITIVENESS 2016-2017

1234567

Institutions

Infrastructure

Macroeconomicenvironment

Health and primary education

Higher education and training

Goods market efficiencyLabor market

efficiency

Innovation

Business sophistication

Technological readiness

Financial market development

Market size

—Score based on key indicators

MEXICO - FREIGHT MODE BREAKDOWN 2017 (percent)

� 80.86% Road

� 19.12% Rail

� 0.02% Air

Source: PwC

25,844places linked

118,812kmof rural (unpaved) roads

3,476bridges

178tunnels

39ferry routes

847toll stations

158,180kmof paved highways (federal, state and toll highways)

36,139kmof urban roads

1,943,945km2

Size of Mexico

228

Q: What main changes did Levic’s operations undergo

in 2016?

A: We amplified our portfolio, opened a new distribution

center in Vallejo and worked to improve our service.

We are a distributor of mostly generic medicines and

we have greatly improved our just-in-time model. The

company already has a strong portfolio in generics, herbal

medicine and wound care, so we have mostly expanded

in prescription drugs from transnational companies, which

have a slightly higher cost. Our work with transnational labs

has grown by 60 percent but in general Levic saw growth

of 14.5 percent in 2016.

Q: What have been Levic’s main drivers of growth?

A: Market factors have driven our growth, while prices and

accessibility have been fundamental over the past 10 years.

Information has also pushed growth because people are

increasingly aware and have access to more information.

People now know that patented and generic medicines are

the same. The difference is only in the cost to patients. As

Mexico is an emerging economy, people need medicines

and need to be able to obtain it. This theme of accessibility

has boosted growth for us.

Q: To what extent does Levic work with the public sector?

A: Only around 2 percent of our sales go to the government,

while the other 98 percent goes to the private sector.

Previously, a cure for a general illness cost MX$500-1,000

(US$28 -56) out of pocket to pay for a doctor and medicine.

Today, patients can receive medical care and medicine at

many pharmacies for MX$150-250 (US$8-14). Because of

this not everyone needs to use government services.

Although we have no plans to change our sales ratio,

we will need to work more in other areas, including the

government, to maintain growth rates.

Q: How is technology impacting the logistics business

and your operations?

A: We are investing in R&D to allow our customers to buy

from us online. We have a web portal that clients can log

into and browse our catalogue of products and costs,

and any order placed will arrive within seven days. We

have been working on this since the summer of 2016 and

it is continually growing. In the first month, sales were

laughable, but by March 2017 online sales represented

9 percent of our total. We are promoting this directly

through our sales force and through our logistics. We

have no fixed target for where we want to be by the end

of the year. It depends on what the market demands

because our objective is to cater to market needs.

Q: How will you achieve your 2017 goals?

A: In 2017, we will begin operations in Monterrey. We are

also working with restocking technology, that is to say

robots that stock quicker than humans and with 99.9

percent exactitude. We are only missing a pincer in our

stocking technology. Our goal is to implement this in

four of our eight centers, three in Mexico City and one

in Michoacan. Levic is working on a project in Central

America and in 2017 we will enter the Belizean market,

where we have a project with the government to send

Mexican medicines there.

Q: How do you prepare for uncertainties such as strikes

and protests?

A: Protests do not affect us much. What does impact

us greatly is the Hoy No Circula (No Drive Day). In 2016,

40 percent of our vehicles could not circulate on any

given day. With one No Drive Day per week, 20 percent

of our vehicles are idle but with the double measure,

two of every five are out of action. Distributing medicine

becomes much more difficult. There are also security

issues and areas we cannot enter because drivers are

asked to pay bribes. We do not enter areas where the

driver will be at risk, or when the risk is larger than the

reward. If we were to push this, then we would be putting

the health of the driver and the good condition of the

medicine at risk.

MARKET FACTORS DRIVING GROWTH, WEB SALES IN FOCUSVÍCTOR SOTODirector General of Levic

VIEW FROM THE TOP

Levic is a Mexican distributor based in the State of Mexico

that is specialized in the pharmaceutical sector. It began

operations in 2000 as a generics distributor and has expanded

operations throughout Mexico

229

Q: What are the greatest challenges in health for

Aeroméxico Cargo? How do you overcome them?

A: Pharma is one of the top five products we transport. Due

to quality and security concerns with land transportation

services, the industry has increased the volume of pharma

products transported by air. We have been offering

specialized services for the domestic market for the last

three years and our market penetration has grown over

100 percent each year. Today, we transport around 12,000

tons of pharma products every year, which represents 90

percent of the domestic air pharma market. Our biggest

strength is Aeroméxico’s security processes, which make

us the most secure airline to fly with. We have invested

a lot of resources over the past three years to make sure

that 100 percent of our cargo is screened and sterile,

which makes us the preferred carrier for most agencies.

Q: What health products does Aeroméxico Cargo

manage?

A: In addition to pharma, we also move biomedical

products and vaccines. We own thousands of square

meters of refrigerated space throughout the world and

we have agreements with suppliers such as vaQtec

and Envirotainer, which enable us to maintain the cold

chain throughout the entire process. The most difficult

products to transport are those that require a controlled

temperature because they are shipped from the factory

to conservation warehouses and then to our customers

or final consumers.

Q: How does working in pharma impact your business

strategy?

A: The challenge for us is to keep pace; entering the

pharmaceutical sector has been our most important

achievement so far. Four years ago, we had almost no

business in this area and now we manage a large majority

of the domestic pharma market. We have become an

airline that is flexible, that cares for its clients’ products,

employing the correct conditions and delivering the

products undamaged. Previously, we moved 20-30 tons

per month in pharma, whereas now we move over 600

tons per month.

Q: As you already manage so much domestic cargo, what

is your objective for the rest of 2017?

A: The pharmaceutical market is much bigger than what is

being moved via air freight today. We are a reliable option

and we have a commercial strategy for the pharmaceutical

market that is very aggressive. Our goal is to move more

pharma and to continue as a leader in air freight. As

an airline, we prefer to work with high-yield products.

However, Aeroméxico’s network is so large that it operates

many flights on which we can accommodate many types

of medicine and cargo; for example, if something very

urgent needs to go to Monterrey in the next two hours,

we can do it. Aeroméxico moves one of every five kilos

of the Mexican air cargo market and we want to keep

growing at the same pace.

Q: What are your plans for pharma and health in Mexico?

A: Aeroméxico Cargo has an investment plan of several

million pesos that will help further strengthen our position

in the national pharmaceutical market. In addition, with the

objective of increasing participation in the international

market, in December 2016, we formally finished remodeling

our facilities in the New Mexico City International Airport

(NACIM), an investment of several million dollars that

positions us as the company with the most modern facilities

and with the highest standards of safety and quality.

Finally, in February 2017 we launched the Health Chain

Service, which will first target the European, US and South

American markets. It will have the capacity to offer our

clients specialized active and passive solutions to achieve

a cold chain that includes freezing, refrigeration and

temperature maintenance during our cross-border flights

thanks to strategic alliances with the most recognized and

certified companies in the market such as Envirotainer,

vaQtec and Cold Chain Technologies.

PHARMA TAKES TO THE SKIES FOR DELIVERIES

RAFAEL FIGUEROADirector General of Aeroméxico Cargo

VIEW FROM THE TOP

Aeroméxico Cargo is a leading air cargo carrier and part of

the airline Grupo Aeroméxico. The company strives to meet

the needs of the supply chain, including pharma, delivering to

Mexico and the world

230

people for the position. This is setting us apart, thinking of

where we are now and where we anticipate going in the

future. We will be bringing new technology to an area of

the industry I believe has been static for decades.

Q: From where are you recruiting your talent? To what extent

do you have to go to other sectors or abroad?

A: We have not gone abroad. Our HR director comes

from outside the distribution and logistics market but

has experience in many industries. Wherever possible, we

would like to provide opportunities internally. I want to

be in a situation where all future opportunities are filled

through promotions. We are looking for the right people,

not necessarily thinking about the right person for the

position today but looking at this with a three to five-

year perspective, bringing in those that will be able to

complement our strategy going forward.

Q: To what extent do you have relationships with Mexican

universities?

A: We do not have any at this moment but that is an area we

are looking to develop. I want to bring in high-potential talent

who could be our future leaders, bring them into our growth

strategy areas to drive new models and then take them from

the conceptual phase to implementation. We have planned

for 2017 to bring in three high-potential MBA graduates who

are ready to land in a position knowing they may not be quite

ready but that we want to develop them. We are beginning

to reach out to universities so we can develop this program.

Q: What are the most important skills that you will be

looking for?

A: We will certainly be more focused on the commercial side.

We will be looking for people with learning agility, flexibility

and able to coordinate groups. I want this company to be

different to others and I see it evolving into different areas,

such as specialized segments, focusing more on customized

models. This does not mean we are walking away from what

we do today, it will be complementary. I am looking at many

sectors, such as private hospitals and insurance. At the

moment only 4 percent of Mexico’s population has private

medical insurance. This is an opportunity.

PUSHING EFFICIENCIES FOR 360° LOGISTICS JOSÉ ALBERTO PEÑADirector General of Grupo Marzam

VIEW FROM THE TOP

Q: Grupo Marzam deals with high volumes of medicines.

What management systems are in place for this?

A: That is one of our key strengths as an organization. There

is continuous opportunity to improve but we are a company

that has been in the market for 83 years so experience has

gradually made us increasingly effective and efficient. We

have 10 distribution sectors in the country, nearly 3,000

employees and 500 vehicles. That allows us to cover almost

95 percent of the country. We also have a strong focus

on technology because that is how we can drive more

efficiencies. We are a large-volume company in a low-margin

industry, so we need to be as efficient as possible.

Q: What state-of-the-art technology is implemented

throughout the company’s operations?

A: Four of our distribution centers are automated, which

drives efficiency throughout the organization. Grupo

Marzam differentiates itself from its competitors in that

all our salespeople work off apps on smartphones. All our

technology is developed internally. While pharmaceutical

companies usually have limited numbers of people in the

IT department, Grupo Marzam’s is over 100 strong. This

demonstrates how important technology is to us and that

we keep it top of mind in everything that we do. We also

have a strong focus on e-commerce. We are trying to see

how we can interact continuously with our customers

from a 360° perspective.

Q: How has Grupo Marzam’s adapted its operations to

e-commerce over the past year?

A: Our app was not fully in use 12 months ago, but today

100 percent of our sales reps use it. It is also being used

by about 500 reps in the pharmaceutical industry, who

use it to collect orders that come directly to us. We have

undergone a massive reorganization, changing 95 percent

of our executives and ensuring that we bring in the right

Grupo Marzam is a Mexican company that started its

operations 83 years ago distributing medicines to pharmacies

in Mexico City. Now it distributes healthcare products across

the country

231Q: How has the global economic environment impacted you?

How do you foresee its future impact?

A: 2017 will be a challenge from an exchange-rate perspective.

For us, another key component is gasoline, which has a

direct impact on our expenses. The exchange rate will have

an impact on the industry as a whole because 90 percent

of material used to produce medicines is imported. Before,

perhaps businesses did not focus as much on driving

efficiency in all areas but it is about the details now. For

example, we have almost 500 vehicles and we have decided

that whenever we change a vehicle, it should be diesel at the

very minimum. We want to move to hybrid or electric in the

future. We are already evaluating if this is economically viable

on a four-year horizon, which is the life a vehicle for us. This

drives us to think differently now. It is not necessarily bad but

we were not ready for a 20 percent increase in gas prices.

Q: What are you short-term plans for Mexico?

A: For us, short term means three to five years. We want

to become a holistic, logistics provider in the healthcare

segment and we will not be moving away from that.

Marzam was very much a pharmaceutical distributor

but today we are in branded, patented and generic

pharmaceuticals and we have moved into wound care,

medical devices, medical equipment and specialized

medicine. All these segments are growing.

From a customer perspective, we were focused on

pharmacies. However, our focus expands now to private

hospitals and clinics, healthcare insurance and the

government sector, which is much more holistic. Our most

important strength is the infrastructure we have. Why

not get involved with a broader range of products and

segments if we are already going past these places and our

infrastructure can cope with it? We are also open to creating

partnerships and alliances. I am a strong believer in alliances

and complementing our infrastructure and expertise.

Q: What drove the 2 percent growth Grupo Marzam

enjoyed over the past year?

A: There are many factors involved. When Marzam was

purchased 12 months ago, there were financial difficulties.

We have been ensuring that, from a business perspective,

we are driving as much efficiency and profit as possible to

ensure we are paying our customers. We have gone from

having a 65 percent fill rate 12 months ago, to a 97 percent fill

rate at the end of 2016. That was driven mainly through pure

product availability. We are probably unique in the interaction

we have with the healthcare sector in general. There is much

more confidence in what Marzam is today than there was one

year ago. A massive change in the way we operate puts us in

a much stronger position.

Q: How do you ensure that your trucks can reach their

destination through times of unrest?

A: We have implemented more technology in that area.

Our distribution network has GPS, trucks are tracked

and they have other security aspects. Our vehicles are

monitored centrally by a control center and we coordinate

them with the corresponding authorities to ensure there

is a rapid response from the police.

Q: What are the greatest challenges Grupo Marzam faces

as a distributor?

A: One of the greatest challenges we face is Mexico’s size

because it is an expansive country. We must ensure we

provide an effective, efficient and continuous service. Security

is a hot topic that requires care. We are a low-margin industry,

so all additional costs immediately impact our profitability.

We need to be prudent about how we manage additional

expenses, which, ideally, we should not have. The health

industry in Mexico is also a complex and fragmented industry

that requires different skillsets. Having had experience with

many markets around the world, I truly believe that Mexico is

one of, if not, the most complex healthcare market.

Warehouse tunnel

232

INSIGHT

EVOLVING TO TAKE ON NEW SUPPLY-CHAIN CHALLENGESDANIEL PARDOCEO of Medistik

trucks to have redundancy control. Now, they use a dual

GPS system that can detect jammers and can send an

alert to the monitoring center that works with authorities

to recover stolen vehicles. Trucks have electromagnetic

closures, so they can only be opened at the delivery point.

When transporting certain products, Medistik also works

with private-security agencies that offer escort services.

Besides insecurity, another challenge the logistics sector

is trying to mitigate is the peso’s depreciation. The cost

of equipment, rent and other elements are usually in

dollars, which affects companies and customers. As

Pardo explains, Medistik is working to become more

efficient by proactively improving transportation and

warehouse management. Part of its responsibility is

ensuring companies gain control of their products

through better inventory management. Pardo highlights

that the main issue in this area is that large healthcare

institutions like hospitals do not have total product

visibility. The company looks to implement technological

tools that will provide clarity on the location and quantity

of every product, reducing inventory-related costs. “We

are adapting, anticipating and inviting our clients to join

us in this process,” says Pardo.

Ensuring full compliance with the supply chain and

product requirements is among the most difficult tasks,

specifically in Mexico, where the challenge in such an

extensive territory is being able to get everywhere. “Any

given company cannot cover the whole country. The

service we provide should help our clients deliver further

and reach the point of sale faster.”

Medistik hopes to offer the public sector some of the

solutions already in place for the private sphere, which

accounts for 100 percent of the company’s customers.

“We do keep in mind that the government is the

largest user. There are big opportunities to help it to

be more actively efficient and to drive down the cost

of healthcare,” says Pardo. He believes that Medistik’s

evolution is not limited to updating its image but in also

giving the broad vision of its service a makeover.

Logistics services can be a challenge for the Mexican

health industry’s supply chain. Companies have to maintain

safety, ensure the chain of custody and comply with their

customers’ requirements in times of high delinquency

and peso depreciation. To mitigate these challenges,

health companies like Medistik have developed strategic

solutions, latching onto new opportunities in the process,

says Daniel Pardo, the company's CEO.

The company, formerly Bomi Mexico, a business with 20

years of experience in the healthcare logistics sector in

Mexico, is looking to reinvent itself and expand in the

local market, which has limited integral logistics solutions.

It wants to triple in size in the next five years through

organic growth that includes improving its services and

offering solutions to new health segments. To further

underpin its evolution, Medistik has developed and

implemented a training and repair center to which clients

can bring their equipment and personnel, who receive full

training on how to use it.

Insecurity in the country has also created the need for

stringent security measures, especially in high-risk areas

such as Mexico City or the State of Mexico, says Pardo.

There were around 1,000 assaults on cargo vehicles on

highways from January to November 2016, according to

the National Public Security System (SNSP), although

that number might be higher because many companies

do not report the crimes, according to Mario Espinosa,

President of the Mexican Association of Vehicle Tracking

and Protection (ANERPV).

The company has taken several steps to maintain

safety and ensure the chain of custody. “We started

by establishing a security manager position. We

then enhanced our recruitment process to ensure the

trustworthiness of all our drivers,” Pardo says. A report

from FreightWatch International, a security logistics

agency, says that assailants usually operate in groups

of six to eight people in three cars and use systems that

block their target’s communications network. Pardo says

this is why Medistik changed the GPS system on all its

233

INSIGHT

counterfeit medicine, Aedo says that in the three years he has

headed SINGREM only two containers have ever been stolen.

Some states dispose of less medicine than others. Aedo says

that the longer they have been present in a state, the more

the program collects. “In the center of the country, Mexico

City, Puebla, Jalisco and Veracruz, our program works well,

but there are still many states that are lagging behind,”

Aedo says. “The North only represents 6 percent of our

collection and it is an area reasonably well covered.” He puts

this down to the fact they only entered these states a year

and a half ago and expects results to improve with time. “In

Mexico City, we collected over 12 tons in September 2016. In

the entire state of Nuevo Leon, we collected 0.2 tons,” Aedo

says. To make greater advances, more government support

is needed for companies to allocate funds to the collection

of expired medicine. “Each state supports us differently.

Hidalgo, for example, has its own collection projects and

invited us to partake. Others are practically not interested

in expired medicine. The support we receive in Guanajuato

is incredible, as is that of Mexico City,” he says.

While it is obligatory for companies to participate in the

disposal of the medicine they produce, many neglect their

responsibilities, leaving SINGREM to clean up after them.

From January to July 2016, only 57 percent of the medicine

collected by SINGREM came from affiliated companies,

while it received no contribution from the companies the

produced the other 43 percent. In addition, many generics

laboratories refuse to participate outright because of a lack

of law enforcement. This is an issue for SINGREM because

52 percent of the medicine it collects is generic. Because

these are expired meds sold two to three years previously,

Aedo expects this rate to rise in line with the proportion

of generics sold.

Despite the setbacks, SINGREM will continue its effort to

cover all 32 states as soon as possible. Once this is achieved,

it hopes to increase publicity nationwide and push people

to dispose of their medicine adequately. By implementing

6,000 containers nationwide, it hopes to collect 1,000 tons

of medicine per year.

While all households purchase medicine, few dispose of

it properly. This leads to a variety of problems including

counterfeit medicine and environmental pollution.

According to the General Law for the Prevention and

the Integral Management of Residues, “large generators,

producers, importers, exporters and distributors” of

special handling products are responsible for “formulation

and execution of management plans.” Yet, not all take

responsibility for their generated residues.

SINGREM, a civil association, was created to tackle the

problem, collecting unneeded and expired medicine from

around the country to prevent it from being tossed into

landfills. Over the past year, the association has expanded its

reach, moving into Chiapas. “We entered Chiapas through

an agreement with the state government. We delivered 40

containers, half of which were placed in government clinics

and the other half in Farmacias del Ahorro,” says José Aedo,

Director General of SINGREM.

One hurdle the association faces is the challenging security

environment in some areas of Mexico. This is the case of

Tamaulipas, in the northeast of the country, where according

to Aedo it is not present because the risks are too great.

Another example is Michoacan, a state it abandoned when

the situation became unstable, although the association

returned once it was safe to do so.

Today, SINGREM has almost extended its coverage across the

country and is now only missing from Tabasco, Baja California

Sur, Chihuahua, Sonora and Tamaulipas. It hopes to have

collected around 520 tons of medicine or 15 million units by

the end of 2016, which it estimates to represent around 15-

20 percent of medicine discarded. It has agreements with

103 laboratories to perform collections and the association

managed 4,750 containers as of September 2016. “Most of

these are in national pharmacy chains, 2,470 of them, such as

Farmacias Guadalajara, Farmacias Benavides and Farmacias

San Pablo,” Aedo says. To minimize security risks, the trucks

that collect the meds from SINGREM containers bear no logo

so as to avoid unwanted attention. While it may seem like a

container full of expired medicine is the perfect source for

AFTER MEDICINE IS THROWN AWAY

JOSÉ AEDODirector General of SINGREM

234

Q: Why should companies contract GNK Logística for their

logistics operations?

A: As a Mexican third-party logistics company (3PL),

our core business is the design, development and

implementation of integrated logistics solutions built to

suit each client’s specific requirements for warehousing,

control, distribution of goods and database management

for the health and pharma industry. We are not dedicated

to buying and selling goods, we leave that to our clients.

We are dedicated to generating valuable information, to

the traceability of goods and nationwide consolidated

transportation.

We have more than 1,000m3 of cold rooms, all of which

have temperature ranges of 2-80°C as recommended by

COFEPRIS. Our parameters are from 4-70°C, meaning that

when the temperature reaches those limits, automatically

a visual and audio alarm activates to ensure the cold chain

is not broken. We also have units with thermostats for

transporting cold products.

Q: What logistical strategies are used to service locations

that are difficult to access?

A: Before we start any operation or project, we always

perform an initial census for which we focus on distant, rural

or difficult to access communities, so we can make a note

of its address, GPS localization, type of road encountered

and all the information we need to design and establish the

best cost-benefit route. We check that the address exists

because we have encountered situations in which it does

not, or is not where thought. Once corroborated, we analyze

all the data from the census and other variables to establish

delivery frequencies. There have been times when we have

had to hire small planes or boats to get to the correct place

at the correct time because there was no road.

Q: What steps do you take to maintain security in the chain

of custody?

A: We have security protocols and procedures as

determined by our quality management system. Since

we began working with the government, the goods we

distribute are low cost or have no price value because

they are free and destined to meet the population’s

needs. We also are well known in the communities to

which we deliver. At the beginning, we did face a certain

amount of risk in some areas like Durango, where we

had to establish certain routes and schedules that were

secure. Our vehicles bear our logo, which is recognized,

and they are all tracked via GPS, have interior cabin

cameras and are constantly monitored. Our warehouse,

fleet of trucks and the goods of our clients are all insured.

We have also used and hired custodians in the past as

requested by our client protocols.

Q: What are the biggest challenges and risks a logistics

company faces?

A: The greatest risk is the loss or damage of the client’s

assets. NOM-059, ratified in August 2016, is also important

for us. It stipulates that to transport pharma goods within

Mexico, a company must use vehicles specifically for this

purpose and cannot transport anything but pharma goods.

As we are already dedicated to this and have a cold chain

in place, this norm has benefited us. Beginning a project is

often the most difficult phase because companies do not

have the full scope of the project.

Q: How does NOM–059 compare to international standards?

A: It is excellent because it eliminates foreign companies

from providing transportation between states and also

benefits the security and safety of goods because they

could be contaminated by other goods and supplies

INFORMATION IS POWERMARIO GARCÍAVice President of Operations at GNK Logística

VIEW FROM THE TOP

NOM-059 stipulates that to transport pharma goods within

Mexico, vehicles must be specifically for this purpose

235

A: We differ greatly from our competitors, mainly because

we treat our clients as business partners or allies. When

we notice they are doing something wrong, we tell

them about it. We also give them reliable, punctual and

auditable information. We are flexible in our operations

and we do not have hidden costs. Our solutions are

tailor-made and we strive to offer the best cost-benefit

solutions. Finally, our personnel is highly qualified and

field-trained to offer outstanding customer service and

a quality response.

Q: What are the main differences when working with the

public and private sectors?

A: The private sector is more demanding due to their

corporate governance and compliance structures and

procedures. The tolerable margin of error is extremely

narrow. Governments often do not have standardized

procedures or high standards when dealing with pharma

goods and their warehouses in most cases do not comply

with any NOM rules or regulations, nor do their vehicles.

We are the ones to suggest they improve to the standards

required by private industry. If companies do not have

reliable information, they do not have sales or consumption

projections. Health services were created to preserve

health, not to worry about logistics. This is the area that is

usually contracted out but there are still states and private

labs that do not contract their logistics operations.

Q: What is GNK Logística’s strategy to remain competitive

over the next five years?

A: We look to strengthen the systems we have in a

well-structured enterprise resource planning. We think

any other Mexican or foreign company with plenty of

economic resources can store and distribute pharma

goods correctly and in accordance with legislation

but we doubt they can better our learning curve and

experience of almost 11 years. We are always researching

new technology and systems that can help us be a

cutting-edge company. Generally, we would like to have

our systems working across the supply chain, from

doctors that generate the demand of goods by typing

the prescription into our system to the supply planning,

control, warehousing and distribution of those goods.

Prescriptions and requirement orders are still written

by hand, so we are looking forward to digitalizing that

information to shorten times. That will help our clients

and us to have better control and timings throughout

the supply chain.

GNK Logística is a Mexican logistics company with a division

fully dedicated to the health industry. It focuses on the design

and development of logistics systems that incorporate the

latest technological advances

in the cargo. I am sure that within two years, labs will

be working only with logistics operators dedicated 100

percent to pharma. Because we are solely dedicated to

pharma, we are not looking to expand to other sectors

or industries. We are totally convinced that we can be of

great value to our clients because of all the specialization

and investments we have made in this area.

Q: How important is tracking and how does it improve GNK

Logística’s services?

A: Whoever has information has power and tracking

has become an important tool for us and the service we

provide. As an example of how tracking benefits us, we

also offer reverse logistics to our clients, who often use

it for returns, rejections or short expiry dates of goods.

We once collected a lot that was subject to inspection by

COFEPRIS and had to trace it to its final user. It helped that

our tracking system gave us that information, otherwise we

would have been in trouble.

Q: To what extent do you have a database of consumed

goods?

A: We have developed in-house systems and also registered

them at the National Institute of Author Rights (INDAUTOR),

which can give us full traceability of each lot number and

the expiry date of every good we have distributed. We

collect inventory information at the place of delivery or

through our systems and we generate the data to know

what and when is consumed. We give this information and

other reports about inventory levels and displacement of

goods to our clients and they decide when to buy, at what

price, from whom and in what quantities. All the information

and reports needed by our clients are available 24/7 to help

them improve and speed up decision-making.

Q: How are health practitioners embracing technology

such as iPads and what are the challenges to adoption?

A: In rural communities, digital advances take longer to

permeate. For example, it takes around 40 minutes for

doctors to deal with the paperwork from a five-minute

medical consultation. Implementing a system that relies

on a certain device is not ideal because these quickly

become obsolete. We have developed our systems to be

compatible with tablets and while they can be used, it

is necessary for hospitals and rural communities to have

the right hardware and network in place, which is the

main challenge we have encountered. Another challenge

is to change the mindset of doctors from doing things

manually to electronically. Tablets are extremely useful

because they put the complete supply chain information

in one’s hand.

Q: What does GNK do differently from other pharma

logistics companies?

236

VIEW FROM THE TOP

Q: How is Sicamsa dealing with the challenges of logistics

in the pharma and health industries in Mexico?

A: The main problem is the lack of logistics regulations for

the transportation of laboratory samples and other types

of materials. Shippers are often unaware of the logistical

complexities involved and delivery companies can be blamed

for any problems. We are facing these problems through

internal rules and by training our staff. The samples we

transport can be essential to a patient’s health so our mission

is to deliver it in the right way and as quickly as possible.

Q: How do you cover the whole country and reach your

clients in 24 hours with so many logistical obstacles?

A: We have contingency plans prepared for every

situation. In many cases, we incur expenses that are

not accounted for in the client’s budget and we bear

the cost ourselves. This kind of service, along with our

rapid response to unexpected issues, has generated a

significant client loyalty. We also have a hangar in Nuevo

Laredo with four jets and two pistol-engine planes, one of

which is a cargo plane, and we are introducing a seven-

ton aircraft for a new project in which we guarantee our

clients zero loss of products.

Q: How do Sicamsa’s solutions make its clients’ operations

more cost-effective?

A: Our main line of business is the transport of laboratory

samples in Mexico. We offer personalized solutions for 24-

hour delivery to IMSS and private companies and we also

transport vaccines, corneal layers and tissue for transplant.

Our main differentiators are our fast delivery times and the

level of security we can offer. Sicamsa offers transportation

of unlabeled drugs and hazardous material, which requires

special documentation. We also transport veterinary

material for small towns and municipalities.

Q: Given the range of services, to what extent do you

incorporate client requests into your offering?

A: Due to our dedication to providing 24-hour delivery

schedules, we must provide a custom-made operation for

each client. This also means that if one of our clients cancels

the order, we cannot charge the other more or decide not

to go to this location at this time, as many other logistics

companies that operate with consolidated purchases must

do. We adapt our infrastructure to client needs but we need

a commitment in return because a fleet of reserve vehicles

can become expensive.

CUSTOMIZED SOLUTIONS FOR MEXICO’S LOGISTICS CHALLENGESJOSÉ ERIC DELGADODirector General of Sicamsa

Mexico is an expansive country and distributing outside the capital city presents a unique set

of challenges. In the face of insecurity and civil demonstrations, among other disruptive factors,

companies have had to adapt strategies to keep products moving, says Mireya García, Director

General of Distribuidora Alpilo, a Monterrey-based logistics company.

“[Insecurity] has impacted us significantly, especially during times of strikes and demonstrations.

During a period of countrywide protests in January 2017 (following a hike in gas prices), our

deliveries were delayed, sometimes up to a week, because there was no way to get through,” says

García. In response, the company began forging alliances with other distributors to lend products

to each other. “We now manage a larger stock and take larger orders so that our clients are better

prepared for unforeseen circumstances,” García adds. The National Survey of Public Urban Security

(ENSU), carried out in December 2016, found that 67.8 percent of the population aged over 18

considered that living in Nuevo Leon state was unsafe, up from 62.8 in September of the same year.

Being a small company, exchange-rate fluctuations also had an impact. “The appreciation of the

dollar does impact us as our costs are sometimes in dollars and the products we distribute come

from the US. We have to continually be checking costs and margins while also paying attention to

the client because we cannot be increasing prices every three months,” García says.

THE WILD, WILD NORTH

237

Q: UPS Temperature True options enable the transport

of sensitive products. What products are you most often

asked to handle?

A: UPS Temperature True is one of our most specialized

solutions when it comes to the transportation

of temperature-sensit ive healthcare products.

Pharmaceuticals, biologics, vaccines, blood products and

medical devices are the types of products we are most

asked to ship with UPS Temperature True. UPS has control

towers that monitor all shipments, help protect against

temperature excursions and can also activate contingency

plans in the event there are unexpected shipment delays.

Q: What are the most common challenges faced when

transporting health products across borders? How do

you overcome them?

A: In Mexico, many products are transported over land

and a challenge that is not often considered is the

number of times a package can be exposed throughout

the transportation cycle. Before picking up a UPS

Temperature True shipment, UPS works with its customers

to provide a comprehensive analysis of shipping options

and procedures such as routing, type of transportation

required, who will come into contact with the shipment,

what types of carriers are acceptable for that type of

shipment and set up of contingency shipment plans.

Everything is defined beforehand, so when we do pick

up a shipment we know exactly how it is going to move,

from where to where and who needs to be notified.

Q: To what extent is the demand for storage services

increasing in Mexico?

A: As Healthcare Strategist for UPS Latin America, I

see this every day. Those wanting to work in this sector

understand their main markets will be Brazil and Mexico

and that they will need to establish a presence in these

high-consumption areas. Mexico itself is a significant

consumer market so there is significant need for our

customers to find the right logistics provider. In 2014,

we opened our newest healthcare distribution center in

Mexico City. It measures over 7,000m2, is GMP compliant

and has temperature-controlled storage capabilities.

Q: What makes Latin America attractive as a region?

A: Five or six years ago, two-thirds of the global

healthcare market was in the US and Europe. Now, those

are mature markets and, although they are significant in

size, emerging markets are growing at faster rates. The

number one region for growth in healthcare is the Asia-

Pacific Economic Cooperation (APEC) region, mostly

driven by China and India and followed by Latin America.

UPS has four strategic priority segments: healthcare,

e-commerce, emerging markets and technology. In Latin

America, we will continue to increase our footprint in

emerging markets with continued investments, especially

in the healthcare segment.

Q: What are your priorities for 2017?

A: Our latest investment in Latin America is a new

healthcare storage and distribution facility in Bogota,

Colombia. In addition, we also just added cold-chain

capabilities to our distribution centers in Mexico and Brazil.

Companies that want to conduct business in the Latin

American healthcare market need to understand the

current and upcoming changes in regulations, as well

as how channel strategies are evolving for customers. In

2017, for both Mexico and the region, we will focus on

our ongoing commitment to continue investing in the

sector. We have strong partnerships with our customers

and, more than being a logistics provider, we want to be

their strategic partner and ally that works hand-in-hand

to understand their supply chain needs and ensure the

success of their business. For example, our procurement

of Marken, a specialty courier service, is a clear example

of a new acquisition that is going to impact our ability to

service the clinical trials logistics market in Mexico and

in Latin America, allowing us to partner with companies

much earlier in the supply chain.

SPECIALIZED SERVICES FOR SPECIALIZED PRODUCTS

INGRID RITTERHealthcare Strategist Latin America of UPS

VIEW FROM THE TOP

United Parcel Service (UPS) is an American company and

one of the world’s largest distributors. Working across over

220 countries and territories, it handles 101.5 million tracking

requests per business day

238

Q: How do changes in regulations in the health industry

affect Majicarga?

A: COFEPRIS is one of the world’s strictest regulatory

agencies. Majicarga transports pharmaceutical products,

medical devices and even clinical tests but also groceries,

equipment and other products that require sophisticated

handling. COFEPRIS’ regulations, the policies of

governmental agencies like the Ministry of Health and the

ability of the health industry to respond to these changes

affect us. NOM-059 regulates good practices regarding the

manufacturing and distribution of drugs. We are in line with

this regulation, but we have been informed there will be

some updates so we are preparing for those. We are also

preparing for ISO-9001-2015 certification, which deals with

quality-management systems.

Q: What are the main challenges for Majicarga?

A: Cost-efficiency is the most pressing issue. We must

make our routes more profitable because many new, bigger

competitors are entering the business, including giant

companies like UPS, FedEx and FEMSA Logistics. These

new competitors are attracted to the segment because

distribution in the pharmaceutical sector is one of the best

remunerated. However, for a company like Majicarga it is

difficult to compete against fleets of thousands of units

and the entrance of these new competitors. The prices we

must offer are much lower than three years ago. Mexico

used to be a paradise for transportation companies, but

regulations have increased in number and strengthened

and have become more complex.

The main challenge for businesses is to find sustainable

strategies that help growing companies maintain or even

further develop so as not to be bought out or absorbed by

larger ones. Additionally, there needs to be regulation to

incentivize and boost Mexican companies.

Insecurity is another significant challenge. Although we have

a sophisticated monitoring system, the existent technology

is limited. No distributor or technology company in the

security market can fully guarantee that a unit carrying

a client’s product will not get lost or robbed. The most

stolen products are drugs like anti-flu medicine, aspirin and

cosmetics because OTCs are the easiest to sell on the black

market. To combat this, all of our employees must have a

reliable-worker accreditation. The company that provides

this service visits with our staff and performs an obligatory

socio-economic study, checks local and federal criminal

records and performs psychological tests.

Q: What are the emerging trends in storage?

A: Pharmaceutical companies are closing their storehouses

and centralizing storage and distribution within the

metropolitan area, specifically in Cuautitlan Izcalli,

Tlalnepantla and Naucalpan, in the State of Mexico. These

storehouses are both storage and distribution centers and

help reduce costs.

Q: What is your relationship with the public sector?

A: We have little direct contact with the government, but

we would like to increase our business with the public

sector because it is a good, well-remunerated market with

attractive contracts. We have focused on marketing reliable

solutions that provide security in the transportation of

medicines for the private sector.

Q: What are your priorities for the next five years?

A: The most important priority is to find new customers,

because sometimes companies become too confident with

the clients they have. We want to implement new means for

advertising through innovative channels and participation in

expos, conferences and other industry gatherings. Investing

in better security controls is preponderant: the number of

robberies increased 60 percent between 2016 and June

2017. We also need to renew our fleet. In the midterm,

e-commerce may impact us, but there are new ways of

doing business in transportation, where people upload

information about specific cargos and transportation

players choose what they want to transport.

NEW MARKET ENTRANTS COMPETE WITH GIANTSERICK JIMÉNEZDirector General of Majicarga

VIEW FROM THE TOP

Majicarga is a Mexican logistics and transportation company

based in Mexico City and specialized in delicate cargo, with

over 25 years of experience. In health, it deals with drugs,

medical devices and clinical tests

239

Q: What strategies should pharmacies put in place to

guarantee access to health?

A: There are many strategies. Farmacias del Ahorro, for

example, provides loyalty cards, giving clients discounts

or the opportunity to receive a free service. For our part,

the number of generics purchases has increased greatly

and we stock our own brands, which gives us the margin

and opportunity to keep growing. The Ministry of Health

and COFEPRIS want lower prices to help those with few

economic resources buy medicine. By stocking generics we

are responding to that need. Laboratories ask us to respect

their prescriptions and not make any changes, which we try

to do. Despite having our own brands, we also continue to

buy the same number of generics from other laboratories.

What clients want from us are good-quality products.

Q: To what extent does ANADIM enable members to

participate in consolidated purchases?

A: We do not need consolidated purchasing because our

members have enough purchasing power on their own.

Independent entities have to do this because they do

not have our levels of organization. Our members work

together to make decisions and to support each other, so

that everyone operates under the same conditions and

with the same discounts. Otherwise, we would not work

as an association.

Q: How does ANADIM function and what characteristics

does it look for in member companies?

A: When there is a governmental issue that impacts all of

us, we can help each other and this has strengthened us

over our 73 years of existence. Companies that join the

association must carry out distribution or run a strong

chain of pharmacies. Our group includes the largest

chains in Mexico, such as Grupo Benavides, Farmacias del

Ahorro, Farmacias Guadalajara, Walmart and FEMSA. We

meet every two months across the country, sometimes at

the facilities of a member company. The association just

inaugurated Analpharma’s facilities, which are incredible.

We could invite companies from across the world and

present the achievements of this 100 percent Mexican

laboratory with pride.

Q: What must be done to ensure the Mexican

pharmaceutical industry grows to its potential?

A: The innovation industry has grown greatly because

there is a lot of competition between generics,

interchangeable medicines and biosimilars. I think the

industry of innovation should be better organized and

implement prices wisely to be more competitive. This

would improve access for everyone.

Q: What added value do companies receive as members?

A: There are several benefits. Firstly, as most of our

members work in Mexico, they can use our facilities in

Mexico City to conduct meetings whenever they like and we

can help arrange any meeting with industry contacts they

would like to see. We also offer support to help solve any

regulatory issues they may face. This instills our members

with confidence, knowing there is always a team that will

support them with anything they need.

Q: What changes have you seen over your time with

ANADIM? What are your expectations for the coming

years?

A: There have been many ups and downs, moments in

which we thought the association would not survive due

to many issues, such as disloyal competition, price-fixing

and leonine conditions. However, the environment has

greatly improved in the past eight to nine years and we

have grown significantly. We are on the right path and

in five years I hope our members account for 80 percent

of total distribution. Over the next three to five years,

ANADIM will continue to play an important role in the

distribution sector as some of our members, such as

Tallis, are enjoying exceptional growth. We account for

65 percent of the distribution of medicine in the country.

A few years ago, that figure sat at 35 percent. This growth

is due to the expansion of pharmacy chains.

SUPPORT FOR PHARMACY CHAINS

SERGIO CHABOLLA Executive Director of ANADIM

VIEW FROM THE TOP

The National Association of Distributors of Medicines

(ANADIM) comprises 18 Mexican companies that are engaged

in the distribution and dispensation of pharmaceutical products

for consumption in Mexico

240

Q: What significant trends are emerging in Mexico’s

health industry and what role is technology playing?

A: There has been significant change related to patient

centricity. Organizations in this sector need to look

inward and develop a patient-oriented culture because

patients look at the pharma industry as they would the

tobacco industry: as if we were taking advantage of them.

This is due to ethical issues related to clinical trials, the

perception of abusive practices regarding medicinal costs

and a general lack of services related to the provision

of pills. However, there are opportunities beyond

merely providing medical treatment. The development

of collaborative models is a key step toward achieving

patient centricity. Such models would help companies

to improve their image and the level of health of the

population while also achieving a reduction in costs.

To improve the industry’s image, several steps must be

taken. First, we must ensure that patients know what is

being done for them. They see a pill but not the effort in

R&D and manufacturing behind it. Actively listening to

them is another key step. That is something the industry

is not used to doing, although it is aware of the necessity.

Involving the patient’s voice in the equation, going “beyond

the pill” and making a holistic effort to offer integral

solutions requires making changes within organizations. We

should train our sales forces to move beyond the “science

behind the drug” approach and educate physicians on the

relationships they need to have with patients and how to

offer more integral solutions. It is necessary to generate

real-life and real-time information through technological

platforms and to have this data corroborated by the patient.

IT enables patients to inform themselves about the

pathologies they suffer and possible therapies, empowering

them when physicians orient, monitor and help address

their problems. Creating value in this model is possible

through information technologies by, for example, using

virtual reality to teach the patient the mechanics of both

pathology and therapy.

Q: What benefits has Signufarma observed through the

use of patient-oriented IT?

A: Signufarma’s hepatitis-C platform has been a positive

achievement in terms of the information collected and

patient monitoring. This protocol creates a treatment

card that includes the complete treatment history:

when it started, whether the patient followed a therapy

beforehand and how the patient has evolved, all while

maintaining the privacy of the patient’s personal

information. The objective of these cards is to show

how many patients have become permanently free of

the hepatitis C viral load. In Mexico hepatitis C is not a

well-identified health problem, so the program enables

Signufarma and the National Institute of Medical Science

and Nutrition Salvador Zubirán to measure the number of

patients that start treatment and its success rate through

monitoring and clinical tests. We expect to help more

people by integrating more health-sector institutions into

the program.

Q: What is your strategy for sales and what results have

you seen?

A: Signufarma’s direct sales model enables us to do

several things. First, deliver medicine of a guaranteed

standard to the homes of chronic patients or to their

doctor’s office, which enables us to keep a record of

a patient’s intake. We deliver the exact prescribed

product in the correct dosage, preventing the problem

of prescription substitution. Second, monitoring the

patient has increased our sales in certain chronic-

degenerative areas between 20 and 25 percent. Patients

provide feedback about their specific needs, particularly

in oncologic and chronic-degenerative therapies. Third,

Signufarma provides patients with commercial options

such as deferred payments and discounts. We increased

our sales because we take better care of patients.

Signufarma is a Mexican company that provides compliance

programs for chronic diseases to pharmaceutical customers

through information technology and CRM programs, providing

solutions to low patient adherence

DIGITAL COMPLIANCE TO IMPROVE HEALTHALBERTO WICKERCEO of Signufarma

VIEW FROM THE TOP

241

Q: What value is DVA Mexicana bringing to the healthcare

sector?

A: EasyCoat, our own brand, includes the manufacturing

of pharmaceutical film coatings for medicines. We are

focused on understanding trends and the direction of

the market so we can build strong relationships with

our clients, offer an integral solution and launch it to

market as quickly as possible. If a client wants to launch

a medicine that has a soon-to-be expired patent, we look

at how to get supply sources that could be validated by

COFEPRIS to launch it in the shortest time possible. The

diversity of our excipients and our film coating EasyCoat

are key strengths for our pharma division. These allow

us to develop solutions in short periods of time, about a

third of the market standard.

Q: What is the profile of DVA Mexicana’s ideal client?

A: As most development does not occur in Mexico but

in the US, some ingredients cannot be changed, so the

majority of our clients are those companies that do carry

out local development, often generics companies. Some are

from the US but also from India and Israel, among others.

For these types of companies, 50 percent of their sales go

to the government through the public tenders. Generics

have much future potential in Mexico. The generics market

continues to grow expansively, at double digits.

Q: What benefits is DVA and its clients deriving from the

changes in COFEPRIS regulations?

A: COFEPRIS decided that all manufacturers must have a

GMP from an authorized source, such as the US, Brazil or

Mexico. It also mandated the separation of high-risk and

low-risk products, which means that low-risk products

require a local GMP, whereas high-risk products have to be

certified by another source. This makes the process more

agile and opens more opportunities for manufacturers.

Q: What nutritional products does DVA Mexicana offer?

A: We are focused on dairy products, bakery, meat and

beverages. We have a plant in Atitalaquia, Hidalgo, and a

laboratory where we elaborate functional solutions such

as Appenmix to optimize our clients’ product quality,

SOLUTIONS IN A THIRD OF THE STANDARD TIME

ALONZO AUTREYManaging Director of DVA Mexicana

VIEW FROM THE TOP

production cost and performance. For example, we

reformulate products to prevent syneresis, which occurs

when packaged products like beverages, ham and cheese

start losing water and consumers find water accumulated

when they open the package. We also provide the

vegetable proteins raw burgers need to stay consistent

when the consumer cooks them. For those clients that

manufacture nutritional beverages and supplements, we

create a functional mix that aims to make the product

better. With this mix, the client can obtain the right

amount of proteins, vitamins and flavor.

Q: What is your main focus: increasing the volume of

production or entering new areas?

A: We are focusing on higher added-value activities for

our customers. We do expect COFEPRIS to fully regulate

the excipient business in the same way as others, which

means having a plant with a GMP is an advantage and

provides us with opportunities to export in the near future.

Having a plant that is up to international standards is

opening the door for us. Thankfully, all the transnationals

that are in Mexico buy high-quality products from the US

and so we can compete. We must also comply with the

requirements of our foreign clients because many export

to the US and so must follow FDA regulations. Today, the

Mexican industry is facing a challenge: how to become

more efficient in logistics and productivity when buying

ingredients.

When we began to see the dollar appreciating against the

peso, the pressure on clients of pharmaceutical products

and food increased because everything is sold in pesos. The

food sector has been challenging, but we have seen many

opportunities. We have decided to invest in a functional

blends manufacturing plant to continue to expand in the

higher added-value solutions.

DVA is a pharmaceutical company focused on the elaboration

of active ingredients and pill coatings such as Easycoat,

which has been in the market for more than 10 years. It also

manufactures industrial chemicals and nutritional products

242

Q: What was behind Diphsa’s decision to offer hygiene

engineering solutions?

A: Diphsa was founded 27 years ago as a local supplier

of medical devices. Around 2000, public institutions

centralized most of their purchases and the added value

that local suppliers like Diphsa offered to the market began

to disappear. We had to identify new opportunities in the

health market and reformulate our business model.

Because we were working in infection control, we realized

that in Mexico there was a lack of solutions for hospitals.

The approach to the problem was the same as that which

many vendors use in other hospital areas: machine, sell and

service. But this was insufficient for solving the challenges

associated with infection control.

Among healthcare stakeholders there also was, and still is,

a misconception that technology can solve operational and

procedural problems. To ensure safe processes we needed

to focus on having the right human resources within the

company, as well as training and infrastructure. With this in

mind, we began to develop the concept of turnkey solutions

for the Central Sterilization Service Department (CSSD),

examining each step of the process: architectural and

operational diagnosis, workflow analysis, conceptual and

engineering re-design, construction, equipment, software,

training and process implementation. This approach has

been effective in more than 80 hospitals and we have

expanded the model to other areas of infection control,

such as hydrogen peroxide room-disinfection systems, by

developing our own brand and manufacturing in France.

Starting this year, we are implementing the model for the

generation of medical oxygen in hospitals, for which we

currently have a research and development project with

CONACYT. We are about to start exporting this approach

through two joint ventures, in China and Uruguay.

Q: What process is the company following to provide these

solutions?

A: We begin with a diagnosis in which we apply a method

we developed for hospitals. We sit down and listen to our

customers to understand their processes, their workflows

and the problems they face in daily operations. After the

diagnosis, we develop a proposal and establish a roadmap

that can take from one to five years.

Q: What added value does Diphsa offer to the health

sector’s supply chain?

A: We continuously work on state-of-the-art analyses

regarding medical technology to stay up-to-date with

the latest innovations in the health sector. We are not

manufacturers, so we have the flexibility to identify and

choose the best technology available regardless of brand.

This has been key in identifying technological trends and

innovations for all the different devices and technologies

required for a complete CSSD proposal. Our supply chain

is global, with a very strong orientation toward Europe and

Asia and we are constantly adding new products to our

portfolio. Our value is that we articulate a process rather

than a product approach.

We have partnered with and made strategic alliances with

global companies established in Mexico and specialized

in surgical instruments and operating rooms. The goal is

to provide a complete solution that guarantees patient

safety throughout the entire surgical cycle, from instrument

sterilization, to recovery after surgery.

Q: What is Diphsa’s relationship with the public sector?

A: We do not work with public institutions due to different

factors. First, standard procurement for medical devices

does not consider quality as a core value and most of the

time price is the main factor in purchases. We would like to

work with public institutions to include the best and most

cost-efficient devices in the National Formulary.

The second reason we try to avoid public tenders is bribery

and corruption. We do not believe in this practice as a

business model and believe that value must be created in

HYGIENE ENGINEERING: INTEGRATING SOLUTIONS FOR INFECTION CONTOLMANUEL SÁNCHEZDirector General of Diphsa

VIEW FROM THE TOP

Diphsa is a Mexican hygiene engineering company with 25

years in the market supplying solutions for infection prevention.

It elaborates integral solutions for sterilization, hygiene and

medical oxygen solutions for private hospitals

243

VIEW FROM THE TOP

Q: What are the challenges of biowaste disposal and how

do you overcome them?

A: Challenges in our line of business begin with regulations.

Getting the permits for the waste-collection trucks can take

seven to eight months, so if we want to serve a hospital or

to participate in a tender, we have to register trucks we

are not yet using. Also, we can only collect waste within a

catchment area and we are limited to working in the center

of the country. Opening a new plant to obtain clients further

away would require a US$20 million investment, which is

extremely risky without a signed contract in place.

Q: What process do you use to safely dispose of

biohazard waste?

A: Refrigerated trucks pick up garbage from public

and private hospitals and take it to our plant in special

containers. The waste must be refrigerated at all times

because if gas escapes from one of the bags and is from

contaminated blood, the effects could be disastrous. We

need to transport our cargo at low temperatures to avoid

evaporation and to ensure no syringes or needles break.

At the plant, workers dressed in biohazard suits put the

waste into a large container, which has an enormous tube

that rotates every hour to change the waste’s position so

that everything is burned evenly in our three chambers. The

ashes obtained from that process are filtered through a fine

fabric and taken to dumps. By the end of the process, all

we emit is water. We also burn expired pharmaceuticals for

hospitals, for which they receive a tax reduction. If they did

not burn them, someone could take them from the trash.

Our trucks also have to be zero-emission vehicles, because

this is our company’s distinguishing characteristic.

REGULATIONS HAMPERING WASTE-DISPOSAL

OPPORTUNITIESABRAHAM FRANKLIN

Director General of Grupo Franklin

terms of technology and knowledge. Most international

health companies are public or based in countries that

have very strong sanctions for corruption, so they have

strict compliance standards that would not allow them to

overestimate their sales to bribe bureaucrats, which is the

rule in most of the public tenders. International companies

that sell directly and have local offices represent a very small

number of the tender winners, which means higher prices,

less access to technology and a scattered responsibility of

technovigilance. The public institutions are not open to the

new arrangements for CSSD projects, such as public-private

partnerships with long-term contracts, while many private

hospitals have understood this can benefit the population

because of the accessibility of state-of-the-art technology

for patient care. This is the reason we have been working

mainly with them. Although there are many economic

incentives to invest our time in the public sector, it does

not match our corporate values to improve our offer and

guarantee the best for patients.

Q: What is the current situation of hospital-acquired

infections in Mexico?

A: According to the Ministry of Health, in Mexico the number

of hospital-acquired infections is only a third of those reported

by Germany or France. Considering the conditions of Mexican

hospital infrastructure, this does not make sense. There should

be a team in each hospital dedicated to epidemiological

surveillance and the continuous systematic collection, analysis

and interpretation of all the information related to health

matters. This analysis helps identify the risks and the source

of infections. In Mexico, we do not have the incentives to

gather and analyze this information because public hospitals

are very regulation-oriented and since the regulation is weak

they actually can claim that they comply with the local norms.

There is no reliable and public information that could help

patients demand higher infection-control standards. In the US

and Europe the insurance organizations took action against

this so if a patient gets infected it is the hospital’s responsibility.

Therefore, hospitals started implementing measures to ensure

proper hygiene. However, this has not happened in Mexico yet.

Training for nurses and doctors regarding infection control is

also outdated. It is quite difficult for them to acknowledge this

and to ask for internal training. We offer continuous education

and training for everyone involved with the CSSD: training in

the use of medical equipment, the best practices for washing

surgical instruments, technical support for engineering

departments, safety in the handling of sterile material and

other important topics.

244

Q: How important is the health sector to VECO’s operations?

A: Traditionally, VECO has been more focused on pharma since

we invest heavily in pollution control. Now, we are starting

to focus on hospitals, because they should invest more in

controlling the environment in both critical and noncritical

areas. We have just installed eight QUIROVECO air-filtering

units in Mexico City’s Hospital General. With this equipment,

the operating room lamp is in the center and has a High

Efficiency Particulate Air (HEPA) filter around it, ensuring the

air is sterilized above and around the operating table. When it

comes to innovation related to air purification, it is necessary

to improve the validation processes and standardized

operating procedures because air-filter technology has not

changed much in the airborne particle-efficiency filtered. The

application design, however, evolves along with our clients’

needs, which modify over time. There may be cases in which

clients require us to design an entire air-filtration system for

a special application and we validate the equipment’s quality.

Q: What steps are followed when a client requests a system?

A: It is a long process. First, the customer sets out the

required system and the air efficiency to be achieved

according to ISO standards. Then, each component of

the system is designed in accordance with the process

requested. One of the greatest issues for hospitals is

nosocomial infections because hospitals are badly designed

and the investment to correct this would be large. A

hospital should be designed so that each consulting room

has a system that brings in clean air from the corridor

and safely removes contaminated air from the consulting

room. However, to implement this change in the air system

in existing large hospitals would require demolishing the

building and starting over.

We are developing systems that mitigate this not only for

hospitals but also for home applications. One of the main

problems in Mexico, especially in cities such as Monterrey,

Toluca, Leon, Silao, Mexico City and Guadalajara, are

respiratory infections resulting from the terrible air quality.

Q: What benefits do hospitals receive from VECO systems?

A: An air-quality control system enables the reduction

of nosocomial infections caused by air contamination,

resulting in cost savings due the reduction of

hospitalization time and the use of antibiotics. Our air-

filtering technology, coupled with a highly trained staff,

can reduce or eliminate the need for antibiotics.

Q: Previously, 60 percent of your business went to the public

sector. In which areas is VECO working specifically?

A: The public sector is an important part of our business,

especially in research and energy generation. Those working

with hazardous substances understand the importance of

ensuring they do not breath the virus. The same goes for the

construction of laboratories. We also offer services to nuclear

laboratories that work in cancer treatment. We manage the

air-quality control of these centers, ensuring that radiation

does not leak. Finally, VECO works with public-sector

institutes that mix medicines.

Q: VECO sells its products worldwide. What is the added

value it offers as a Mexican company?

A: Our price/quality ratio is very good and some of our

products from 1970 are still in use today. In 2016, we

began a process to redesign our equipment to prepare

ourselves to go out and look for stronger distributors in

the US, Canada and Europe, where investments of this

type are most common.

Q: What role do you see VECO playing in health in Mexico?

What solutions can improve access to health?

A: We should get more involved in regulatory affairs, bringing

the knowledge we have acquired nationally and internationally

to generate regulations that force institutions to use adequate

air-pollution control systems. The CSG has begun certifying

hospitals and has increasingly raised standards, which has

enabled some to improve at a manageable pace. The main

objective should be standardization at a high-level.

SECURITY IS IN THE AIRÁNGEL DE VECCHIDirector General of VECO

VIEW FROM THE TOP

VECO manufactures systems and equipment for the

purification of air and gases. It provides services to industries

including electronics, energy, nuclear engineering, aerospace,

pharmaceuticals, biochemistry and oil chemistry

245

Q: What are the main solutions Inframedica offers the

healthcare sector?

A: Inframedica offers design, engineering and installation

of supply networks for oxygen and medical gas through

our wholesale and retail sales to hospitals and small

clinics. We have good relationships with many medical

groups, such as Ángeles, StarMédica, Hospital San José,

Hospital ABC and Beneficiencia Española.

Q: What strategy do you implement to ensure these clients

stay with you from the start to the end of a project?

A: Our solid infrastructure allows us to guarantee the maximum

strength, efficacy, professionalism and responsibility that

our customers deserve. With hospital projects, we have a

complete team of specialists who are ready to collaborate

on each part of the project. We collaborate with the main

health institutions and physicians in respiratory care in Mexico.

Such is the case of Seguro Popular, which uses our solutions to

provide services in respiratory care to low-income populations.

Q: How do you manage your distribution?

A: We have the largest distribution network in the country,

which guarantees the delivery of medicinal oxygen to

hospitals, clinics, homes of patients and those patients with

affiliated insurance companies or government institutions.

This network is supported by 30 production plants and 200

sales points across the country.

Q: How are you addressing sleep issues?

A: We have a high-tech sleep clinic for the diagnosis and

treatment of obstructive sleep apnea. We treat more than

1,000 patients and we have more than 80 mobile clinics

across the country offering this service.

Q: What innovation is possible in the gas distribution market?

A: The cooperation with our main partners, Air Products

and Chemicals, allows us to modernize and use vanguard

equipment for the supply of medicinal gases that contribute

to long-term competitiveness.

Q: As a market leader, what is the added value Inframedica

brings to the healthcare industry?

A: We are investing in large infrastructure to provide

services to treat diseases with high mortality in Mexico,

like Chronic Obstructive Pulmonary Disease, which in 2016

became the third cause of death in Mexico. We also develop

alliances with the main health organizations and institutions

that have allowed us to create solutions for the diagnosis,

treatment and follow-up of patients.

BETTER GAS MANAGEMENT, BETTER HEALTH SERVICES

EDGAR ARTEAGADirector of the Medical Division for Inframedica

VIEW FROM THE TOP

Inframedica is part of Mexican company Grupo Infra and has

almost 100 years of experience. It focuses on the development

of devices and infrastructural products for gas management,

health and work safety

Analyzing human gametes

246

Q: What are the greatest challenges that pharmacies are

facing in the current market?

A: We face aggressive competition from national chains that

are entering areas where regional chains had maintained

an unchallenged presence for many years. Everyone can

compete on price, but the main issue is service and a big

pharmacy can offer all the medicines listed on a prescription.

The national chains often have large inventories and if a

regional pharmacy does not, it becomes less competitive.

Medicines for chronic diseases are now in high demand

and although people are cost-conscious, they also prefer to

obtain all the items they need at one store. Service, stock,

location and price are the top four challenges.

Q: To what extent would you consider creating your own

brand?

A: More than an own-brand, we would be creating an

exclusive brand because it would be sold through our

pharmacies and would not bear the logo and branding of

each individual pharmacy. We are in the process of creating

such a brand that would be available throughout the group.

Generics are enjoying the most growth, so combining

generics with a private label should produce good results.

To date the brand is designed and developed, we are simply

awaiting regulatory approval. We hope to launch it in 4Q17.

Q: What plans do you have to put doctors in these

pharmacies?

A: We have set up 100 consultancies so far from a base of

zero and we continue to grow. Of those, 62 pharmacies

are in operation and the others are still a work in progress.

The doctors are not our employees and they have full

liberty to decide which treatment to prescribe. We use

a third party that is specialized in this area to find those

doctors. In addition to general doctors, we hope to add

specialized consultancies.

Q: To what extent will specialists in pharmacies be linked

to the specialized areas within stores?

A: They will be in two senses. First, salespeople will be

specialized in what they are selling, usually linked to the

provider, which trains those people to use the products.

Secondly, we want to add specialized doctors such as

dermatologists. We will first see how this progresses and

then bring other areas online. We are even considering

offering basic dental services. The company we are

working with to provide doctors also collaborates with

us to set up clinics in those small towns that suffer from

access issues.

Q: What growth do you expect for home deliveries and

online sales?

A: We are hoping for aggressive growth because we are

still small. We need to more than double our revenue from

home deliveries in 2018, reaching around 150 percent

growth as we are starting from a small base. We expect

to see growth of around 300-400 percent in our online

services. The platform is already running in two chains. The

back end of the platform will be the same for each chain,

although the front end will reflect the individual chain.

Q: How is the platform organized and what impact is

e-commerce having on pharmacies?

A: We sell through various channels, one of which is online,

which is an emerging and growing area. By technological

platform, we mean mostly two things. The first is information

management at the point of sale. The second enables

operations related to inventory control, to sales statistics, costs

and putting costs online to allow customers to make quick

decisions, promotions and discounts. In addition, we want to

implement specialized software for personnel management,

because there is a high level of rotation in the pharma-retail

sector and constantly training people is expensive.

Q: Will independent pharmacies have a role with the group?

A: We are working on a program to invite independent

pharmacies that we hope will be ready by the end of 2017.

We hope to close 2017 operating around 600 pharmacies,

not counting those that are independent.

SMALLER PHARMACIES FIGHTING BACK AGAINST BIG CHAINSGUILLERMO MARTORELLDirector General of Grupo RFP

VIEW FROM THE TOP

Grupo Regional de Farmacias Productivas (Grupo RFP) was

founded in 2016, uniting pharmacies such as Farmacias San

Francisco de Asís, Farmatodo, Farmacia Noscaro, Farmacias

de Dios, SFG and Súper Farmacia Gems

247

Q: What main challenges in terms of administration are

pharmacies facing right now?

A: There are 45,000 outlets, including pharmacies and

convenience stores, that sell over-the-counter drugs and

30,000 pharmacies, including chains, self-service and SMEs.

ANAFARMEX is pushing for a new model that strengthens

SME pharmacies or community pharmacies so that the

network is composed mainly of this type of business, as

it is in Europe. In Mexico, we follow the American model,

which is vertical and employs a large inventory but with little

rationality at the sales point. The pharmacy is a service that

provides drugs to the population and the European model

accomplishes this because in SME pharmacies, 80 percent

of the inventory is pharmaceutical while the remaining 20

percent is of another variety. In the American model, 30

percent of the products at supermarket pharmacies are

pharmaceutical, while the remaining 70 percent are not.

Q: What is ANAFARMEX’s main priority?

A: We want to claim the role of pharmacies in dispensation.

The WHO has proposed that all countries achieve better

product management. To that end, Mexican authorities

are working to certify pharmacy operators. We provide

performance ratings based on CONOCER’s Competency

Standard 468, which addresses the dispensation of drugs

and health-related products at pharmacies. Through an

agreement with the Ministry of Public Education and the

Ministry of Health, we provide pharmacy employees with

training from the Integral System for Training on Dispensing

(SICAD), COFEPRIS and CONOCER. In the future, we hope

that when customers enter a pharmacy of any type, they

will see a sanitary or operating license, which lets them

know there is a certified operator on site. Right now, only

30 percent of operators are certified.

Q: Medical consultations and branded generics are now

available at pharmacies. What challenges and opportunities

does this represent?

A: Fifty percent of the country’s 30,000 pharmacy outlets

now have Pharmacy Anexed Consultories (CAF), where

there are around 10 million consultations per month, more

than ISSSTE provides in the same period. However, it is

important that the doctors in these offices are trained. With

generics, pharmacies need to be clear about what is said

regarding these products. We must avoid the conflicts of

interest that arise through prescription substitution.

Q: What can be done to promote local businesses over

their larger counterparts?

A: The quality of service is fundamental. If there is no quality

service or certified staff related to those investments, the

projects will be small. A prescription must be treated as

an official document and free access to drugs must be

supported with advice from the operator. The price factor is

also affecting SME pharmacies, so the challenge is to reduce

that gap between supermarkets and chain pharmacies.

COFECE has been researching noncompetitive business

practices and hopefully in the future these will decrease.

Q: There are products that have been withdrawn from the

foreign market but are still sold in Mexico. What can be done?

A: Mexican pharmacies were not submitting pharmacovigilance

reports but after the WHO started demanding these reports,

certified pharmacy operators became obligated to do them.

We also need to reinforce the importance of the patient report.

These new responsibilities brought by the new regulations will

help authorities decide when to remove a drug.

Q: How does ANAFARMEX contribute to the eradication of

illegal products in the pharmaceutical market?

A: The WHO says that 10 percent of everything commercialized

in the market comes from illegal sources. Fortunately, in

Mexico the figure is 1.5 percent. We recommend that when

consumers purchase products, they verify that the provider

is a reliable company that has the official document of

recognition as a distributor issued by the Ministry of Public

Education (SEP). ANAFARMEX has a permanent committee

focused on the illicit market.

PHARMACIES: SAFE ACCESS TO HEALTH

ANTONIO PASCUALPresident of ANAFARMEX

VIEW FROM THE TOP

ANAFARMEX is an association that represents mainly small

and medium pharmacies but also some pharmaceutical chains,

making up a network of 30,000 sales points. The association

has been providing members with services for over 31 years

248

HOW ARE YOU OVERCOMING THE

LOGISTICS HURDLES IN MEXICO?

JOSÉ ALBERTO PEÑA Director General of Grupo Marzam

INGRID RITTER Healthcare Strategist Latin

America of UPS

MARIO GARCÍA Vice President of Operations at

GNK Logística

ROUNDTABLE

One of the greatest challenges we face is Mexico’s size, so we must ensure we provide

an effective, efficient and continuous service. Security is a hot topic that requires

care. We are a low-margin industry, so all additional costs immediately impact our

profitability. We need to be prudent about how we manage additional expenses,

which, ideally, we should not have. The health industry in Mexico is also a complex and

fragmented one that requires different skillsets. I truly believe that Mexico is one of

the most complex healthcare markets. 2017 will be a challenge from an exchange-rate

perspective. For us, another key component is gasoline, which has a direct impact

on our expenses. The exchange rate will have an impact on the industry as a whole

because 90 percent of material used to produce medicines is imported.

In Mexico, many products are transported over land but a challenge that is not

usually considered is the number of times a package can be exposed along the

transport cycle. Before picking up a UPS Temperature True shipment, UPS works

with its customers to provide a comprehensive analysis of shipping options and

procedures, such as routing, type of transportation required, who will come into

contact with the shipment, what type of carriers are acceptable for that type

of shipment and set up of contingency shipment plans. Everything is defined

beforehand, so when we do pick up a shipment, we know exactly how it is going

to move, from where to where and who needs to be notified.

The greatest risk is the loss or damage of the client’s assets. NOM-059, ratified

in August 2016, is also important for us. It stipulates that to transport pharma

goods within Mexico, a company must use vehicles specifically for this purpose

and cannot transport anything but pharma goods. As we are already dedicated

to this and have a cold chain in place, this norm has benefited us. Beginning a

project is often the most difficult phase because companies do not have the full

scope of the project. The private sector is more demanding due to their corporate

governance and compliance structures and procedures. The tolerable margin of

error is extremely narrow. Governments often do not have standardized procedures

or high standards when dealing with pharma goods and their warehouses in most

cases do not comply with any NOM rules or regulations, nor do their vehicles.

Mexico is the 14th largest country in the world, making

distribution and transportation a logistical challenge.

Added to its vastness is its reputation for insecurity, an

issue companies must overcome to successfully transport

goods. These issues not only pose logistical hurdles but

can also contribute to higher expenses. Mexico Health

Review asked relevant players from the logistics industry

how they are tackling these and other challenges while

delivering services and products in health and pharma

in Mexico.

249

JOSÉ ERIC DELGADO Director General of Sicamsa

VÍCTOR SOTO Director General of Levic

RAFAEL FIGUEROADirector General of Aeroméxico Cargo

ERICK JIMÉNEZDirector General of Majicarga

The main problem is the lack of logistics regulation for the transportation of

laboratory samples and other types of materials. Those in charge of shipments are

often unaware of the logistical intricacies involved and delivery companies can be

blamed for any problems. We are addressing this by providing more training for our

staff and we have established certain internal rules. For example, if the container

provided by our client to transport a sample is inappropriate, we would reject the

order or use one of our available containers. Even though a value cannot be placed

on samples, an inappropriate protocol can translate to a loss of millions of dollars for

clinical laboratories. The samples we transport can be essential to a patient’s health

so our mission is to deliver it in the right way and as quickly as possible.

Protests do not affect us much. What does impact us greatly is the Hoy No Circula

(No Drive Day). In 2016, 40 percent of our vehicles could not circulate on any

given day. With one No Drive Day per week, 20 percent of our vehicles are idle

but with the double measure, two of every five are out of action. Distributing

medicine becomes much more difficult. There are also security issues and areas

we cannot enter because drivers are asked to pay bribes. We do not enter areas

where the driver will be at risk, or when the risk is larger than the reward. If we

were to push this, then we would be putting the health of the driver and the good

condition of the medicine at risk. We are investing in R&D to allow our customers

to buy from us online. In the first month, sales were laughable, but by March 2017

online sales represented 9 percent of our total.

Due to quality and security concerns with land transportation services, the

industry has increased the volume of pharma products transported by air. We

have been offering specialized services for the domestic market for the last

three years and our market penetration has grown over 100 percent each year.

Today, we transport around 12,000 tons of pharma products every year, which

represents 90 percent of the domestic air pharma market. Our biggest strength

is Aeroméxico’s security processes, which make us the most secure airline to

fly with. We have invested a lot of resources over the past three years to make

sure that 100 percent of our cargo is screened and sterile, which makes us the

preferred carrier for most agencies.

Cost-efficiency is the most pressing issue. We must make our routes more profitable

because many new, bigger competitors are entering the business attracted to

the segment because distribution in the pharmaceutical sector is one of the best

remunerated. However, for a company like Majicarga it is difficult to compete against

fleets of thousands of units and the entrance of these new competitors. The prices

we must offer are much lower than three years ago. Businesses must find sustainable

strategies that help growing companies maintain or even further develop so as not to

be bought out or absorbed by larger ones. Insecurity is another significant challenge.

Although we have a sophisticated monitoring system, the existent technology is

limited. No distributor or technology company in the security market can fully

guarantee that a unit carrying a client’s product will not get lost or robbed.

Novo Nordisk cycling team

251

The increase of life expectancy due to the control of infectious diseases has

given foot for new concerns such as chronic diseases, common in the elderly

population and a group of young people prone to these conditions due to

unhealthy lifestyles. Chronic diseases such as diabetes, obesity, cardiovascular

conditions, cancer and renal deficiency are a priority for citizens and healthcare

institutions. Also, issues such as teenage pregnancy, breast feeding, maternal

mortality and geriatrics are demanding more attention and more resources.

Efforts from the public healthcare system are focused on providing care

for these patients once they are diagnosed, which is sucking up most of the

shrinking public budget without producing effective results. The new action plan

is focused on prevention strategies that could help reduce the rising number of

cases, together with the creation of awareness campaigns on the main health

issues. The Mexican population lacks discipline in medical checkups, only visiting

a doctor when feeling discomfort or pain, which leads to conditions being

diagnosed in late stages when very little or nothing can be done to alleviate the

condition. This also results in higher costs for health institutions. This chapter will

cover the main health concerns in Mexico explaining what healthcare players in

the sector are doing to solve them.

HEALTH CONCERNS

11

253

CHAPTER 11: HEALTH CONCERNS

254 ANALYSIS: Serious Diagnosis for the Mexican Population

256 VIEW FROM THE TOP: Yiannis Mallis, Novo Nordisk

258 VIEW FROM THE TOP: Irma Egoavil, Ferring Pharmaceuticals

260 VIEW FROM THE TOP: Erick Alexanderson, SMC

261 VIEW FROM THE TOP: Claudio Castro, Synthon

262 ANALYSIS: The Three Types of Diabetes

263 VIEW FROM THE TOP: Carlos Oviedo, GDA

264 VIEW FROM THE TOP: Julián González, Check-Up Center

265 VIEW FROM THE TOP: Sergio Brown, Beckman Coulter and Danaher

266 INFOGRAPHIC: Obesity: A Growing Problem

267 VIEW FROM THE TOP: Carlos López, Medix

268 VIEW FROM THE TOP: Juan Carlos Borgatta, Borgatta

269 VIEW FROM THE TOP: Rogelio Villarreal, Centro de Oftalmología Monterrey

and Ojos Para México Foundation

270 ANALYSIS: Cancer a Top Killer Among Men and Women

272 EXPERT OPINION: Myriam Lingg, Swiss Tropical and Public Health Institute

and the University of Basel

274 ANALYSIS: Success Of 90-90-90 Aids Program Requires 20/20 Vision

275 INSIGHT: Juan Tamayo, COMOP

276 EXPERT OPINION: Carlos Ortiz, ABC Medical Center

Janet Pineda, ABC Medical Center

277 ANALYSIS: Maternal and Infant Health

278 VIEW FROM THE TOP: Felipe Espinosa, Laboratorios Collins

279 VIEW FROM THE TOP: Ignacio Castañón, Alcon Labs

280 ANALYSIS: Beware of Mosquitoes

254

SERIOUS DIAGNOSIS FOR THE MEXICAN POPULATION

According to the Deloitte 2017 Global Healthcare Outlook,

by 2020, 50 percent of global healthcare expenditure

(around US$4 trillion) will be spent on three causes of

death: cardiovascular diseases, cancer and respiratory

diseases. Today, Mexico’s main health concerns pivot

around endocrine disorders, cardiometabolic diseases

and CNS conditions and finding cost-effective strategies

to prevent, diagnose and treat these conditions. The main

cause of death among the Mexican population in 2015,

according to INEGI, were heart conditions, followed by

diabetes mellitus and cancer.

Mexico’s top priorities can be categorized by age group.

First, fight child obesity and teenage pregnancy to

ensure the wellbeing of future generations. According

to ENSANUT, the combined prevalence of obesity and

overweight in children between the age of 5 and 11 is

33.2 percent. Second, address the increasing prevalence

among an aging population of CNS diseases such as

Alzheimer’s, diabetes and cardiovascular diseases. Third,

educate the generation of young adults who are prone to

diseases caused by unhealthy lifestyles. “We are shifting

from infectious disease to chronic diseases,” says Oscar

Parra, Managing Director of Mexico, Central America and

Andes of Lundbeck. “Before, bacteria caused illnesses

but now diabetes, cancer, depression and

coronary diseases are more frequent. Mexico

is a young country and the main driver for

growth is its large population. Therefore, it

is important that all decision-makers in this

country realize that the young population needs to be

healthy to be productive.”

In 2016, diabetes was the second-leading cause of death in

Mexico, accounting for 14 percent of all deaths nationwide,

according to the WHO report for that year. According to

ENSANUT, the incidence of obesity among the Mexican

adult population is 71 percent although that varies across

the country depending on a number of factors, a situation

that subsequently demands different tactics, making

a concerted policy approach difficult. “There are very

clear regional differences based on the cultural traits and

customs of the population. For example, the folklore of

each state has an impact on eating habits and this can vary

widely across the country, requiring a different approach

in each location,” says Erik Alexánderson, President of the

Mexican Society of Cardiology (SMC).

The Mexican government is addressing the problem by

implementing a special tax on production and services

(IEPS) related to sugary drinks. In addition, the country is

considering the possible application of a tax on products

with a high sugar or fat content. But taxation alone will

not solve a problem that begins with the population’s lack

of knowledge about the disease and its causal factors.

ANALYSIS

Public health policies in Mexico have evolved to tackle the

challenges of a population that is living longer. The emergence

of chronic disease control as a priority is putting a strain on

public finances and highlighting the need for preventive care

PERCENTAGE OF THE POPULATION PER REGION

0

10

20

30

40

50

SouthMexico CityCenterNorth

OBESE (EQUAL OR MORE THAN 30)

OVERWEIGHT (25-29.9)

NORMAL (18.5-24.9)

UNDERWEIGHT (LESS THAN O EQUAL TO 18.5)

PERCENTAGE OF THE POPULATION PER AREA

0

10

20

30

40

50

UrbanRural

OBESE (EQUAL OR MORE THAN 30)

OVERWEIGHT (25-29.9)

NORMAL (18.5-24.9)

UNDERWEIGHT (LESS THAN O EQUAL TO 18.5)

� Obese

� Overweight

� Obese

� Overweight

� Normal

� Underweight

� Normal

� Underweight

WEIGHT IN MEXICO PER REGION (percent) WEIGHT IN MEXICO PER AREA (percent)

Source: ENSANUT 2016

255

ENSANUT’s results showed that 76.3 percent of Mexicans

do not know how many calories they should consume each

day and only 14 percent of adults comply with the WHO’s

suggestion of 150 minutes of exercise per week. Yet. the

survey also revealed that 62.3 percent of the population

considers they have healthy nutrition and 67.3 percent

consider themselves physically active.

TEEN PREGNANCY

Another major concern, both at the health and social levels,

is the high rate of adolescent pregnancies. According to

the OECD report Society Glance 2016, Mexico ranks first

among OECD countries in teenage pregnancy. Of every

1,000 babies born, 73.6 babies belong to teenage mothers

between the age of 15 and 19, while the average for all

OECD countries is 14 babies per 1,000.

In response, the government has adopted a national

strategy for prevention of teenage pregnancy: ENAPEA, a

program that was established to address this issue, targets

zero pregnancies for ages 10 to 14 and a reduction by half

for ages 15 to 19 by 2030.

FIGHTING CNS CONDITIONS

Regarding CNS conditions, the most recent National Survey

of Psychiatric Epidemiology shows that 23 percent of the

population suffers from a mental condition. According

to the Mexican Health and Aging Study (ENASEM),

which appeared in the World Alzheimer Report 2016, the

prevalence of dementia was 6.1 percent in the population

aged 60 and above. The study also found that diabetes and

depression were a risk factor for this condition.

To face these health issues, the public healthcare systems

are investing in prevention and early diagnoses to lower

the costs of treatment, especially amid a rise in life

expectancy. According to INEGI, life expectancy for

Mexican men increased from 71 years in 2010 to 73 in 2016

and for Mexican women from 77 in 2010 to almost 78 in

2016. According to Deloitte’s Global Health Care Outlook

2017, life expectancy in Mexico is projected to increase

by one year by 2020. The report estimates that by 2020,

global health expenditure will climb to US$8.7 trillion, from

US$7 trillion in 2015. Prevention and early diagnosis could

help reduce this burden. “Mexico has done a great job in

generating consciousness, due in part to the government’s

sponsorship of a large number of campaigns, although

there is still a great deal of work to do. Habits need to

change, which is difficult,” says Carlos López, Director

General of Mexican company Productos Medix, which is

dedicated to fighting overweight and obesity.

The private sector also has a significant role to play in

the landscape of prevention and care and partnerships

between private and public companies have become

strategic. “We are focusing more on improving our

patients’ outcomes by helping institutions measure results

and apply effective solutions, which gives us a competitive

advantage. AMIIF and IMSS are also launching a project

to prioritize a group of critical diseases in which they

create rules so that the different companies offer shared-

risk models that can provide access to innovations,” says

Alexis Serlin, Director General of global pharmaceutical

and biotechnological company Novartis.

These initiatives and joint efforts between the private

and public sector will be key to addressing Mexico’s main

health concerns. “Private companies are changing from

being providers to becoming partners,” says Fernando

Oliveros, Vice President of Medtronic.

Source: World Alzheimer's Report 2015

ESTIMATED NUMBERS OF PEOPLE WITH DEMEN-TIA, MEXICO

0

2

4

6

8

10

12

14

16

18

2030202520202015

ESTIMATED NUMBER OF PEOPLE WITH DEMENTIA IN MEXICO (millions)

� Men � Women

Source: OECD data

OECD COUNTRIES WITH HIGHEST TEENAGE FERTILITY

0

10

20

30

40

50

60

70

80

Hun

gar

y

Slo

vaki

a

US

Turk

ey

Chi

le

Mex

ico

BABIES BRON FROM TEENAGE MOTHERS FOR EVERY 1000 BIRTHS

BABIES BORN FROM TEENAGE MOTHERS IN OECD COUNTRIES (per 1,000 births)

256

Q: Novo Nordisk is working on oral insulin. What would

the impact be in Mexico, where diabetes rates are so high?

A: Oral insulin has been the Holy Grail of diabetes for

many years, other than finding an outright cure. It would

be significant in a market like Mexico, but it is not a silver

bullet. In the midterm, it is more likely that oral glucagon-like

peptide 1s (GLP1s) reach the market, which could offer an

excellent level of glycemic control for patients, with minimal

risk of lowering glucose below optimal or safe levels. The

arrival of oral GLP1s will transform treatment across the

globe. As a company, we are investing in both technologies,

but we see oral GLP1s as a faster and better route into the

oral market, which should occur in the next five to 10 years.

Q: What advantages does Novo Nordisk’s new drug

semaglutide for obesity offer and why move into this

segment?

A: We have been working in diabetes for more than 90

years. For us, obesity is an adjunct area that has always been

very exciting, but has never been considered a disease by

the community of physicians. We have developed two GLP1

molecules that work on both diabetes and obesity. One is

commercially available in Mexico, called liraglutide, which is

available in two formats: one to treat diabetes and a second for

treating obesity. The other is semaglutide, the next generation

of GLP1, which will also hopefully be used for diabetes and

obesity. The current GLP1 has excellent data in terms of

efficacy, safety and weight lowering effect and clinical trials

with semaglutide have shown even greater promise. The good

news for us is that we have made an entry into this market and

we have other products in the pipeline for the next five to 10

years. We carry out many clinical trials in Mexico and the sites

here are among the most efficient in the world.

Q: Just over 6,000 people suffer coagulation issues in

Mexico. What is the advantage for Novo Nordisk to cater

to such a small number of patients?

A: There is an unmet medical need for patients, so our

products make a very real and significant difference. As

a company, we only enter a therapeutic area if we can

make a difference. With our strong history in molecular

engineering, hemophilia is an attractive space in which

Q: COFEPRIS is known for its strict regulatory approach.

How did this impact Novo Nordisk’s operations?

A: Mexico has implemented strict regulations that have

impacted the entire value chain. These restrictions are

well-founded and are a natural evolution of the Mexican

industry. This is a positive tendency. There are some

restrictions placed on operations, but overall the standard

of production in the country is positive.

Q: With the increasing number of generics companies

entering Mexico, what strategy are you employing to

ensure Novo Nordisk products retain market share?

A: Mexico is a market in which generics are now dominant,

mostly in oral treatments, but less so for insulin and

injectables. Protein products cannot be copied exactly

due to the many intricacies and stages of the production

process and their impact on the resulting molecule. Novo

Nordisk has a broad range of innovative insulin products

and injectables, so the biosimilar/generics trend has not

had a dramatic effect on our business.

In addition to the top products, we offer high quality

previous generation products at even more affordable

prices. We compete directly with biosimilars in the high

volume/very low price segment, while our previous-

generation products compete in the medium price-range

and our latest and most innovative products compete in

the best-in-class tier.

Q: Last year, Novo Nordisk was the government’s top

provider of human insulin and had the third-largest share

of the overall diabetes segment. Can the company keep

pace going forward?

A: Novo Nordisk is the largest insulin provider in the world,

with over 50 percent of the global insulin market and

25-30 percent of the overall diabetes market. In Mexico,

we are not the market leader yet and last year we had

8-10 percent of the market, depending on the segment,

which is three times less than our global average. As the

demand for better diabetes care and products in Mexico

is growing, we are sure we will continue to grow strongly

in coming years.

TREAT NOW TO AVOID COMPLICATIONS LATERYIANNIS MALLISVice President and General Manager of Novo Nordisk Mexico

VIEW FROM THE TOP

257

the industry and patients must all contribute in tandem. We

will continue to offer attractive price points for our products

to make sure that an increasing number of patients can

receive better treatment. If they are using human insulin

now, perhaps they could move onto modern insulin and

then potentially to our best-in-class and most innovative

insulin: insulin degludec.

We need to help and empower people with diabetes to

take ownership of their disease, follow the regimen, do not

cut corners and become really interested in achieving the

best outcome, to see real progress in bending the diabetes

complications curve. If patients follow this path, they may

be able to avoid retinopathy, blindness or kidney disease

and live a healthy life.

In most countries, pharmaceuticals represent only 10

percent of the total cost of diabetes. If people can invest

that first 10 percent or even a little more to get access

to better products, a big part of the other 90 percent of

costs can hopefully be avoided. In Mexico, this is critical,

because the system is now treating the complications of

people that began suffering from diabetes 15 years ago.

Since then, the diabetic population has more than doubled.

we can apply this principle of synthesizing, developing,

creating and producing proteins. Apart from the

gratification of improving the everyday lives of people with

hemophilia, it is also an attractive commercial opportunity.

Q: What is the company’s market position in the

hemophilia segment?

A: For patients with hemophilia who have developed

inhibitors, we are leaders with recombinant factor VIIa

(rFVIIa) in Mexico, offering treatment to almost three-

quarters of them. From the smaller inhibitors segment,

we are now entering the broader hemophilia population.

Turoctocog, our new recombinant factor VIII product,

entered the market in 2017 and it has been successful so far.

Q: What is the added-value Novo Nordisk provides in the

growth hormone segment over its competitors?

A: We offer a constant presence and dedication to the

patient. When we enter a segment or a medical need, we

are there to stay. People know they can depend on us, that

we will continue focusing on that area and supporting the

patients for as long as there is demand for our products. We

have attractive devices for patients, such as a pen instead

of a needle and syringe. In addition, we support patients

and doctors with education and other services.

Q: As head of Novo Nordisk Mexico, how will you

contribute to Mexican healthcare over the next two years?

A: Diabetes is a problem that is too big for one company or

party to solve. The public sector, the medical community,

Novo Nordisk is a Danish pharmaceutical company that is a

world-leader in diabetes, growth hormones, and hemophilia.

With a global presence in over 180 countries, it has been

operating in Mexico since 2004

Technological innovation at Médica Sur

258

casa (Baby at home) that helps patients with a fertility

need who do not have the purchasing power to access

treatment. The major problem in reproductive health is

that all costs are paid for fully out-of-pocket, so not all

patients are able to undergo treatment. As world leaders in

reproductive care, through our Proteger (Protect) program

we work with INCan and other associations to identify

and support female patients who have cancer and could

potentially have a future reproductive need. Our program

enables them to protect their ovules and thus ensure

future possibilities of getting pregnant. We work mostly

with breast cancer patients because it is a disease that

can be cured if detected early enough.

Q: What internal and external factors have contributed to

the company’s growth?

A: Ferring has enjoyed success in the private and the public

sectors due to our portfolio and because we are committed

to helping people become parents and to keeping mothers

and babies healthy, from conception to birth. Over one-third

of our investment in R&D targets innovative treatments in

reproductive and maternal health but we are also passionate

about making a difference to people’s health and quality

of life through our work. Something we are working on

is diversification. We supply to 18 countries in the region,

which has also helped us to grow and we have striven to

differentiate ourselves and bring products here that could

have an impact on the population.

Q: Which products will you bring to Mexico?

A: We will be launching three new products in the short

to medium term. The first is the treatment for erectile

dysfunction. The others are focused on fertility. One is a

biotech product that is a recombinant treatment, different

from what is on the market because it enables doctors to

tailor doses to a patient’s specific needs. The other is a

treatment that makes it easier for a fertilized egg to attach

to the uterus at the beginning of pregnancy. This treatment

has an innovative application and dissolution method

that supports the proper absorption of the drug, which

differentiates it from other intravaginal alternatives. This

will be on the market in September 2017.

Q: Ferring operates in many areas, some quite specialized.

Which are the most relevant for the Mexican market?

A: Our urology portfolio contains a product aimed at

hormonal dependent prostatic cancer, an antagonist that

enables fast and safe disease control without increasing

cardiovascular risk, a relevant factor for the Mexican

population. In addition, in August 2017 we will be launching

a product for the treatment of patients with erectile

dysfunction. Although it would be a first-line treatment,

it will be particularly useful for patients with metabolic

syndrome, obesity or cardiovascular disease because this

segment is at risk if systemic treatment options are used.

Q: What is Ferring’s most interesting project at this time?

A: Ferring is not a Big Pharma nor an orphan drugs

manufacturer but a specialized company attending niche

pathologies. We are becoming a more technology-oriented

company, which is due to the areas in which we work. For

example, we manage a portfolio for patients with chronic

intestinal disease, which is not so frequent, is difficult to

diagnose and patients need a lot of follow-up during the

treatment. We have been providing digital tools to provide

such follow-ups for the past three years.

Q: How can technological innovations help patients?

A: The way they work varies according to therapeutic

areas. For example, we have an app for patients with

inflammatory bowel disease that provides information on

the different stages of the disease and the reasons behind

its progression. The main issue for these patients is that

even though the disease may be controlled, there could be

a specific event that pushes it to another stage. We provide

support and teach them to identify symptoms. Another

program helps patients with prostatic cancer track the

disease properly, providing them with access to prostatic

antigen testing. Ferring also runs a program called BB en

DIVERSE NICHES PROVIDING GROWTHIRMA EGOAVILDirector General of Ferring Pharmaceuticals Mexico

VIEW FROM THE TOP

Ferring Pharmaceuticals is a Swiss company that has a wide

portfolio of products spanning prostate cancer, birth, intestinal

inflammation, assisted reproduction, bed wetting, cirrhosis

bleeding and coagulation issues

Q: What challenges do you face when bringing innovation

to Mexico and how do you overcome those?

A: Sometimes, access to innovation in Mexico is not easy

and can take a long time. Even if innovation can deliver

added-value, it must be proven. Adoption of innovation

can also be challenging as it sometimes means that the

therapeutic conduct has to be changed. For example, our

new erectile dysfunction product will meet an unmet need

and for it to be effective we have to work with physicians

and medical associations to ensure it is used in the right

way and prescribed for the right patients. The testing

and dosage adjustment for the recombinant personalized

fertility treatment that we will be launching will be different

from current alternatives in the market and will require us

to support physicians as they adopt the product.

Q: Ferring entered a partnership with Metabogen to

produce probiotics for pregnant women. What role do

alliances play for the company?

A: Alliances are important. However, Ferring is a private

company focused on innovation and clinical research and

just like all companies we need to be selective in this area,

allying with those that could help maximize our business.

The investment required to put a product on the market

is huge, sometimes over US$1 billion, and the likelihood of

success is limited. Companies that are good at R&D in a

specific area can benefit from these alliances.

Q: There is a lack of reliable, updated information on health

in Mexico. Is there an opportunity to use your apps to

provide a database?

A: That is not so easy. We can extract some epidemiological

data but the aim of our digital tools is to support doctors with

patient management and to understand diseases. Institutions

are becoming more open to collaboration so perhaps there

may be an opportunity to explore an alternative like this

in the future. If we want to be successful as a country and

society in changing Mexico’s healthcare indicators we have to

find ways to make alliances with public and private players.

Q: What will your priorities be for 2017 other than launching

those three new products?

A: We will have to maintain our leadership in the area

of fertility. We closed 2016 with over 60 percent market

share in Mexico’s fertility segment. We have to keep doing

what has worked and also find new ways to support our

business over the long term. There is an opportunity with

our product for prostatic cancer to help more patients

at an institutional level, so we need to work with public

institutions to show the benefits this hormonal treatment

could provide without increasing cardiovascular risk and to

ensure it is fully reimbursed. We will also work to maximize

our digital platforms to ensure that everyone who can

benefit from them has access.

260

The Mexican Society of Cardiology (SMC) focuses on the

study, research and execution of new knowledge in the field of

cardiology for scientific and academic applications in Mexico.

Based in Mexico City, it has branches throughout the country

an absolute truth 20 years ago is no longer useful. In half a

century, cardiology has changed immensely and I cannot

imagine what it will be like in 50 years.

Q: What cardiac problems most plague Mexicans?

A: Cardiac diseases are the main cause of death in the

Mexican population, accounting for about 127,000 deaths

every year. This mortality rate is higher than that of cancer,

pulmonary diseases and even diabetes. In fact, most diabetic

patients die due to heart failure. Ischemic heart disease and

heart attack are the main cardiac problems causing these

deaths. There are many risk factors for these conditions

and our population has most of them. The major ones are

tobacco use, hypertension, atherosclerosis, dyslipidemia

and diabetes mellitus. Then there are secondary factors like

overweight, obesity, sedentarism, stress and tension. What

triggers the burden of cardiovascular problems is that 20

million Mexicans are hypertensive, only a third of them

know it and just a portion of those are well-treated. Plus,

about 60 to 70 percent of our population has altered lipids.

But since these are problems that do not generate major

discomfort for a long time, people only seek care when they

are experiencing grave symptoms.

Q: What are the main challenges in addressing these issues?

A: The number of patients with cardiovascular disease is

rising every day. We see young people dying of a sudden

heart attack. There are patients 30 or 40 years of age with

heart problems due to diabetes, hypertension or obesity at

a young age, and many of them never did anything about

it. This is due to the Latin culture of not going to the doctor

until presenting pain. In Mexico, there is no preventive culture

like in Europe, the US or Canada. Besides these young people

dying of heart disease, we have a population niche that did

not exist before: the elderly. With the control of infectious

diseases, we have increased life expectancy and people now

live to 76 on average, much more than 20 years ago. Today,

we have many 80-year-old patients and their probability of

suffering from cardiac disease is high as these are chronic

diseases caused by age. Our challenge is to take care of

these two population groups and achieve the WHO objective

of reducing cardiac death by 25 percent by 2025.

Q: What are the main problems the society faces in the

different regions of the country?

A: There are very clear regional differences based on the

cultural traits and customs of the population. For example,

the folklore of each state has an impact on eating habits

and this can vary widely across the country, requiring a

different approach in each location. Some eating habits make

people more prone to atherosclerosis, the accumulation of

cholesterol in the arteries, because they eat too much fat

and red meat. Also, working habits and stress levels to which

each population is exposed have an impact. The northern

states have a strong custom of achieving targets rapidly, so

they work under a lot of stress. In higher income locations,

work hours are longer, so people usually eat out and lack

time to exercise, which puts people under more stress. With a

lower income demographic, people have more time to move

and walk. The weather and pollution also play an important

role. Considering these factors, we cannot pretend that what

we do in one place is applicable to others. We cannot look

at Mexico as a unique concept because it is the result of

a group of situations and environments. We cannot make

public health solutions based on a standard citizen because

there is no standard citizen.

Q: What is the association’s relationship with regional

cardiology societies?

A: For the Mexican Society of Cardiology it is important to

approach the organization’s regional branches. We believe

there should be more cooperation between associations,

so their projects can have a national health and educational

impact and have access to the improvements developed in

our central offices. That also creates a stronger sense of

belonging. We have signed agreements with seven regional

societies and we are working on more. These agreements will

give them access to our expertise, databases and academic

sessions. Cardiology is evolving at a high speed; what was

NATIONAL-LOCAL EFFORT NEEDED TO COMBAT HEART DISEASEERICK ALEXANDERSONPresident of the SMC

VIEW FROM THE TOP

261

and in certain circumstances almost 50 percent. Our

company is always betting on the future.

Q: What are your plans for the plant in Jalisco, soon to

open and how will it impact your position here?

A: The plant required an investment of around US$20

million and will measure 8,000m2 with a capacity of 200

million tablets, 200 million capsules, 15 million blister

packs and 1 million bottles. The plant is mainly focused on

high-containment products such as oncological products,

for which volumes are small. It will be certified by the

EMA, as are all our sites, because we have plans to export

in the future.

The main focus right now is to produce for

Mexico but since COFEPRIS is recognized

in certain Central American countries, some

products manufactured in this plant will be

sent to Central America. Given Mexico’s

proximity to the US, in the future it could be

an option to gain FDA approval to send our

products north as well. There is no doubt

the plant will make our company stronger.

We did not build it to increase our production capacity

because we have enough capacity globally to supply

Mexico without a problem.

Q: What are Synthon’s plans and expectations in the

coming years?

We want to become a quality reference in oncology and to

be ranked within the top 15 laboratories worldwide treating

CNS and MS. We have two chemotherapy products in the

market and are launching products for multiple myeloma

and lung cancer, and we are working on Imatinib, our first

product for leukemia. We are the only lab in Mexico that

has three aromatase inhibitors for breast cancer.

Q: What is the strategy behind Synthon’s shift from

generics to CNS, oncology and MS?

A: We still produce generics in these therapeutic areas

but the dream of Synthon’s founder was to develop

high-quality molecules at affordable prices to reach

unattended populations.

During its early stages, the company developed molecules

for large consumer volumes. International market trends

eroded the price of these molecules and in 2007 the

company reconsidered its mission. Generics were growing

because countries were seeking quality drugs at good

prices and biotechnology provided the biological medicines

to replace small molecule medicines. We

wanted to reach patients in both areas

so we created a division called Synthon

Generics and another called Synthon

Biopharmaceuticals. The latter develops

new molecules such as antibody drug

conjugates to fight cancer, especially breast

and prostate cancer.

Synthon focuses on CNS because the

population is aging. If we had evaluated the market 50 years

ago, we would have chosen to tackle tuberculosis or typhus

because people died of these illnesses at a young age. A

change in hygiene habits controlled those diseases but new

ones developed as people grew old, such as Alzheimer’s,

Parkinson’s and cancer. Now CNS is a big market because

there is a large population that needs care.

Q: What areas of research do you manage in Mexico?

A: In Mexico we carry out the clinical studies that the

authorities require of us and participate in the company’s

global research projects. We are planning to start phase

three of our SYD 985 project involving breast cancer

monoclonal antibodies and Mexico is one of the study’s

sites. We will look for patients needing treatment and

register the protocol with CROs. We need patients with

terminal breast cancer that bear specific technical traits,

such as HER 2 positive tumors. Globally we invest around

35 percent of our total sales in research in a regular year

RECONSIDERED MISSION BROADENS FOCUS FROM

GENERICSCLAUDIO CASTRO

General Manager of Synthon

VIEW FROM THE TOP

Synthon, founded in 1991, looks to become a recognized

leader in specialty pharmaceuticals, focusing on autoimmune/

neurodegenerative diseases, particularly multiple sclerosis

(MS) and oncology

35%of total sales

revenue is invested in

R&D globally

262

THE THREE TYPES OF DIABETES

It is no secret that diabetes is rampant in Mexico, linked

to the poor lifestyle choices of its citizens and increase

rates of obesity. Despite the efforts of health organizations

and private companies around the country to prevent

development and promote early diagnosis of the condition,

prevalence rates are still high. By 2014, around 422 million

people worldwide suffered from diabetes, which is one in

every 11 people, a figure that has quadrupled since 1980. The

latest WHO figures attribute 1.5 million deaths per year to

diabetes, most of which occur in low and middle-income

countries as the population lacks access to the medicine

and technology needed.

“The number of deaths due to diabetes multiplied by

about seven times between 1980 and 2015, from around

14,600 in 1980 to 98,500 in 2015. In the 21st century so

far, there have been 1.1 million Mexican deaths directly due

to diabetes. This is a grave problem,” says José Narro,

Minister of Health of Mexico. According to a WHO report,

in 2016 diabetes was responsible for 14 percent of deaths

in Mexico, more than all cancers, which killed 12 percent

of the population. In 1980, diabetes was responsible

for only around 7 percent of deaths in Mexico and has

consistently risen year on year. Being overweight, obese

or physically inactive increases the risk of contracting

diabetes. Mexico has an operational strategy for fighting

diabetes, overweight and obesity and physical inactivity.

It has implemented evidence-based national diabetes

guidelines and standardized criteria for referral of patients

from primary care to higher levels of care. It also maintains

a diabetes registry. Furthermore, primary care facilities

generally carry insulin, metformin, sulphonyl urea, blood

glucose measurements, HbA1c tests and urine strips for

glucose and ketone measurement.

Private companies are also capitalizing on this opportunity

to provide services for the millions of Mexicans that suffer

from the condition and need follow-up services. Some such

as Uhma Salud, are providing diagnostics and online portals

to change habits and prevent the conditions from developing

in the first place. Others such as Salud Cercana are providing

follow-up services for those already diagnosed with chronic

conditions. However, despite the opportunities, investment

fund Dalus Capital remarks that many young companies lack

the knowledge, network and understanding of the ecosystem

to create impactful companies.

TYPE 1 DIABETES (T1D)

T1D, previously known as insulin-dependent,

juvenile or childhood-onset diabetes, is usually

present from birth, childhood or adolescence

and is characterized by a lack of insulin.

Causes and risk factors remain unknown and prevention

techniques are yet to be discovered, though it is thought

to be the result of genes and environmental factors yet to

be determined. A daily dose of insulin, the hormone that

controls blood sugar levels, is needed to prevent death.

Symptoms of T1D include frequent urination, thirst, constant

hunger, weight loss, vision changes and fatigue.

TYPE 2 DIABETES (T2D)

T2D is known as acquired diabetes, as it is usually caused by

risk factors such as obesity and by the body’s ineffective use

of insulin. It is much more common than T1D and accounts

for most diabetes-related deaths. T2D is preventable and

global health organizations and governments recommend

maintaining healthy eating habits, avoiding tobacco use

and exercising adequately. Most recently, a high intake of

sugary beverages has been linked to diabetes. This is an

issue in Mexico, a country consistently ranked among the

top five worldwide for consumption of sugary beverages.

Poor disease management can trigger seizures, loss of

consciousness and diabetic ketoacidosis (KDA), which leads

to a diabetic coma in T1D and T2D. A hyperosmolar coma is

a possible complication of T2D and it carries a mortality rate

of 10-20 percent. Other major complications are blindness,

heart attacks, stroke and lower limb amputation due to poor

blood flow causing nerve damage and the development of

foot ulcers, worsening to the point of amputation. Diabetes

is also one of the main causes of kidney failure.

GESTATIONAL DIABETES (GD)

Gestational diabetes is the least well-known of the three

types of diabetes, occurring during pregnancy. It is a form

of hyperglycemia with blood sugar levels above normal

but below those of T1D or T2D. This leaves women at an

increased risk of pregnancy and delivery complications and

also increases their risk and child’s risk of developing T2D

in the future. It occurs as the body struggles to produce

enough insulin to control the increased blood sugar levels

during pregnancy and usually disappears after giving birth.

Although any woman can develop GD, certain factors

place women more at risk including obesity, previously

having given birth to a baby weighing over 4.5kg, previous

experience of GD, having a parent or sibling with diabetes

and being of South Asian, Chinese, African-Caribbean or

Middle Eastern origin.

ANALYSIS

In recent decades, diabetes has crept into people’s lives

to become a main cause of mortality in Mexico. A chronic

disease, diabetes impacts the sufferer for life and has a

variety of devastating side effects

263

Q: Lab acquisitions have helped spur GDA’s growth. What is

the strategy to integrate these labs?

A: Over the past two years GDA has acquired Olab

Diagnósticos Médicos, Laboratorios Azteca and

Laboratorio Clínico Jenner, which were the third, fourth

and fifth most important players in Mexico City and its

surrounding urban area and have made GDA the second-

largest player in the industry. GDA is now integrating the

operations of these companies, retaining the best qualities

and practices of each.

We are a multibrand group that will leverage operational

and administrative synergies to enhance the value of each of

our brands. Olab is recognized by many doctors and public

and private-sector institutions for its expertise in imaging

tests such as MRIs, tomographies, mammographies, x-rays

and ultrasounds. Azteca is well-known for its leadership in

clinical analysis, especially in forensic science and toxicology

analysis, while Jenner and Swisslab are focused on disease

prevention through clinical analysis. Although our brands have

specializations, each has medical-imaging equipment.

We will concentrate our laboratory tests and analysis in a

central location and our imaging diagnosis in a blue room, a

model that will improve the quality and reduce time during

the diagnosis process. The new 5,000m2 central laboratory

will be robotized and will provide service to our brands, clients

and other potential clients, both nationally and internationally.

We will continue to look for small to medium-size companies

that complement the group’s portfolio and we will also resume

inorganic growth during the second half of 2017 through the

expansion of our brands in Mexico City.

Q: How are these alliances impacting your operations?

A: In 2017, GDA collaborated with Grupo Diagnóstico

PROA and Laboratorio Médico Polanco to establish

the Mexican Council of Medical Diagnosis Companies

(COMED), which aims to unite all the diagnostic labs in

Mexico to help lawmakers improve current regulations.

We also want to put regulation in place to ensure

healthy competition while also organizing congresses

and symposiums to spread knowledge and best practices

in the industry. These efforts will translate into better

diagnostic services in the country.

Q: How is GDA responding to Mexico’s need for quick and

precise diagnostics?

A: The group is joining forces with international suppliers to

implement the highest available technology that will improve

diagnoses. Our blue room has the technology to conduct live

sessions between the treating doctor and our radiologists.

The platform also allows us to share images with experts

around the globe to improve the diagnosis in difficult cases.

Q: What is your strategy to put Big Data to use?

A: In this industry, Big Data applications should translate

into timely disease prevention. In this area, we would like

to cooperate with local governments and companies by

sharing all the information we gather to increase prevention.

The Ministry of Health is the appropriate entity to use this

information for the benefit of Mexican citizens. We believe

COMED will accelerate the creation of such synergies

and regulations to help the Mexican population without

threatening the privacy of our clients.

Q: What are your growth expectations for the following

five years?

A: The president of Empresas Aries drafted an aggressive

growth plan comprising organic and inorganic growth. This

is why we are building strong foundations such as our new

central lab, which will be 10 times larger than the current lab

and capable of meeting our growth needs. Our goal is to

increase our market penetration in Mexico and expand our

coverage in Latin America. To achieve this, we will open several

branches across our brands, mostly in the same markets in

which we are already present. We also have a few companies

in sight that will increase our national and regional coverage.

LAB ACQUISITIONS BOLSTER BRAND VALUE

CARLOS OVIEDODirector General of GDA

VIEW FROM THE TOP

GDA was founded in 2007 in Mexico as a private equity fund

focused on real estate and later expanded to other sectors. The

clinical diagnostics unit GDA has become a leading industry

player through various acquisitions

264

forbidden for us to write prescriptions or change

prescriptions. Many doctors recommend us, but it is

based on personal experience and merit.

Q: Mexicans are well-known for avoiding check-ups. How

does this vary with high-level executives?

A: They are more conscious of the need for check-

ups and prevention. Around two-thirds of our clients

are companies that send their top-level executives.

Many of these are only meeting a requirement of

their company and around 10-15 percent do not come

back for their results, although digital results are kept

permanently. Some companies are active in making sure

their employees do get the result and ask for statistics.

Cardiovascular diseases are the main trends. Some are

already conscious that they have an issue, others not.

Q: What strategy is behind your remodeling the Santa

Fe clinic?

A: We will be completely renewing the clinic, from the

reception to the distribution of space, and we are introducing

more tests, such as for high-performance athletes. The sports

check-up will be 100 percent focused on cardiovascular

issues and causes of sudden-death and we will bring in the

new clients through marketing. Athletes are more aware of

the importance of prevention and are concerned with their

health. This will be introduced by July 2017.

Q: How do you ensure that your doctors have the latest

knowledge?

A: Our medical director is active in making sure our doctors

stay up-to-date and take courses. We also incentivize this;

for example, our doctors have just taken a course on echo

and heart ultrasounds. Although this is usually reserved for

echo cardiographists, it is important for us because we will

be including it in our check-ups for athletes.

Q: Why is now the ideal moment for your expansion?

A: The perspective of Mexicans has changed. It is true

that Mexicans, especially the elderly, do not worry about

prevention, but young people are increasingly looking after

themselves. We expect to fill the new clinic within six months.

Q: Check-Up Center’s target clients are high-level

executives. What is your strategy to reach this target?

A: In 2017, we will be opening a new center in the upscale

Polanco neighborhood of Mexico City, although it has

been delayed by the remodeling of our center in the Santa

Fe business district. Check-Up Center has been in the

market for 15 years and was the first in Mexico to merge

a full-body scan through computerized tomography with

a traditional check-up.

We renew most equipment every two to three years and

tomography machines every five years. We renew with

such frequency to also be at the height of innovation.

In addition, all our studies are non-invasive. Take the

example of rectal sigmoidoscopy, part of a colonoscopy.

Only 5 percent of the population really needs this. We use

our studies to determine whether a patient is a potential

candidate for a full colonoscopy or not, limiting the

invasiveness of the procedure.

Q: To what extent do you consider other clinics as your

competitors?

A: We only consider the two largest hospital chains as

our competitors due to target clients and the quality of

their studies. Our doctors are experts in imagology and

our labs are managed by Quest Diagnostics, the largest

diagnostics lab company in the world. It has the highest

quality in Mexico and no one else reaches its standards.

The tests are carried out in only two hours and the results

are returned within a week. We obtain much more medical

information than standard check-ups.

Q: To what extent do you have partnerships with clinics

to refer patients if they have an issue?

A: We only produce diagnostics, we do not recommend

anyone and we do not perform any treatment. It is

REGULAR DIAGNOSTICS KEY TO GOOD HEALTHJULIÁN GONZÁLEZDirector General of Check-Up Center

VIEW FROM THE TOP

Check-Up Center has been providing preventive diagnostics

for 15 years in exclusive locations in Mexico City. It aims to

provide a full check-up in two hours, using the most up-to-

date technology on the market

265

volumes to achieve more efficient clinical diagnosis. We

lead the automation market for Mexican public and

private laboratories. In fact, we are the medical devices

manufacturer with the most automatized laboratory

installations in the market. When a sample tube arrives

to the lab, the process is automated from the beginning

to when the final result is obtained. All this is possible

through our working methodology, the Danaher Business

System, which applies the Kaizen methodology or the

continuous improvement ideal to make processes more

efficient. Besides our quality products and solutions, we

transfer this methodology to our clients to help them

achieve their objectives.

Q: You recently bought the clinical microbiology business

from Siemens Healthineers. How has this shaped your

plans?

A: It has been an interesting opportunity that has enabled

us to expand into an area in which we had minimal

activity. Microbiology has become very important for

us. In five years we have gone from having a strong

business in hematology, immunoassays and clinical

chemistry, to expanding to microbiology and urinalysis.

All the acquisitions we have made are investments with

the purpose of creating a bigger value proposition for

our laboratory partners and our commercial partners.

Q: What new technologies and tests have you integrated?

A: We have two new tests: P2PSA for men and

antimullerian hormone for women. The latter helps women

identify where they are in their reproductive age. The

time frames of human reproduction have changed greatly

and this solution is helpful for women who postpone their

maternal stage due to their professional life. The P2PSA

evaluates prostate health according to the prostate health

index, improving prostate cancer diagnosis.

Q: How has Beckman Coulter adapted its solutions

portfolio to Mexico?

A: In Mexico, our solutions help health professionals to

deliver earlier diagnosis and more precise treatments.

We have solutions for immunology, clinical chemistry,

hematology, microbiology and urinalysis. Our products

simplify, automate and innovate complex biomedical

testing. In the microbiology field we developed cultures

to identify what type of microorganisms are affecting

the patient and which is the best treatment to eliminate

the infection. Overall, we have a complete portfolio for

diagnosis and technology for medium-sized laboratories

and we offer automatization for central laboratories that

deal with high volume.

Mexico belongs to what we call high-growth markets

and it is our main office in Latin America. We have been

here for a long time so we adapted our proposal to the

market’s needs. We have created a value proposition

for both the public and the private sector and we have

established strategic relations with other companies to

reach our final clients. Our equipment and instruments

have provided our clients with efficient results so they feel

safe working with us. Also, this success was led by our

highly qualified team in the commercial and engineering

sectors, which is our main differentiator.

Q: What type of customers are driving Beckman Coulter’s

growth in Mexico?

A: In Mexico, the market is segmented into the private and

the public sector. A larger volume is sold to the public sector

through IMSS, Seguro Popular, ISSSTE and the Ministry of

Health. Our sales to the private sector are also growing

through the establishment of reference laboratories. We

are offering the private sector solutions that allow them to

handle more test volume.

In the public sector, we work with our network of

authorized distributors, with whom we decide which

government tenders to participate in. We cannot

always participate in all those we would like to, but the

government is starting to consolidate and purchase larger

DIAGNOSING GROWTH OPPORTUNITIES

SERGIO BROWNVice President LATAM of Beckman Coulter and Director of Danaher LATAM

VIEW FROM THE TOP

Beckman Coulter is an American manufacturer of analytical and

diagnostic solutions. It merged with US-based Danaher, which

owns innovation companies focused on testing and measurement

in several sectors, including life sciences and dental

266

INFOGRAPHIC

61.3%

67.3%

42.3%

51.4%

80%

76.6%

48.4%

6.7%

76.3%

44.6%

OBESITY: A GROWING PROBLEM

The statistics tell a convincing tale, even if the people

disagree: despite high overweight and obesity rates

and low rates of fruit and vegetable consumption, in

a self-evaluation the Mexican population reports lower

rates of excess bodyweight and higher rates of healthy

eating, in addition to not understanding food labeling and

dietary requirements. These statistics show

that Mexicans do not know what their ideal

weight range is, nor when they step over it,

and demonstrates the state of confusion in

which the Mexican population resides and

the need for better diffusion of clearer information from

the health authorities. In addition to unhealthy eating,

the population suffers from a range of other influential

factors such as lack of sleep or insomnia and long work

hours which contribute to sedentarism and leave little

time for exercise and healthy living.

� Obesity

� Overweight

� Obesity

� Overweight

28.4 percentreported sleeping less than seven hours. Insomnia (classed as difficulty in sleeping at least three days per week) affects almost a fifth of the population, mostly women.

2/3 of Mexicansreport watching TV in the hour before

going to sleep.

There is no escaping the health problems being overweight or

obese cause, especially as almost three of every four Mexicans

fall into one of these two categories. Yet these conditions cannot

be solved with a pill and require profound behavioral change

considers they have a healthy diet

considers themselves to be physically active

regularly consumes vegetables

regularly consumes fruit

considers themselves capable of eating five or more portions of fruit or vegetables per day

of the population suffers from abdominal obesity

considers themselves overweight

considers themselves obese

does not know how many calories one should consume in a day

reports that nutritional labelling on food is little comprehensible or incomprehensible

OF MEXICAN ADULTS

OF MEXICAN ADULTS AGED OVER 20

OVERWEIGHT OR OBESE PER AGE RANGE IN MEXICO (percent)

Source: ENSANUT 2016

72.5%Overweight

or obese

76.6%Abdominally

obese

0

20

40

60

80

100

adultsover 20

teenagers12 to 19

children5 to 11

GENDER COMPARISON OF OVERWEIGHT AND OBESITY IN MEXICAN CHILDREN (percent)

0

10

20

30

40

Five to 11years old

12 to 19years old

Girls Boys

267

Q: Overweight and obesity was declared an epidemic in

Mexico in late 2016. How has this impacted your operations?

A: We have been focused on this problem for many years,

but having overweight and obesity declared an epidemic

helps us with the diffusion of knowledge because it

generates a higher consciousness that it is a problem, a

chronic disease. When the company was first founded,

obesity was not seen as an epidemic but as an aesthetic

problem. We must still figure out how to face this and

how to reduce prevalence rates. Mexico has done a

great job in generating consciousness, due in part to the

government’s sponsorship of a large number of campaigns,

although there is still a great deal of work to do. Habits

need to change, which is difficult. Education also plays an

important role. Overweight and obesity in children is more

serious than these issues in the general population, yet,

children suffering from these problems almost certainly will

continue to do so in adulthood. Childhood overweight and

obesity is also more difficult to solve because they are still

growing, so restricting nutrition is not as simple as in adults.

Despite the declaration having awoken consciousness, the

solution remains a puzzle.

Q: The ENSANUT 2016 results show overweight and

obesity is considered a problem for other people. How is

Medix addressing this?

A: ENSANUT 2016 was representative of how people

see themselves versus how they are. There are two ways

of convincing people they have a problem. The health

side is more complicated, as often people do not feel ill.

By posing overweight and obesity as a health problem,

people do not identify with this. We have taken a different

approach, focusing on aesthetics and wellbeing. We ask

patients if they would like to change their image. If we

ask what a person’s goal is, perhaps to play football with

their children or go camping, but they are generally too

tired to do so, this could be a target. Among people who

are trying to lose weight, 70 percent are doing it for

image and 30 percent for health. We help people reach

their goals safely, which is vital. To drop a large amount

of weight quickly is bad for one’s health and in the long-

term, the body responds negatively to this.

MEXICO'S ONGOING ISSUECARLOS LÓPEZ

Director General of Medix

Q: What are your priorities for 2017?

A: For both 2017 and 2018, we will be focusing on

increasing sales. We grew by 7 percent in 2016 despite

uncertain global conditions. Our target is 20 percent

growth in sales in 2017 and we also want to maintain a

profitable model that satisfies shareholders as well as

employees. In addition, Medix will be working on the

consolidation of its model and expanding sales channels.

Database and knowledge integration will be improved to

offer more options in the future, factoring in Big Data.

Medix is working on a geographical expansion to have

an important impact on the health of other countries. We

are the biggest company offering obesity solutions in

Mexico and we want to achieve this in Latin America too.

Q: Does that expansion plan also include acquisitions?

A: We are pursuing businesses in Chile, Bolivia, Uruguay,

Peru, Colombia and Europe. Our strategy is to build

partnerships with major market players in each country,

not only in the pharmaceutical sector but in logistics and

distribution as well. We are always looking for opportunities

to expand our product portfolios in the markets in which

we are already present. In addition, Medix is working

on an e-learning project with the objective of creating

an overweight and obesity community across different

countries, with specialists who can share experiences and

knowledge in this field.

VIEW FROM THE TOP

Medix has been dedicated to the fight against overweight and

obesity since its inception in 1940, providing integral solutions

in 11 countries with the goal of diminishing the impact of these

conditions

“Among people who are trying to lose

weight, 70 percent are doing it for image and 30 percent for health”

268

Nemocast 3D is only one of several software applications

developed by our partner NemoTec that we use, all

deal with diagnoses and treatment planning. Nemotec

software has helped develop this new business model and

35 percent of our platform is based on their technology.

Q: How important is innovation to the success of

Borgatta’s business?

A: Companies that want to be profitable must stay up-

to-date or they will not remain in the market. Innovation

must be in your DNA and focused on the customer’s

needs. At Borgatta, we understand this and seek to

develop simple and useful solutions for our clients.

Q: In the past you have stated that customers today have

more information. How does this impact the industry?

A: It has both a good and an adverse impact. Good

because they look for information and adverse because the

information they obtain is not always correct. In this respect,

the orthodontist plays an important role because he will be

the first to provide the patient with professional advice.

Q: What role will Borgatta’s plant in Ixtapaluca play in

the company’s growth plans?

A: We import all orthodontics products such as movement

tools from different countries: the US, Japan, Korea and

Brazil, among others. We produce radiography machines

at international quality levels and export them. Recently,

we received FDA approval to export to the US.

Q: What is the average time required to obtain a sanitary

registration?

A: It depends on the class of the device. On average, a

class II dental-device registration takes six months when

all documents are on hand and a class III takes about

nine months.

Q: What are the company’s priorities for 2017-2018?

A: We have an obligation to understand market

tendencies and stay updated. We need to be able to offer

our customers and the market whatever solutions are

required to meet the latest trends.

Q: How does Borgatta’s app contribute to improving

healthcare?

A: As with any medical specialization, orthodontics

is influenced by technology and today diagnoses are

largely supported by technological tools such as 3D

images. Once the diagnoses are done, a treatment plan is

developed and executed based on images and software.

This eases the work of the physician and clearly shows

the patient what the treatment will be and the results.

The information can be illustrated with an interactive

app. This is the future of orthodontics and 90 percent

of what we do.

Q: What is Borgatta doing to raise awareness of the

importance of dental health among patients?

A: As a company, we are not only a supplier of materials

but we also focus on continuous education through

courses, bringing scholars from different parts of Latin

America, supporting local researchers and working with

universities. We also advertise to patients to create

awareness on how there is more to orthodontics than

aesthetics. Borgatta wants to support both physicians

and educational centers because this industry has the

heaviest impact on most medical practices.

Q: What are the most signifianct dental trends?

A: The most common problems are related to poor dental

hygiene and the subsequent problems. Issues related to

prevention, which generally are mismanaged, especially

in government programs, are also near the top of the list.

The tendencies include diagnosing based on 3D images,

shortening the treatments using latest generation tools

and invisible dental correction. However, only a small

percent of our business is based on prevention. In the

pharma division for example, we develop fluorides that

are used to make children’s dental enamel more resistant.

INNOVATION, DIGITAL PUSHING DENTAL HEALTHJUAN CARLOS BORGATTADirector General of Borgatta

VIEW FROM THE TOP

Borgatta is a Mexican company established in 1973 by

founder Juan Carlos Borgatta with the aim of supporting

dental professionals and preserving oral healthcare through

high-technology products

269

need new technology to detect cases early. The results will

be published in the Mexican Society Journal at the end of

2017 and it will provide useful information for the future.

Q: What differences do you see in patients based on

age, socio-economic background and urban versus rural

inhabitants?

A: The social distribution of ages is changing in Mexico. The

population now lives longer and we are seeing diseases

that present themselves later on in life, such as macular

degeneration. Although the prevalence of glaucoma is 5

percent at 40, at 70 it is 18 percent and above that it rises

to 30-35 percent. Like glaucoma, macular degeneration must

be detected early because the impact is irreversible. Diabetic

retinopathy is common due to the big diabetes problem in

Mexico and occurs in both T1D and T2D. It also requires early

diagnosis to stop the progression of problems in the retina.

Q: What are the most challenging conditions you have faced?

A: The most challenging cases are those that go to the

foundation Ojos para México at late stages of a disease, as

there is not much we can do for them. The eye is already taken

by the disease and most cells cannot be replaced. However,

we are working on a stem cell treatment to find a solution for

these challenging cases. Perhaps we will be able to help them

with stem cells in the future.

Q: What are your ambitions for 2017 and how do you aim

to achieve them?

A: In 2017 we would like to see our own institute of

ophthalmology to provide all services in one place, with

research in the building. We will be able to take new advances

right from the bench to the patient’s bedside. We will also be

offering surgery in 2017 with the Barraquer Ophthalmology

Center. Spanish doctors will be visiting us to participate in

cataract surgeries and to share their experiences with us.

Q: What are the main trends in ocular health you have

observed over the past year?

A: One of the main concerns in Mexico is cataract. When

we provide cataract surgery, we are putting workers back

into the economy. Mexico needs this. There is a significant

problem in Mexico regarding ocular health because there are

instances in which national health institutions cannot provide

the services needed. This is an opportunity for organizations

like Ojos Para México to collaborate with those institutions

to bring the latest advances in ophthalmological technology

to people in Mexico.

Q: How much of a priority is cataract surgery for the

public sector?

A: It is a top priority, followed by glaucoma, because if it is

not detected in time, it leads to problems that are irreversible.

We are working with the University of Monterrey (UDEM)

to develop a system for the early detection of glaucoma,

so it can be treated and the ocular health of this segment

of the population can be preserved. We have calculated

the economic impact of primary open angle glaucoma in

Mexico and the numbers are extremely high [potentially

US$659 million per year, according to an article published

by Villarreal et al in the Revista Mexicana de Oftalmología].

Through this detection system, we are trying to minimize

the efforts and costs required at the federal level.

Q: What percentage of issues is genetic versus

environmental? How does the diagnostics and treatment

differ between them?

A: Through a protocol carried out at the University of

Monterrey, we discovered that the prevalence of glaucoma

in people aged over 40 in Mexico is 5 percent but 95

percent of that 5 percent was unaware of their condition,

as it does not produce any pain. Once the patient notices

sight loss, it is too late and the disease is in an advanced

stage. In addition, 95 percent of those 5 percent did not

suffer from high intraocular pressure. This means there is

another key factor for the appearance of glaucoma but we

are still trying to find out what it is. We also found that

the best way to detect these cases was not pressure, so

we conducted another test and we are concluding that we

A BRIGHT FUTURE FOR MEXICOROGELIO VILLARREAL

Director General of Centro de Oftalmología Monterrey and Ojos Para México Foundation

VIEW FROM THE TOP

Centro de Oftalmología Monterrey is a leading ophthalmological

clinic in Monterrey, Mexico. It treats a large number of patients

from abroad with its cutting-edge techniques and performs

research with stem cells

270

CANCER A TOP KILLER AMONG MEN AND WOMEN

American Cancer Society reports that symptoms

often appear in later stages of the disease,

meaning later diagnoses and lower survival rates.

The most common risk factor for liver cancer

is chronic hepatitis B or hepatitis C infection.

Other risk factors include liver damage caused by alcoholism,

obesity and T2D, according to the ACA.

LIVER AND BILIARY PASSAGES CANCER

In many countries biliary cancer is considered uncommon. It

was the eighth most common cancer in US men in 2014, 11th in

UK men in 2013, ninth in Argentinian men in 2014 and seventh

in Brazilian men in the same year. It is usually found more

commonly in South-East Asian countries; for example, it killed

the second most number of men in Singapore in 2014 and the

Philippines in 2011. There are three types of bile duct cancer:

intrahepatic, perihilar and distal, the latter two of which are

classed as extrahepatic.

Bile duct cancer is particularly nasty. According to the

American Cancer Society, the five-year survival rate for

localized or stage I extrahepatic bile duct cancer is 30

percent, 24 percent for regional (stage II and III) and a mere 2

percent for distant or stage IV extrahepatic bile duct cancer.

For intrahepatic bile duct cancer, the five-year survival rates

are even lower. There is only a 15 percent chance for stage

I, 6 percent for stage II and III and again only 2 percent for

stage IV, according to the ACA.

LUNG CANCER

Worldwide, lung is the second most common cancer

behind prostate for men and breast for women. Lung

cancer is split into three main types: nonsmall cell, small

cell and lung carcinoid or lung neuroendocrine tumor. The

ACA reports that about 85 percent are nonsmall cell, 10-

15 percent are small cell and less than 5 percent are lung

carcinoid tumors.

The main risk factors for lung cancer are environmental:

tobacco, radon, asbestos and diesel exhaust. Although

tobacco use is the main risk factor, over 40,000 cases of

lung cancer are diagnosed annually in nonsmokers. Black

men and white women are the groups most at risk.

PROSTATE CANCER

Prostate cancer is one of the cancers that most affects

men worldwide and is the most common cancer in men in

Mexico. There are several types of prostate cancers though

most are adenocarcinomas. Links between prostatic

While genetic and environmental factors are known to be

involved in cancer, science has not yet pegged a specific

cause for specific cancers. According to the WHO, 30

percent of deaths caused by cancers can be traced back

to five factors: high BMI, insufficient fruit and vegetable

intake, lack of physical activity, alcohol consumption and

tobacco use.

The top five killer cancers differ per gender and per country.

For Mexican men, prostate, lung, liver & biliary passages,

stomach and liver are the deadliest. For Mexican women,

breast, uterus, liver & biliary passages, cervix uteri and liver

are the main killers. Treatment is continually improving and,

as a result, survival rates have and are continuing to improve.

These are the main risk factors and survival rates of the

cancers that most affect Mexicans.

BREAST CANCER

Breast cancer campaigns and news have taken over the

health media in recent years. There are more and more drugs

being released to treat the condition and survival rates are

high. The five-year relative survival rate for those diagnosed

with stage I breast cancer is almost 100 percent. Even at

stage III, the survival rate is 72 percent, according to the

American Cancer Association (ACA).

CERVIX UTERI CANCER

More commonly known as cervical cancer, this develops in

the lower part of the uterus in the area where the cervix and

the exocervix meet. Most of these cancers are squamous cell

carcinomas, meaning they evolve from skin cells, according to

the ACA. HPV is associated with this disease, so vaccination is

highly recommended to avoid contracting it and subsequently

later developing cervical cancer. Although rates have dropped

in countries with high levels of vaccination, it perseveres in

Mexico due to a cultural stigma of the vaccination, leading

some parents to refuse vaccination of their children. This

cancer is easily detectable through pap smears, although

this requires adequate access to healthcare services, which

remains a challenge in some parts of Mexico.

LIVER CANCER

Although there are several types of liver cancer, the most

common type is hepatocellular carcinoma (HCC). The

ANALYSIS

Cancer rates have increased dramatically in past decades, first

appearing in the top 10 causes of death in Mexico in the 1960s.

Today, cancer, cardiovascular disease and diabetes are three

of the biggest and most-feared killers worldwide

271

a diet rich in smoked and salted foods, tobacco use and

obesity. People with type A blood also have a higher risk of

developing stomach cancer for reasons yet unknown.

The five-year survival rate for stomach cancers detected

in stage IA is 71 percent, according to the ACA, although

this drops rapidly through the stages. The overall, relative

survival rate of stomach cancer is 29 percent.

UTERUS CANCER

According to the Canadian Cancer Society, most uterine

cancers are endometrial carcinomas, whereas only a small

percentage are uterine sarcomas. It is the second most

common cancer in women in Mexico, although it is most

common in Caucasian and post-menopausal women. Other

risk factors include being overweight, never having given

birth, diabetes and endometrial hyperplasia.

intraepithelial neoplasia (PIN) and atypical small acinar

proliferation (ASAP) with prostate cancer are under study.

The risk of prostate cancer is relatively high. The ACA

explains that around one in seven men will contract

prostate cancer in their lifetimes and around one in 39 will

die from it. It mostly affects older men, with the average

age of contraction at 66. The five-year survival rates are

equally high, with a rate of almost 100 percent for men

with prostate cancers in local and regional stages. This

drops to 28 percent for distant stage cancers, once again

highlighting the importance of early diagnosis.

STOMACH CANCER

Most stomach or gastric cancers are adenocarcinomas:

cancers that start from the cells that line the stomach. The

most associated risk factors are helicobacter pylori infection,

MALE AND FEMALE CANCER DEATHS PER YEAR IN MEXICO (thousands)

Source: WHO database, 2014 data (latest available figures)

1 2 3 4 5 6 7 8

Nasopharynx

Mesothelioma

Thyroid

Hodgkin lymphoma

Melanoma of skin

Testis

Multiple myeloma

Rectum and anus

Gallbladder

Larynx

Bladder

Lip, oral cavity and pharynx

Oesophagus

Brain, central nervous system

Kidney

Non-Hodgkin lymphoma

Pancreas

Colon

Lip, oral cavity, pharynx, larynx and oesophagus

Leukaemia

Colon, rectum and anus

Intestine

Liver

Stomach

Liver & biliary passages

Lung

Prostate

8 7 6 5 4 3 2 1 0

Nasopharynx

Mesothelioma

Larynx

Hodgkin lymphoma

Oesophagus

Melanoma of skin

Bladder

Lip, oral cavity and pharynx

Rectum and anus

Thyroid

Multiple myeloma

Corpus uteri

Lip, oral cavity, pharynx, larynx and oesophagus

Kidney

Brain, central nervous system

Non-Hodgkin lymphoma

Gallbladder

Leukaemia

Colon

Pancreas

Ovary

Lung

Colon, rectum and anus

Intestine

Stomach

Liver

Cervix uteri

Liver & biliary passages

Uterus

Breast

BLOOD, CNS, BONE

the 3 most common cancers in children

49,416people were treated for breast cancer in IMSS in 2015

272

2016); monitoring clinical treatment outcomes by

introducing arthroplasty registers (Gliklich et al., 2014);

assessing HRMD risk through post-market due diligence

programmes (ODEP, 2015); classifying implant quality

(Poolman et al., 2015) and establishing revision rate

benchmarks to prevent the use of poorly performing

implants (NICE, 2014). These strategies are frequently

integrated into regulators’ work and help bridge the gap

of evidence and uncertainty (Wilkinson and Crosbie, 2016,

Randall, 1997).

EPIDEMIOLOGY OF JOINT REPLACEMENTS

Joint replacements in Mexico will increase and life

expectancy may be an important indicator for the

development of joint replacement demand. In Mexico, life

expectancy has improved over the past 15 years (OECD,

2016a), the incidence of osteoarthritis increases rapidly

in patients over 50 (Hooper et al., 2014) and in obese

populations (Kulkarni et al., 2016), which is a serious

health burden in Mexico (OECD, 2016b). Patients who

have already received a joint replacement are exposed

to revision surgery by the increase in years since primary

surgery took place.

The clinical long-term performance of HRMD is an

important input parameter for decision-making because

it determines the future need of revision surgery. Many

countries have access to high-quality data on joint

replacements, which they use to evaluate medical

outcomes (Gliklich et al., 2014, Herberts and Malchau,

2000, EAR, 2016). Using poorly performing medical

devices is one of the reasons for high revision rates. For

instance, increased incidence of post-operative problems

resulting from the use of metal-on-metal hips led to

higher hip revision rates (FDA, 2014). However, in Mexico

medical device regulation does not include clinical long-

term performance of HRMD in their quality agenda with

exception of the federal techno-vigilance department and

health technology assessments, the findings of which are

used to include technologies on the National Formulary.

Between 2014 and 2015, researchers from the Swiss

Tropical and Public Health Institute, UNAM and the INSP

Studies concerned with the epidemiology of hip and knee

joint replacements show that the demand for primary

joint replacements and revision surgery is growing (Patel

et al., 2015, CDCP, 2009). To control the financial impact

of joint replacement, it is important to achieve good

implant survival rates because the health expenditures

of revision surgery are significantly higher than primary

joint replacement (Kandala et al., 2015). Arthroplasty

register data shows that the clinical performance of

hip and knee implants in the long-term demonstrates

a strong variation (Herberts and Malchau, 2000). Using

poorly performing implants increases the revision risk.

Yet, little is known about health policies encompassing

strategies to decrease the use of poorly performing

hip and knee implants. The objective of this study is to

analyse the contribution of survival rate benchmarks as

recommendations for decision-making and to discuss the

health economic contribution of introducing survival rate

benchmarks in Mexico.

ISSUES RELATED TO ORTHOPEDIC HIGH-RISK

MEDICAL DEVICES

Medical device regulation is challenged with the mismatch

of the information validity needed for market approval

and evidence from actual use of high-risk medical devices

(HRMD) (Reynolds et al., 2014, Kramer et al., 2012,

Tarricone et al., 2014, WHO, 2010). One reason for this is

that premarket regulation is mainly based on conformity

assessments and does not include findings from clinical

long-term outcome studies (Tarricone et al., 2014, Ciani

et al., 2015). HRMDs are implanted in the human body and

are therefore recommended, subject to the highest level

of premarket and post-market regulation (FDA, 2017).

Policymakers from other countries such as the UK,

Germany, Switzerland and the Netherlands are frequently

concerned by effectively ensuring standards of clinical

safety, performance and efficacy of HRMD (Lauer et

al., 2014, Sorenson and Drummond, 2014). Countries

use different strategies to ensure or monitor safety and

performance of medical devices such as strengthening

post-market regulation (Duke-University, 2016, FDA,

SURVIVAL RATES: AN OPPORTUNITY TO IMPROVE ORTHOPEDICSMYRIAM LINGGPh.D. candidate at the Swiss Tropical and Public Health Institute

and the University of Basel

EXPERT OPINION

273

2015). For instance, these are used in the UK and they

are important in the regulation of HRMD, used to improve

outcomes. The National Institute for Health and Care

Excellence (NICE) defines recommendations including

benchmarks for the quality of hip prostheses for example,

as “the new joint should work well in at least 95 percent of

hip replacements over 10 years, instead of the current 90

percent” (NICE, 2014). This is an important contribution

to decision-making processes because it suggests that

decision makers should thoroughly review all available

evidence.

In Mexico, no data is available on national implant survival

rates. However, policymakers in Mexico could introduce

such benchmarks and request decision-makers consult

survival rate data from countries with an arthroplasty

register or consult the findings of risk assessment

programmes as they are used in the Netherlands or the

UK (Poolman et al., 2015, ODEP, 2015).

IMPACT OF BENCHMARKS

The use of survival rate benchmarks may have a positive

impact on orthopedic revision rates and their financial

burden. Introducing these survival rate benchmarks may

improve the eligibility of medical devices, strengthen

quality assurance and enhance organisational governance.

The Mexican health system lacks high-quality data for

orthopaedic surgeries. However, average survival rates

from different arthroplasty registries could be used as

reference instead. Economic analysis in orthopaedics

provides a powerful tool for the evaluation of healthcare

technologies and treatment strategies (Bozic et al., 2003).

More research analysing the potential financial impact of

using survival rate benchmarks may provide important

findings. In the case of Mexico, even though no high-

quality data is available, sufficient information of implants

purchased in the past is publically available. It is stored at

the electronic contracting system Compranet of Mexico.

To apply economic analysis, the data from Compranet

and average survival rates from different arthroplasty

registries could be used.

conducted studies in Mexico on the regulation, assessment

and management of orthopaedic HRMD (Lingg et al.,

2016a, Lingg et al., 2016b, Lingg et al., 2017a, Lingg et al.,

2017b). These studies showed quality concerns related to

post-market regulation and procurement of orthopaedic

HRMD. In Mexico, several governmental offices as well

as a number of non-governmental stakeholders are

involved in the regulation, assessment and management

of medical devices. Nevertheless, reviewing articles 83,

179 and 180 of the Medical Device Regulation of Mexico

shows that there are no specific regulations for HRMD

differentiating them from lower risk medical devices.

Further, before 2016, HRMDs were included together with

other medical devices in a general standard list (Standard

List for Medical Care Products).

POLICY IMPLICATIONS

In health systems, decision-making takes place at different

levels of healthcare delivery to allocate limited resources

optimally (Schöffski and Graf v. d. Schulenburg, 2008).

Health economic analysis significantly contributes to this

and encompasses important perspectives to attribute cost

and benefit to specific healthcare provisions. Economic

costs for joint replacements are high (Hiligsmann et al.,

2013) and are differentiated into direct costs (hospital

admissions, medical examinations, drug therapy), indirect

costs (losses in productivity resulting from absence

from work) and intangible costs (Schöffski and Graf v. d.

Schulenburg, 2008). The direct costs associated with joint

replacements are high and driven by the cost of surgery,

hospitalization and rehabilitation. Different methods are

available to conduct health economic evaluations based

on specific health economic principles that inform policy

decisions, encompassing the efficiency and effectiveness

of medical treatments (Breyer et al., 2004).

At the policy level, health economic analysis is globally

increasingly taken into consideration. For instance, health

technology assessments are a form of policy research

that seeks to inform policy makers about the clinical and

economic value of health technologies such as medical

devices and includes findings derived from results of health

economic analysis (Banta, 2009, WHO, 2011). Further, in

orthopaedics health economic analysis increasingly receives

more attention due to its financial impact (Haentjens and

Annemans, 2003). It is an essential element in decision-

making and HTAs at purchasing decision-level are

increasingly discussed (McGregor and Brophy, 2005,

Kidholm et al., 2009, Ehlers et al., 2006, Sampietro-Colom

et al., 2012) and supported by policy-makers.

SURVIVAL RATE BENCHMARKS

A promising strategy to ensure quality is to implement

guidance for survival rate benchmarks (Kandala et al.,

Joint replacements in Mexico will increase and life expectancy may be an indicator for joint replacement demand

274

SUCCESS OF 90-90-90 AIDS PROGRAM REQUIRES 20/20 VISION

The UN estimates that about 37 million people worldwide

are living with HIV/AIDS, 1.8 million of which are children. Its

analysts peg the number of people that have been affected

by HIV worldwide since the beginning of the endemia in June

1981 to 2015 at 69.5 – 87.6 million and put the number of

people that have died from AIDS-related illnesses at 29.6-

40.8 million.

In 2015, there were around 2 million people living with

HIV in Latin America, according to the UN. An estimated

100,000 new infections occurred during the year in the

region, a number that has not varied between 2010 and

2015. It is probable that 2,100 of these newly infected are

children under the age of 14. Just over half are thought

to be receiving treatment, as 1.1 million of these are

accessing antiretroviral therapy (ART). ART is not a cure

but it can help manage the condition as it controls viral

replication within a person’s body, allowing a person’s

immune system to strengthen itself and fight off any

infections that could otherwise be deadly.

HIV was responsible for 4,811 deaths in 2014 in Mexico, making

it the 16th prevailing cause of death, according to INEGI. It

was the 14th cause of death in men, responsible for 3,893

deaths, and 17th in women, linked to 918 deaths. UNAIDS

estimates 4,000 deaths in Mexico related to AIDS for 2015.

Worldwide, the main cause of death for people living with

HIV is tuberculosis, which is also responsible for one in three

deaths of AIDS sufferers in 2015, according to the UN.

On World AIDS Day 2014, 20 years after the original

Paris Declaration in 1994, UNAIDS brought together city

mayors from around the world to sign the 2014 Paris

Declaration. The signature of this declaration was a

commitment to putting their cities on a fast-track and

achieving 90-90-90 by 2020, meaning 90 percent of

people living with HIV will know they have the virus, 90

percent of whom will be on ART and 90 percent of those

will achieve viral suppression, which will reduce the risk of

transmission. Reaching this target is estimated to prevent

almost 28 million new HIV infections and 21 million deaths

by 2030.

Mexico City is among the cities that signed up the Fast-Track

Cities initiative. In addition to the 90-90-90 objectives, the

Fast-Track Cities commit to eliminating the AIDS

threat in their cities by 2030, rapidly reducing

the number of HIV/AIDS related deaths.

The WHO recommends six types of prevention.

The first is the consistent use of condoms, which have an

85 percent or greater chance of preventing infection. It is

also wise to test for HIV, STIs and TB, as it is the leading

cause of death for HIV sufferers. In addition, medical male

circumcision reduces the risk of heterosexually acquired HIV

infection in men by 60 percent. The WHO also recommends

ART in uninfected people with a HIV-infected partner to

reduce transmission, within 72 hours of exposure to HIV

and ART for pregnant women to reduce mother to child

transmission (MTCT). MTCT occurs in 15-45 percent of

untreated pregnant women. In the case of ART through

infectious stages, MTCT is almost eliminated, according to

the WHO. UNAIDS estimated that 77 percent of pregnant

women living with HIV received ART in 2015.

ANALYSIS

IN LATIN AMERICA IN 2016

Source: UNAIDS

2 millionpeople were living

with HIV

41%virtually

suppressed the virus

50,000AIDS related deaths

74%know their

status

0.5%adult HIV prevelance

55%taking ARVs

100,000new infections

Although human Immunodeficiency Virus (HIV) and

Autoimmune Deficiency Syndrome (AIDS) may not seem

commonplace, these two diseases remain a reality for

millions around the world

275

INSIGHT

After 23 years supporting professionals in the Mexican

healthcare system, COMOP continues to invest in research

on osteoporosis that could lead to a change of model in

the prevention and treatment of chronic diseases. “Our goal

is to evolve the high-level training of health professionals.

We do not just aim for a scientific proposal but also for an

impact on daily life,” says Juan Tamayo, CEO of the Mexican

Committee for the Prevention of Osteoporosis (COMOP).

According to the Mexican Association for Bone and Mineral

Metabolism (AMMOM), 18 percent of Mexican women and 8

percent of men above the age of 50 suffer from osteoporosis.

Data collected by the International Osteoporosis Foundation

shows the probabilities of suffering a hip fracture after the

age of 50 is one in every 12 women and one in every 20 men.

Considering this panorama, COMOP has been working on

the development of three lines of research.

The first is to research the results of an ongoing study of

mothers and their children started 20 years ago by the

National Public Health Institute and the Perinatology

Institute. These children, Tamayo explains, were born after

less than 38 weeks of gestation, weighed less than 3kg and

with a height under 50cm. As such they were more likely

to suffer from bad bone health and chronic diseases like

diabetes and obesity. In Mexico, the purpose of looking

at the results of this study is to gather information on

the behavior of the skeletal health of these children as

they grew and to determine how lifestyle can influence

development. COMOP has allied with other institutions

to analyze the data. “We are in contact with Mount Sinai

Hospital in New York, the University of Michigan and the

University of Toronto. Together, we will collaborate by taking

our program to a more operative level to collect information

from 100 multidisciplinary centers,” adds Tamayo.

A second line of research has followed 550 children for 15

years who were born with low stature and weak bones due

to genetic conditions that make them prone to develop

cardiovascular diseases and diabetes. “The purpose of this

research is to prevent those children from growing at a low

weight and with weak bones by encouraging healthy habits

and by providing nutritional supplements. When they reach

the age of 20, we will see if this had an impact. If it does,

this would be extraordinary because these are measures

you can apply to all social sectors,” says Tamayo.

The third line of research focuses on the role of exercise in

children born with weak bones and muscles to prevent the

development of osteoporosis. Promoting a healthy lifestyle is

a national priority since Mexico, according to the WHO, ranks

first in childhood obesity, with a penetration of 35 percent in

children and in teenagers. As Tamayo explains the bottom

line of the three lines of research is to prove that despite the

genetic predisposition with which some children are born

with, an early intervention of adequate nutrition and exercise

leads to strong, tall and healthy children.

Experts believe that osteoporosis originates in the first

1,000 days of life, Tamayo says. “Today, we can identify

children who will have weak bones before age of two. ”The

research will help COMOP develop a new model of care

among health professionals that considers more factors

during a child’s growth to create a Big Data-based platform

that doctors can use. The objective of creating a program

that collects all this data is to create a primary preventive

measure for osteoporosis can be applied in the first 40 years

of life, says Tamayo. A second prevention wave, he adds, can

be carried out between 20 years and the first fracture and

consists of applying a combined diagnostic technique of

skeletal sonometry and densitometry offered by COMOP’s

private brand for the diagnosis of osteoporosis, Oseograph.

The third approach is to provide aid in case of a fracture.

COMOP also focuses on promoting research and preserving

evidence to develop online training courses to inform and

update physicians in new diagnoses and preventive trends.

“We need to have credibility, so that those who take courses

with us recognize we are training them in something that

will help them in practice and that will give them the tools

and knowledge necessary to tackle the problem.”

Besides COMOP, Tamayo leads Accessalud, an institution

dedicated to treating chronic diseases.

START EARLY TO PREVENT OSTEOPOROSIS

JUAN TAMAYOCEO of COMOP

276

MULTIDISCIPLINARY PROGRAM NEEDED TO REDUCE CC NUMBERS

One in 10 cancer-related deaths in Mexican women is

caused by cervical cancer (CC), which kills 11 women every

day, according to the Mexican Ministry of Health. While in

2006 breast cancer replaced CC as the first cause of death

by cancer in Mexican women, according to INEGI, CC killed

4,009 women in 2015. The highest mortality rates belong

to the states of Morelos, Oaxaca and Chiapas, validating

the fact that CC is an inequality indicator since its mortality

tends to concentrate in the least economically favored

regions throughout our country.

The primary cause of CC is chronic infection with a high-

risk type (16 and 18) of human papillomavirus (HPV), the

most common infection acquired during sexual relations. In

most women, these infections resolve spontaneously, but a

minority persist and may progress to CC 10 to 20 years later.

This gap offers an opportunity to detect and treat precursor

lesions. The Pap smear is a well-established method for

examining the cells collected from the cervix to determine

whether they show signs of these lesions. It is a free and

essential screening test that must be done annually. It can

be done every two or three years if the patient has three

consecutive normal tests.

The evolution of CC has been widely studied and its precursor

lesions identified. In 1988 the Bethesda system (TBS) for

reporting cervical cytologic diagnosis was first introduced

and revised in 1991, 2001 and 2014. Its aim is to develop a

uniform terminology for cervical cytology interpretation

and upright communication between pathologists and

clinicians. TBS reports have three basic components:

a descriptive interpretation, a statement of specimen

adequacy and, optionally, a general categorization of the

interpretation. TBS defines the squamous intraepithelial

lesions, as well as all the HPV associated noninvasive

squamous cell abnormalities, and divides them between

low-grade squamous intraepithelial lesions (LSIL) and high-

grade squamous intraepithelial lesions (HSIL). Specimens

with subtle changes can be classified as atypical squamous

cells of undetermined significance (ASC-US). This division

has a better inter-observer reproducibility than other

reporting systems.

The features of LSIL include nuclear enlargement with

hyperchromasia or pyknosis and irregular nuclear contours

along with a perinuclear cavity and peripheral thickening

of the cytoplasm. Features that favor HSIL include

increased numbers of abnormal cells, higher nucleus to

cytoplasmic ratios, greater irregularities in the outline of

the nuclear envelope and nuclear chromatin distribution.

The appearance of the cytoplasm can help to distinguish

LSIL from HSIL in borderline cases. LSIL involve mature,

intermediate or superficial cytoplasm with polygonal

borders, while cells of HSIL have an immature cytoplasm,

either delicate or dense with rounded cell borders.

Based on the natural history of HPV infections, the majority

of LSIL regresses within an average of two years. However,

when LSIL or HSIL is detected by a Pap smear, a colposcopy

is recommended within six weeks; if HSIL is detected, a

biopsy should be performed and the patient must be

treated with cryotherapy or loop electrosurgical excision

procedure (LEEP). If HSIL is not detected, the cytology

must be repeated at six to 12 months. The treatment of CC

includes surgery, chemotherapy and radiotherapy.

A national program of CC screening has been in operation

since the 1970s, and ENSANUT reports 45.5 percent of

Mexican women of reproductive age had a Pap smear

in 2012, with increasing numbers and a plan to reach at

least 70 percent by 2018. Although screening with cervical

cytology has diminished CC in our country we still have

the highest mortality rates among OECD members. The

Ministry of Health has almost 2,000 employees working in

the national screening program, including colposcopists,

pathologists and cytotechnologists, but they are not

equally distributed or skilled, which hinders some women’s

access to efficient screening. Our health system must

focus on risk factors and low participation in screening

programs that dismiss many women from timely detection

of precursor lesions. Only a multidisciplinary program

established by determined policymakers, managers and

professionals in the health sector will meet the extent and

quality indicators needed for a real solution for the current

numbers of CC in Mexico.

Janet PinedaResident in Pathological Anatomy

at ABC Medical Center

Carlos Ortiz Chief of Surgical Pathology at ABC Medical Center

EXPERT OPINION

277

MATERNAL AND INFANT HEALTH

When presented with the problem of Mexico’s greatest

health concerns, many think not only of chronic disease such

as diabetes and cancer but also of teenage pregnancies.

“Another great issue is pregnancy in girls and teenagers.

Children of 10-14 years old are having babies. There were

400,000 births in 2015 and almost one in every five births

is to a teenage mother. The government has implemented a

national strategy aimed at preventing teenage pregnancies,

which are often unwanted and unplanned.,” says José Narro,

Mexico’s Minister of Health. Additionally, early childhood

disease has been one of the top 10 causes of death in

Mexico every decade since the 1950s. Globally, maternal

mortality has plagued women for millennia and although

most deaths are now preventable, they still occur, mostly

in developing countries.

MATERNAL MORTALITY

According to the WHO, 99 percent of all maternal deaths occur

in developing countries. Although Mexico has many policies in

place to prevent maternal and infant deaths, many pregnant

women, especially in rural areas, are unaware of official

recommendations and policies. Many maternal and infant

deaths can be prevented with the correct care. Unfortunately,

not all women receive this care due to factors such as

poverty, distance, lack of information, inadequate services

and cultural practices. In Mexico, UNICEF has implemented

RapidPro, a tool available through the government’s Prospera

Digital program, to bring information rapidly

and effectively to underprivileged women

through digital means.

TEENAGE PREGNANCY

According to the WHO, pregnancy and childbirth are the

second-greatest cause of death in 15-19-year olds globally.

Babies born to teenage mothers face a 50 percent higher risk

of dying in the first few weeks or being stillborn than those

born to mothers aged 20-29. Teenage pregnancy also has

a lasting impact on education levels as over 90 percent of

teenage mothers do not attend classes. The WHO reports that

although adolescent births count for 11 percent of all births,

they account for 23 percent of disease due to pregnancy and

childbirth. In January 2015, President Peña Nieto launched the

National Strategy for the Prevention of Teenage Pregnancy

(ENAPEA), whose objectives are to reduce the rate of

pregnancy in 15-19-year olds by 50 percent and eradicate

pregnancy in under-14s by 2030.

INFANT MORTALITY AND HEALTH

Approximately 2.7 million newborn babies died in 2015

globally and an additional 2.6 million are stillborn, according

to the WHO. According to OECD figures, infant mortality

rates in Mexico in 2014 were 12.5 deaths per 1,000 live births,

down from 17.6 in 2004. Infant mortality is defined as the

death of a child under the age of one. A WHO report pegs

the annual number of neonatal deaths in Mexico at 14,594

for the year 2013, the main causes of which are prematurity

and congenital abnormalities. Chronic diseases are

responsible for over half of infant or post-neonatal deaths

(aged one month to 59 months).

ANALYSIS

Indicators often used to measure the development of a country

are maternal and infant mortality. Although Mexico has made

great progress in these areas, work remains to be done. Also

linked to these indicators is the issue of teenage pregnancy

1% Non communicable diseases

5% Pneumonia

6% Other conditions

13% Birth asphyxia& birth trauma

14% Sepsis and otherinfectious conditions

24% Congenital anomalies

37% Prematurity

2% Meningitis/encephalitis

5% Diarrheal diseases

12% Other conditions

13% Injuries

17% Pneumonia

52% Non communicablediseases

ESTIMATED DISTRIBUTION OF CAUSES OF NEONATALS AND UNDER-FIVE DEATHS, 2013 - POST NEONATAL DEATHS (AGED 1-59 MONTHS)

� 37% Prematurity

� 24% Congenital anomalies

� 14% Sepsis and other infectious conditions

� 13% Birth asphyxia & birth trauma

� 6% Other conditions

� 5% Pneumonia

� 1% Noncommunicable diseases

� 37% Noncommunicable diseases

� 17% Pneumonia

� 13% Injuries

� 12% Other conditions

� 5% Diarrheal diseases

� 2% Meningitis/encephalitis

ESTIMATED DISTRIBUTION OF CAUSES OF DEATH OF CHILDREN AGED 1-59 MONTHS

ESTIMATED DISTRIBUTION OF CAUSES OF NEONATAL DEATHS

Source: WHO (2013, latest data available)

278

consumption of antibiotics and animal meat is the greatest

source of antibiotics for humans. We would like to participate

in this development with COFEPRIS because we think it is an

excellent initiative.

Q: What impact will this regulation have on your operations

and on your products’ formulas?

A: At first, it would limit the sale of antibiotics but I think that in

the long term this is a good area to begin regulating. It would

be beneficial for us to participate, to transmit our experiences

and in turn we can listen to COFEPRIS’ concerns. There is

nothing better for a country than for the population and the

authorities to work together to avoid the implementation

of a unilateral vision. I do not think we are going to change

the formulas of our products but the way in which they are

prescribed. The formulas are correct but we would have to be

much more careful of the way in which we administer these

products to animals.

Q: What are your short-term plans for your veterinary

operations?

A: We would like to create an alliance with another player. We

are already exporting a little to Central and South America

and Africa. There are good opportunities in Central and

South America because there are few manufacturing plants.

Antibiotic-infused premixes for the prevention of infection

in chickens and cows are our main product for this market.

In Africa, some governments have processes to facilitate

the entry of simple products, which helped us accelerate

exportation to those countries.

We continue to develop products for smaller species and

aquaculture and we are looking for a strategic alliance in

another country to accelerate our development. In addition,

we could export to other parts of the world where there

is little competition and it would be faster to do that in

cooperation with another party. We would like to enter

Europe a little faster. In Mexico, we would like to complement

our portfolio with products from abroad by importing

vaccines for cattle. The market is practically virgin and with

our industry knowledge and the prestige of our brand, it

presents an unmissable opportunity.

Q: What veterinary products top your portfolio here and

where are the coming opportunities?

A: The most important products are premixes and injectables.

Premixed food contains antibiotics and is our number one

market. Injectables for mastitis and other livestock infections

are our second most important group of products in the

veterinary division. We are venturing into the production of

products for small species such as cats and dogs.

In the near future, we would like to enter the aquaculture

market. There are many shrimp and trout farms in Mexico,

so we are already developing a premix for shrimp that can

be tipped into the water at shrimp farms, for example,

and will not disintegrate. This protects the shrimp from

infections. The aquaculture market in Mexico is growing

greatly, especially in northern states such as Sinaloa and

Chihuahua, where trout and shrimp farms have become

endemic over the past three years. We see a business

opportunity there for our veterinary sector.

Q: How does COFEPRIS interact with animal health

regulators?

A: SAGARPA is the top regulatory agency but COFEPRIS

will soon be involved with veterinary health because humans

consume animals. COFEPRIS tightly controls the human

AQUACULTURE THE NEXT FRONTIERFELIPE ESPINOSACEO of Laboratorios Collins

VIEW FROM THE TOP

Laboratorios Collins is a Mexican pharmaceutical group

with 47 years in the market focused on the manufacturing of

high quality medicine at affordable prices. Its main areas of

operation are generics and veterinary care

ProMéxico 2014 says Mexico is the 4th global exporter of

fresh Bluefin tuna, 2nd in frozen Bluefin tuna

279

Q: After 70 years in the eye-care sector, what are Alcon’s

main opportunities?

A: We are leaders in the surgical and contact lenses

market in Mexico and we believe our biggest opportunity

is in market expansion. There are approximately 2.3 million

Mexicans who need cataract surgery but only around

200,000 surgeries are performed annually in the country.

Our mission is to expand this market, especially because

around 17 percent of those who need this surgery are

already blind and their condition is totally reversible with

a 20-minute procedure. In Mexico, less than 1 percent of

the population uses contact lenses compared to around 14

percent of people requiring visual correction in the US, so

there is great opportunity here.

Q: How does Mexico compare to other countries in terms

of surgeries performed?

A: The number of surgeries performed is the lowest per

100,000 citizens among OECD countries. Many people

do not realize this is a curable disease, instead believing it

is a normal consequence of age. The number of patients

increases in Mexico because diabetes sufferers are more

prone to having cataract and retina problems. Plus,

considering the generational changes in the country and

the growth of the elderly population, there will be more

people needing this surgery and higher quality lenses.

Previously, it was possible to give 68-year-old patients two-

year lenses in countries a with life expectancy of 70, but if

life expectancy reaches 90 years, we would have to provide

lenses that will last much longer.

Q: What innovations are you following to facilitate the

treatment of visual diseases?

A: Innovation in intraocular surgery is advanced and we

have made progress in the lenses portfolio. We launched

a trifocal lens that enables patients to see from a long,

medium and short distance. Before, we had monofocal

and bifocal lenses but now people are asking for more,

especially as trifocal lenses assist the eye when in front

of a screen. Soon this trifocal lens will have toricity for

people with astigmatism. We are also changing surgical

technology. Normally, the machine makes an incision of less

AN EYE ON EXPANSION IN VISION CARE

IGNACIO CASTAÑÓNDirector General of Alcon Labs

than 3mm, destroys the crystalline and sucks it up. Then,

the doctor inserts a lens in the incision that sets inside the

eye. We are launching a 3D visualization system for retina

surgery, for which the doctor will have 3D glasses. Using

a 55-inch screen, he will be able to see the eye in three

dimensions. Another product we are launching is called

intraoperative aberrometer, a tool that helps calculate the

lens a patient needs.

Q: What are the most recent developments for contact

lenses?

A: We keep innovating to increase the comfort of contact

lenses. We have two types of daily lenses: one that is

lubricated when blinking, making the lens very comfortable,

and a water gradient lens, which has an extremely high

water composition.

Q: What is the business model you use to offer great quality

and technology to the public and the private sector?

A: Our portfolio is divided between what we offer to the

public and private sector. It is not realistic to offer the

same to both because the prices for a cataract surgery

vary according to the technology used. They can range

from MX$25,000 (US$1,389) to MX$100,000 (US$5,555)

depending on the patient’s budget and vision. For the public

sector, we try to offer high-capacity products that can cover

a lot of volume. Plus, we offer the public sector better prices

when purchasing in bulk. Around 70 percent of sales go to

the private sector and 30 percent to public institutions.

VIEW FROM THE TOP

Alcon Labs is the ophthalmology division of Novartis. It was

founded 70 years ago in Texas. The company is the global

leader in contact lenses and eye surgery and manufactures

surgical instruments and pharmaceuticals for vision care

The number of surgeries performed is the lowest per 100,000 citizens among OECD countries

280

BEWARE OF MOSQUITOES

Mosquito-borne diseases have been the subject of panic

in recent years. Here are the symptoms and effects of

the five most well-known vector-borne viruses in Latin

America, their effects and prevention recommendations

from global health organizations, notably the WHO and

the PAHO, followed by a map of areas at risk due to aedes

and haemagogus mosquitoes in Mexico.

CHIKUNGUNYA

Chikungunya is a viral disease transmitted by infected

mosquitos, most commonly the aedes aegypti and the

aedes albopictus. It can be fatal in rare cases. The most

common symptoms are a high fever, joint pain and

swelling, a rash, headache, nausea and fatigue, although

it can sometimes be misdiagnosed

as dengue fever because of the

similarity of the symptoms of

each. Symptoms usually appear

four to eight days after being

bitten and usually last two to

three days. The virus can remain in

a human’s system for up to a week

and it is possible for uninfected

mosquitos to catch the disease

by biting the infected and thus continuing the spread of

the disease. There is no vaccine but recovery provides

immunity. Autonomous transmission was detected for

the first time in the Americas in 2013. In 2015 PAHO

confirmed 37,480 cases and suspected 693,489 cases

in the Americas.

DENGUE FEVER

Dengue fever is a tropical disease spread by the aedes

aegypti and the aedes albopictus, mostly found in Latin

America and Asia. According to the WHO, the global

incidence of dengue has grown dramatically over past

decades and half the world’s population is now at risk of

the mosquito-borne disease in tropical and sub-tropical

climates. It estimates 500,000 people per year are

affected with severe dengue and require hospitalization,

many of whom are children. The WHO also indicates that

although numbers are under-reported, it is estimated

284 millon to 528 million people are affected, whether

they present symptoms or not. Symptoms include a high

fever, severe headache, pain behind the eyes, muscle and

joint pain, nausea, vomiting and a rash. Early detection

and effective healthcare have lowered fatality

rates from around 20 percent of infected to

under 1 percent.

In September 2016, the first dengue vaccine,

created by Sanofi Pasteur, was made available in Mexico. It

was the first country in the world to receive the preventive

treatment, after receiving COFEPRIS approval in late 2015.

It is a tetravalent vaccine, efficient against all four dengue

virus serotypes. The vaccine underwent 25 clinical studies in

15 countries involving 40,000 people. Before issuing approval,

COFEPRIS researched the vaccine for two years in conjunction

with international experts. It is available to those 9 to 45 year

olds. In the 9-16 age group, it has shown to have prevented 90

percent of cases of severe dengue, also known as hemorrhagic

fever, and prevented 80 percent of hospitalizations due to the

disease. The vaccine is given in three doses on a 0/6/12-month

schedule.

MAYARO FEVER

Mayaro fever is a virus usually

transmitted by the haemagogus

mosquito but the aedes aegypti

in South America has been found

to mutate and now also carries the

disease. It produces symptoms

such as a fever, headache, muscle

and articulation pain, nausea, pain

behind the eyes, stomach pain

and a rash. Symptoms take one to three days to manifest,

during which time the infected may be bitten by more

mosquitos, thus spreading the disease further. The last

outbreak was reported in Venezuela in 2010, with 77 cases

and 0 deaths, according to the PAHO.

Originally a South American disease, it is mostly present

in forested areas such as those in Brazil, Venezuela, Peru,

Bolivia and Colombia. In addition, the virus was detected

in Haiti in September 2016. With globalization and the

aedes aegypti mosquito present in a greater geographical

area, it is feared the virus will continue to spread and reach

Mexico, beginning in Yucatan, in the South. There is no

vaccine against mayaro fever.

YELLOW FEVER

Yellow fever, or hemorrhagic fever with hepatitis, is an

acute viral disease transmitted by mosquitos belonging

to the aedes and haemagogus species. It has the name

yellow because some patients develop jaundice as a result.

Although many do not experience adverse effects, more

common symptoms include fever, muscle pain, backache,

ANALYSIS

Vector-borne diseases have made headlines across the world

over the past year, particularly in developing countries. Five

are a potential threat to Mexico: chikungunya, dengue fever,

mayaro fever, yellow fever and zika

500,000number of people per

year affected with severe dengue and who require hospitalization, many of

whom are children

281

headache, loss of appetite, nausea and vomiting. For

most sufferers, symptoms last three to four days but for

a small proportion of people, the disease worsens and

around half of these people die within seven to 10 days,

according to the WHO.

The main areas of risk for yellow fever transmission are

South America and West Africa as the virus is present in

monkeys in those regions. Although the disease is not a

current health risk for Mexico, as with mayaro fever it is

worth being aware that the vector is present and thriving

in the country. A pre-emptive vaccine is available and is

recommended by health institutions around the world

for those travelling to areas of known yellow fever. A

single dose of the vaccine, produced by several global

manufacturers, provides immunity within 30 days for at

least 10 years and potentially for life. To prevent the risk

of an endemic, the WHO recommends vaccination of at

least 80 percent of a population, mosquito control and

endemic preparedness and control.

ZIKA

The zika virus is transmitted mostly by mosquitoes of

the aedes family. Symptoms include mild skin fever, a

rash, conjunctivitis, muscle and joint pain, malaise and

headache and lasts two to seven days. Based on a review

of evidence, the WHO have concluded that zika during

pregnancy is a cause of microcephaly and Guillan-Barré

syndrome, as vertical transmission occurs from mother to

child. Sexual transmission is also confirmed and strands

of the virus have been found to remain in the system

for months, thus causing a prolonged need for caution.

Active transmission of zika has now been reported in

most of the Americas, from the Southern US to Argentina.

Due to the number of microcephaly cases reported and

the number of other neurological diseases caused by

zika, the WHO declared a public health emergency on

Feb. 1, 2016.

There is no vaccine for zika. National and international

health agencies recommend protection against mosquito

bites and practicing safe sex to avoid contracting the

disease. Delaying pregnancy has been recommended to

hopeful parents and genetically modified mosquitos have

been released into the wild to mate and pass on a fatal

gene to offspring, thus killing potential future disease

carriers. Both have come under criticism. Meanwhile, the

disease continues to spread.

Few recorded sightings of the haemagogus

Increased number of haemagogus sightings

Areas with an altitude of less than 2,000m, presence of the aedes mosquito

Areas with an altitude of more than 2,000m, little presence of the aedes mosquito

Source: CDC and EOL

AEDES AND HAEMAGOGUS MOSQUITOES IN MEXICO

Latinoamericana Tower

283

INSURANCE

12Much of the Mexican population is employed informally and does not have access

to public health services because they do not contribute to it. Instead, they are

covered through public insurance provider Seguro Popular.

Private health insurance in Mexico is limited in what it covers and remains

unaffordable for many. This is an opportunity that smaller private companies

have recognized. They are implementing innovative models to serve those in

the gap: rich enough to have access to public health services but too poor

to afford a private health policy. Others have observed disease trends and

spotted a chance to provide insurance for cancer, for example, which would

pay out should the insured ever be diagnosed with the specified cancer,

usually breast or prostate.

This chapter will highlight the efforts insurance companies and pension funds

are making to provide better healthcare quality and retirement opportunities.

It will also look into the prospects for financing from the vast pool of resources

Mexican retirement funds hold and look into how the insurance business is facing

the population’s main health concerns, their growth potential and plans of action.

GET THE INSIDE PERSPECTIVE ON MEXICO’S MAIN INDUSTRIES

Mexico Business Publishing supports business and political leaders in driving the development of Mexico’s main industries by offering first

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www.mexicobusinesspublishing.com

285

CHAPTER 12: INSURANCE

286 ANALYSIS: Innovation Needed to Bridge Insurance Gap

288 VIEW FROM THE TOP: Manuel Escobedo, AMIS

289 VIEW FROM THE TOP: Bruno Guarneros, Seguros Atlas

290 VIEW FROM THE TOP: Ricardo Casares, PartnerRe

292 VIEW FROM THE TOP: René Mieres, La Latino Seguros

293 VIEW FROM THE TOP: Paulino Decanini, SiSNova

294 VIEW FROM THE TOP: José María Ostos, McKinsey & Company

295 VIEW FROM THE TOP: Luk Vanderstede, Bupa Global

296 INFOGRAPHIC: The Main Causes of Death in Mexico

298 VIEW FROM THE TOP: Raúl Kuri, Seguros GNP

300 INFOGRAPHIC: Challenges Ahead for Health Insurance

302 VIEW FROM THE TOP: Javier Potes, Consorcio Mexicano de Hospitales

303 VIEW FROM THE TOP: Mario Carrillo, SCOR Global Life SE

304 VIEW FROM THE TOP: Cristina López, Murguía Consultores

305 VIEW FROM THE TOP: Omar Viveros, Willis Towers Watson

Eduardo Hori, Willis Towers Watson

286

INNOVATION NEEDED TO BRIDGE INSURANCE GAP

Providing universal access and coverage remains one of

the greatest challenges of healthcare in Mexico. The public

sector covers most formal employees through IMSS and the

Seguro Popular, an institution dependent on the Ministry

of Health, provides insurance for those working informally.

Those who can afford it buy private insurance, although

penetration rates are low in Mexico: 3.27 percent according

to the Encuesta Intercensal 2015.

“The market in Mexico is small because to have private

health insurance people must pay twice: once to social

security and then to their private insurance. Other

countries such as Chile and Colombia have reformed

their systems and integrated the private and public

sector. However, despite its small size, it remains an

attractive market as there are 8 million people privately

insured in Mexico,” says Ricardo Casares, Vice President

of PartnerRe Health Latin America.

Some states see higher rates of overall coverage than

others: San Luis Potosi, for example, an industrial hub with

many manufacturing workers paying public contributions,

has the highest rate of overall healthcare coverage in the

country with 89.53 percent of the population

affiliated to a certain service. Similarly, Nuevo

Leon and Campeche have rates of 87.88

and 87.84 percent, respectively, while the

lowest rates of overall coverage are seen in

Michoacan, with 74.03 percent, Mexico City with 78.49

percent and the State of Mexico, with 78.69 percent.

Conversely, Mexico City appears among the top three

states for penetration of private insurance along with

Nuevo Leon and Baja California. The country’s capital has

many informal workers with no access to healthcare but

also hosts a large number of corporate headquarters that

buy policies for their employees.

In states with oil rigs and workers, insurance coverage rates

from institutions such as PEMEX, SEDENA and SEMAR are

highest: Tabasco (5.22 percent), Campeche (3.96 percent)

and Veracruz (3.68 percent).

Employers are increasingly recognizing that sick workers

are not productive and that presenteeism is just as costly

as absenteeism, creating a financial burden. The Chamber

of Deputies reports that from January to September 2016,

absenteeism cost the Mexican economy MX$1.65 billion

(US$91 million). It estimates that presenteeism, though

difficult to measure, causes losses 4.5 times greater. Due

to the prevalence of chronic diseases in Mexico, it is thought

that by 2030 economic losses due to poor worker health

ANALYSIS

Increasing insurance rates in a country that does not have a

history of insurance culture is the challenge companies face.

The gap of those uninsured or with access to public services

but aspiring to private, presents an opportunity

00 11 22 33 44 55 66

Over 75

70-74

65-69

60-64

55-59

50-54

45-49

40-44

35-39

30-34

25-29

20-24

15-19

10-14

5-90-4

Source: Encuesta Intercensal 2015 � Women � Men

THE MEXICAN POPULATION (millions)

287

will reach 6.3 percent of GDP. For this reason, companies are

keen to take out insurance policies for their employees, also

providing opportunity to incorporate innovative models.

“The most important trend in insurance is prevention.

This concept is gaining momentum and companies are

implementing several strategies to participate in this

emerging area. There is a small percentage of the population

that is sick and there is another small percentage that is

healthy. In this demographic, there are sub-segments:

people who are disposed to developing diabetes, for

example, or those who engage in some kind of physical

activity but not consistently. Although there is still a long

way to go, we have noticed that a significant percentage

of the population is aware of prevention. Companies are

offering insurance to attract and retain employees and by

implementing prevention and wellness, they are reducing

their costs. By reducing stress levels, fewer people will need

to use public health services due to illness. It is a win-win

situation," says Omar Viveros, Director of Health & Benefits

at Willis Towers Watson, a global insurance broker.

Although reinsurance is a market dependent on the

insurance market, it also relies on the particular risk

culture of that market. “Brazil has almost double Mexico’s

population, so by simple numbers, this doubles the need

for direct insurance. However, companies in Brazil prefer

to retain much of their risk and what reinsurance does

exist pertains to a system that was previously a monopoly.

Mexico has roughly half the population of Brazil but we

provide double the reinsurance volume, which makes

Mexico the most important market for reinsurance in Latin

America,” says Mario Carrillo, Regional Director of Mexico,

Central America and the Caribbean for global reinsurer,

SCOR Global Life SE.

In this context, small insurance companies are making

their way to market, looking to provide coverage for those

completely uncovered or unhappy with public-sector

insurance. “Our idea was to become the largest hospital

network in Mexico even though our bed average is only

around 34 per hospital. Instead of being the largest hospital

network we want to become the first private healthcare

system in Mexico. We wanted to save patients money

and avoid out-of-pocket expenditure,” says Javier Potes,

President of the Conscorcio Mexicano de Hospitales.

However, there is still a bridge to gap as over 17 percent

of the population, or some 20.3 million Mexicans, remains

without any type of medical coverage, according to the

Encuesta Intercensal 2015.

“In Mexico there is a weak culture of insurance, investing

and risk management, which means people need to

be educated. In addition, insurance companies need to

ensure they have a product offering for the middle and

low socioeconomic segments. Some insurance companies

are strategizing to enter this market, perhaps by creating

products that offer new types of coverage or by working

with special providers. They need to segment this market

in a way that is attractive but affordable,” says José María

Ostos, Associate Partner at McKinsey & Company.

However, despite the challenges the sector presents,

many remain optimistic about its future. including Manuel

Escobedo, the President of the Mexican Association of

Insurance Institutions. Mexico faces major challenges

in its health system, especially chronic-degenerative

diseases. However, it is possible to turn these challenges

into opportunities thanks to the work of society and the

public and private sectors. We firmly believe that Mexico

has important elements: the country is the world’s 15th-

largest economy and ranks 11th in terms of population size.

It is about evaluating and realizing an appropriate strategic

management,” he says. “We want to show the benefits that

our sector can offer to expand the health coverage and the

quality of the services that are offered.”

HEALTH SERVICES IN MEXICO

UNKNOWN

NOT AFFILIATED

AFFILIATED TO A HEALTH SERVICE

119,530,753TOTAL POPULATION

� 82.18% Affiliated with a health service

� 17.25% Not affiliated

� 0.57% Unknown

AFFILIATION WITH HEALTH SERVICES IN MEXICO

Source: Encuesta Intercensal 2015 Source: CONDUSEF

RANKING OF MAJOR MEDICAL EXPENSES INSURANCE POLICIES 1Q17

1 Seguros Banorte 7 Metlife

2 Seguros Atlas 8 Bupa

3New York Life Seguros Monterrey

9 AXA

4 Allianz 10 GNP Seguros

5 Seguros Bx+ 11 Mapfre

6 Inbursa Seguros 12Aseguradora Interacciones

288

proposing collaboration scenarios between the public and

private sectors is to achieve short-term protection for the

19.3 million Mexicans who do not have this right.

Q: How does AMIS promote access to healthcare in a

country where access to health is a challenge?

A: With our proposal we want to show the benefits that

our sector can offer to expand the health coverage and

the quality of the services that are offered. The actions to

effectively meet our objectives are based on three axes:

population coverage, extent of coverage and services or

risks covered.

Q: To what extent are insurance policies based on

preventive actions a possibility in Mexico?

A: There is a gap in digital transformation both in Mexico

and internationally; for this reason, the 27th edition of

the AMIS Insurance Convention had as its main theme,

The Client of the Future in Insurance. At the same time,

each company works on the development and adoption

of new technologies that bring insurance to more people.

The new products must be aligned with the needs of

the client, which will be the focus of the activity of

the insurers. With the adoption of technology in the

implementation of policies and in customer service,

what we seek is to have the innovation that the industry

needs to offer financial protection through insurance to

the entire population of the country.

Q: What growth do you expect for the private insurance

sector in Mexico and what will be the contributing

factors?

A: We are a business sector that bets on Mexico and believes

in its people. In 2016, we invested MX$33.4 billion (US$1.9

billion) and generated employment for more than 76,000

people. Last year, the insurance sector grew 9.9 percent in

real terms and we reached MX$435 billion (US$24.2 billion)

in premiums. Given current economic conditions, we expect

7 percent growth in the insurance market in real terms this

year. By 2020, we expect the value to reach 3.1 percent of

GDP. To achieve this goal, we have designed the Expansion

Plan, which includes 16 priority projects for the industry.

Q: How can AMIS and the insurance industry better

support Mexico’s health system?

A: The public health system in Mexico has achieved

significant results, despite the fact that in recent decades

it has faced increasingly complex diseases that afflict

the population. In this context, the insurance sector

considers it essential to implement structural reforms that

will allow us to impact the epidemiological panorama

of the country. At AMIS, we have designed a proposal

titled: Towards Universal Coverage of Financial Health

Protection, in which we analyze the challenges we

consider most urgent.

Q: What role do insurance companies play in the fight

against chronic diseases?

A: The insurance sector in Mexico considers chronic diseases

to be of vital importance because they impact the life

expectancy of Mexicans. Our proposed document includes

financial protection for management of chronic diseases.

We consider it relevant to contribute with a proposal that

helps the government to respond to these needs, since

in recent years the costs related to treating only diabetes

have risen to US$7.7 billion. We believe that prevention is

key because if information campaigns are implemented for

timely care, adequate treatment can be accessed.

Q: What are the main challenges of operating in the

current Mexican healthcare system?

A: Mexico faces major challenges in its health system,

especially chronic-degenerative diseases. However, it is

possible to turn these challenges into opportunities thanks

to the work of society and the public and private sectors.

We firmly believe that Mexico has important elements: the

country is the world’s 15th-largest economy and ranks 11th in

terms of population size. It is about evaluating and realizing

an appropriate strategic management. The objective of

SECURITY VERSUS VULNERABILITYMANUEL ESCOBEDOPresident of AMIS

VIEW FROM THE TOP

The Mexican Association of Insurance Institutions (AMIS)

founded in 1937, unites Mexico’s insurance companies, with

the aim of promote the development of the sector across all

industries, including health

289

Q: To what extent should indicators be a part of a hospital’s

certification?

A: They absolutely should be. Now, certification is mostly

about services offered to patients, ensuring that the labs and

facilities are adequate, but there is no follow-up on the results

of that service. Individually, hospitals know the number of

infections that occur at the facility and publishing that figure

would be the transparent thing to do. The cost of medicine is

also impacting us greatly because the maximum retail price

is established for sale in pharmacies but not for hospitals,

which can charge insurance companies a higher rate.

Q: What is the financial impact of fraud in medical insurance?

A: We see falsified information, identity theft either of the

policyholder or the doctor, fake prescriptions and receipts

from ghost companies, middlemen who take a large cut

and dead people that are still alive. Who pays for all of this?

Policyholder does through their premiums, because insurance

companies pass these costs to the customer. If fraudsters steal

MX$500,000 (US$27,777), they are released within 24 hours.

Only theft over MX$800,000 (US$44,444) is punished. We

need to work with the authorities to change this. It is thought

that 10 percent of the cost of insurance premiums is due to

fraud. In 2013, fraud cost the insurance industry MX$15 billion

(US$833 million) overall.

Q: What trends do you expect to see over the next five years?

A: Insurance for the elderly will be one of the most significant

trends. We are facing a change in the population pyramid.

Now, a couple ending their work life at 65 will need to pay

MX$100,000 (US$5,555) annually for their insurance. However,

how much is their pension? They will probably be spending

three months of their pension on the insurance. Clients want

to be able to go to any hospital, to get discounts everywhere,

to pay only the minimum deductible. If clients go to hospitals

we have agreements with, it is much cheaper.

Q: How have the major medical expenses sector performed

in Seguros Atlas’s portfolio of services?

A: It is one of the company’s most important branches but

in general it has not grown as much as expected. Only 7

percent of the Mexican population has insurance or about

9 million people. This has increased by only 1 million people

in the past five years due to a lack of insurance culture and

access opportunities. Unfortunately, insurance is an elite

product because it is expensive and certain segments of

the population do not have access.

Q: What trends have you seen over the past 30 years?

A: The strongest trend is innovation. The last AMIS

convention was focused on technology and on optimizing

processes without losing the essence of service, a vital

component of our business because we work with people.

We need to focus on using technology to offer services to

our customers.

Q: What type of technology are you implementing?

A: We are changing our internal systems, developing and

using apps. For this, an inter-hospital system is required,

along with a call center and a doctor to perform the

diagnosis. We must also ensure compliance with data

privacy laws. Our app for patients is informative and

keeps them in contact with us. Another technological tool

is hospital electronic records. We have developed this and

are on the verge of releasing a digital card, accessible by

phone and which contains a policyholder’s information. It

also displays a QR code that hospitals can scan to obtain

a patient’s medical history. It will be available in 31 medical

units nationally.

Q: Atlas has an alliance with the Consorcio Mexicano de

Hospitales. What are the benefits of such alliances?

A: We need the cooperation of hospitals to optimize costs.

Our alliance with Consorcio Mexicano de Hospitales will

improve quality through certification. A hospital may

have the best transplantologist, the best neurologist and

conduct many renal transplants but, how many infections

occur there? Certification ensures all doctors and nurses

are qualified and are specialists in their field.

LACK OF INSURANCE CULTURE, ACCESS STUNTS GROWTH

BRUNO GUARNEROSMedical Director of Seguros Atlas

VIEW FROM THE TOP

Seguros Atlas is a Mexican insurance company in operation

since 1941. It offers specialized services such as fire and

maritime, life, accident and illness. It aims to offer personalized

insurance services to the general population

290

in Mexico and the US. There is a service we offer called Pulse,

which helps our clients manage the largest catastrophic claims

they may face such as cancer, transplants and heart diseases,

in turn helping patients reach the best quality of care at the

lowest cost possible.

Q: What trends are you seeing in the health market?

A: One of the most worrying trends is the increase in cancer

cases and the number of claims that insurance companies are

seeing. Health costs have always been a worry for insurers

as medical inflation is much higher than general inflation.

Companies are trying to better understand what is happening

in these trends and take preventive action to control this as

much as possible, without impacting premiums.

Q: Of PartnerRe’s products in health, which is the most

popular?

A: In Latin America, Working Excess Loss is the most

popular product. Our client defines a limit they can absorb,

in dollars or local currency, per person per year, all costs

below that limit are the responsibility of the insurer. If

costs exceed this amount, we take responsibility for those

amounts in excess. This is the type of product most used to

reinsure medical plans. The limit is defined by the size and

solvency of each client. To a lesser extent, we have quota

shares, or CATs for catastrophes such as pandemic, or an

event that impacts a larger number of people.

Q: What growth have you seen in 2016 in Mexico?

A: Precisely in 2016, PartnerRe started its health

operations in Latin America. Our initial activities focused

on a market analysis, country by country, to define our

top priorities. We started well, reaching clients in Peru,

Argentina, Mexico and Brazil.

Q: What strategy did PartnerRe implement to establish

themselves here in Mexico?

A: Our strategy followed several phases: research and getting

to grips with the market, the opportunities and the healthcare

system in each country, understanding how the private and

public sectors interacted with each other to identify the

niches we could direct our service. Once done, we defined

Q: The private insurance market in Mexico is small. How much

need is there for reinsurance?

A: The market in Mexico is small because to have private health

insurance people must pay twice: once to social security and

then to their private insurance. Other countries such as Chile

and Colombia have reformed their systems and integrated the

private and public sector. Despite its small size, it remains an

attractive market as there are eight million people privately

insured in Mexico. The insurance companies active in the

market are serious and respected companies, so this is an

attractive segment to develop for PartnerRe.

Q: How does PartnerRe set itself apart from other reinsurers?

A: Reinsurers offer capacity so that insurance companies

can settle any deviations in their results. PartnerRe wants to

offer not only capacity but also to be a partner in business,

helping insurers develop their own insurance portfolio. We

help them improve their profitability, always a relevant factor

for health insurance, and amplify their presence in the Mexican

market, which results in benefits for us too. We achieve this by

being close to our clients and examining their issues carefully.

PartnerRe has a team of over 80 people specialized in health,

INSURING THE INSURERSRICARDO CASARESVice President of PartnerRe Health Latin America

VIEW FROM THE TOP

AFFILATION TO HEALTH SERVICES IN MEXICO

0

20

40

60

80

100

US

Turk

ey

Mex

ico

Ko

rea

Isra

el

Fin

land

Cze

ch R

epub

lic

Can

ada

Bel

giu

m

Aus

tral

ia

PUBLIC AND PRIVATE HEALTH COVERAGE (percent of population)

Source: OECD 2015 � Public � Private

291

priority countries to start our efforts, we established an

operating model, then internally determined our pricing and

underwriting models and how our operations would work in

issuing contracts and managing events. After that, we began

visiting companies, announcing that we started our health

reinsurance operation in the region, complementing the

other lines of business we already had available. Health was

practically the only line we were missing in the Latin American

market. We approached clients around the dates they

were due to renew contracts with their existing reinsurers,

requested information, and present to them our offer and

services. There are more countries in Central America in which

we would like to start operating. We aim to open Guatemala

and Panama this year, as we have seen important companies

requiring reinsurance services there.

Q: What were the greatest challenges you faced in entering

Mexico and how did you overcome them?

A: The greatest challenge is always being better than the

competition. Reinsurance prices are low and there is strong

price competition, therefore we do not only want to compete

on price but also with a differentiated service based on our

unique expertise, additional services and our expert team,

through our Pulse program. We will continue looking at the

Mexican insurance market. There are also possibilities for

offering reinsurance to other types of companies such as

self-insurers, which are large multinationals and government

programs that provide their employees insurance. We could

offer them a Stop-Loss type of coverage in case the plan goes

over the company’s budget. In 2017, we will be identifying this

market in Mexico and in Brazil.

Q: Your 2016 results show 6 percent growth on a constant

currency basis. What part of this is due to Mexico and Latin

America?

A: A great part of this is due to an important growth

that we have in our life portfolio in Latin America. Non-

life reinsurance is going through a difficult phase of price

lowering. This is a pressured sector, but on Life and Health

we expect to continue our growth trend. In addition to

starting our health operations in Latin America, we also

started in Middle East in 2016. Opening such niches has

pushed company growth. We have expanded so much due

to PartnerRe’s desire to be a preferred reinsurer for all our

clients, to be a reinsurer that listens to and understands

client needs. Before offering a quote we ensure the solution

will solve the client’s needs in the best possible way by

performing a complete analysis. We focus on offering

tailored solutions to clients. PartnerRe is recognized for

offering technical solutions with high levels of support that

enable us to quantify risks and give solutions.

Q: What will your priorities be for 2017 and how will you

achieve them?

A: We will focus on the largest and most profitable

markets in Latin America, getting close to target clients

and demonstrating our services. In March 2017, we held

an event in the US, taking several clients from Mexico and

Guatemala and showing them a world-class operation

from the largest private health insurer worldwide. We

are also working very closely with reinsurance brokers,

as they play an important role in several markets. We

are planning to grow organically, although we are always

open to the possibility of inorganic growth. Last year

we acquired a reinsurer in Canada for health. Other

acquisitions and strategic alliances have been made in

the past, for example with BestDoctors we are offering

a popular product in Asia.

PartnerRe provides multiline reinsurance to insurance

companies in three segments: nonlife, life and health and

corporate. The life and health segment provides coverage to

primary life insurers and employer-sponsored pension plans

292

a hospital does not have a maximum price cap. Another

problem is related to age; the older you get, the more

insurance costs go up. In this regard, life insurance could

play an important role. If you consistently invested in your

life insurance then you should be able to draw from that

insurance in old age to pay for medical expenses.

Q: How is technology changing and impacting La Latino

Seguros’ operations?

A: Technology is transforming our operations. We are

working on an app that will allow our clients to easily access

information and contact us. It will help clients control their

spending, as it will tell them which hospitals are included in

their policy. The app also allows for greater communication

with the company, without intermediaries, because we

recognize that call centers are managed by third parties and

obtaining some information can be difficult. We expect to

have the app ready and available by December 2017.

Q: What are La Latino Seguros’ priorities for the coming

years?

A: We have enjoyed significant growth in the past three

years, a period in which we almost tripled our operations.

In 2014, we started the year managing premiums worth

MX$430 million (US$23.8 million) and we are expecting to

finish 2017 with MX$1.3 billion (US$72 million) in premiums.

When it comes to the products we offer, we have not

closed our life products division, even though it requires

a significant capital injection. We manage traditional

and integral products in the life segment. The integral

products are investment products that can be made for a

determined number of years. We believe that we offer an

important differentiated product for the market. Although

we have been in the country for over 100 years, we are

working to create more awareness of our brand and to find

new ways to reach more clients. That is our focus. We are

not expanding into new business areas; our challenge is

to continue growing steadily in the segments we know so

well and to continue offering top-quality service so that

in five years we can go from being a small company to a

medium-size company.

Q: How is La Latino Seguros positioned in the health

insurance sector?

A: La Latino Seguros has been in the market for 111 years. It

started as an insurance company providing life products but

as the business evolved, we began playing in the medical

expenses segment. We have the most long-lived name

among insurance companies in Mexico. We have insured the

Mexican population in times of crisis such as the Revolution,

and the earthquakes of 1957 and 1985. La Latino Seguros

is among the top paying companies in terms of meeting

claims during disasters, particularly for the health sector. Our

participation in the Mexican health sector is limited to certain

segments but it is a very important part of our portfolio.

Q: Which indemnification products tend to be more popular

for the health sector?

A: We are focused on offering indemnificatory products

that complement our medical expenses coverage. We are

reviewing the more common diseases that take a toll on

the population and analyzing how the scheme could work.

The company is also analyzing the possibility of reaching

agreements with public national institutions such as the

National Institution for Cardiology or the Pediatric National

Institution. This would allow us to sell affordable medical

insurance with reasonable coverage conditions that might

provide access to A or A+ hospitals but that guarantee

access to other excellent hospitals.

Q: What is behind the increased premiums for medical

expenses?

A: In recent years, insurance companies have recognized that

COFEPRIS does not regulate the prices hospitals can charge

for medications. For instance, pharmacies are regulated by

COFEPRIS and are given a maximum price at which they

can sell a medicinal product, but that same medication in

COVERING MEXICAN REQUIREMENTSRENÉ MIERESCommercial Director of La Latino Seguros

VIEW FROM THE TOP

La Latino Seguros is a Mexican company with more than

100 years of experience in the insurance sector. It offers a

wide range of policies in medical expenses, life, automobile,

accidents, corporate and house insurance

293

Q: What is SiSNova’s growth strategy?

A: We have agreements with more than 300 hospitals and

5,000 affiliated doctors across Mexico. In mid-2015, we

did not have any clients but by the end of 2015 we had

over 7,000. In 2016, we insured over 40,000 people and

in the first quarter of 2017 we were near 50,000. The main

internal drivers of this growth are our focus on medical

care and our response to the insured patient. Once a user

becomes a patient, we answer as a provider of medical aid

not as an insurance company, recovering the essence of

why someone approaches an insurance company, especially

when they require specific medical care. We have a 99

percent policy renewal rate.

There are also external factors that boost this growth, the

most important of which is the big gap that is not covered

by the public or private health sectors. There are 121 million

people in Mexico, around six million of whom have private

insurance. But more than 30 million Mexicans belong to the

C segment, where some have coverage but want to access

a system with better services. Therefore, there still is a great

opportunity to open access to the Mexican population.

The public sector has limited capacity to offer punctual

and complete service and the private sector is becoming

increasingly expensive, leaving behind the larger part of the

Mexican population. We grow by looking for new users and

through references from our team and our clients.

Q: What are the company’s objectives for 2017 and the

coming five years?

A: We would like to keep growing at the rates we have seen

so far. However, we are conscious that uncontrolled growth

can affect the level of service in solving medical problems.

The challenge is huge because the need is infinite. Our

business is not to sell policies, it is to offer medical care

with quality and security through an insurance policy.

Q: SiSNova is a young company. What strategy has it

employed to compete against established companies and

new models?

A: Our differentiator is that we prioritize medical criteria

over financial or economic criteria. Our offer is based

on early prevention and the promotion of a change in

healthcare culture. This has a significant impact on costs

because if we change our habits, we can prevent chronic

diseases and their related complications and if we detect

diseases on time we can treat them before they become too

complex and expensive. Therefore, our focus is on integral

medical care, from prevention to treatment.

Changing healthcare culture is a long process, so first we

want to provide access to immediate medical care without

a direct cost for the user. We establish specific parameters

to be able to provide follow-up and organize our insured

population by demographic and epidemiological

characteristics. We promote this by giving users benefits

as they accomplish their goals, so they can have access to

better services without higher prices.

Q: It says on your website that a new era in medical

insurance began on May 2, 2015. How so?

A: This is because our greatest goal is to give the Mexican

population more access to a better healthcare service

with international standards and quality. Major expenses

coverage was designed to avoid an economic rupture

when there is a health problem within the family but the

deductible and co-payment must be covered first by the

patient. Insurance companies never cover prevention,

primary care or early diagnosis. Everything is designed for

treatment. Traditional insurance companies have tried to

administrate healthcare with the goal of containing costs,

but their policies are designed for major health expenses.

This makes the system inefficient and this is one of the

major factors why private insurance is so expensive in

Mexico, and one of the main reasons why out-of-pocket

expenditure is so high and increasing despite extensive

healthcare infrastructure. Also, since public services

sometimes receive a subsidy, the public believes it has the

right to healthcare, but this comes at a cost.

INNOVATIVE INSURANCE BRIDGES CARE GAP

PAULINO DECANINIExecutive Vice President of SiSNova

SiSNova is a Mexican company attempting to change the

insurance landscape, offering preventive services through

policies aimed at those not covered by the public or private

sectors

VIEW FROM THE TOP

294

The private label market is growing at over 20 percent in

value terms. This is disproportional growth compared to the

overall 4-5 percent growth rate of the total pharmaceutical

market. In the past, pharma companies would have simply

increased prices when faced with a tough global economic

situation, but now it is not possible because patients have

low-cost alternatives and pharma companies would lose

market share. Despite this, in 2016 prices increased because

raw material costs rose due to the peso devaluation. To

remain competitive, pharma companies are focusing on cost

containment measures. In the past, these companies never

looked at general and administrative expenses or back-office

costs, focusing only on their sales force expense, which is the

largest item on their profit and loss statement. Now, every

cost item is being examined. Some companies are starting to

look into digital promotional and patient support models to

enable this efficiency but they have not reached the level of

sophistication of other industries. Companies still believe that

traditional face-to-face promotion is the way to go.

Q: What are the most prominent issues you have spotted?

A: What is new these past years is peso devaluation, in

some way driven by the US political situation. Companies

have reacted with caution, especially when it comes to

new investments but I do not see any panic. Companies are

working as usual. The other change is the launch of more

biosimilars. Multinational companies are the ones mainly

affected by this trend. They are struggling because they

now face more competition across their innovative portfolio.

Some multinationals are launching patented products in

Mexico but they are also having trouble getting inclusion to

the formularies of the main institutions, which is becoming

increasingly difficult. The strategy of solely focusing on

innovative products might work in developed countries but

not in Mexico, so multinationals need to adapt their strategies

or change their portfolios. Across the broader healthcare

industry, I see a proliferation of start-ups and business models

trying to bridge the gap that the public and private insurers are

not filling. These new businesses are positioning themselves

in the center, serving the middle and low socioeconomic

segments that cannot pay for traditional private insurance

but do not want to receive public care.

Q: Why are medical insurance penetration rates so low in

Mexico? What is being done to increase this?

A: Brazil is the best comparison for Mexico, which has a 21

percent rate of private health insurance as a percentage

of total healthcare spend, the highest in Latin America. In

Mexico, there is a weak culture of insurance, investing and

risk management. This means people need to be educated.

In addition, insurance companies need to ensure they have

a product offering for the middle and low socioeconomic

segments. Some insurance companies are strategizing to

enter this market, perhaps by creating products that offer

new types of coverage or by working with special providers.

They need to segment this market in a way that is attractive

but affordable.

Q: To what extent are companies making drastic changes

this year considering current global economic challenges?

A: Given that the new economic environment is only one driver

shaping the Mexican pharma market, it is also important to

understand there are other drivers. A few years ago, we were

wondering why, if Mexico has a high prevalence of chronic

diseases, a growing middle class and an aging population,

overall healthcare and specifically pharma expenditure were

not exhibiting high growth rates. This is because public

investments in healthcare are not as high as they should be

and also there is low private health insurance penetration.

A good example is high-cost treatments because people

cannot pay for them out-of-pocket. Low-cost pharmaceutical

treatments are being bought out-of-pocket, which translates

into healthy growth rates for this segment. But this specific

growth cannot be seen in the market audits we track; this

growth is coming from the impulse and private label segments,

comprised of low-cost products sold in pharmacies directly

to customers. The impulse market is growing at more than

10 percent in value terms and on average up to half of an

independent pharmacy’s products will be impulse products.

NAVIGATING CHANGES IN PHARMAJOSÉ MARÍA OSTOSAssociate Partner at McKinsey & Company

VIEW FROM THE TOP

McKinsey & Company is a global management consulting firm

that serves leading businesses, governments, NGOs and not-for-

profits. It is the largest and longest-established management-

consulting firm in Mexico working in every major sector

295

purchase. Finally, we contribute to prevention awareness by

supporting events, like 5k and 10k races that we believe are

promoting a longer, healthier and happier life.

Q: Who are Bupa Global’s customers and what added value

do they receive?

A: The people that buy Bupa Global have a clear idea of

the importance of protecting their health. Those who come

to us are aware that we do cover certain risks that other

companies do not, such as extreme sports. In the case of

corporate clients, the companies that choose to work with

us recognize the benefits of Bupa Global coverage for

employees who frequently travel, or the companies just

want to provide an international premium medical insurance

as a retention strategy.

Q: What are Bupa Global’s main distribution channels?

A: We distribute through three different channels: agents,

direct sales and through partnerships with companies. In

Mexico, we are associated with American Express and with

Actinver. The main distribution channel in Mexico is agent

sales because people here prefer to deal face to face.

Q: What products can Bupa Global offer that other insurance

companies cannot?

A: We launched our Bupa Global Health plan in 2015 and it is

very straightforward. There are three variations of the product:

select, premier and elite. All have almost the same offering but

the difference is the insurance sum, which means that benefits

will increase as you move up. For all three products, the

insurance sum is renewable, so when customers renew their

policy they continue to pay the same amount. Unlike other

companies, we do not have a closed network of institutions

or doctors; we are an open network. However, we know which

hospitals our customers frequent and we have a department

to verify that the service conditions are appropriate.

Q: Bupa reported global revenue of £14 billion in 2015-2016.

What part did Latin America play in this?

A: This year, Bupa is celebrating 70 years and Bupa Global, its

insurance division, is one of the main players in this success.

Bupa Global has 22 million people insured globally and 86,000

employees and Bupa Global Latin America and Bupa Global

Mexico enjoyed strong growth from 2015 to 2016. The main

drivers of this growth are our presence and branding.

Q: What are the main challenges of operating under the

Mexican healthcare system’s regulations?

A: We regard regulations positively and we understand

that the goal is to have cohesion between what an

insurance company says and what it does. Regulations

verify that we provide only those services we can comply

with and that the rules of the game are clear. Fortunately,

the interaction between insurance companies and

regulatory agencies is positive.

Q: Premiums are paid in pesos but the insured amount and

deductibles are in dollars. How does currency volatility

impact Bupa’s bottom line?

A: Currency devaluation impacts companies like Bupa that

are active on the international stage. However, we have

implemented financial tools to mitigate that impact, which

includes hedging our assets. Our joint venture with Blue Cross

Blue Shield, the largest insurance company in the US, has been

one of our biggest sales drivers in the last few years and our

affiliates have coverage in 97 percent of facilities in the US.

Anybody who has a Bupa Global Mexico card also gets one for

Blue Cross Blue Shield, a benefit that has also helped improve

our customer-retention rate.

Q: What cost-effective solutions is Bupa Global providing its

clients to promote preventive care?

A: Two years ago, the AMIS finally authorized the inclusion of

preventive benefits in an insurance product. At Bupa Global,

when clients acquire an insurance policy they are entitled

to a free check-up with the annual renewal. We have digital

tools and a health app tailored specifically for Bupa customers

and we also have online distribution channels through which

potential customers can receive advice about their policy

INTERNATIONAL INSURANCE RETAINING MEXICAN TALENT

LUK VANDERSTEDEDirector General Mexico of Bupa Global Latin America

VIEW FROM THE TOP

Bupa Global is an insurance company belonging to Bupa, a

prominent association that cooperates in different business

areas but focuses on health in its international markets division.

Bupa Global has been in Mexico for more than 20 years

296

0 10 20 30 40 50 60 70 80 90 100 110 120 130

Other causes

Abnormal clinical and laboratory symptoms, signs and findings not classed elsewhere

Septicemia

Alcohol dependency syndrome

Anemia

Infectious intestinal diseases

Illness caused by HIV

Chronic and non-specified bronchitis, emphysema and asthma

Self-harm

Undernutrition and other nutritional deficiencies

Congenital malformations, deformities and chromosomal abnormalities

Perinatal a�ictions

Kidney failure

Influenza and pneumonia

Homicide

Chronic obstructive pulmonary disease

Cerebrovascular diseases

Malignant tumors

Diabetes mellitus

Ischemic heart conditions | Total heart conditions *

In motor vehicles | Total accidents

Alcoholic liver disease | Total liver conditions

68.47% 31.53%

43.12% 56.88%

33.21% 66.79%

THE MAIN CAUSES OF DEATH IN MEXICO

conditions accounted for almost half of all

deaths in Mexico in 2015.

Despite rapid treatment advances, there is no

magic cure for these diseases. Although certain

risk factors have been identified and scores

of scientists are working on finding solutions, perfectly

healthy people can be struck down by a heart attack and

children develop tumors. Cardiovascular disease englobes

tens of different conditions and a diabetes diagnosis entails

precautions such as a special diet for the remainder of one’s

life. Failure to do follow these precautions can not only

eventually lead to death but can cause debilitating side-

effects such as blindness and diabetic foot, resulting in

amputation and poor quality of life.

Cancer is often thought of as the scariest of them

all, as a tumor surgically removed or declared gone

after treatment such as chemotherapy can reappear,

sometimes years later.

Following the trend in other countries and notably in

developed ones, the main causes of death in Mexico

have evolved over the past century. Whereas infections

and communicable diseases were previously the

main killers, the rise of the pharmaceutical industry

and the implementation of better hygiene practices

have contributed to the decline of these killers. This

has enabled people to live longer which, alongside

unhealthy lifestyles, has facilitated the rise of chronic and

degenerative diseases. The longer people live, the more

likely they are to develop a degenerative CNS condition

such as Alzheimer’s or Parkinson’s disease, impacting

quality of life. Today, a Mexican is much more likely to

die from cardiovascular disease, diabetes or cancer

than influenza, diarrhea or smallpox. Those top three

INFOGRAPHIC

The main causes of death in Mexico have evolved over the

past 90 years, transitioning from infectious diseases to chronic

conditions. Over the past 30-40 years, cardiovascular conditions,

cancer and diabetes have become the top three foes of Mexicans

CAUSES OF DEATH IN MEXICO IN 2015 (thousands)

Source: INEGI

*Excluding Heart Attacks

655,688total deaths in Mexico in 2015

297

HEART CONDITIONS

Pneumonia/influenza

Whooping cough

Diarrhea/enteritis

Gastroenteritis and colitis

Infectious intestinal diseases

Malaria

Early childhood diseases

Smallpox

Measles

Accidents

Violent or accidental death and poisonings

Violent or accidental death

Cerebrovascular diseases

Heart disease

Malignant tumors

Diabetes mellitus

Hepatic cirrhosis and other liver diseases

Liver conditions

1922 1930 1940 1950 1960 1970 1980 1990 2000 2010 2015

1

2

3

4

5

TOP 5 CAUSES OF DEATH IN MEXICO SINCE 1922

Stroke (blood cannot reach a part of the brain)

Abdominal aortic aneurysm (swelling of the aorta, the main artery)

Arrhythmia (abnormal heart rhythm)

Angina (pain in chest)

Atherosclerosis (build-up of fatty material inside the arteries) Atrial

fibriliation (irregular pulse)

Brugada syndrome (heart rhythm disturbance that restricts the flow of sodium ions to heart cells, causing disrupted electrical impulses through the heart)

Cardiac Arrest (heart stops pumping)

Cardiomyopathy (genetic condition, often thick or enlarged heart)

Cardiovascular disease (term for all diseases of the heart and circulation)

Congenital heart disease (heart condition or defect developed in the womb)

Cornonary heart disease (ischaemic heart disease, build-up of fatty material on coronary artery walls)

Catecholaminergic polymorphic ventricular tachycardia or CPVT (heart rhythm disturbance, caused by high levels of calcium in cells)

Familial Hypercholesterolaemia (genetically high levels of cholestoral in the blood, causing fatty build-up)

Heart attack (not enough oxygen-rich blood reaching the heart)

Heart failure (heart not pumping blood correctly)

Heart valve disease (diseased or damaged valve impacting blood flow)

Inherited heart conditions (most common are cardiomyopathies, arrhythmias, Familial Hypercholesterolaemia)

Long QT syndrome (heart rhythm disturbance delaying the flow of potassium ions out of heart muscle cells, sometimes allows too many sodium ions into the cells; causes a delay in electrical impulse)

Progressive cardiac conduction defect (PCCD) (slow electrical impulses, leading to heart block)

THE EFFECTS OF DIABETES

Other

Eye problems

Blindness

Amputations

Diabetic ketoacidosis

(T1D)

Hypersmolar state (T2D)

Hypertension

Dyslipidemia

Heart attackStroke

Death

side effects

Hypoglycemia

55% the number of diabetics that follow

treatment as indicated by

a doctor

Source: INEGI, Medigraphic

Source: British Heart Foundation Source: Diabetes.org

298

VIEW FROM THE TOP

PREVENTION A CORNERSTONE FOR OLDEST INSURER IN MEXICORAÚL KURIDirector of the Agent Channel of Seguros GNP

generate positive change and allow people to contribute

to the strengthening of a healthy and prosperous society.

Without a doubt, the healthcare sector plays an important

role in our society and is one of the main foci in the

development plan of any country.

In Mexico, we face a challenge in providing first-class

medical attention to all Mexicans to generate a positive,

long-term change. The hurdles are many. The first is to

generate a culture of prevention and opportune attention

to chronic degenerative diseases among all members of

society. The second is timely care and close monitoring

of the treatment of these patients. Finally, we must

strengthen research for new medical treatments.

The insurance sector plays an important role in

strengthening the healthcare industry because it grants

access to healthcare under any circumstances to a

greater number of people.

Q: What role does GNP Seguros play in the transition

toward a culture of prevention?

A: GNP Seguros is constantly on the lookout for services

that promote the prevention of chronic degenerative

diseases and their timely care, with the goal of improving

people’s health and their quality of life. Among the

programs we have developed to promote prevention is

GNP Looks After Your Health, which aims to diagnose and

reduce risks for the most common chronic degenerative

diseases in the country. This p rogram promotes three

essential habits, which are a balanced diet, regular

physical activity and stopping smoking. These three

habits, along with regular medical visits, are fundamental

to reducing health risks.

To date, 17 companies have entered the program with an

average participation of 70 percent of their employees

for a total of 16,500 participants. Out of a sample of

2,200 individuals, we measured a 32 percent reduction

in the risk of suffering a chronic degenerative disease.

This program is different from others because besides

prevention, it aligns with timely detection of the risk

Q: What are the main challenges you face when operating

in Mexico’s healthcare system?

A: The Mexican insurance sector is still developing and

searching for strategies to widen its reach among the

local population. Our strategy is to raise awareness

among individuals and companies about the importance

of insurance in the formation, care and optimization of

their legacy.

Today, approximately 80 percent of private healthcare

expenditure is paid out of pocket because only 7 percent

of the population has medical insurance. Of those who

have health insurance, 60 percent obtain it through a

company policy and the remaining 40 percent have an

individual policy. This situation reflects the importance

of increasing awareness about the need for health

insurance among Mexicans that will allow individuals to

generate a culture of healthcare prevention. Furthermore,

a larger number of insured allows insurance companies

to generate specific products according to the needs of

the population.

GNP issues one out of every three insurance policies for

medical expenses in Mexico. We have been the number one

company in this type of insurance for the past 70 years.

Promoting a culture of insurance is of the utmost

importance and this principle leads all our actions as

an insurance provider. We consider the use of insurance

a responsibility that benefits individuals, their families

and their surroundings. Through the program GNP

Looks After Your Health, we have provided education

and counseling regarding the acquisition of major health

expenses insurance.

Q: What role does healthcare play in GNP Seguros’

overall operations?

A: For GNP Seguros, healthcare is vital, both for

our internal and external activities. We have several

specialized programs designed to increase the impact of

prevention and timely treatment. These programs permit

individuals and companies to create a virtuous cycle to

299

Seguros GNP is one of the largest insurance companies in the

Mexican market. It has over 115 years of experience in cross-

sector insurance and is a part of the industrial group Grupo

Bal, which includes El Palacio de Hierro and Industrias Peñoles

factors of these diseases. Close monitoring of every

single one of our insured clients permits the program to

provide specific recommendations to contribute to the

improvement of people’s health.

Q: Some specialists see critical diseases as the insurance

sector’s Achille’s heel. What is GNP Seguros’ view on

this matter?

A: The relevance of chronic degenerative diseases has

motivated us at GNP Seguros to develop programs

focused on improving people’s health through timely

detection and care.

In the cases of insured clients who already have one

of these chronic diseases, GNP Seguros provides them

with top-flight treatment and follow-up to improve

their quality of life. The company also gives them many

tools to manage these conditions, including our Integral

Accompaniment Program that provides personalized

support for the insured. This program began for patients

of breast and colon cancer but has expanded to now also

encompass those with a chronic degenerative condition,

all types of cancer and neurological and cardiovascular

diseases.

Q: What strategy will Seguros GNP implement to

contribute to Mexican medical care over the next few

years?

A: Our role as an insurer is to continue developing

initiatives that make excellent healthcare services

available to all socioeconomic levels. The goal is to

enable all individuals to receive timely care in the face

of a sudden and serious medical emergency. Another

goal is to help them adhere to an appropriate follow-up

regime to improve their quality of life.

We also want to strengthen GNP Looks After Your

Health by adding more companies and individuals to

this virtuous cycle. The adoption of healthy habits

and periodic medical visits will promote risk reduction

of chronic degenerative diseases among the general

population.

Q: GNP has said that it expects cyberattacks, such as

the Wannacry virus, to increase the sale of insurance

policies. Is this happening?

A: The digital era we live in poses significant risks such

as cyberattacks, which rose by 50 percent in 2016. These

attacks increasingly target organizations and institutions

instead of individuals. We estimate that over 556 million

people are hit by these attacks worldwide every year,

causing economic loses over US$110 billion. In Mexico,

the damages caused by these crimes are estimated to

be over US$2 billion.

Without a doubt, the healthcare sector is among the

most vulnerable to these attacks due to the sensitive

information it handles. For that reason, it is important

to acknowledge that even after all security measures are

undertaken it might not be possible to prevent all attacks.

The sector has to implement broad-reaching security

measures and protection policies that allow all institutions

to safeguard their valuable information. Among these,

the acquisition of cybernetic damage insurance must be

considered to prevent and reimburse economic and brand

damage brought about by these crimes.

Q: What measures is GNP Seguros implementing to

protect organizations?

A: GNP Seguros is aware of the risks that cybernetic

crimes pose to companies in every sector. For that

reason, the company allied with Beazley, a global leader

in cybernetic attack protection, to develop CyberSafe

GNP, a comprehensive insurance to protect organizations.

Among the main benefits of this insurance product is

damage restitution, which can reduce economic losses for

the insured by up to 80 percent. This solution integrates

services such as a call center, expert reports, legal

representation, public relations and crisis management

to develop and implement an action plan to manage the

results of the attack.

GNP Seguros is a fully Mexican company with over 115

years of experience in the insurance sector, working across

segments. Our commitment to the country is not only

aimed at the financial field. We are also committed to

promoting responsible actions to raise social awareness

and to benefit Mexican health, which we believe is one of

the main pillars of a thriving society. For that reason, we

develop programs that help improve the health of Mexican

families and that promote prevention and timely detection,

all of which are cornerstones for improved health.

60 percent obtain health insurance though a company policy and 40 percent have an individual policy

300

INFOGRAPHIC

Higher medical expenses and a longer life expectancy have

created fresh challenges for the health insurance industry. To

attract customers, companies are adjusting coverage terms to

include limitations while also creating more flexible policies

This may not be enough as companies are also taking a hit on

previously profitable areas. According to AMIS, the accident

rate in 2016 was above profitability for companies. Also,

there are fewer workers in the public sector and

those employees remaining are losing benefits

such as medical insurance. Still, the public

sector represents a hefty opportunity as the

government remains a big purchaser. Between

October 2014 and March 2015, the federal government paid

leading insurer Seguros GNP MX$1.6 billion (US$88 million)

to cover major medical expenses for 320,000 public servants.

AUTO PARTS PRODUCTION PER YEAR IN MEXICO

0

10

20

30

40

50

60

70

80

200

6

200

7

200

8

200

9

2010

2011

2012

2013

2014

2015

2016

MEDICAL AND HEALTH PREMIUMS (MX$ billions)

DISTRIBUTION OF THE REGIONAL SUSTAINABLE DEVELOPMENT FUND 2

Source: CGM, Ministry of Economy 1 With figures to March of 2015

11% Mazapil

9% Cananea

7% Nacozari de Garcia

5% Fresnillo

4% Ocampo

4% Caborca

2% Sierra Mojada

2% Sahuaripa

2% Morelos

2% Eduardo Neri

2% Aquila

2% Alamos

1% Chinipas

47% other

MEDICAL INSURANCE PREMIUMS (percent of the market)

7.5%of the population

was insured in Dec. 2014 (over 9 million

people)

CATASTROPHIC EXPENSES

� 37.4% Cancer

� 8.87% Bone system

� 7.78% Cardiovascular disease

� 7.69% Nervous system

� 5.3% Accidents

0

5

10

15

200

6

200

7

200

8

200

9

2010

2011

2012

2013

2014

2015

2016

13.3% 13.6% 14.1% 13.4% 13.9% 13.7% 13.5% 13.7%14.8% 14.1% 14.6%

12.8% 13.2% 13.7% 13.1% 13.6% 13.4% 13.1% 13.2%14.2% 13.6% 14.1%

0.4% 0.4% 0.4% 0.4% 0.3% 0.3% 0.3% 0.5% 0.6% 0.5% 0.5%

LOW ACCEPTANCE

EXPENSIVE CASES (cost per patient)

Blood cell conditions in underage patients

MX$90 million

Body component equilibrium

MX$64.2 million

Glucosaminoglicanos metabolic disorders

MX$47 million

LONG CASES (cost per patient)

Diabetes patient (MX$1.4 million)

27 years

Cysticercosis patient (MX$2.6 million)

24 years

Chronic kidney failure (MX$2.1 million)

24 years

45% between 25-44 years old

71% part of collective or group plans

21% individual

—Major medical expenses —Health —Total

� Major medical expenses

� Health0.31%

GDP

CHALLENGES AHEAD FOR HEALTH INSURANCE

301

COORDINATION WITH PUBLIC HEALTH

PREMIUM SHARE (percentage of the insurance market)

LOSS RATIOS FOR MAJOR MEDICAL EXPENSES 2010-2016 (percent)

0

2

4

6

8

10

200

6

200

7

200

8

200

9

2010

2011

2012

2013

2014

2015

2016

Sources: AMIS, El Asegurador

Most people are willing to pay for a known medic, if he or she is coordinated with public security network

� Individual � Group

HIGHER PRICES

In Mexico, the number of claims in group policies has always been higher than in individual policies

CONDUSEF and AMIS started a major medical expenses simulator that includes 10 companies, with the aim of increasing health insurance penetration in the Mexican market

SIMULATOR

of consumers with financal support are willing to go for a medical consultation with a private doctor, if references to the public network are possible

79.2%

60.3%has a doctor near workplace of house

64.8%are willing to pay for consultation near workplace of house

OF CONSUMERS WHO REPORT THERE IS A DOCTOR NEAR HIS OR HER WORKPLACE OR HOUSE AND WHO ARE WILLING TO PAY FOR CONSULTATIONS:

60

65

70

75

80

85

90

95

2010 2011 2012 2013 2014 2015

69%Individual

Percent of the population with major medical expenses coverage

2004 3.9%

2005 4.9%

2006 5.6%

2007 5.6%

2008 5.7%

2009 6.0%

2010 6.1%

2011 6.9%

2012 7.6%

2013 7.4%

2014 7.7%

2015 7.5%

Medical expenses policies increase in price every year

According to experts between 10% and 12%

According to Condusef, between 9% and 14%

78%Group

—Loss ratio 5 big firms —Loss ratio 5 big firms —Total loss ratio —Total loss ratio

79%total

medical expenses

74%group

medical expenses

93%individual medical

expenses

PRICE INCREASES OVER 10 YEARS

302

It does not cover cancer or a heart attack; in those cases,

patients should use their social security. This will be the only

insurance in Mexico for the middle segment in cost. Besides,

the system works with deductibles instead of refunds.

To arrange all these benefits we will launch a mobile

application that works with an algorithm that performs a

risk evaluation for each patient and provides personalized

information. It also will have a patient’s history uploaded so

even if a patient changes doctors, the doctor can still access

records. In the future, this platform will provide incentives for

prevention, such as gaining points to access gyms. The idea

is also to provide better prices to our patients and to allow

doctors to achieve more volume.

Q: What are the main advantages for hospitals, doctors and

patients as part of the consortium?

A: The initial advantage was achieving better purchase

prices because if all the small to medium-sized hospitals

buy together, they can get lower costs. The second idea

was to share information. The hospitals needed to see if

they were doing things right, so we developed manuals and

organized exchanges of professionals between the hospitals.

Then we started developing training opportunities for the

employees of each hospital. We developed online courses

for 13 different positions with different modules in each

and planned 30 annual talks on different topics. Now we

have four certification courses in hospital management,

marketing, purchasing and quality.

Q: What are your main objectives for 2017?

A: We want to reach 250,000 memberships for our system

in the next two years. It will be possible because at the

consortium there are 100,000 hospitalized patients every

year and 300,000 more who undergo ambulatory procedures.

The consortium will keep training and providing information

exchanges. We also want to integrate specialty clinics to

reach the goal of becoming the first private healthcare system

in Mexico. It is not an easy task because Mexicans do not

understand what a healthcare system is. But we are working

to create a model that includes all types of services, like social

security does, for a similar price and with better service.

Q: How has the consortium’s business model evolved with

the healthcare system?

A: The first goal of the consortium was to achieve operational

effectiveness, cost reduction, training and information

exchange. Our idea was to become the largest hospital

network in Mexico even though our bed average is only

around 34 per hospital. However, this vision has changed.

Instead of being the largest hospital network we want to

become the first private healthcare system in Mexico. We

wanted to save patients money and avoid out-of-pocket

expenditure. We did a study on health coverage in Mexico

and we found that 6 percent of the population has coverage

for major medical expenses, 60 percent have social security

and the rest cannot afford insurance. This last group is the

one that usually comes to us and spends a lot of money.

The reason for this situation is because insurance in Mexico

was created for hospitals, not for patients. The main

problem in Mexico is the lack of money. Insurance systems

can help us organize the market and become efficient in

managing hospital expenses so that premiums do not rise

as they usually increase 15 to 25 percent every year. Last

year, 20 percent of insurance holders canceled their policy.

Insurance is also limited and there are only options to cover

catastrophic diseases but not for the most common causes

of hospitalization. We want our model to bridge these gaps.

Q: What is the consortium’s plan to address this situation

as a group?

A: We approached insurance companies and proposed an

system we designed for patients at consortium hospitals.

It will be delivered to the segment of the population that

has no coverage through private insurance or social security.

It costs no more than MX$5,000 (US$277) a year and is

available with Seguros Atlas and Seguros Banorte. It includes

up to MX$170,000 (US$9,444) of medical expenses at our

hospitals and covers 90 to 95 percent of hospitalizations.

PRIVATE SECTOR STEPS UP TO THE PLATEJAVIER POTESPresident of the Consorcio Mexicano de Hospitales

VIEW FROM THE TOP

Consorcio Mexicano de Hospitales is a consortium of hospitals

that offer patients insurance coverage, working together to

save costs and aiming to create the first private healthcare

system in Mexico

303

Q: How important is Mexico within your global operations?

A: It is very important. As a reinsurance and insurance

market in general, it is one of the main ones. Brazil has

almost double Mexico’s population, so by simple numbers,

this doubles the need for direct insurance. However,

companies in Brazil prefer to retain much of their risk

and what reinsurance does exist pertains to a system that

was previously a monopoly. Mexico has roughly half the

population of Brazil, but we provide double the reinsurance

volume, which makes Mexico the most important market

for reinsurance in Latin America.

Q: How does the Mexican market compare to others in Latin

America?

A: Each country has its particularities and its own challenges.

The insurance markets in Latin America have developed

differently. In Mexico, private insurance penetration is low and

the objective of institutions has always been to increase this,

which means that more people are covered. In Colombia, for

example, insurance penetration is relatively good. There are

several types of coverage, such as pension fund insurance,

that do not exist in Mexico. Some countries allow citizens to

deduct their private insurance expenses from their federal

taxes, meaning they do not have to pay twice like in Mexico,

where people pay for public healthcare provided by IMSS

and then for a private policy on top of that.

Q: What are your goals for 2017? How will you achieve them?

A: We are seeing strong growth. Fortunately, each year has

been a record for us over the last 10 years or so. This is not

a coincidence, it is due to our development plan. In Mexico,

SCOR ranks third or fourth in its life and health business.

We have three main lines of development: the traditional

market, reinsurance to solve capital needs and designing

new products. We are currently researching other products

that could be viable and adapted to this market.

Q: What have been the biggest challenges in insurance and

reinsurance in 2016?

A: The main challenges have arisen from exchange rate

volatility. Medical inflation has increased and as a result

incidents have become more expensive to cover. In addition,

since policies are sold in US dollars, it is a challenge for

some people to renew them. Another factor is market

competition. It is a finite market with a defined number of

potential customers, which puts pressure on prices. Some

players are prepared to enter the market by narrowing

their margins, which also places more pressure on both

the insurer and reinsurer. Finally, medical insurance has

always functioned like a service. It is not a purely profitable

segment; life insurance, for example, has more stable, long-

term margins. Medical insurance is more volatile. Year-

on-year results vary and are influenced by many factors,

including hospitals, doctors’ fees, consumables, new

technologies, devices and medicines. Because of these

conditions, the number of players willing to participate in

the market is decreasing.

Q: What is the advantage of maintaining operations in this

challenging segment?

A: Most participants in the medical insurance segment

want more. Doctors want increased fees, hospitals want to

earn more for each case, agents want a higher commission

and insurers want increased profitability. As a reinsurer,

our operations are globally diversified and, therefore,

we can also help companies by introducing them to

best practices and solutions from other countries. For

example, to better manage medical expenses, insurers can

offer specialized policies that limit coverage to specific

conditions, such as fractures.

Q: Which is the most popular of the specialized products?

A: There is a certain product called catastrophic diseases

that was developed in the UK 20 years ago. There have

been catastrophic products covering 30 different diseases,

including some that were quite rare. These products have

been optimized and we have whittled them down to six

main ones, including cancer, heart attacks and organ

transplants. Of these six, cancer has the most impact.

ALTERNATIVE ROUTES TO GROWTH

MARIO CARRILLORegional Director of Mexico, Central America

and the Caribbean for SCOR Global Life SE

VIEW FROM THE TOP

SCOR is a French reinsurance group founded in 1970 with

a global presence in over 160 countries. It operates in life &

health and property & casualty and has had a direct presence

in Mexico for six years

304

those who are over 30 years old. For a company prevention

program to succeed, we must start with young people right

when they begin their working life and habits.

Exercising regularly, taking an entire hour for lunch and not

eating in front of the TV are some habits that companies

should promote to keep people healthy. There is a vicious

cycle that prompts health-related events: many people work

10 hours a day for minimum wage, and must commute for

up to four hours daily, lacking the time to exercise. Because

they earn minimum wage, they are likely to have unhealthy

eating habits. Obesity follows and eventually employees

suffer from diabetes, cardiovascular problems and related

diseases. We need to break this cycle.

Q: How do you help people over 35 years old to change

their habits?

A: A campaign that usually has good results is to remove

trash cans from the office, which compels workers to get

up and walk. Walking contests also have positive results.

Providing rewards like vacation days or cinema tickets is

important. When employees start noticing results, they stop

doing it for rewards and start doing it for their wellbeing.

Q: What are the advantages and challenges of micro

insurance?

A: Companies like American Express sell a series of

inexpensive micro insurance policies, such as life and travel.

However, when a person takes out a loan, the organization

providing it must include life insurance (payment protection

indemnization) so that the credit is paid if the creditor

passes away. Micro insurance should not be for sale, it must

be given to the people in the poorest social segment.

Q: What are Murguía’s biggest challenges?

A: The biggest challenge is becoming more efficient, being

up-to-date on global trends, achieving differentiation

and being in direct contact with patients instead of

over the phone or by email. For the rest of 2017, our

challenges are preventing mistakes, further training our

staff and preparing for next year’s potentially politically

troublesome situation.

Q: What advantages or benefits do clients receive from an

insurance broker like Murguía Consultores?

A: Being a specialized broker enables Murguía Consultores

to identify client needs. Identifying when to offer benefits to

employees is important, so we develop three to five-year plans

that allow clients to modify provided benefits according to

their changing needs. The ability to develop strategic plans

and to provide agile, tailor-made solutions and personalized

services are some of our strategic advantages. Murguía has a

team of 15 people that take care of health-related events by

providing our clients with direct 24/7 assistance.

Q: What role does prevention play in Murguía Consultores’

offering?

A: When a Murguía client contracts any of our three

programs, our supplier Uhma performs medical examinations

and applies a health risk-assessment questionnaire. This

provides an insight on people’s habits and lifestyles. Based

on that health assessment, Murguía develops a demographic

profile of the company that enables it to identify common

diseases and develop tailormade solutions to prevent or

minimize them. Our programs are focused on generating

changes in habits to achieve positive health results.

Q: What are the most common diseases companies see

among their employees?

A: There are two kinds of health-related events: the chronic

and the catastrophic. Many chronic events are related to

stress: gastritis, colitis and even paralysis are caused by stress.

Lack of physical activity can also aggravate stress-related

diseases. Even if these conditions are diagnosed, they are

usually not covered by insurance policies. The most common

catastrophic events are cancer, intestinal obstruction and

heart stroke, which sometimes are related to both stress

and obesity. Companies that do not promote exercise may

have employees who are vulnerable to disease, especially

WELLNESS MAKING INROADS IN INSURANCECRISTINA LÓPEZDirector of Employee Benefits of Murguía Consultores

Murguía Consultores is an insurance broker working across

sectors. In health insurance, it specializes in offering policies to

employees of its client companies that cover everything from

dental and vision to critical illness

VIEW FROM THE TOP

305

PREVENTION AN EMERGING

INSURANCE TREND

Q: What is the most significant trend in health insurance?

OV: Medical insurance is expensive due to a number

of reasons. It is overused but has not yet reached mass

consumption. In 2016, 9.1 million people bought medical

insurance, a small percentage of a country that has over 120

million people. To amplify insurance penetration in Mexico,

companies need to create specific coverage. Employers also

must have the ability to offer coverage and benefit schemes

that make sense to its employees. But it is also necessary for

the government to contribute with fiscal incentives.

The most important trend in insurance is prevention.

This concept is gaining momentum and companies are

implementing several strategies to participate in this

emerging area. There is a small percentage of the population

that is sick and there is another small percentage that is

healthy. In this demographic, there are sub-segments: people

who are disposed to developing diabetes, for example, or

those who engage in some kind of physical activity but not

consistently. Although there is still a long way to go, we have

noticed that a significant percentage of the population is

aware of prevention. Companies are offering insurance

to attract and retain employees and by implementing

prevention and wellness, they are reducing their costs. By

reducing stress levels, fewer people will need to use public

health services due to illness. It is a win-win situation.

Q: Would indemnification payments have a positive impact

on the mass consumption of medical insurance?

OV: Indemnification payments are already being used

and are certainly a mechanism that can help to spur mass

consumption of medical insurance. However, they are not

the solution. In 2013, the number of insured people went

from 8.8 million to 9.2 million people, an important leap

when comparing the growth of insurance in previous years.

Q: How is the insurance market preparing to take care of

an aging and obese Mexican population?

OV: As employers, we must continue with efforts to educate

the population on the dangers of obesity. There are a

number of initiatives companies can implement, such as

offering healthy snacks that can have a positive impact

in the medium term. We need to work on insuring more

people so that in a few years the public sector will not be

saturated by the demands of an elderly population. We

need to work on creating a prevention culture.

EH: The social security system in Mexico is saturated. Data

from the National Population Council (CONAPO) estimate

that close to one-fourth of the Mexican population will be

aged over 60 by 2050. If this segment of the population

with a larger tendency to get sick uses public health, it will

greatly increase pressure on the system. The other option is

that people who have enough resources use private medical

services, but individual insurance for people over 60 is

extremely expensive. That is why we suggest using private

pension funds to cover these future private medical expenses.

Q: How can the private and public sectors work together

to promote wellness and prevention?

OV: In late 2015, the Ministry of Labor and Social Welfare

(STPS) recognized that stress is a condition that impacts

health negatively. As a consequence of work-related stress,

indicators such as tobacco use and alcoholism have increased.

It would be ideal if the government could enforce measures to

promote prevention in companies. However, employers would

balk at this because of the related increase in operating costs.

In an ideal world, the private sector and the government

would act with greater synergy; if a governmental initiative

became mandatory, the private sector would be subject to

sanctions if it refused to comply, thereby giving companies

the incentive to act. However, the government must really act

upon it. Additionally, companies must understand that stress

among employees has a negative impact on their productivity.

Willis Towers Watson’s consultancy has the experience and

the abilities to help companies implement wellness strategies

and to negotiate with insurance companies or third parties

when needed.

EDUARDO HORI Senior Consultant in the Retirement

Practice at Willis Towers Watson

OMAR VIVEROS Director of Health & Benefits at Willis Towers Watson

VIEW FROM THE TOP

Willis Towers Watson is an advisory, broking and solutions

company that helps clients around the world turn risk into

a path for growth. With roots dating to 1828, Willis Towers

Watson has 40,000 employees serving more than 140 countries

Dental practice lab for students and dentists

307Traditionally, Mexican medical professionals are seen to be part of the general

brain drain to the US and to a lesser extent, Europe. Many insiders beg to differ.

They argue that although professionals may choose to train abroad, they often

return to their homeland with a variety of additional skills – a plus for the country.

A bigger issue for Mexico may be that it is training too many general doctors,

around 14,000 per year. It has the capacity to offer specializations to less than

a quarter of those, creating potential opportunities for foreign professionals.

Mexican universities are addressing the issue by further improving the training

they offer students and are imparting additional competences requested by

recruiters, such as business or communications skills. In the modern world,

learning is never complete and some institutions are going online to offer

additional courses to medical professionals.

This chapter will feature analyses on the Mexican job market, gender equality and

insightful interviews with the country’s top universities and recruiters, enabling

readers to explore the strategies employed to keep talent at home while also

attracting foreign talent.

ATTRACTING & RETAINING TALENT

13

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309

CHAPTER 13: ATTRACTING & RETAINING TALENT

310 VIEW FROM THE TOP: Enrique Cabrero, CONACYT

312 VIEW FROM THE TOP: José Mustre de León, CINVESTAV

314 EXPERT OPINION: Jorge Valdez, Tecnológico de Monterrey

 Germán Fajardo, UNAM

316 ANALYSIS: Gender Pay Gap Prominent in Mexican Healthcare

317 INSIGHT: Marlene Llópiz, IMC

318 VIEW FROM THE TOP: Dominik Bacher, Bacher Zoppi

319 VIEW FROM THE TOP: Justyna Kroplewska, Hays

320 INSIGHT: Francisco Hernández, Grupo Accses

321 INSIGHT: Ignacio Pérez, Heidrick & Struggles

322 ANALYSIS: Jorge Valdez, Tecnológico de Monterrey

323 VIEW FROM THE TOP: Simone Sato, Laureate International Universities

324 EXPERT OPINION: Marlene Llópiz, IMC

327 VIEW FROM THE TOP: Gabriel Alvarado, Kronos

328 ROUNDTABLE: How Can the Private Sector Promote a Better-Educated Workforce?

310

A: Most of the brightest Mexican talent focuses on

researching chronic and infectious diseases, the leading

causes of death and disability. Research is primarily

focused on obesity, metabolic syndromes, nephrology,

rheumatology, heart diseases and respiratory diseases.

Mexico has renowned researchers who focus on the

study of infectious diseases, including vector-borne

diseases such as dengue and chikungunya, as well as

those resulting from a virus like zika.

Many of our scholars have been internationally recognized

for their work. For instance, in 2017 the British Council

granted the physicist Fátima López the Study UK Alumni

Entrepreneurial Award. She completed a Ph.D. in Medical

Physics at the University of Sheffield and she is currently

responsible for implementing a new national policy that

allows IMSS to commercialize new technologies, with

royalties bringing in hundreds of millions of pesos that

will be reinvested in the Mexican healthcare system.

The British Council also granted Pablo Manrique the

Study UK Alumni Social Impact Award. He completed his

Ph.D. at the Faculty of Infectious and Tropical Diseases of

the London School of Hygiene and Tropical Medicine. He

is a professor and researcher at the University of Yucatan

and focuses on control methods of the Aedes aegypti

mosquito, the main transmitter of dengue, chikungunya,

zika and yellow fever.

Last year, L’Oréal, CONACYT, UNESCO and The Mexican

Academy of Sciences granted Viridiana González a

scholarship for her work on aging and health problems

of the elderly. She works in the Department of Health

Sciences at the Metropolitan Autonomous University.

Q: What has been done to increase the number of

specialized workers, a need identified by CONACYT in

2015?

A: The number of scholarships provided by CONACYT

has increased by 34 percent since 2012 and there are

45 percent more members of the National System

of Researchers. The number of students enrolled in a

Q: How can Mexican talent be encouraged to stay in

Mexico after graduating and not leave to work abroad?

A: CONACYT has several programs to retain and attract

highly qualified human capital. One is the Professorships

for Young Scholars Program that incorporates young

people into the country’s research system. Currently,

there are 1,298 professors distributed across universities

and research centers, focusing on various topics.

We also have repatriation and retention programs.

Additionally, we have the Program for the Incorporation

of Postgraduates into the Industry. This program has

been developed to facilitate the employment of trained

professionals to promote competitiveness and innovation.

For this program, CONACYT contributes half the salary

of the selected candidates.

Q: How do Mexican science and medicine programs rank

globally? What more needs to be done to improve them?

A: This year we have 27 medical and health science

programs listed as “internationally competitive” in the

Mexican Postgraduate Quality Program. CONACYT

awards this category in recognition of a program’s

longstanding commitment to pioneering research, the

best quality in teaching, outstanding academic resources

with international standards, as well as international

collaborations with prominent institutions around the

world. As of March 2017, these programs had 292 students

with scholarships provided by CONACYT and they were

located in seven different institutions in five states. There

were also 25 internationally competitive programs in the

fields of biology and chemistry with over 1,500 CONACYT

scholarship holders.

To improve the quality of our programs, we have been

supporting the acquisition of scientific publications

and the expansion of infrastructure through different

funds. For instance, the national laboratories call

has funded several large initiatives in areas such as

radiopharmaceuticals and biotechnological medicines.

Q: In which areas applicable to health does Mexican

talent shine the brightest?

ENCOURAGING TALENT DEVELOPMENT THROUGH SCHOLARSHIPSENRIQUE CABRERODirector General of CONACYT

VIEW FROM THE TOP

311

and validation protocols for robotic devices for human

use. Similarly, the National Institute of Cardiology is

developing a coronary stent to aid the treatment of

coronary artery diseases. This project, supported by the

incentives to innovation program is in a preclinical phase.

It is expected to open new markets and trigger industrial

and commercial ventures due to its comparatively low

price.

Q: How is CONACYT working with international

organizations and institutions to showcase Mexican

talent abroad?

A: We have fostered international cooperation through

agreements with governments and institutions around

the world. We have signed more than 200 cooperation

instruments and we have supported high-impact research,

mobility and participation in international scientific

projects. Regarding medicine, we participate actively in

the Global Alliance for Chronic Diseases through global

projects. We are aware that health institutions play a

key role in research, so we support them in international

initiatives. For instance, we recently channeled a

£2.5million Newton Fund initiative to the Sectoral Fund

with the Ministry of Health.

Q: What are CONACYT’s main goals for the next few

years?

A: CONACYT has set objectives to guide our future

work, which include a more efficient and responsible

management of public resources and stronger

participation of the private sector and universities in

expenditure. We are committed to advancing niche

sectors in Mexican states and to working with the recently

formed consortium to promote regional development. We

will also continue to consolidate strategic international

alliances, as well as with the institutions of the Science,

Technology and Innovation System.

Regarding medicine, we are supporting the development

of translational medicine in particular regarding metabolic

diseases, in line with the national health priorities. We

also promote progress in preventive medicine, especially

regarding teenage pregnancy, maternal and child health

and infections associated with medical treatment,

including the indiscriminate use of antibiotics and the

subsequent rise in antibiotic resistance, a rising threat

worldwide. Mexico is also following suit in global efforts

to develop personalized medicine.

program related to medicine or health sciences increased

by 43 percent between 2012 and 2017. The number of

programs connected with medicine or health sciences

registered in the quality graduate programs listing

jumped from 207 in 2012 to 365 in 2017, an increase of 76

percent. The number of researchers related to medicine

or health sciences registered in the National System of

Researchers increased by 60 percent from 2013 to 2017.

In addition, the implementation of the professorships for

young scholars program has created new academic jobs

throughout the country. This has been an outstanding

program to support research in Mexico.

Q: CONACYT supports certain companies. What criteria

does it use to select them?

A: To fund a project, CONACYT evaluates all submissions

and then selects the best ones, prioritizing those that

belong to strategic areas such as health, pharmaceutics,

bio and nano-technology, aerospace, automotive and

energy.

The incentives to innovation program is an instrument

to support projects that aim to develop new products,

services or processes or to improve existing ones based

on technological advances. We have already completed

eight competitive calls, supporting 5,549 projects

with a total budget of approximately US$1.6 billion,

which means an average of US$201,000 per year. Two

hundred and forty projects (4.3 percent) were related

to pharmaceutical areas. These projects received a total

US$55 million. We can also include health projects, of

which there were 259 (4.7 percent of total projects

funded) and US$81.5 million. Additionally, the program

supported 25 projects related to medical devices with

US$7.7 million.

Q: Which are the most promising projects being

developed in conjunction with or with grants from

CONACYT?

A: We are in the last stages of the creation of a consortium

in translational medicine to facilitate the application

of knowledge obtained from clinical trials and basic

research to produce new pharmaceutics, treatments and

prevention systems. The Ministry of Health and UNAM are

also taking part in this project.

In addition, we have projects for the design, synthesis

and preclinical validation of new treatments to prevent

drug abuse. The preclinical phase has already concluded

and the clinical phase is next. The treatments are being

developed in the National Institute of Psychiatry and are

supported by the Sectoral Fund of Research in Health

and Social Security (FOSISS). Furthermore, people at

the UNAM are developing affordable hand prosthetics

The National Council of Science and Technology (CONACYT)

is a government entity that aims to increase quality,

competitiveness and innovation of companies in its areas of

focus. It is known for offering scholarships to students

312

25 percent of our researchers are not from Mexico and

around 70 percent have studied abroad.

Q: Why do these students return to Mexico?

A: Until recently, part of that may have been the high

salaries CINVESTAV pays its researchers. There is also easy

access to students here, yet this is not expensive because

most students have scholarships paid by external agencies,

like CONACYT. This is unlike what happens in other North

American universities, where a graduate student needs to be

directly financed by the project being researched.

Q: Researchers often publish before considering IP, losing out

on patents. To what extent does this happen at CINVESTAV?

A: Publication is vital for a researcher’s career development

due to the national academic evaluation system in Mexico. We

have an office of technology transfer within the institution,

which in some cases contacts a researcher to delay

publication and generate a patent beforehand. Our policy is

that if a product or development does not have short-term

commercial potential, it is not convenient for the institution to

file patents, whereas scientific publication is a valuable asset.

We only filed 44 patents in 2016.

The time and resources needed to conduct clinical trials are

sometimes beyond the scope of an educational-research

institution like CINVESTAV. For example, we have a joint

patent with UNAM and the Autonomous University of Morelos

State for a medicine derived from amphotericin, a powerful

mycotic that can be used as a last resort for infections but with

a high mortality rate of almost 50 percent. In preclinical trials,

the lethality of the new compound we developed in animals

was under 5 percent. To make this a commercial medicine,

we must conduct clinical trials and even associated with the

other two universities the costs are significant: it would cost

around US$3million.

Q: To what extent does CINVESTAV have preferred

partnerships to carry out these trials?

A: We work with hospitals, particularly with the IMSS and

ISSSTE systems, and several hospitals that are part of the

Ministry of Health, such as Hospital Juarez. The characteristics

Q: CINVESTAV operates in 12 health areas. Which are the top

three for the Mexican healthcare market?

A: The largest is probably pharmacology but we also have

significant operations in genetics and molecular biology,

which helps us touch on more modern themes such as

translational medicine, genomic medicine, metabolic diseases

and chronic-degenerative diseases. In addition, infectology is

another important area, due to the rise of emergent infectious

diseases. Our infectomics and genetics departments are

working on zika and chikungunya. It would appear that these

infectious diseases are no longer a main health concern for

Mexico but it necessary to remain vigilant.

Q: What is your ideal student profile?

A: It would be a student with a solid foundation in

biology, mathematics, chemistry and physics and with

strong communication skills. We base our admissions on

propaedeutic processes and, at the end of the courses, we

choose the best students. This gives us time to homogenize

our student population and to measure the students’ work

capacity. Around 25 percent of our students who have studied

medicine want to move into research; around 50 percent are

biologists and another 25 percent come from other areas such

as chemistry or engineering.

Q: What is your strategy to strengthen the international

competitiveness of Mexican researchers?

A: The Ministry of Public Education gives us specific funds for

mobility, which differentiates us from most universities and

research centers and enables over a thousand of our graduate

students and faculty members to participate in annual short-

term visits abroad. These visits are often based on long-term

collaborations and increase our international presence.

Since CINVESTAV was founded, our strategy has been

to bring in the highest quality researchers. Currently,

PIONEERING MEDICAL ADVANCESJOSÉ MUSTRE DE LEÓNDirector General of CINVESTAV

VIEW FROM THE TOP

The Center of Research and Advanced Studies (CINVESTAV) is a

respected research institution headquartered in Mexico City that

also offers postgraduate and doctoral degrees. It has a strong

focus on health, as it was originally established by a cardiologist

313

already been published. The project began in 1985 by

documenting physics research in Mexico, then it grew

to be Inter-American and around 10 years ago it was

decided this would be useful for all areas. This project

is supported by the Mexican Academy of Sciences and

CONACYT.

Q: What are CINVESTAV’s priorities for the Mexican

healthcare industry in 2017?

A: In 2017, our priorities will not change, unless there is

an epidemiological emergency. The main focus will be on

chronic and degenerative diseases, such as Alzheimer’s

and Parkinson’s. In addition, we will try to start the

construction of a center to study the effects of aging.

Specifically, this is important for Mexico City because it

has the highest proportion of elderly adults. This may be

because healthcare is better here than in other places,

enabling people to live longer. This is a joint project with

the government of Mexico City.

Q: What is an example of a project executed in the

institution?

A: A special technique for cultivating human skin cells

was developed around 2009. This project was expected

to be for mass-use, to cultivate macroscopic tissue to

treat serious burn cases. The main issues with these cases

are dehydration and infection, so the affected areas need

to be covered as quickly as possible. Because of this

project, 50x70cm expanses of tissue could be routinely

produced. This technology was licensed to BioSkinCo, a

Mexican company based in Guadalajara. The product has

been successful but it could have more impact. However,

the public health system in Mexico has not been able to

adopt the product, perhaps due to costs. The royalties

from projects such as this one help us finance other

research initiatives.

of CINVESTAV do not allow us to attend patients directly. We

think this is an advantageous partnership because it enables

our research to have an immediate impact on patients and it

also enables medical doctors at those hospitals to have access

to leading technology.

We also have the most modern vivarium in Latin America,

winning an award in 2016. We have several transgenic species

in it, such as rats genetically modified to have diabetes so we

can study the effects of the disease, a unique case in Mexico.

Q: What is the importance of health for CINVESTAV?

A: Around 30 percent of our researchers work in health, 25

percent of our published articles are in health and the area

is allocated around 30 percent of the budget. However, the

impact on human resources is greater: around 42 percent

of our students work in health. We may have 15-20 new

admissions every year in our physics department but around

100 in molecular biology and we are turning 70-80 percent

of applicants away.

We have a National Laboratory for Genomics and Biodiversity

(Langebio) at CINVESTAV on our Irapuato campus. Our

genome sequencing capabilities are the largest in Latin

America. We created this laboratory between 2005 and

2015 and we were the first group worldwide to sequence

the genome of corn. In Monterrey, there is a group working

in biomedical physics and engineering to design medical

devices. They are working on a new x-ray tomography

machine that complements imagenology techniques such as

nuclear magnetic resonance imaging.

Q: CINVESTAV is compiling ATLAS, a history of Mexican

science. What is the importance of this compilation?

A: ATLAS clearly documents various collaborations in

all areas. This is an ongoing process, but part of it has

314

EXPERT OPINION

ACADEMIC MEDICINE: OPPORTUNITIES FOR COMPETITIVENESS AND DEVELOPMENTJORGE VALDEZDean of the School of Medicine and Health Sciences of the Tecnológico de Monterrey

Medicine faculties traditionally stick to teaching only the

field of medicine, but Tecnológico de Monterrey’s School

of Medicine and Health Sciences teaches other areas of

the medical field like biomedical engineering, nutrition

and wellness, clinic and health psychology, health care

management and odontology. We also offer a variety

of master’s, specializations and doctoral programs.

Tecnológico de Monterrey applies the “clinical professor”

model, because being a docent is necessary to be part of

an AMC. All physicians that have an office in the Academic

Health Center of the Tecnológico de Monterrey are required

to be part of the clinical professor model as well and be

certified by each specialty’s national council.

There have been advancements in medical education

through cooperation between public and private universities

in Mexico in organisms like the National Association of

Universities and Institutions of Higher Studies (ANUIES) and

the Mexican Association of Faculties and Schools of Medicine

(AMFEM). In the latter, universities created the competence

profile of the Mexican general physician, a manual listing

competences all medical professionals must have, and the

incremental quality model, which enables the raising of

quality standards in medical human resource formation.

We need to develop our own abilities, retain and attract

talent from elsewhere. AMCs are necessary to retain and

attract medical talent and to be competitive. A national

strategy is necessary to make academic medicine the

objective of schools of medicine nationally. There are some

AMCs in Mexico, such as Centro Médico Siglo XXI, national

institutes of specialties, the university-hospital of UANL

and those operated by the Tecnológico de Monterrey in

Monterrey, Mexico City and Guadalajara. The development of

AMCs is an area of opportunity that requires combining the

strengths of public and private organizations. It can attract

investment both from the private and public health sectors

and from abroad. It is necessary to intervene and promote

research given the challenges health problems in Mexico

present and to push the government to allocate more funds

to health. Together, these steps can create a virtuous cycle

that improves the development of the country.

The School of Medicine and Health Sciences of the

Tecnológico de Monterrey practices academic medicine

conducting medical research and educating students while

caring for patients. This fundamental triple helix enables us

to form internationally competent, humanely sensitive and

entrepreneurially spirited medical professionals.

The Tecnológico de Monterrey and other universities

promote the creation of Academic Medical Centers (AMCs),

medical associations with an international branch, to

boost academic medicine. They are composed of one or

more hospitals, a school of medicine and health sciences

and some research elements. Health science students in

AMCs do not only receive practical education and acquire

experience in care-giving but also come into contact with

medical research, which provides a foothold for a virtuous

cycle that advances research, care and education.

Bettering medical education and advancing academic

medicine in Mexico and Latin America are huge areas of

opportunity. The QS World University Ranking 2017 in

medicine includes only 25 Latin American and four Mexican

universities. There are 150 faculties and schools of medicine

throughout Mexico, but less than half are accredited by

the Mexican Council for the Accreditation of Schools of

Medicine (COMAEM). We cannot aspire as a country or

region to be competitive on an international level without

the creation of processes of certification and accreditation

that validate the quality of the care we deliver, the research

we perform and the education we provide.

We cooperate with AMCs around the world to form

internationally competent professionals. The hospitals we

operate have national and international accreditations of

warmth and quality as measured through patient experience.

All physicians working in them are certified. Our educational

programs, like all regular medical schools, are certified

by COMAEM and all 16 of Tecnológico de Monterrey’s

specialization and the two doctoral programs are on

CONACYT’s Quality Graduate Programs Register. Finally,

70 faculty members are a part of the National Researchers’

Institute (SNI) and work in seven strategic approach groups.

315

Q: How is the UNAM School of Medicine working with the

government to this end?

A: This is a situation in which the solution does not lie solely

with the School of Medicine. We strive for our students to be

the best prepared and to be competitive in their respective

fields and to have the necessary competencies aligned with

the epidemiological profile of Mexico. The labor issue does

not necessarily depend on us. We are working closely with

the Ministry of Health and health agencies. It is not a new

nor an easy problem. It has to do with the health system

itself and the healthcare model. The Ministry of Health

has proposed a new model of care, which we hope will be

successful in increasing job openings. We are proposing

several solutions. One of which is to train

medical doctors with a family medicine

specialty, adding a couple of years to the

core medical curriculum to make it a nine-

year combined studies program.

Q: Apart from the medical specialty, what

skills do employers look for and how is

UNAM meeting this demand?

A: The reality of the situation is that the

main focus in hiring is in meeting the academic demands.

There are instances, such as medical institutes or highly

specialized IMSS hospitals that require other characteristics

such as highly technical knowledge and a research

background. The competencies of other areas are difficult

to evaluate but the most important role of a doctor is the

human aspect. This may be one of the most important

elements, sometimes even more than technical abilities.

A patient does not know if we are providing the correct

treatment or choosing the right study. They pay attention to

how they are treated. The doctor’s focus is on the technical

side and patient’s focus is on the human aspect. Therefore,

our main goal is to include both in medical education.

Q: What is UNAM doing to ensure students get the best job

offers in Mexico and do not feel the necessity to leave the

country?

A: Several years ago, the Brazilian government, due to a

lack of general medical doctors, brought Mexican medical

doctors to Brazil. Generally, doctors that go abroad do so to

specialize and are usually the elite. They leave to take medical

licensing exams in the US, Canada or Europe to obtain their

specialization or subspecialty.

The problem is not that our doctors are going abroad

but rather, the challenge lies in providing adequate job

opportunities at home. Mexico produces around 14,000

physicians per year in approximately

140 medical schools but, in general,

Mexican physicians do not receive

employment offers from abroad.

Recent graduates have little interest

in becoming a general practitioner

and they focus on obtaining a

specialization, which is a reflection

of the labor market as, for example,

IMSS only hires medical doctors with a

specialization, particularly because its healthcare system

is geared toward family medicine. IMSS attends around

70 million Mexicans, which means that roughly half the

health system is blocked to the general practitioner as this

system impedes them from accessing jobs in this sector.

The Ministry of Health of each state and ISSSTE have

opened few vacancies for general practitioners. Therefore,

a general medical doctor has limited opportunities to

enter the workforce.

Options for a recent medical graduate include specializing,

which is what the majority aspire to. Around 40,000

physicians applied for the National Residency Exam in 2016,

competing for about 8,000 places. This varies by specialty

as some have greater demand, such as ophthalmology or

otorhinolaryngology. This leaves around 30,000 without a

specialization. Some of these doctors go into private practice

in general medicine but others are being hired as pharmacy

consultants, with around 15,000 positions available.

ADAPTING TO THE HEALTHCARE SYSTEM

GERMÁN FAJARDODean of the School of Medicine at UNAM

The School of Medicine at the National Autonomous University

of Mexico (UNAM) is one of the most prestigious and recognized

in Mexico and Latin America. It encompasses nine departments,

including public health, pharmacology and surgery

14,000the number of doctors Mexico

produces per year in around 140

medical schools

VIEW FROM THE TOP

316

GENDER PAY GAP PROMINENT IN MEXICAN HEALTHCARE

One issue with healthcare in Mexico is access, which is in

large part linked to purchasing power. The Global Gender

Gap Report 2016 by the World Economic Forum places

Mexico 122nd of 144 countries for gender equality in

economic participation and opportunity and 128th of 135

countries regarding wage equality.

“[A] priority in terms of public health is the lack of access

to healthcare and pension funds for women who work in

the informal sector. This is also the situation for all those

women who have to stay at home to take care of family

members who are sick or who have a disability

or chronic illness. In Mexico, more and more

people are living longer while suffering from

chronic diseases and women are usually

responsible for this care because there are

no public services offered to these patients,” says Ana

Güezmes, the representative for UN Women Mexico.

On average, Mexican women perform four times as much

unpaid work as Mexican men. This translates to around 112.6

minutes per day for men and around 373.3 minutes per day

for women, according to the OECD. Within the healthcare

sector itself, the gender pay gap is stark: on average across

fields men earn MX$65.6 (US$3.6) per hour, compared to

MX$51.1 (US$2.8) for women, according to the National

Institute of Women (INMUJERES), a government entity.

ANALYSIS

Access to health in Mexico is in large part determined by

economic factors, yet half the population is on average paid

less, based on gender. This remains true even within the

healthcare sector itself, which is usually seen as more equal

0

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AVERAGE INCOME PER JOB BY GENDER (MX$ per hour)

Source: INMUJERES

Over MX$25,254

From MX$17,046 to 25,254

Under MX$17,046

MEN

Over MX$25,254

From MX$17,046 to 25,254

Under MX$17,046

women

Over MX$25,254

From MX$17,046 to 25,254

Under MX$17,046

TotalMONTHLY SALARY RANGES FOR HEALTHCARE SECTOR WORKERS

AVERAGE INCOME (MX$ per hour)

Men

� Men

� Women

—Average

Women Total

� Under MX$17,046 (US$947)

� 75.9%

� 14.8%

� 9.3%

� 82.6%

� 11.7 %

� 5.7%

� 79.9%

� 12.9%

� 7.1%

� From MX$17,046 to 25,254 (US$947 to US$1,403) � Over MX$25,254 (US$1,403)

317

INSIGHT

Companies increasingly face the challenge of not only training

new talent but retaining that talent and keeping professionals

up-to-date amid rapid changes. In addition to financial

incentives, healthcare companies can turn to organizations

like the Continuous Medical Education Institute (IMC) for help

and guidance.

“We are an ally and a strategic partner for our clients because

given the constant changes in the industry, companies cannot

cope with the amount of training they want and need to

provide for their staff,” says Marlene Llópiz, CEO of IMC, which

offers custom-made solutions to prepare human capital in the

pharmaceutical, scientific and medical industries.

The Institute provides different services, adapted to

each of its clients’ needs, such as advisory boards,

focus groups and continuing medical education courses.

According to Llópiz, most of the companies that look for

these services are pharmaceuticals, hospital groups and

public institutions, such as ISSSTE and IMSS. “We had

a summit on vaccination for the elderly which several

pharmaceutical companies participated in, as well as

the National Geriatrics Institute (Instituto Nacional de

Geriatría). The final result is an upcoming publication in

the Gaceta Médica that will set national guidelines for the

vaccination of the elderly,” said Llópiz.

The topics chosen for the institute’s course catalogue and

events are usually hot topics in the industry, in this case,

geriatric care. In fact, since 2016, Mexico has been training

health professionals to provide geriatric care for specific

diseases like Alzheimer’s and dementia as part of the country’s

commitment with the PAHO plan.

Key among the goals and outcomes of these summits is the

exchange of knowledge among professionals, the access

to new information and the development of new ideas, but

mostly the writing and contributing of new policies that will

bring about changes in the healthcare sector at a corporate

and national level. “We are hopeful there will be a second

geriatric summit in 2019. We are also planning to host a

summit on nutrition for the elderly,” she adds.

These types of initiatives are favorable for the industry because

they motivate and promote the development of national

talent, which in Mexico has been drained by countries that

offer better academic opportunities. In Mexico, 85 percent of

science professionals who hold a post-graduate degree have

studied abroad, and many usually remain outside of Mexico.

Also, in 2012 Mexico saw the lowest investment in science

of OECD countries. However, companies are starting to take

action to retain that prepared talent. According to Llópiz,

many pharmaceutical companies have started providing

financial incentives to their workers based on the results

of compulsory academic courses, emphasizing a worker’s

responsibility for their education.

When a company wishes to work with IMC, the institute

prepares a proposal based on the client’s needs. Some request

training on a specific disease and treatment, to be delivered

during a determined period of time and for a certain type

of professional, whether related to market access, medical

training or for the sales forces. IMC can also help prepare

international exchange programs. “We are working on a

proposal for a company that would like to send a group

of oncologists to Spain to visit oncology centers and learn

about their experiences and exchange points of view and

treatment guidelines.” The institute is also organizing a summit

of ophthalmologists in Central America for retina experts to

develop national guidelines for this specialty for several Latin

American countries.

Because IMC’s solutions are tailored to the client, the

institute can work with private and public, national and

international, corporate, small and commercial companies

and academia. All ask for different services, but they have

one thing in common: the need for continued training and

up-to-date information. “The industry is very dynamic and

you have to always be willing to change with it. We used

to always talk about reference drugs for treating patients.

Then, generics came along and it was a revolution and a

new beginning for pharmaceutical companies. Currently, we

have biotechnological drugs on board. Therefore, both the

physician’s knowledge and strategies to promote pharma

sales have to be continuously updated.”

KEEPING MEXICAN TALENT AT HOME THROUGH TRAINING

MARLENE LLÓPIZCEO of IMC

318

which allows us to recruit nationwide in a timely manner.

We do turn to other sectors or young talent directly from

university, not due to a lack of candidates with experience

in our industry but mainly to meet our clients’ specific

requirements.

Q: What new skills do companies expect from their

future sales force?

A: Sales representatives should have the capacity to

manage their territory just as an entrepreneur would

do, negotiating at all levels with key opinion leaders

and pharmacies to optimize demand and ensure the

availability of a product at the points of sale.

Additionally, new candidates need digital skills to

effectively administrate all future communication

channels with their clients. As for district managers,

companies are looking for coaching skills to accelerate

the development of skills needed for the increasing

responsibilities of today’s sales force.

Q: What were Bacher Zoppi’s growth drivers in 2016 and

what are the company’s priorities for 2017?

A: It has been a challenge for Bacher Zoppi to compensate

for the industry’s reduction of the overall sales force head

count with new business opportunities. However, in 2016,

we exceeded our growth expectations with aftersales

services in hospitals, which represents the fastest growing

area of our business.

We have also developed and improved several services,

such as talent pools, training programs and other sales force

services for the pharmaceutical and healthcare industry.

We will continue to focus on developing and offering

specialized services for the pharmaceutical and

healthcare industry. Our added value is our expertise with

more than 20 years offering tangible results in real-time.

We are committed to exceeding client expectations. This

has enabled us to become the leader of our industry,

which has brought us much recognition and many

recommendations.

Q: How does the Mexican health talent market compare

to other industries?

A: The employee market in the pharmaceutical and

healthcare industry is still highly attractive, precisely

because of preferential conditions compared to other

industries in terms of compensation packages, benefits,

training programs and career plans.

Bacher Zoppi has been a pioneer in offering specialized

services for the pharmaceutical and healthcare industry

for more than 20 years. Due to our solid processes and

compliance with the requirements of the industry as well

as the authorities, a great number of companies prefer

our talent pool and staffing services to hiring new sales

talent. We recruit around 1,500 people per year, which

makes us one of the main employers in our sector.

Q: To what extent has the rise of digital technology

impacted recruiting for in-person visits?

A: Digital technology has not produced a significant

variation in the number of people being recruited to

perform in-person visits. However, we are fully aware

that the industry is evaluating and implementing digital

technology to increase the promotional impact and to

continuously optimize marketing and sales expenses.

Q: Does the existing talent pool in the health industry

meet your needs or must you turn to other sectors?

A: We have a vast variety of job profiles since our clients

define or at least approve the characteristics for each

vacancy. The importance of finding the specific talent

for each position according to the characteristics of each

company is a key success factor for Bacher Zoppi. We

have our own experienced and specialized recruiting

team across Mexico and maintain an updated database

with more than 20,000 commercial and sales candidates,

SPECIFIC TALENT FOR SPECIFIC COMPANY CHARACTERISTICSDOMINIK BACHERCEO of Bacher Zoppi

VIEW FROM THE TOP

Bacher Zoppi, a Mexican outsourcing company, recruits sales

forces for pharmaceutical and healthcare companies. It was

founded by Swiss entrepreneur Dominik Bacher and former

Novartis Commercial Director Reto Zoppi

319

is necessary for management positions. For private sector

sales, we look for soft skills. However, for both clients, flexibility

is mandatory because the health market always has different

opportunities. With sales, it is important that applicants can

highlight the advantages of the products, because selling is

not about prices or competitiveness but what the patient can

get from the drug or the equipment.

We are also living in a world of mergers. We have many

Big Pharma brands in the process of downsizing, so they

have to do more with fewer people. For each person, this

translates to more work. Before, product managers focused

on one medical device or a single group of products. Now,

they deal with larger portfolios.

Q: How important are soft skills over traditional medical

skills?

A: Medical skills are much appreciated but those who have

been working in the industry for 15 or 20 years have gained

knowledge from their experience. They may not have a

medical background but most unit directors have excellent

medical knowledge. It is not possible to have a successful sale

to a hospital or IMSS if you cannot detail the benefits for the

patient and the pharmacoeconomic information of a product.

Q: Hays is the number one staffing firm on LinkedIn. What

role does social media play?

A: It is extremely important. The digital age allows the most

direct and fastest way to reach our audience with quality

specialized information. We try to be visible to our potential

clients because in life sciences we only dedicate our time to

pharma and medical devices, which is unusual for staffing

firms. Therefore, we strive to be the first company to come

to a candidate’s mind due to our knowledge and opinion

leadership. This should make the difference for candidates

and clients in the market.

Q: What are the top challenges companies face in filling

jobs and what positions are most in need?

A: The main positions that need to be filled within the

pharmaceutical and medical devices industries are in sales

because of the high turnover, especially at entry level. A

specific difficulty in these sectors is specialization. These

areas require a high degree of specialization, product or

therapy knowledge as well as experience working with the

government (IMSS, ISSSTE, SEDENA, PEMEX) and the private

sector so talent from other sectors is not always appropriate.

Q: Where are companies finding that missing talent? Is it

coming from abroad?

A: Mexico is not so focused on importing talent yet. First,

companies have to be willing to import international talent

and then the laws of each country have to be flexible

enough to allow this, otherwise it will take longer to bring

the person over. The solution is to fill entry-level positions

and develop that talent through programs, as many have

done. Another solution is to use agencies like ours.

Q: To what extent are companies cooperating with

universities?

A: Most of our clients employ second and third-year

students through internship programs. Usually the students

are not paid but they gain experience, so it is a win-win for

both sides. At the master’s or doctoral level, internships

are often a program requirement and for companies it

is an opportunity to get to know future talent. However,

sometimes students enter a university program with a

specific plan and five years later, when they finish, the

industry is no longer in the same position as when the

program was designed. Still, the relationship between

companies and universities is a priority and an opportunity

to work together to solve the industry’s talent gaps.

Q: What skills do Hays and its clients look for and how does

that apply to the public and private sectors?

A: We consider hard and soft skills. When we look for hard skills

we go after people who have worked with the government

before, because it is composed of complex institutions that are

particularly different from private companies. This experience

SPECIALIZATIONS IN HIGH DEMAND

JUSTYNA KROPLEWSKASenior Consultant at Hays

VIEW FROM THE TOP

Hays is one of the world’s leading recruitment companies

with over 6,000 consultants in 33 countries working in 20

specialties, including accountancy, construction, banking,

education, health, legal, energy, retail and telecoms

320

INSIGHT

IMPROVING EMPLOYEE HAPPINESS, RETENTIONFRANCISCO HERNÁNDEZDirector of New Projects at Grupo Accses

High employee rotation is a notable issue in the Mexican

workforce and, more specifically, in the healthcare sector.

Francisco Hernández, Director of New Projects at Grupo

Accses, believes mental wellbeing is a key factor. Improve

that and improvement in retention will follow.

“Those that are happy at work, who feel appreciated and

protected, are more productive and more loyal to the

company,” Hernández says, adding that the level of rotation

also changes due to the level of income. “The higher the

income, the higher the level of rotation in specialized

clinics.” He also stresses that this can help attract new

employees in addition to retaining good talent. “Although

a company can advertise through social media such as

Twitter and Facebook, another way to advertise is with

happy employees,” he adds.

Mental health, and good health in general, depend on more

than pills and doctors’ visits, Hernández says. Intangibles

such as happiness and mental balance play a major role.

“When a person is emotionally stable and well, they are

less likely to get any type of illness. Depression and stress

are doorways for illness,” he says. The NHS reports that

stress has a variety of emotional, mental, physical and

behavioral symptoms including inability to concentrate,

headaches, sleep problems and irritability.

Grupo Accses’ core activity is overseeing company

payrolls but it differentiates itself by providing additional

services to the employees on the payroll. In May 2017, it

launched its Access to Health Life program, which will

provide affiliated employees with discounts through

alliances the company has made with specialized medical

services, pharmacies, laboratories, spas, restaurants and

other entertainment venues.

Hernández is hoping this will help lead to healthier employees.

Improving an employee’s wellness and satisfaction can help

reduce absenteeism and the lesser-known presenteeism,

both important problems in Mexico. “Recent statistics from

the Harvard Business Review show that most personnel

rotation is due to reasons other than income. Around 40

percent of people do change jobs because they do not earn

enough, but the rest leave for other reasons such as bad

bosses or not feeling appreciated,” Hernández says.

A London School of Economics report quoting a

2016 Evans-Lacko study states that depression costs

Mexico over US$14 billion in lost productivity and that

depression-related presenteeism costs Mexico US$11.3

billion. The same study showed that Mexicans are likely

to keep working during depression, thus impacting their

productivity and performance.

Grupo Accses’ Access to Health Life program will first be

rolled out to the 3,600 employees already on the company’s

payroll. It will then be rolled out to other companies and their

employees, which Hernández says is easier to do once Grupo

Accses shows it cares about the wellbeing of their clients’

employees. The group will also look for more partnerships

to improve its offering. “We are looking for partners with

the ‘wow’ factor, the one that takes people out of their daily

routine.” It also looking to eventually offer funeral insurance.

“When a person is young, it does not matter but when you

have a family, worrying about this type of thing impedes

happiness and influences the company’s vibe.”

2.7% DON'T KNOW

2.3% 21+DAYS

0.4% 16-20 DAYS

2.6% 11-15 DAYS

2.7% 6-10 DAYS

23.8% 1-5 DAYS

65.6% 0 DAYS

MEXICAN EMPLOYEES ARE LIKELY TO KEEP WORKING DURING AN EPISODE OFDEPRESSION, IMPACTING THEIR PRODUCTIVITY AND PERFORMANCE AT WORK

IN THE MIDDLE OF THE DONNUT :DAYS TAKEN OFF WORK DURING AN EPISODE OF DEPRESSION

� 65.6% 0 days

� 23.8% 1-5 days

� 2.7% 6-10 days

� 2.6% 11-15 days

� 0.4% 16-20 days

� 2.3% 21 + days

� 2.7% Don't know

Mexican employees are likely to keep working during an episode of depression, impacting their productivity and performance at work

DAYS TAKEN OFF WORK DURING AN EPISODE OF DEPRESSION

Source: Evans-Lacko, S. & Knapp, M. Soc Psychiatry Psychiatr Epidemiol

321

INSIGHT

the executive roles they deserve, despite their experience.

There is sometimes machismo,” he adds.

Regarding the health industry in general, Pérez is confident

despite recent budget cuts, which have led to fewer

changes in executive management. “I believe the industry is

evolving favorably, even with the challenges it faces, many

of which are related to the lack of government budget,

inclusion difficulties and the talent war,” he says.

The main issue in executive talent in the life sciences and

healthcare industry is retention, which has led to companies

paying bonuses to keep people, which in turn creates

internal inequality issues and eventually leads to talent wars.

This war happens on social media, as now employees are

not just poached from within the country’s industry but

from abroad, too. “There are many Americans, Colombians

and Venezuelans in the pharma sector at all levels. I think

Mexico needs to send more people abroad,” Pérez says.

Some companies are prepared to bring in talent from other

sectors, he says when discussing the trend of bringing in

new blood, be it from other industries or other countries.

About 80 percent of a successful integration depends on

acclimatization with the company’s culture. For this reason,

he says, some companies bring in executive talent from

other subsidiaries or branches to fill a position.

Pérez emphasizes the importance of creating a balance

of talent on a team. “What is needed is the necessary

experience, the personal characteristics, the executive

competencies, which you either have or do not have, and

finally the cultural fit,” Pérez says. “The health sector has a

good reputation as it is seen as dynamic.”

In the next five years, Pérez expects the industry to continue

evolving to provide better coverage and to keep striving for

efficiency while maximizing investments. Diversity will also

play an important role. “This is important for me. We need

to give Mexicans more exposure abroad and, as a country,

we need to become more attractive to encourage these

people to return to Mexico,” he says.

Despite many advances in the last decades, gender

equality is still an issue in the business world. Boardrooms

are mostly filled with men and many women feel pushed

out or held back because of their gender. In September

2016, research institute Catalyst analyzed the number of

female CEOs at S&P 500 companies. The result? Twenty-

three or just 4.6 percent. It also showed women hold only

19.9 percent of those companies’ board seats.

Mexico is no stranger to this level of inequality, including in

the health industry, says Ignacio Pérez, Managing Director

of top-executive recruiter Heidrick & Struggles. “You could

count the number of female director generals on your

hands in the health sector,” he says, “and 60 percent are

not Mexicans. We need more female executives.”

Heidrick & Struggles’ Life Sciences and Healthcare

Practice manages the executive talent needs of all manner

of healthcare companies, including medical devices,

pharma and hospitals. The firm is a sponsor of the World

Economic Forum, which in its 2016 Global Gender Gap

Report placed Mexico 128th on its 144-country list of wage-

equality indicators.

Pérez stresses the importance of diversity in the

boardroom in gender, background and competencies, and

says companies are making a mistake if they continue

this trend. “We see many companies in which women

earn less than their male counterparts. This should not

be. It is a total error of talent management,” he says,

while emphasizing that women should be judged on their

performance and talent, not on their gender. According to

the OECD, the gender pay gap in Mexico was 16.7 percent

of the median male wage.

Women also need the same training and exposure as their

male counterparts if they are to be promoted to executive

positions. “There should be equality of opportunities, not

quotas, which simply create unneeded positions,” Pérez

says. Still, even if women have the training and experience

there is another obstacle to overcome: machismo.

“Sometimes employers are not prepared to place women in

DESPITE ADVANCES, GENDER EQUALITY STILL AN ISSUE

IGNACIO PÉREZPartner at the Consumer, Life Sciences

and Healthcare Practice of Heidrick & Struggles

322

ANALYSIS

THE QUALITY OF HUMAN TALENT SPECIALIZED IN HEALTHJORGE VALDEZDean of the School of Medicine and Health Sciences of the Tecnológico de Monterrey

of medicine have been recently created, 13 of which are

public while 37 are private.

At a postgraduate level, according the Interinstitutional

Commission for the Training of Human Resources for

Health, there are 27 medical specialties available to study

in Mexico. In 2016, 7,810 students were admitted to a

university course for medical specialization, according to

figures from the National Examination for Applicants for

Medical Residencies (ENARM). At a master’s and doctoral

level, schools are adopting the philosophy of training health

researchers. This is due to the curricular and methodological

value of the structure of these programs. In terms of

academic excellence, as of May 2017 of the 510 active

medical specialization programs, 189 were accredited and

recognized in the Registry of National Program of Quality

Postgraduates (PNPC), which forms part of CONACYT. The

practice and execution of the medical profession does not

end with graduation. CONACEM administers the regulation

for certification and renewal procedures, so specialists can be

responsibly evaluated according to norms and procedures.

Boosting and solidifying the quality of the specialized

training that human talent receives in the health sector and

enhancing excellence in the provision of health services

will only be possible if the problems of quality vis-a-vis

medical education are addressed. Faced with a lack of

quality models in medical programs and a high level of

service in medical care for epidemiological diseases, the

Model of Quality for Schools and Faculties of Medicine

stands out. It is based on the theory of the management

of quality, accreditations and rules for medical education.

This methodology takes into account the five levels of

an incremental quality model (beginning, development,

standardization, innovation and sustainability) and it is

structured with guiding principles aligned to leadership and

planning, program and research design, students, integral

education, facilities, links to other institutions, evaluations,

continual improvement and results. The schools of medicine

in Mexico are at the standardization level and, as an added

value, this model can serve as a guide for improving how we

position ourselves regarding innovation and sustainability.

In the last decade, medical students have shown great interest

in acquiring specialized clinical knowledge that enables them

to contribute to the competitiveness of the public and private

health sectors. It is imperative that the authorities regulating

medical education help to create an appropriate atmosphere

by providing quality guidelines for academic programs.

The determination of Mexico’s human talent to begin a

university degree in general medicine shows an inclination

toward continual growth. This has translated into over 100,000

medical school applications yearly and around 20,000

admissions nationally. According to the Higher Education

Scholastic Population Yearbook of the National Association of

Universities and Higher Education Institutes (ANUIES), there

were 126,296 students studying medicine across all years, of

which 14,781 finished their studies and 13,084 were granted a

degree during the 2015-2016 school year.

Considering these statistics, it is imperative that the leaders

and visionaries of the national medical education and

labor market offer the general population a catalogue of

professional programs that impart quality and academic

excellence at undergraduate and postgraduate levels. It is

to this end that the National System of Accreditation (SNA)

and the Council for the Accreditation of Higher Education

(COPAES) enjoy the privilege of conferring official recognition

to the organisms that accredit academic programs in Mexico.

Responsibility for accrediting academic programs

specifically developed by schools and faculties of medicine

at the undergraduate level falls to the Mexican Council for

the Accreditation of Medical Education (COMAEM). The

accreditation process focuses on a general methodology

of evaluation, a benchmark and quality indicators. In March

2017, 142 schools and faculties of medicine were registered

with COMAEM, 49.3 percent of which were accredited: 41

public and 29 private entities. The Mexican Association of

Schools and Faculties of Medicine (AMFEM) is responsible

for promoting innovation in training, care and research

models that connect the local to the global. As of April

2017, there were 100 schools and faculties of medicine

affiliated with AMFEM. In addition, 50 schools and faculties

323

A: The network follows a global health science academic

model. This learning model was created nine years ago and

the results have been positive. The model has several pillars,

one of which is educational technology. Our students have

to use technology while learning because it is important for

diagnosis and patient treatment.

Another important pillar of the model is learning

through simulation because we are focused on training

professionals with a high level of expertise and who

know how to think critically and solve problems based on

scientific evidence. Our campuses have simulation centers

that help develop skills and clinical competencies. We are

the first university to integrate this type of program and we

are the only global group with interdisciplinary simulation.

We use this as a tool not only for teaching medical skills

but also to help our students develop communication skills

through doctor-patient role plays. Having knowledge is

not enough: it is important that students can apply that

knowledge. This method guarantees security for patients

because if we can prepare professionals to deal with

real scenarios, we can be more certain of the quality of

professionals we graduate.

Q: What opportunities does Laureate International

Universities provide its member universities?

A: Being part of an international network provides several

academic and professional opportunities. First, we receive

constant feedback from other institutions because the

network helps strengthen knowledge among the branches

— we can learn from other countries’ problem-solving skills

and evolution strategies.

Belonging to the Laureate network also provides

opportunities for teachers to go abroad for research at

other universities and for students to go on exchanges.

Q: How is Mexico positioned to meet demand for medical

degrees and which areas are attracting the most attention?

A: Globally, there is growing demand for medical degrees.

The same is true in Mexico but we lack the resources to

meet demand. In some states, there are too few clinical

sites available for the number of people interested in the

degree and Mexico needs more physicians. Every time a

new medical school opens it is filled to capacity. Veterinary

degrees are also gaining a lot of interest. We only offer this

degree on two campuses, but we have expansion plans.

People with technical degrees, such as nurses or

physiotherapists, are also interested in obtaining a more

professional education. We have a post-graduate program on

health management, for example, to train doctors who already

own a consultancy on how to administrate their business.

Another area of high demand in the health sector is for

specialization programs. Ninety percent of Mexican medical

students want to earn a specialization but there are not

enough spaces and even less so for nutritionists and

physiotherapists. In general, many health professionals

cannot access the specialization they want, which is an

important issue we have to address.

Q: How does Mexico’s education in health sciences

compare to other countries in the region?

A: There are areas in which Mexico is advanced and there are

others where we lag. The Del Valle University (UVM) health

science programs are available on 30 campuses. Fifteen years

ago, we were the first to offer a bachelor’s in physiotherapy

and we have granted degrees to 80 percent of Mexico’s

physiotherapists. However, in Brazil physiotherapy has been

a regulated profession for 50 years. Even though we are 35

years behind, it will not take us long to catch up to other

countries. Professionals are requesting more opportunities to

specialize, which is a great step for the development of the

healthcare system. We are trying to increase the number of

bachelor’s and master’s degrees in our portfolio.

Q: How are academic offerings adapted to the changes in

healthcare management and practices?

A NETWORK OF EDUCATIONAL OPPORTUNITIES

SIMONE SATOVice Rector of Health Sciences at Laureate International Universities

VIEW FROM THE TOP

Laureate International Universities is a global network of 70

campus-based and online universities. In Mexico, Del Valle

University and the Technological University of Mexico belong

to the network

324

Continuous medical education constitutes a broad

concept closely related to professional competency. It

is a serious need for physicians because of the incessant

output of knowledge from biomedical research that

continuously challenges our paradigms about health

and disease and implies notable involvement for medical

practice when describing the pathophysiology, diagnoses

and treatments of every disease.

Among the different stages of medical education,

practitioners are forced to follow a continued learning

process to keep up-to-date on the knowledge and skills

that ensure they will be successful professionals of

outstanding proficiency. For physicians, it is key to train

with strict and critical thinking through life-long learning.

They should also be able to embrace methods of science

into their practice, such as critical analysis.

Medical training needs to be assessed as a compilation

of different types of knowledge, integrating experience,

practice and accurate scientific background. It

encompasses all the learning experiences physicians

have with the conscious intention of habitually and

persistently improving their proficiency. Education given

after graduation entails a higher educational challenge.

At this stage, the physician should decide on his own

the most appropriate methodology and content for his

or her learning either as a formal education course or

by selecting in detail the contents and dates through

continuing medical education.

Formal graduate education is focused on intellectual

production. It has its own selective character and is

nationally regulated and performed only by certain

institutions. Nonformal graduate education, such as

continuous medical education, has a nonselective profile

and distinguishes itself by its flexibility and simple

regulation. It is a clear and defined activity that supports

the professional development of physicians and leads to

improved patient outcomes. Continuous medical education

is a self-regulated manner to ensure clinical competence

and it shapes the growth and development of physicians.

Nevertheless, this modality has not figured in universities

with the appropriate force, despite its essential role. It is our

vision that continuous medical education will effectively

assist physicians in the generation, translation, diffusion,

critical appraisal and utilization of new knowledge

that contributes to high-quality, compassionate and

cost-sensitive care for patients. It encompasses those

learning activities performed after graduation from formal

programs with objectives restricted to upgrading, and

generally are activities with a determined duration and

are carried out in traditional ways.

The aim of continuing medical education is to establish

a link between health professionals and the fast-growing

body of knowledge to gain the competences required for

optimal clinical practice. Postgraduate and continuing

medical education differ from undergraduate education

in that they go beyond increasing knowledge and skills

to improving physician competency and performance in

practice, ultimately leading to better patient health.

Continuous medical education encloses a system of

learning as an expression of intellectual creation. It is

controlled institutionally and targeted at graduate

medical professionals in the following forms: courses,

workshops, pre-congress courses, graduate seminars,

specialty conferences, scientific debates, diplomas and

studies whose contents are supervised and scrutinized by

highly trained professionals in a similar manner to peer-

review journals. Continuous medical educators must know

and be able to use the literature, must derive practical and

effective results that create or improve learning systems

and must continue their own professional training. In the

past two decades, the concept of self-managing one’s

knowledge has earned a special connotation in the

pedagogy field and the teaching-learning process.

It has been demonstrated that continuous medical

education formats differ in their impact in clinical practice

and in health professionals’ decision-making. Particularly,

those with higher impacts are those that use case-based

learning, small interactive learning groups, multifaceted

EXPERT OPINION

CONTINUOUS EDUCATION ENSURES OUTSTANDING PROFICIENCYMARLENE LLÓPIZ CEO of IMC

325

educational programs that combine different media and

the programs that are longer than one session. Magisterial

conferences and written materials by themselves do not

produce any change in clinical practice because of the

complexity of the changing process, and through these

actions only consciousness for the need for change can

be created.

There are specific programs of continuous medical

education and most have been institutionalized. In these,

the progressive diffusion of new information and internet

and communication technologies (ICTs), particularly

mobile ones, has had and is still having its effects.

Training schemes based on e-learning and on technology-

enhanced learning are increasingly widespread.

Internet-based continuous medical education has

components that differ from traditional continuous

medical education and can offer additional value for both

providers and participants. An element that contributes

to this added value is internet usage and high coverage

of ICTs, which have grown remarkably in areas such

as healthcare administration. This makes it possible to

take advantage of the increasing use of the internet and

mobile devices for educational purposes.

A key element of ICTs is their ability to shorten distances,

benefitting physicians who practice in remote and isolated

areas. Additionally, this enhanced geographical coverage

implies the availability of programs beyond borders, but

needs can change across borders and programs must

adjust to the needs of every community, incorporating

elements such as language, culture and health-system

limitations, but keeping in mind scientific evidence.

Another advantage is cost, as traditional continuous

medical education entails expenses such as facility

leasing, catering, stationery, audiovisual equipment,

transportation of staff and participants, while internet-

based continuous medical education can be organized

based on content, making it a more affordable learning

alternative.

The selection and design of the most relevant continuous

medical education is based on data from each physician’s

present professional responsibilities and performance.

One source to define specific content criteria to maintain

competency in a variety of specialties comes from new

efforts by professional societies. Evaluating continuous

medical education in the context of performance

improvement is a logical and essential element in the

cycle of learning. Changes occurring in the field of

continuous medical education demand new structures

that direct thinking about the role of learning in each

physician’s professional development.

Effective healthcare requires continuous learning.

According to Nancy Bennet and her collaborators

in an article in the journal Academic Medicine, the

principles to build continuous medical education can be

summarized as the following: act as a guide for physicians

to understand their own learning needs to recognize

opportunities and resources to match with needs to

enhance proficiency and promote lifelong learning

skills; study the role of continuous medical education

to enhance physicians’ knowledge, performance, and

healthcare results; design educational strategies based

on research findings about how physicians learn and

endorse changes in their professional conduction.

These strategies should include standard and dynamic

formats that incorporate new technical capabilities for

synchronous and asynchronous learning; collaborate

with other continuous medical education educators to

maximize the ability of continuous medical education

to satisfy the varied learning needs of physicians and

healthcare systems; and grant that healthcare outcomes

can be measured with clinical proficiency scales. For this

endeavor it is crucial to broadcast information about

healthcare innovation; and to increase the professional

development of continuous medical educators, including

their understanding and use of theory and research to

provide effective support for appropriate changes in

physicians’ knowledge, performance and healthcare

outcomes.

Much of medicine’s contract with society is based on the

integrity and appropriate use of scientific knowledge and

technology. Physicians have a duty to uphold scientific

standards, to promote research and to create new

knowledge and ensure its appropriate use. The profession

is responsible for the integrity of this knowledge, which

is based on scientific evidence and physician experience.

Sustaining knowledge and skills through continuous

medical education is a characteristic of medical

professionalism; therefore, it must be considered as a

right and duty of every graduate physician.

“The aim of continuing medical education is

to establish a link between health professionals and the fast-growing body of knowledge to gain the competences required for optimal clinical practice”

326

An expert in stitches

327

Q: What percentage of your operations does health

represent and what is your market share target?

A: Twenty-nine percent of Kronos’ business is within the

healthcare industry. Kronos’ development strategy is based

on stakeholder input, market trends and customer needs.

Stakeholders from the healthcare vertical with deep domain

knowledge participate in associations and communicate

with customers daily to listen to recommendations for

ongoing product improvements. By also monitoring

market trends, Kronos looks for innovations to drive

market leadership. Finally, our customers provide constant

input and direction by submitting ideas to Kronos and by

participating in various customer advisory boards.

Q: What potential does Kronos see for opportunities in

health in Mexico and what strategy will it use to capitalize

on them?

A: Kronos can help and add value in any process within

the continuum of care, whether they are health providers

or workers, clinical specialists or medical devices and life

sciences manufacturers. We are specialists in health and

life sciences organizations, so we add value to everything

and everyone that touches, or is around, patients. Our main

focus and most important objective is patient care.

Q: What added value can Kronos provide over other

companies?

A: Kronos workforce management solutions provide best-

in-class functionality, automation, ease of use and seamless

integration for any sized organization in every industry.

More than 30,000 organizations use Kronos worldwide

to maximize their workforce, maintain compliance and

improve employee engagement and productivity. In

addition, Kronos continues to invest approximately 10

percent of gross revenue in R&D. This funding provides us

with the ability to continue advancing our solutions and

provide our customers with the most innovative solution.

Q: What does Kronos look for when creating alliances and

what added value do these provide?

A: Kronos partners with managed applications services and

managed hosting-solutions providers to help organizations

ease the burden on their in-house IT departments. This

provides organizations all the benefits of a workforce

management solution without the challenges of planning

and implementing new technology.

Q: In which area is Kronos seeing the best return on

investment?

A: Kronos’ corporate strategy is focused on three core

principles: cultivating continual innovation, building and

sustaining our own engaged workforce and fostering a

customer-first approach in all that we do. By delivering

innovative workforce solutions, Kronos helps all types

of organizations strike that balance of individual and

organizational needs. 

Q: What internal and external factors are boosting the

workforce management industry as a whole?

A: Three of the most significant trends driving Kronos’ market

are workforce solutions in the cloud. Deploying workforce

management and human capital management solutions in

the cloud provides a single source of data, simplifies software

delivery and helps organizations accelerate workforce goals.

Cloud solutions unburden IT staff to focus on core business

initiatives while the organization can be sure to leverage the

latest version of the Kronos solution.More than any other time

in history, organizations are faced with enormous challenges

regarding risk mitigation and compliance management due

to labor regulations. Keeping up-to-date on new requirements

and legislation is one part of the challenge, while accurately

tracking and maintaining compliance is the other. Kronos

provides solutions with workforce diversity in mind for

workers of all generations, regardless if they are contractors,

part-timers, hourly or salaried, telecommuters or field workers.

Our software is powerful, scalable and flexible enough to

handle complex pay rules while providing employee self-

service and collaboration features to empower the workforce.

IT SOLUTIONS FOR THE WORKFORCE

GABRIEL ALVARADOLATAM & Caribbean Vice President and General Manager of Kronos

VIEW FROM THE TOP

Kronos is a US-based company that offers workforce

management solutions for a variety of industries, including

distribution, manufacturing, entertainment, retail and media.

It is present in over 100 countries

328

HOW CAN THE PRIVATE SECTOR

PROMOTE A BETTER-EDUCATED

WORKFORCE?

EFRÉN CAMPOPresident and Executive Director of

Grupo Neolpharma

FRANCISCO MORALES Director of 3M Healthcare

NEIVI ORTIZ Director General of

Grupo Saned Latin America

ROUNDTABLE

Biotechnology and nanotechnology are two lines in which we are interested

in stimulating research. The prize (CINVESTAV’s prize for innovation in bio-

nanotechnology) was linked to pharmacology but it is now more open as it has

enabled the creation of new materials. The invitation to participate is open to

all the institutions and professionals working on those themes and the prize is

MX$300,000 (US$16,666). Half of the award is to reward the researcher and the

other half is to fund the continuity of the winning project. The purpose of the prize

is to create new talent, provide exposure and increase the diffusion of these kinds

of scientific proposals. We are approaching 2016’s winning researcher to ask for

his help capsulating some drugs we want to deliver to the limbic part of the brain.

We have well-established metrics. In hospitals, for example, we can measure infection

rates and their reduction. This is hard data that can corroborate our progress. The

same goes for hand hygiene. If people comply, infections are reduced. The same

applies to food safety because we can prove there are no pathogens or food viruses

on instruments. We signed an agreement with the foundation (Fundación Carlos

Slim) to participate and collaborate in education through the healthcare academy,

which is an umbrella for any kind of educational activity. We worked on this with

the foundation and IBM. Students are eager to learn about new practices and new

technologies and we struck an alliance with Del Valle Universty to provide these. Part

of the university’s responsibility is to show students not only the history of their field

but also what they will encounter on a daily basis in their practice.

Traditional education is unilateral and there is no debate between the receptor and

the educator. The education model is changing. We introduced simple and innovative

educating actions in which the teacher gives the students the main role in their

education and learning. This model is what we call Teach to Learn (T2L). We designed

our programs according to Dale’s Learning Cone, which says that 90 percent of what

we learn can be retained when we teach it. We also looked at Maslow’s Pyramid,

which shows that recognition is a main human need. We realize that people are

looking for a cooperative learning environment that can be delivered virtually and

for recognition of the content they produce. We also train doctors in affective and

effective doctor-patient communication and have a health sciences agreement with

Anáhuac University in which we develop content for programs.

Training and academic growth are fundamental to overcome

the current challenges in the health industry, as well as

enhancing the competitiveness of Mexico in the international

market. Collaborative initiatives between academia and the

public and private sectors, the application of technology

in learning and the integration of disciplines are some of

the trends that several companies are pursuing to achieve

better human capital. Mexico Health Review asked seven

leaders from manufacturing, consulting, law and marketing

companies working in the healthcare sector about their

contributions to improving Mexican health talent.

329

ALEXIS SERLINDirector General of Novartis

NELSON VALENZUELA LATAM and Caribbean Director of Arthrex

ALEJANDRO DE LA PARRA Director General of Astrum Salud

JAVIER CORTÉS Counsel at Jones Day

The role of the pharmaceutical industry should transform from being just a seller

to becoming a partner of the health system. We have different projects with

different institutions, such as one with IMSS on MS. In nutrition, the Center for

Diabetes Treatment (CAIPADI) has achieved 80 percent control of their diabetic

patients, while an average institution has 20 percent control. When an institution

applies a model and achieves outstanding results, we share that knowledge with

other institutions. For example, we send professionals from other institutions such

as PEMEX to spend time in the center to see how the model works and then we

help them apply the system in their institution.

In addition to our doctors educational center in Forida, we have one in Mexico

and one in Brazil because we have the obligation to correctly train doctors to use

our products. The courses are open to everyone, even those who do not use our

products. Some courses are available online through Arthrex’s webpage, which puts

over 4,000 videos online, and through our Surgeon’s Virtual App, which enables

doctors to first practice digitally before moving onto dry labs. In our labs, we use

imported cadaveric pieces from the US. Unfortunately, in Mexico the culture of organ

donation is poor and if we have chance to use a Mexican cadaver, the law is clear,

demanding the use of the full body. Can you imagine putting a full body on a table

just to practice on his knee?

We have formed solid commercial and academic alliances with various organizations

across the globe to offer better solutions to our users in health, education and

communication services. This has further improved our overall service quality

by giving it a globally competitive edge. Our alliance with the New York-based

organization Life Extension Advocacy Foundation has developed new and better

ways of providing educational and informative content in Spanish, closing the gap

for Spanish-speaking communities and enabling them to learn, engage and support

other prominent organizations in the life sciences industry. We emphasize that

education is a prime concern in improving healthcare in the modern world and it must

be addressed correspondingly to be offered in an accessible and effective manner.

We have established a coalition with the World Academy of Medical Sciences.

We are a firm of more than 2,500 lawyers in 44 locations worldwide, which

ensures a seamless communication across jurisdictions and shared experience and

knowledge with practice leaders and healthcare regulators across the world. We are

one team offering the same quality and client service standards. The lawyers also

receive continued education and we share knowledge among our offices based on

experience. We have access to the leader of each practice in case they want a peer

review or if they need to know how a similar situation is dealt with in other places.

Most other international firms have local offices and they are not coordinated. Several

of our global lawyers also have a degree in Life Sciences, providing comprehensive

support to our clients.

Flags on the American British Cowdray (ABC) Medical Center

331As an attractive market that offers access to North, Central and South America,

the foreign interest in Mexico is sizeable. Many are making Mexico their strategic

center of Latin American operations and they are settling in the local market with

the help of consultancies. They face challenges such as the changes in COFEPRIS

regulation, the security environment and navigating the fragmented healthcare

system. But there are advantages to being located here. COFEPRIS is recognized

by an increasing number of Central and South American countries and exporting to

those countries is a tempting bonus. By manufacturing generic pharmaceuticals in

the country, companies gain a more advantageous position in government tenders.

Mexico has a diverse and growing population, a strategic location and numerous

trade agreements that make it ideal for doing business in the health sector. It

has become a destination for manufacturers and research facilities, which allow

legal advisers and consultants to become guides for foreign investors interested

in expanding in the area. This chapter is dedicated to those companies that are

opening the market to new opportunities and clearing the path for entrepreneurs.

It offers valuable insight into doing business in Mexico through interviews, analyses

and expert opinions on the healthcare industry.

DOING BUSINESS IN MEXICO

14

333

CHAPTER 14: DOING BUSINESS IN MEXICO

334 ANALYSIS: New Businesses, New Challenges

336 VIEW FROM THE TOP: Ignacio García-Téllez, KPMG

337 VIEW FROM THE TOP: Xavier Ordoñez, Deloitte

 Horacio Peña, Deloitte

338 EXPERT OPINION: José Alarcón, PwC

340 VIEW FROM THE TOP: Ángel Ramírez, A3R

341 VIEW FROM THE TOP: Geraldine Rangel, Healthlinks

342 VIEW FROM THE TOP: Paul Doulton, Oriundo

344 VIEW FROM THE TOP: Carlos Rábago, Alliancesfa

345 VIEW FROM THE TOP: Christian López-Silva, Baker McKenzie

346 INSIGHT: Alejandro Luna, Olivares

347 VIEW FROM THE TOP: Ernesto Algaba, Hogan Lovells BSTL

 Cecilia Stahlhut, Hogan Lovells BSTL

348 VIEW FROM THE TOP: Javier Cortés, Jones Day

349 VIEW FROM THE TOP: Rogelio de los Santos, Dalus Capital

350 VIEW FROM THE TOP: Eduardo García, Monterrey Ciudad de la Salud

351 VIEW FROM THE TOP: Mireya López, Pro Pharma Research

352 VIEW FROM THE TOP: Francisco Corpi, Elsevier

353 INSIGHT: Luisa Gutiérrez, Medisi

354 VIEW FROM THE TOP: Neivi Ortiz, Grupo Saned

355 ROUNDTABLE: How Open are Mexico’s Public and Private Health Sectors to Innovation?

334

NEW BUSINESSES, NEW CHALLENGES

Not only is the country a destination for manufacturing and

research, it is among the favorite destinations for foreign

investment. According to the World Bank’s GDP Ranking for

2016, Mexico is among the top 15 economies in the world.

The numbers speak for themselves: between 2009 and

2015, foreign investment in the pharmaceutical market alone

was just shy of US$3 billion, according to ProMéxico and,

based on INEGI’S data, there are 770 entities specialized

in the pharmaceutical sector, including 20 top international

pharmaceutical companies such as Merck, Pfizer, Janssen

and Novartis.

“The Mexican population is over 120 million and

its purchasing power is growing. We are also a

neighbor to the largest producer of medicines

and patent-holders in the world while the

medical devices manufacturing industry has

grown enormously and is located close to the border. Mexico

represents a great opportunity for foreign investment,” says

Javier Cortés, Counsel at the international law firm Jones Day.

The events of late 2016 and the first half of 2017, however,

have put investors on alert, with uncertainty coloring

decision-making processes in spite of Mexico’s well-known

advantages. The proximity of the next Mexican presidential

elections in 2018, a weaker peso and the economic policies

proposed by US President Donald Trump are all worrying

factors, says Geraldine Rangel, Director General of

Healthlinks, a Mexican strategic consulting firm dedicated

to helping foreign healthcare companies succeed in the

Mexican market.

Still, overall, the positive outweigh the negatives. Early in

2017, Bayer concluded its €40 million investment in the

construction of a corporate site in Mexico City. Novartis is

also executing a five-year US$50 million investment plan

targeting clinical research and it is working on the creation

in Mexico of a Center of Operations for Latin America, which

will host a team of 1,000 associates.

Mexico offers unmatched business opportunities in Latin

America, as demonstrated by the World Bank’s Ease of

Doing Business Ranking 2017. Mexico ranks 47th globally but

is ranked first in Latin America. The ranking compares the

regulatory environment for domestic firms in 190 countries

and develops a score for each based on indicators such as

ANALYSIS

0.9

1.0

1.1

1.2

1.3

1.4

1.5

2021202020192018 20172016201520142013

1.2621.298

1.143

1.0641.124

1.183

1.251

1.325

1.403

EVOLUTION OF MEXICO’S GDP (US$ trillion)

Sources: ProMéxico, INEGI, International Monetary Fund (estimated from 2017 onwards)

Source: Doing Business Report 2017, World Bank Group

EASE OF DOING BUSINESS RANKING IN THE AMERICAS

Country Global ranking Score

US 8 82

Canada 22 78.5

Mexico 47 72

Colombia 53 71

Peru 54 70

Chile 57 69.5

Costa Rica 62 68.5

Jamaica 67 67.5

Panama 70 66

Santa Lucia 86 63

A diverse and growing population, a strategic location and

numerous trade agreements with countries and regions

around the world have made Mexico the ideal place to do

business in the health sector

335

difficulty of starting a business, dealing with construction

permits, registering property, acquiring credit, protection

for minority investors, taxes, trading across borders and

labor market regulation.

The internationalization of COFEPRIS is another advantage

that has not gone unnoticed. The regulator is recognized

by eight Latin American countries, in addition to having an

agreement of homogenization with the US' FDA and with

Health Canada. “COFEPRIS, our regulatory agency, focuses

on providing registration protocols to make our country an

attractive destination for clinical research. The agency has

also simplified the registration process for new products

and continues to seal recognition agreements that make

Mexico even more attractive,” says Healthlinks’ Director

General, Geraldine Rangel. Its international recognition

also provides opportunities in the international market for

Mexican manufacturers, which usually export alkaloids, its

derivates and other products containing antibiotics.

COFEPRIS is also making several changes internally and

adopting new regulations such as the pharmacovigilance

norm to increase patient safety and to optimize its service.

Fortunately, the inclusion of authorized third parties has

facilitated processes and alleviated COFEPRIS’ workload.

Currently, there are 19 authorized third parties working in

the health sector. “The creation of the authorized third-party

system was a great decision. The government’s acceptance

that its internal structure could not deal with the volume

of demand was a good move,” says Carlos Pérez, Director

General of NYCE.

Business opportunities continue to arise in Mexico as the

country prepares to transition from being a manufacturing

site to an innovation center, as demonstrated by its 58th

place in the Global Innovation Index 2017. José Antonio

Meade, Minister of Finance and Public Credit, wrote in El

Economista in April 2017 that investment in research and

technology development rose to 0.60 percent in 2016 from

0.43 percent in 2012, a jump of almost 40 percent. The

Ministry offers a fiscal credit applicable to the company’s

income tax for 30 percent of its investment in technology

and research, he wrote.

Despite the market changes over the last years, the positive

incentives available in the Mexican healthcare market

should continue attracting business opportunities for local

and transnational companies, helping them achieve their

corporate goals and expanding the country’s growth.

MEXICAN EXPORTS IN THE PHARMACEUTICAL MARKET IN MILLION DOLLARS

1.0

1.5

2.0

1.75

1.25

2015 2014 20132012 20112010 2009

1.180

1.359

1.675

1.776

1.592

1.742

1.855

MEXICAN PHARMACEUTICAL EXPORTS (US$ billion)

Source: ProMéxico

Mexico is first among Latin American countries in the World Bank's Ease of Doing Business Ranking 2017

GLOBAL INNOVATION INDEX 2017

Country Global ranking LCN* Region Ranking

Chile 46 1

Costa Rica 53 2

Mexico 58 3

Panama 63 4

Colombia 65 5

Uruguay 68 6

Brazil 69 7

Peru 70 8

Argentina 76 9

Dominican Republic 79 10

Source: The Global Innovation Index 2017

* Latin America and the Caribbean

336

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.

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.

FARMING DATA FOR BETTER WELLBEINGIGNACIO GARCÍA-TÉLLEZDirector of Health of KPMG in Mexico

VIEW FROM THE TOP

KPMG is one of the world’s largest consulting firms,

specializing in audit, tax, advisory services and industry

insight across 21 industries, including healthcare and life

sciences

337

NEW RULES A CHALLENGE FOR

BOTH PRIVATE, PUBLIC

Q: What can Deloitte offer healthcare companies?

A: We offer help with regulatory compliance, like GMPs for

medical devices and materials, and we manage regulations

such as NOM-059 concerning drugs. We deal with topics

related to follow-ups for the use of drugs and medical device

types 1, 2 and 3. Medical supplies must meet the quality

regulations of each company.

Even though we manage this process, sometimes compliance

is not achieved because it is not just about meeting the

authorities’ requirements but also regulations. Mexicans

must have control of the drugs from their production to

their consumption. This control must be present both in

distribution and along the supply chain. There are many

biotechnological products in development, so the cold chain

is important and requires great care. In September 2016, NOM-

022 was published on pharmacovigilance. The law regulates

products commercialized in the country and the demands

for compliance are very different from the former law. This

represents a new challenge for the public and private health

sectors because active pharmacovigilance and tracking

systems are required, with metrics presented as proof of use.

Q: How can you help clients adopt this new regulation?

A: We can help them by checking their pharmacovigilance

programs and verifying how they work. We also advise on

communication with physicians because they are the first

ones to be notified about these kinds of issue when patients

tell them a drug made them ill. Unfortunately, patients in

Mexico do not notify the authorities about these issues, even

though it is the only way to know what is being done right

to make it better and what is done wrong to improve on it.

Q: How can companies deal with public sector budget cuts?

A: Considering there are growth opportunities in both the

private and the public sector, for many companies the latter

has been the main driver and with budget constraints there

are many questions about how to continue growing. There

are companies looking for and succeeding in finding growth

opportunities. Some are highly specialized and target their

investment to specific segments. There are also those

that target large medical audiences so their portfolio and

investments are consistent with their market intentions. Most

of these are national companies. Companies with top growth

levels have only one of these profiles. The companies we see

struggling are trying to do both simultaneously. During times

of constraint the real challenge is to have a clear strategy

without trying to accomplish everything, because that creates

inconsistency.

In Mexico, the public sector’s budget is large. It is concentrated

in IMSS and the different public institutions that require

medicine and it is distributed through tenders for which

providers must comply with bioequivalence, quality, good

manufacturing practices, exportation costs and other

requirements related to transparency, ethics and legal topics.

We expect an increasingly better supply of medicine, devices

and also services.

Q: How is innovation integrated into the Mexican healthcare

system and how open is the system to innovation?

A: Mexico needs to innovate more. We are in a different

Mexico. Before, we had family doctors, now we have

social security, Seguro Popular and medical consultancies

in pharmacies, so we must strengthen health services

through innovation and by guiding doctors, so they can

approach the population with quality drugs. Instead of

filling the market with generic products, we should provide

more innovative products.

At first glance, it could be said that Mexico does not

innovate as much as other countries, but we have seen

interesting cases of health-related innovations by Mexican

entrepreneurs. With regard to innovation brought by

transnational companies, perhaps more than openness

to innovation the issue is our speed in adopting it.

Remember, over 10 years ago our country was a preferred

territory for medical releases.

Horacio PeñaSenior Manager in Strategy and

Operations Consulting at Deloitte

Xavier OrdoñezPartner in Strategy and Operations Consulting at Deloitte

VIEW FROM THE TOP

Deloitte is one of the world’s leading audit, consulting,

tax, financial advisory and risk advisory brands, with about

245,000 people at member firms in 150 countries and

territories

338

EXPERT OPINION

A YEAR OF UNCERTAINTY AND OPPORTUNITYJOSÉ ALARCÓNLead Partner of Healthcare at PwC

Uncertainty and opportunity are the touchstones of 2017, in

which health services are shifting to value-based healthcare,

a move from which there is no return. This has been a trend

for a long time and has already consolidated in the US.

Mexico is a little behind but is getting there.

On the side of risk, we have new geopolitical dynamics,

but business and health go beyond this. PwC has identified

five megatrends: rapid urbanization, climate change

and resource scarcity, a shift in global economic power,

technological breakthroughs and demographic and social

change. These megatrends configure the reality we face

in a country where the middle class is the size of Peru’s

population and almost twice that of Chile. This class is

changing many views of the health sector and asking

for more value. The megatrends themselves overlap; for

example, putting together technological advances with

the lack of resources in the city are empowering ideas like

Uber, Airbnb or services that provide care at home. There

are also 2,500 private businesses practicing a new model

of integrating a doctor inside the company, a new market

that has been captured by companies like Previta. Also,

there are websites such as Curely and Doctorondemand on

which many Mexican doctors offer their services. This fusion

with technology and collaboration between sectors is what

we need to develop smart cities or, in the case of health,

clusters that gather clinics, academics and researchers.

There have been many initiatives for the development

of clusters in Mexico: Biometropolis, the health park in

Cuernavaca called Ayana and Tecnopolo. However, these

projects have been subject to political changes that put

them on standby.

When talking about the shift of healthcare to value,

there are three ways in which a company’s strategies are

oriented: strategies to adapt for value, to innovate for

value and build for value. PwC has compiled an executive

report on the top US health issues of 2017 and there are

six that translate to Mexico.

Patients are increasingly open to sharing their information

with the pharmaceutical industry on how they feel after

taking certain medicines. In Mexico, we need to personalize

pharmaceutical care through programs of patient

engagement for treatment adhesion. There are some

initiatives already operating such as Pfizer Conmigo (Pfizer

With Me) or Abrace a la Vida (Hug Life) from Abbott, which

must evolve to achieve their full potential. For example, PwC

EIGHT TECHNOLOGIES WITH GREAT POTENTIAL TO DISRUPT THE US HEALTH INDUSTRY OVER THE NEXT DECADE

Technology Areas of potential impact

Artificial inteligence (AI) Digitalized supply chain, efficient billing, accelerated R&D

Augmented reality (AR) Fitness and wellness gaming apps, guided tours of grocery aisles, surgical guidance

Blockchain Consumer identity management, fraud prevention, personal health data protection

Drones Digitalized supply chain, delivery of healthcare goods to consumers, emergency and disaster response

Internet of Things (IoT) Inventory control, care coordination, remote patient monitoring, digital supply chain, digitized operations

Robots Digital supply chain, remote patient monitoring and care, digital behavioral health services

Virtual reality (VR) Patient distraction, stress relief, medical school education tools consumer and clinician training, scenario planning

3D printing Customized implants, prosthetics and transplants, distributed supply chain, on-demand inventory

Source: PwC

339

has developed Bodylogical, a group of algorithms that,

when given information on a patient’s vital signs and

habits, will predict what the patient will suffer from within

a specific set of diseases.

There should be alliances between insurance companies,

pharmaceuticals, medical devices companies and patient

associations to create a model guaranteeing patients are

taken care of. In the future, we should see changes such as

COFEPRIS requesting that when registering a medicine,

pharma companies register a patient engagement

program too.

Another important aspect is the security of patient

information. There is a company in Mexico called SOHIN that

has developed a program to assist patients with cancer by

giving them advice and liaising with insurance companies.

This is the type of integrated model we need in Mexico.

An element to consider is the new force of innovation

devoted to detecting infectious diseases like H1N1 and zika.

The current test for zika takes two to three days to provide

a result, whereas a new test created by In Bios International,

currently undergoing registration with COFEPRIS, takes only

four hours.

There is also a wave of new medicines designed to counteract

antimicrobial resistance and others improving diagnosis.

In addition, the Ministry of Communications is sponsoring

a project called SINBA carried out by the Department of

Health Information (DGIS) of the Ministry of Health. It is a

platform that will help improve epidemiological surveillance

of the country and will eventually link all relevant information

from the day we are born. So far, SINBA has released an app

that locates the closest health center.

Many programs in Mexico focus on nutrition and wellness,

such as PrevenIMSS and PrevenISSSTE, and the National

System Against Obesity spends MX$80 billion (US$4.4

billion) every year. We have to continue working on

education because there are no short-term solutions. In

our survey in the US, consumers were asked from whom

they would be willing to take nutritional information and

79 percent chose their family doctor over their pharmacy,

gym, employer, grocery store and big box store. More follow-

ups after yearly checkups are needed and we should try

more popular models. The University of Texas launched an

experiment with hospitals in which community members

could subscribe to a nutrition program for free. First, they

were tested for diabetes or potential diabetes and then

were given a work-out plan and medicine if needed. This

could be implemented here. On the strategic sourcing side,

decision-makers from IMSS ask themselves if they should

buy from regional or national distributors in consolidated

PricewaterhouseCoopers (PwC) is a UK-based advisory, audit,

tax and financial services firm that aims to build trust in society

and solve important problems. With a global presence, it is one

of the biggest firms of its kind

2

2015

2014

2013

2012

2011

2010

200

920

08

200

720

06

4 6 8 10

purchases because there are four national players and

around 16 regional ones. The question is: why not integrate a

fifth player through national credits and in this way increase

competition? Another important topic is collaboration. The

best example in Mexico is the PPP model. However, the

situation is sad because many projects have been suspended,

such as Bahia de Banderas, Tabasco and Mazatlan. We need

from our authorities what we call the 4 Cs: communication,

collaboration, compassion and compromise. Politicians are

lacking compassion for citizens by blocking PPP projects,

while certain hospitals are overwhelmed by demand.

THE EVOLUTION OF PUBLIC AND PRIVATE EXPENDITURE PER CAPITA (US$ thousands)

Source: OECD

� Mexico

� United States

� France

� Turkey

Public spending

340

ideas, great talent and good sales strategies, but they

lack strategic planning. Many of the initiatives get lost or

into trouble because the entrepreneur forgot to establish

something as simple as a business model. There are simple

examples of mistaken decisions, like not including a salary

for the founder because he believes the idea must grow

first. Many entrepreneurs are not creating a thoughtful

plan and they are spending a lot of money and time

solving problems they could have prevented with better

organization. We try to provide all the necessary resources

because we believe that one should work for the best, but

be prepared for the worst.

Q: How can a Mexican consultancy like A3R help

international companies to expand here?

A: Our company can facilitate and make the start of

operations more efficient for foreign companies because

foreign business people are often concerned with why

some formalities are so complicated in Mexico. I try to

explain to them that Mexico has a huge money-laundering

problem and the authorities have put many security

measures and control mechanisms in place that do not

exist anywhere else. As a former government functionary,

I must recognize that the authorities often establish

a measure for a problem caused by 3 percent of the

companies and the remaining 97 percent are also affected

by those measures.

Q: What value do your clients receive by working with

a local and not an international firm?

A: Each of our clients is served by one of our partners. This

is our added value but we recognize that this limits us in a

way because there are only four of us and we cannot deal

with many clients at the same time. We do not go after big

companies because they have expertise and a complex

internal structure. Entrepreneurs place more trust in us and

give us the space to participate when they face new challenges

and opportunities. We are not interested in having a base of

200 clients. Instead, we have been growing by guaranteeing

our clients good service and a long-term relationship. That is

why we do not compete on prices. We compete on quality,

which is one of the hardest things to do in the service market.

Q: What is the profile of the healthcare companies you

work with?

A: They usually are distributors of pharmaceutical or

medical devices that sell to the government through tender

processes. We look for small-medium companies that

have around MX$50 million to MX$300 million (US$2.7

million to US$16.6 million) in sales annually. Preparing their

tender participation is a challenge for them because the

difficulty of the tenders is not in the technical and quality

requirements but in the correct submission of the documents

the government requires. We also like to work with creative

companies. However, companies with good ideas sometimes

lose a lot of money because the documentation they submit

is incorrect. That is why our expertise in preparing and

reviewing documents for purchase processes saves our

clients working hours and reassures them that the project

they are presenting is competitive.

Q: What changes have the tender processes produced

in the market?

A: The public Mexican health market is dominated by a few

companies. This is a result of the tender rules, which state that

only those who have already won a tender can participate in

the next auction, instead of allowing new players in that could

break the monopoly. However, if a medium-sized company

wants to provide a product but is not immediately capable

of supplying the massive amounts the government needs it

is completely left out of the auction. By breaking down the

volumes into more manageable sizes, competition would be

increased and the government could begin working with other

companies that may be able to further improve service.

Q: What are the main obstacles to success for healthcare

entrepreneurs in Mexico?

A: The main healthcare sector problem is that entrepreneurs

do not use the information available. They have great

OPENING OPPORTUNITIES FOR MEXICAN ENTREPRENEURSÁNGEL RAMÍREZDirector General of A3R

VIEW FROM THE TOP

A3R is a Mexican consultancy focused on corporate

negotiations, financing and administration. It helps companies

to restructure and optimize their operational, administrative

and technological strategies

341

in acquisitions will hire specialized investigators to avoid

purchasing businesses associated with money laundering.

Q: What regulation has the most impact on incoming

companies?

A: The elimination of a plant requirement had a huge impact

on incoming businesses. Also, the recognition of regulatory

agencies such as the FDA and Health Canada helped as

well. Finally, speeding up processes through authorized

third parties helped make regulatory procedures more

efficient and thus increased the attractiveness of Mexico as

an investment destination for health.

Q: Why has the clinical trial business failed to grow

significantly in Mexico, considering local opportunities?

A: In Latin America, Argentina hosts the most clinical studies

because Mexico never exploited its potential. But things

are changing. Even our Ministry of Economy recognizes

that clinical studies could attract the investors our country

needs. We have the centers, the patients and COFEPRIS

is simplifying procedures so I do not believe that other

countries offer more benefits. The problem is that Mexico

does not promote itself enough. Mexico is becoming an

appealing country for clinical research and we hope the next

administration will also work toward this objective.

Q: What are Healthlinks’ expansion plans?

A: Our plan is to boost the human capital in our regulatory

and medical marketing team, where we have also successfully

added new technologies to deliver our services. We will

encourage international expansion through workshops held

abroad on the Mexican market and its opportunities, and we

will also share our knowledge through webinars. Considering

the political and economic environments, we expect

companies to carefully evaluate their Mexican investment

potential and we will be there to guide them.

Q: What service does Healthlinks provide to companies

looking to do business here?

A: We offer a service called Pre-Start Up Program through

which we evaluate how well a company will perform in the

Mexican market. Healthlinks ensures the company complies

with regulatory requirements before starting operations

here and we study its product and predict its potential

success, providing the company with relevant information

to understand market dynamics and avoid the unnecessary

risk of potential failure. One goal is to provide managers

and staff a view of what they will face when they get to

Mexico. Seven out of 10 companies that come to Mexico fail

in their first years because no one helped them build the

right strategy. Our mission is to inform companies about

the challenges they will face and to help them succeed

from the beginning. Around 40 percent of our clients do

not have the complete documentation or decide to first

start operations through a distribution partner before

establishing their own subsidiary.

Q: How do foreign companies view the Mexican market and

its potential?

A: Mexico is seen as an attractive market with particular

and positive business conditions that are not easy to find

in Latin America or other countries in the world. One plus

is COFEPRIS, our regulatory agency, which is focused on

facilitating registration protocols to make our country an

attractive destination for clinical research. The agency has

also simplified the registration process for new products and

continues to strike recognition agreements that make our

country even more attractive. On the downside, potential

investors will face some uncertainty in 2017 and 2018 given

the Mexican elections, peso instability and the restlessness

caused by US economic policies that will have a direct

impact on our economy.

Q: How is security weighing on the investing decisions of

foreign companies?

A: Delinquency and corruption endanger Mexico’s popularity.

Many companies have been affected by robberies or have

faced bribery demands from drug traffickers, especially

manufacturing sites in Morelos. Some companies interested

LEARN THE LANDSCAPE BEFORE ARRIVAL

GERALDINE RANGELDirector General of Healthlinks

VIEW FROM THE TOP

Healthlinks is a Mexican strategic consulting firm dedicated to

helping foreign healthcare companies succeed in the Mexican

market. It focuses on medicine, cosmetics, food and nutritional

supplements and medical devices

342

Q: When looking at Mexico’s health sector, what impact

would a medical savings-plan model have?

A: Mexico has a similar structure for pension plans, so-called

AFOREs, in which there are individual savings accounts.

Applying that to the health system would pass the locus

of control to the patient to change his behavior. The plan

builds up savings that can be passed onto children, just

like a pension plan, which reinforces good behavior and

eliminates the perverse incentives that exist in the system.

IMSS and ISSSTE have the required technology in the

form of AFOREs, which would be applied to healthcare. A

single payer, which is what could happen with the Seguro

Popular, would be even easier. Behavioral change is the key

to reducing the colossal burden of obesity and diabetes,

the leading cause of disease and healthcare spending, so a

plan that engages the patient, guided by his family doctor,

and motivates a positive change of lifestyle habits would

be the most logical and affordable solution. There is no

better way to get better health for less spending. Medical

technology advances are a big help but lifestyle changes

show a better long-term ROI.

Q: To what extent would the unification of the various

health institutes be a necessary first step?

A: It would not be necessary because if the patient decides

on where best to spend his money, competition would

decide where he goes. This medical savings plan would

be a single fund managed by the patient who is advised

by his doctor. One of the biggest problems with the IMSS

and ISSSTE is that they are payers and providers, so the

money does not flow to the most efficient provider. There

is no bigger perverse incentive than the payer and provider

being the same.

Q: How viable is the prospect for change in Mexico’s

healthcare system?

A: Healthcare leaders say that the aging population, obesity

and diabetes are making it difficult for the public sector to

cover health costs. In Mexico, unlike European countries,

healthcare is not a vote-getter because it is low on the

political agenda. Hardly a single politician in Mexico will run

on a healthcare platform unless they are talking about free

Q: How does Oriundo operate and what advantages does

it provide?

A: Oriundo’s strength is its local knowledge, so we

recruited independent consultants and specialists in

their markets: Argentina, Chile, Colombia, Peru and Brazil.

We are all independent operators, which is a different

structure from other consultancies. Other firms offer

similar services in Mexico, but we are the only one that

covers Latin America. We have also been doing it for

much longer and some of our associates were previously

clients. Market entry strategies for new players into the

region have been our foremost activity.

Q: Which countries or regions will Oriundo reach out

to next?

A: We had someone working in Central America but that

position is currently open, so we should put someone

there. We believe that targeted search is the way

forward, helping our clients renew their portfolios. We

can access new and hard-to-find R&D and bring it to Latin

America. Through our associates in Europe, we learned

that the University of Barcelona had discovered a new

process that employed nanotechnology to overcome

problems related to skin and aging. The university has

a development laboratory but no commercial activity,

so we brought the technology to Mexico for a Mexican

partner and the technology is doing very well. In Madrid,

we discovered another therapy related to derma.

Q: To what extent are Mexican universities producing

possible opportunities?

A: We have been working on a big project for a

Mexican laboratory that is very small but has important

nanotechnology used to prevent nosocomial infections.

This has to be done on a global basis. There are patents

registered and the UK was the first to issue. However, this

is an exception. There is no reason why Mexican universities

should not be thinking along these lines. The universities

of Nottingham and Manchester, for example, have a person

or department devoted to building on this technology, on

how to capitalize on it. In fact, the people working on this

in the UK are mostly Mexican.

CHANGE BEHAVIOR TO BRING DOWN HEALTH SPENDPAUL DOULTONFounder & Managing Partner of Oriundo

VIEW FROM THE TOP

343

healthcare for everyone, a promise that would be difficult

to keep. What is different is the person of Mikel Arriola,

Director General of the IMSS, who is a great paradigm

buster. Alongside Minister Narro, he is probably the only

one that could bring about change.

Q: COFEPRIS is recognized outside Mexico. How much of

an advantage does this present?

A: This is a positive step. Mexico is ahead in terms of

recognition, not just by Latin America but also by the

WHO, the FDA, the EMA and others. Mexico is also the

only country in Latin America in which generics meet global

standards, giving it a huge competitive edge. Mexico is the

best beachhead for Latin America, from a technology and

regulatory standpoint and the harmonization of regulations

with other countries has been occurring slowly over the

past 30-40 years. Things take time because there are vested

interests but Mexico has the best regulatory environment

and it is recognized all down the Pacific Coast. Even

Argentina is considering recognizing COFEPRIS.

Q: Many Indian generics companies have entered Mexico.

What is the key to succeeding here?

A: India has been trying to enter the Latin American market

for a while, but it took about a decade to understand that

a price-cutting basis for competition does not work here.

To have a competitive advantage in the generics business,

you must be able to respond to rapid shifts in demand

and IMSS has decentralized buying. Indian companies have

changed their model and are entering the market with

differentiated products. Those that are making it here are

those developing supergenerics or that have products from

their own research. Outsiders, no matter their country of

origin, cannot enter the market on the basis of price alone.

Those with no local presence, no understanding of the local

market and no local production will not make it because

Mexico has generics that meet global standards.

Q: How are the Big Pharma companies competing with this

influx of high-quality generics?

A: Generally speaking, global players try to differentiate

on the basis of their R&D portfolio, competing for new

therapeutic areas and doing it better than others. One

thing to bear in mind is how the market dynamic has

been impacted by the supermarket and pharmacy chains.

The fastest growing sector in Mexico is the private-label

business, of which the largest manufacturer worldwide

is Perrigo. That, combined with the trend of having

doctors’ consultancies in pharmacies, so-called “doc-in-

a-box” programs, are the factors boosting the private-

label sector. Given these factors, companies must have

local operations to be able to negotiate and respond.

All this is very healthy and is bringing down the Mexican

wholesalers that dominated the market for so many years.

Oriundo is a consultancy composed of former CEOs that helps

new entrants to Latin American pharmaceutical markets. It has

four main business lines: market entry, portfolio rejuvenation,

acquisition and divestment and turnaround

The monopsony has been broken and the Mexican market

is becoming a much healthier market.

Q: What is your advice for clients that compete against

these private labels?

A: Most pharmaceutical manufacturers have moved this way

and those supplying to pharmacies have cut out wholesalers,

which is why prices are lower. Pharmaceutical manufacturers

that want doctors in pharmacies to prescribe their products

need to make sure they sell to that chain. Some will exclude

you and there are special distributors to help you get into

independent pharmacies. It means re-orientating the

business model, not implementing new technology. The

doc-in-a-box model is important to underline. It is generally

criticized but it has been a wonderful thing. In the past,

patients would go to a pharmacy and self-diagnose, buying

products that had worked in the past. Now, the patient can

go see a doctor for MX$30 (US$1.6) or even for free and

receive a diagnosis and the right medicine for that condition.

In the pharmacy chain next door, he buys the medicine.

These doctors in pharmacies, around 25,000 of them, have

been a great revolution. They are well-trained and they write

as many prescriptions as the IMSS does, which represents

savings for the public institutions. Previously, Mexico was an

unusual market in that it had products that had been on the

market for over 50 years, which patients bought because

they had done so in the past and did not want to pay for a

prescription. These old-faithful brands are on the decline.

Q: To what extent does this happen in other countries?

A: It is not unique to Mexico, although the country still

has the highest rate of out-of-pocket expenditure. India is

the only other country that sees such high rates. In Brazil,

there is now a large pharmacy chain that is emerging but

Argentina is much more fragmented. The major shifts in

Latin America have been on the basis of intermediaries.

“These doctors in pharmacies, around

25,000 of them, have been a great revolution. They are well-trained and they write as many prescriptions as the IMSS does, which represents savings for the public institutions”

344

visit. Our system eliminates the applications that are not

useful for a developing market and adds those that help

simplify the local model’s operation and make it faster. Our

integrated audit information and geolocation applications

enable a company to know where representatives are and

to keep track of who is working and who is not.

Q: How would you evaluate the current state of the Mexican

pharmaceutical market?

A: Every market is linked to the population. The Mexican

market is covered in terms of product necessity and

common diseases. However, there is an increase in the

number of players. Demand is also dispersed because

pharma companies sell similar products. We could generate

more savings and improve profitability through more

precise software and a better recruiting process. As a

country and as an industry we should recognize that digital

transformation is not optional, it is a requirement.

Q: What added value does Alliancesfa bring to the

pharmaceutical industry?

A: We provide customized solutions. We are inviting our

clients to integrate their sales force to the evaluation process

and, besides providing the software, we are involved in the

whole process. We act as consultants to orient our clients on

how to achieve better practices and policies for the medical

visit and we perform frequent updates to the system

based on client needs. Client requests are evaluated by a

committee and accepted changes are offered to all clients.

We are a trustworthy provider and we are committed to

working with those customers who resist change to make

sure they easily adapt to the CRM. We assure our clients

that we will help them reach their objectives.

Q: What are Alliancesfa’s growth expectations, both in the

short and long terms?

A: By 2018 we want to double the number of users we

administer today and by 2020 double that number again.

From 2020 onward, we want to grow in the sectors we are

integrating this year, veterinary care, medical devices and

oral health, and replicate the value we have provided to the

pharmaceutical industry.

Q: Alliancesfa offers sales force solutions for the

pharmaceutical industry. What are your main products?

A: We are focused exclusively on the pharmaceutical

industry in Mexico and Latin America. Our main product is

a Customer Relationship Manager (CRM) with and without

real-time geolocation but we also offer e-learning programs,

visual aids, business intelligence and data validation. We are

working on replicating in veterinary care, oral health and

medical devices what we have done in pharma.

Q: What benefits does CRM provide the Mexican and Latin

American pharmaceutical industry?

A: An adequate program will make operations more formal

and efficient. Companies should know the doctors who are

prescribing their products, where those doctors are located

and everything that must be considered in direct marketing. If

pharmaceutical companies know this, they can develop better

communication and management of their sales because a

company cannot control what it does not measure.

Q: How can Kangaroo, your CRM software, make a

difference for clients?

A: Kangaroo is the current generation of our software.

Its objective is to help companies advance in a faster

and simpler way. The product was developed in Mexico

and is updated along with Android and iOS and we are

also evaluating the possibility of making it available for

Windows. Kangaroo is operating version 2.5, but version

3.0 will be launched by the end of 2017. We apply the same

international standards as any other provider in terms of

data centers, development and management and we use

Structure Query Language (SQL) to manage our database

and Microsoft for software development. However, unlike

other software, our applications are specially designed for

Latin America. In Mexico, sales representatives are assigned

a territory or a route and a list of physicians they have to

CRM, THE STRATEGIC ALLY FOR MEASURING SUCCESSCARLOS RÁBAGOCEO of Alliancesfa

VIEW FROM THE TOP

Alliancesfa is a solutions provider for sales and marketing in

the pharmaceutical industry and niche companies. It provides

solutions such as customer relationship management for loyalty

programs and automatization of sales forces

345

The main lesson is that health regulation is not harmonized

at the international level, as every country has different rules.

There is not a body of international treaties on health law.

That is why the negotiation of certain international trade

treaties has attracted so much interest. First the Pacific

Alliance (PA) and then the Trans-Pacific Partnership (TPP)

pioneered an international law approach where health law

was incorporated into the disciplines of international trade

law. This represents a new avenue to pursue what is now

being called regulatory convergence and may constitute

the new way to approximate the regulatory frameworks of

different jurisdictions. Of course, this normative development

was impacted by certain decisions of geopolitical impact

such as the withdrawal of the US from the TPP. However, the

approach is likely to remain for future negotiations. It will also

depend on the success of the PA in this regard.

Q: What are the main legal challenges faced by foreign

companies looking to invest in health in Mexico?

A: One of the main challenges would be to navigate the

rules for holding regulatory approvals. This aspect varies for

different products and creates constant misunderstandings

among advisers not familiarized with health regulations. This

has a great impact on M&A transactions. The best practice is

to include in full the regulatory component within the scope

of the supported transaction, from the initial due diligence

process to the planning process and its implementation.

Q: What regulatory challenges will most impact the industry

in 2017/2018 and how?

A: Developments are expected in the areas of access to

public formularies, prescription-review mechanisms in public

institutions, transparency on interactions with healthcare

professionals, digital, personalized medicine and biotech

products. At the same time, we have seen increased oversight

of the industry from the tax and antitrust authorities.

Q: How is Baker McKenzie helping clients overcome new

challenges in the Mexican market?

Being a global law firm enables us to quickly identify major

industry trends, giving us the opportunity to dedicate

resources to create quite early high-value projects, such as

our digital health initiative, where we integrate key areas

of legal service such as health regulation, information

technology and privacy law.

We have also embraced technology and have developed

useful mobile apps for our clients, such as our Global

Healthcare MapApp and our Global Antitrust Dawn Raid

App. The MapApp is a mobile application that provides

access to real-time information on the laws and regulations

impacting the healthcare industry in more than 40 countries.

MapApp also provides users with the contact details of

Baker McKenzie’s healthcare specialists, which makes it an

invaluable tool for healthcare companies that need quick

access to information. Dawn Raid provides clients across

44 countries that are experiencing a raid with real-time

step-by-step guidance on their rights and obligations, as

well as instant access to Baker McKenzie’s antitrust lawyers.

The app is a cutting-edge platform that provides practical

assistance and peace of mind for individuals on the ground

handling unannounced inspections. It answers a range of

practical questions on a country by country basis under

local law. The Antitrust Commission in Mexico has increased

its activities and oversight of the healthcare markets with

several ongoing investigations and the adoption of the first

criminal action in the country.

Q: Many regulatory agencies speak of homogenization of

Mexican law and regulations with US and EU laws. To what

extent is this possible?

A: We have a lot of experience comparing different regulatory

frameworks. For instance, we were commissioned to conduct

a broad study comparing the health regulation for medicines

in the EU and in Mexico. This was funded by the European

Commission and formally delivered to COFEPRIS. However, on

a regular basis we also prepare webinars comparing regulation

in different jurisdictions using our experts from different

regions and multijurisdictional surveys on specific topics.

GLOBAL VIEW, DIGITAL RESOURCES FOR NEW

CHALLENGESCHRISTIAN LÓPEZ-SILVA

Partner and Head of Healthcare & Life Sciences at Baker McKenzie

VIEW FROM THE TOP

Baker McKenzie is a global law firm operating in automotive,

consumer goods & retail, energy, mining & infrastructure,

financial institutions, healthcare, tourism, private equity, real

estate and technology and media & communications

346

INSIGHT

PROGRESS STILL TO BE MADE IN DATA PACKAGE EXCLUSIVITYALEJANDRO LUNAPartner and Life Sciences Co-Chair at Olivares

Intellectual property is preciously guarded in all sectors

and countries due to its high intangible value and as a

result, patent litigation is prevalent. According to PwC,

four of the 10 largest initial adjudicated damages awards

globally between 1996 and 2015 were in the health sector.

NAFTA partners the US and Canada have beefed up their

regulations and law firm Olivares says Mexico also needs

to step up when it comes to data package exclusivity.

Olivares, a Mexico-based leader in intellectual property law,

presented evidence to the regulating authorities for data

package exclusivity to be changed, namely to mirror the

rulings in other NAFTA countries. Whereas in the US and

in Canada certain pharmaceutical products are protected

for five years and new formulations and new indications

are protected for three years, biologics and orphan drugs

are granted 12 years of protection. “In Mexico, there is only

an incipient and weak protection for five years, granted

through an internal COFEPRIS paper that would have

difficulty standing up in a court of law. Data package

exclusivity terms remain at five years for biologics and

orphan drugs. This is not satisfactory,” says Alejandro Luna,

Partner and Life Sciences Co-Chair at Olivares.

The firm has presented evidence to the regulating authorities

showing that these drugs require over 12 years of R&D and

therefore should be granted longer exclusivity periods.

“Most patent litigations occur in pharma because of the

rise of generics. This began around 20 years ago and

there is little case law to rely on because most cases were

either settled or are still ongoing,” explains Luna, who is

negotiating on behalf of AMIIF in international free trade

agreements. He is lobbying for a change in Mexican law

in data package exclusivity and in patentability. He was

previously negotiating for the TPP, and should NAFTA

renegotiations go ahead, would look to represent the

pharmaceutical industry.

In 2003, linkage regulations came into effect in Mexico to

avoid these disputes. “The Mexican Institute of Industrial

Property (IMPI) publishes patent registrations in its journal,

which COFEPRIS checks before registering a new patent

to ensure one does not already exist. In addition, the

registrant must swear under oath that to their knowledge

there is no other existing patent. Before this regulation

came into effect, there were 20 compound molecules

under litigation. Now, there are none,” says Luna,

adding that new formulations are the most commonly

disputed. “The easiest way to fight an unlawful marketing

authorization is to have it nullified, rather than filing an

infringement lawsuit before IMPI, which can take years

to reach a decision. By having a patent published in the

linkage regulation it should prevent or nullify marketing

authorizations in violation of patents.”

Counterfeiting is often seen as a major problem in pharma.

According to the US-based Pharmaceutical Security

Institute, in 2015, there were 3,002 incidences globally

of counterfeit medicine involving 1,095 pharmaceutical

products. In Mexico, El Universal reports that between

Jan. 1, 2007 and Dec. 31, 2015 the Attorney General’s

Office seized 945,152 fake medicines, just under 942,000

of which were confiscated in Mexico City. The Attorney

General has been granted stronger powers in Mexico

to pursue action against counterfeits without the prior

authorization of the title holder, yet Luna believes that

the most efficient course of action to reign in counterfeit

medicine in Mexico would be to confiscate them at the

borders. “Under current law, products cannot be seized

because they are considered in transit between countries.

If this is changed, it would be much more difficult for

counterfeit products to make their way into the Mexican

market,” he adds.

To protect against counterfeiting, filing a patent is a

necessary step. However, many are unaware of intellectual

property procedures in life sciences, including in the highly

patented pharma sector. Luna says this happens most

often with researchers and universities. “Because they

are often required to publish papers, they do so without

knowing the intellectual property ramifications. Once

a paper is published, the knowledge it contains can no

longer be protected by IP law, which many are unaware of.”

347

TPP TO AFFECT IP REGULATION

Q: To what extent have regulations been homogenized

with those of the FDA or EMA?

EA: Mexico has become an attractive investment

destination for the pharmaceutical and health industry.

Several factors have contributed to this interest in our

country, including the successful harmonization and

cooperation of COFEPRIS with other leading health

agencies, such as the FDA. In 2011, the Ministry of Health

implemented through COFEPRIS a special program

known as the Agreement for the Promotion of Innovation,

intended to expand the availability of innovative medicines

to Mexican patients and strengthen the competitiveness

of the market. Furthermore, it aimed to permit recognition

of drug authorizations issued by other agencies for

the marketing of new molecules. As a result of the

implementation of the program, COFEPRIS has signed

agreements with regulatory agencies from Australia,

the US, Canada, the EU and Switzerland. Through these

agreements, COFEPRIS can recognize and validate

marketing authorizations of health inputs that are not

yet marketed in Mexico and that have been issued in the

partner countries, recognize GMP certificates of other

countries and work with other agencies to evaluate new

products before authorization is granted.

Q: What regulatory challenges do incoming foreign

companies face?

EA: The main challenge facing companies is legal certainty

that the government and the regulatory pathway provides

guarantees and ensures certainty with respect to their

submissions and assurance that authorizations are secure.

CS: They must also be reassured regarding time frames

and requirements because there are many permits and

authorizations needed. We need to be more focused on

compliance with regulation rather than with paperwork

and filings. Also, an important challenge is the difficulty

of placing the new high-tech and innovative products

within the regulatory framework. Our regulation is many

steps behind new technology, which has resulted in

certain companies and products facing adversity when

complying with requirements.

EA: Companies are challenging and requesting that their

patent rights are properly guaranteed by the law during

the timeframes granted. On one side of the coin are the

rights and warranties needed while on the flip side, those

are precisely the challenges companies will face and

they will request their rights and warranties are properly

respected. A common desire is that the linkage system

between COFEPRIS and the Mexican patent office turns

into an efficient tool, providing the proper security for the

exclusivity rights encompassing patent rights and product

marketing authorizations.

Q: What will be the biggest regulatory issues in the

next five years?

CS: Regulations improving biotechnology and high-tech

and innovative products will be an issue. I would expect

improvements to the legal framework for high technology

in medical devices, which is difficult as the sector develops

quickly. Personalized medicine is an important issue we will

also see over the next few years. I think the cosmetic sector

will see changes given rapid technological advances

EA: Equivalence agreements and recognition of foreign

product authorizations for faster pathways will provide the

Mexican population with more alternatives. There should be

homogenization through amendments to legal provisions,

following the global trend of expanding markets. Product

innovation will be a driver for regulatory change to ensure

they are safe and efficient. Also important is the potential

implementation of the TPP in Mexico, assuming that this

treaty enters into force. The TPP proposes at least 10

years of protection from the date of marketing approval

for undisclosed tests and other data concerning the safety

and efficacy of chemical agricultural products. Biologics are

granted an eight-year term of protection from the date of

first marketing approval.

Cecilia StahlhutSenior Associate of the Life Sciences

Practice at Hogan Lovells BSTL

Ernesto Algaba Partner of the Life Sciences Practice at Hogan Lovells BSTL

VIEW FROM THE TOP

Hogan Lovells BSTL is the Mexican branch of the international

law firm present in 25 countries with over 2,500 lawyers. It

operates in areas as diverse as aerospace, energy, finance,

infrastructure, life sciences and real estate

348

Q: Despite these issues, foreign companies still want to come

to Mexico. What is driving international investment?

A: The Mexican population is over 120 million and its

purchasing power is growing. We are also a neighbor to

the largest producer of medicines and patent-holders in

the world while the medical devices manufacturing industry

has grown enormously and is located close to the border.

Therefore, Mexico represents a great opportunity for foreign

investment. During these times of uncertainty, it helps that

we are a global firm with a large presence in the US and we

have broad knowledge of its commercial regulations. We can

provide our clients with up-to-date information and we also

accompany them through the regulatory changes and the

industry’s evolution.

Q: What opportunities does homogenization between the

FDA and COFEPRIS bring to the industry?

A: These homogenization opportunities became possible

through an agreement signed in October 2012 that allowed

faster healthcare registration of American products.

COFEPRIS has replicated this procedure with Health Canada

and through other agreements with South American

countries, which makes the process faster for medicine

and medical devices. Authorized third parties are not

included in this process for medical devices. The inclusion

of these institutions is positive, but there should be room for

accommodating more institutions, otherwise it becomes a

monopoly. They should standardize requirements and there

should be more players.

Q: What is the added value Jones Day offers that similar

firms in Mexico cannot?

A: We have over 2,500 lawyers in 44 locations worldwide.

We have great depth in the US and our clients are some

of the largest laboratories in the world. We are truly one

firm worldwide, which ensures a seamless communication

across jurisdictions and shared experience and knowledge

with practice leaders and healthcare regulators across the

world. The lawyers also receive continued education and

we share knowledge and experiences among our offices.

Most international firms have local offices and they are

not coordinated.

Q: What main issues has Jones Day noted in the Mexican

healthcare industry?

A: It is important to consider that modifications to sanitary

registrations require the consent of the rights holder. It is

common for Mexican distributors to become the owners

of such registrations, which on a day-to-day basis protects

them from contract infringements. This makes it difficult for

international manufacturers or sellers to claim their rights in

a dispute and thus the Mexican holder of the registration that

breached its commercial responsibilities has a clear advantage

in any possible conflict. Therefore, foreign companies must

think carefully about how to structure a contract before

coming to an agreement with a Mexican distributor.

A matter for concern is that Mexican legislation lacks

a clear mechanism for approaching the authorities

about how to resolve doubts on the interpretation of

regulations. If sanitary regulations established certain

steps to approach the authorities in good faith in such

cases, this would in all likelihood lead to an opportunity

to improve the relations between authorities and

manufacturers or distributors of healthcare products and

to improve the authorities’ surveillance.

Q: What does COFEPRIS need to do to improve this situation?

A: In general, there are many discrepancies in the

application of regulations. We also believe that better

access should be provided to communicate with

the decision-making authorities. Additionally, the

pharmacopeia is not yet published in the Official Journal

of the Federation, despite it being the official support of

COFEPRIS’ actions for medicine approval procedures. We

believe that there are procedures not included in the law.

For example, there is no clear regulation on advertising

alcoholic beverages in certain places or on advertising

tobacco in duty-free shops for certain events.

SMOOTHING THE IMPORT PROCESSJAVIER CORTÉSCounsel at Jones Day

VIEW FROM THE TOP

Jones Day is a global US law firm with offices in 44 countries.

Its practices include capital markets, global regulation,

antitrust, energy and healthcare, among others. It has been in

Mexico since 2009

349

this is an insurance scheme for corporate clients. Around

10 percent of the 1,000 opportunities we receive every year

are in the health sector. However, to get into the health

space, startups require more knowledge, a better network

and understanding of the ecosystem.

Q: What is the standard process companies go through to

receive financing from Dalus Capital?

A: They approach us and show us why they are different,

why they have innovation behind them and why a customer

would prefer to use their solution, product or service over

existing ones. We evaluate the efficient scalability of

their business model, which is a key constraint. We also

try to determine if the problem they treat can be solved

differently. In the early stages, we can help them configure

the best approach to monetize that opportunity. After they

pitch, if we like what we see then we decide on terms and

conditions and perform due diligence. Lastly, we draw up

an exclusion plan to mitigate the risks the venture faces and

present it to the investment committee. On average we ask

for 20-25 percent equity.

Q: What are your expectations for 2017?

A: Planning for a year is too short. If we do not solve chronic

diseases, they will have a huge toll on people’s quality of

life and on the finances of the country. They have a huge

impact on social security costs because there is no budget

that can withstand those problems. We are only delaying

and not taking care of the problem as it is evolving. I

expect the healthcare system to be more transparent, the

incentives should be aligned with increasing quality of life at

a lower cost, which is a big problem. Many solutions are not

simply having more beds and doctors. We need to deploy

technologies that can scale and can change this dichotomy

and the dynamics of this industry. Watch out for AI and the

cloud because they will shape this industry.

Q: What kinds of health startups are emerging in Mexico?

A: Mexico has enormous and untapped potential in many

aspects, from medical devices to therapeutics. We see ever-

more sophisticated groups with relevant papers published

in prestigious journals and I recently met with a financial

group that created a startup for psychiatric treatments

with a Big Data approach. Most things being cooked up

are geared toward creating disruption in the health system

but many are expensive, do not solve the root cause and

drain more and more resources because people get sick.

These groups are doctors or professionals tired of being on

the other side of the equation and who are trying to provide

solutions through technology to keep bigger communities

healthy and avoid people reaching the treatment phase. We

are an innovation-based fund but we do not plan to invest

in taking a therapeutic through phases I-III. We consider

how to deploy technology based on apps and Big Data to

serve communities.

Q: What steps into the health startup industry have you

made so far?

A: We have not made any investments yet but we have one

in progress. The first investment that we wanted to close

with fund one, a US$70 million fund, was an app from a

doctor based in Mexico City. He has been published in five

or six top journals worldwide and had a solution for HPV

diagnostics and a therapeutic solution for infection in both

women and men. I was told that although the publications

were great and the cases treated were real and verified,

the team behind the app lacked the rigor and scientific

approach to scale the project worldwide. Also, we have

just met with a US company that has developed a solution

applicable to the Mexican and Latin American markets to

automate the diagnosis of cervical cancer through pap

smears. Another company from Monterrey is working

on a solution for diabetes by diagnosing symptoms in

the eyes, feet and skin. It is establishing small outlets in

heavy traffic areas and offers eye examinations. Now, it

is working with corporations to lower insurance costs by

installing technology on employee phones to track health

habits and subtly influence them. The company promises

to reduce insurance costs by up to 50 percent. In truth,

LONG WAY TO GO FOR HEALTH STARTUPS

ROGELIO DE LOS SANTOSDirector General of Dalus Capital

VIEW FROM THE TOP

Dalus Capital is an early stage and growth equity fund founded

in 2015 and based in Monterrey and Mexico City. It is focused

on supporting Mexican and Latin American entrepreneurs and

works in a diverse range of sectors, including health

350

prevention, minimal correction and highly sophisticated

procedures. In addition, the private sector has focused on

and strived to complement the public system, from macro

to micro providers.

Secondly, is the development of medical tourism. It

is already happening but there are no overarching

statistics we can rely on. Although there is still some

suspicion of the industry, which is dissipating, medical

tourism is increasing thanks in part to the city’s favorable

environment. In 2016, medical tourism was strongly

reflected in national tourism figures.

A third achievement is that the value chains in this offering

have also integrated other sectors through the tourism

cluster, such as the hotel industry, the light vehicle sector

and aviation. Inter-cluster work has been beneficial in this

sense and together we have developed plans to improve

integrated services. This concept has strengthened

medical tourism. I see an emerging line in digital services

and distance care, which is something we could explore

in the future.

Q: What are the cluster’s ambitions for 2017 and how will

it achieve them?

A: In 2017, our goal is to strengthen medical tourism and the

perception and positioning of Monterrey as a destination, in

addition to forming a strategy of networks. We can support

other clusters across the country and we can cover the

demand they cannot satisfy because we are only two hours

by air from the furthest cities in Mexico.

Q: How is the cluster working with the government to

promote medical tourism?

A: We have a- close relationship with the Ministry of

Economy and Labor and the Ministry of Health. Medical

tourism is a priority for the government, for the economic

incentive it represents for the state and for the possibility

of offering care to more people. We have received support

through various ministries to develop activities that

promote the city, to offer high-quality services and to

facilitate processes and paperwork.

Q: What advantages does this cluster provide for its

member hospitals?

A: The cluster has many advantages because it does not

only focus on generating added economic value but also on

developing the industrial sector and attracting investment.

There are important elements that are being addressed, such

as nursing, patient security, clinical research and quality of

researchers. We are also working on a diploma in research

for the members of the cluster.In terms of security, we run

simulations of potential accidents in hospitals, in which

all hospitals cooperate. The doctors and nurses from the

“affected” hospital provide feedback on the reaction of

the other hospitals to the emergency. The cluster also has

marketing committees focused on attracting health tourism

to Monterrey. Monterrey Ciudad de la Salud is an open

organization so we are looking for new members. The main

criteria for admission is quality.

Q: How are you working with universities to ensure that

graduates have the skills required of them?

A: First, universities are part of the tourism cluster and include

relevant themes in their programs. Second, we are seeing a

phenomenon of small details in the health sector such as

making English a requirement for graduation. Practice is vital,

as a bilingual person can easily lose words that are not used.

Much of the student population gains experience in dealing

with the conditions most relevant to Mexico, such as NCDs.

Epidemiology classes also take into account that people

can now die of infections that previously did not exist in a

particular region. Zika is one of the clearest examples of how

movement patterns have shifted and impact a community.

Q: What have been the cluster’s three most important

achievements over the past 10 years?

A: The most important achievement is that we have formed

an integrated offer of health services on several levels:

WORKING TOGETHER TO OVERCOME DIFFICULTIESEDUARDO GARCÍAPresident of Monterrey Ciudad de la Salud

VIEW FROM THE TOP

Monterrey Ciudad de la Salud, created in 2011, is the first health

cluster of its kind in Mexico. Based in Monterrey, it brings together

public and private hospitals with government officials and aims to

promote health and medical tourism

351

products that can be new molecules or new combinations

for which there is not yet ample evidence to demonstrate

their safety in Mexico. With no exceptions, Class 3 products

should undergo a pharmacovigilance study even though

they represent only between 10 and 20 percent of drugs.

Q: What main issues do your customers face? How do you

help to solve them?

A: Most companies face problems in drafting protocols

and risk-management plans or adapting them to local

regulations for pharmacovigilance studies, so they need help

in drafting and adapting them through their global offices.

We also run the outsourcing of pharmacovigilance units for

those companies that prefer to have a lean organizational

structure in Mexico and focus on their core activities. The

execution of post-authorization safety studies is one area in

which companies need help from an established player like

us. We are creating a document-management system for

COFEPRIS and the industry so they have a digital system

to facilitate renewals of all the sanitary authorizations that

contain references to pharmacovigilance requirements.

Q: What will be your main priorities for the rest of 2017?

A: We hope to bring all pharmaceutical industry players

into the PPROVigi network. We have already brought

IMSS on board and we are working with the Coordinating

Commission of the National Institutes of Health. The

School of Medicine at UNAM already has working

arrangements with us. Later, we will turn to the remaining

institutes such as ISSSTE, PEMEX and a couple of big

hospitals from each state to have uniform representation

of side-effects across Mexico. It usually takes two to eight

months to bring any institute on board after complying

with their processes. We want to reach a 50/50 business

split between Mexico and Latin America because we want

to be in touch with other national regulators.

Q: What is the PPROVigi platform, its target market and

the benefits for users?

A: G8 countries have integrated healthcare systems in

which even paramedics can send pharmacovigilance

reports. This is not the case in Mexico, so we wanted

to develop a system that the regulator, constituents of

the healthcare system and research institutes could all

use. Patients and healthcare professionals can access it

using cellphones and pharmaceutical companies and big

hospitals can use the web version to capture information,

verify quality control, check the MedDRA code, an

international medical terminology dictionary, and submit

reports to COFEPRIS online. The platform is available to

all hospitals and research institutes free of charge or at

subsidized cost. Pharmaceutical companies and other

marketing authorization holders should subscribe to this

platform to perform their pharmacovigilance operations.

Principally, pharmaceutical laboratories are attracted to this

platform because it adds many functional efficiencies to

their pharmacovigilance operations, due to the network of

hospitals also using the platform.

Q: The 2012 NOM-220-SSA1 is on your website. When will

you start helping clients to comply with the 2015 version?

A: Once the new version of NOM-220-SSA1-2012 is

published in the Federal Official Journal, we will update

the website. We have a ready reckoner waiting to go to

print that contains a synopsis of the law and all applicable

instances to Latin American countries. As soon as it is

made official, we will print the book and distribute it to

all our clients. Many companies in Mexico have their Latin

America head offices here and we want to give them a

single snapshot of the region. Some of the biggest changes

are in the frequency of reporting, the content of each report

and the requirement of risk-management plans. Previously,

the risk management plans had no categories. The changes

to the NOM will introduce three classes. Class 1 is for

generics or time-tested drugs with a low or well-established

risk profile that makes for an easy renewal process. Class

2 is a little more complex, containing medicinal products

with uncertain risk or with evidence of safety concerns

while Class 3 is composed of newly approved medicinal

DIGITALIZING PHARMACOVIGILANCE

MIREYA LÓPEZOperational Director of Pro Pharma Research

VIEW FROM THE TOP

Pro Pharma Research is a Mexican company created in 2012. It

has evolved into a one-stop shop for pharmacovigilance over

the past six years and it is looking to facilitate the process

industrywide with its digital platform in Mexico and LATAM

352

Elsevier is a global information analytics company that

helps institutions and professionals develop scientific health

projects. It is traditionally known as the leading editorial of

scientific literature

Q: What solutions has Elsevier introduced to the Mexican

scientific community? What are its main products?

A: We apply 140-plus years’ experience in simplifying and

organizing life sciences information to ensure discoverability

and accessibility of vital information. Elsevier’s solutions

include Embase, which provides high-quality biomedical

information with a level of comprehensiveness not seen

anywhere else. It is recommended and trusted by the

Cochrane Collaboration, international regulatory agencies

and thousands of users across the pharmaceutical and

medical devices industry. Even with the technological

advances in genomics, only about 5 percent of drug

candidates make it to market. Up to 30 percent of those that

fail are due to inadequate or inaccurate target validation

resulting in a lack of efficacy or unanticipated off-target

effects, often leading to unforeseen serious adverse events.

We offer a solution to mitigate this problem through our

tool Pathway Studio. Providing global content from patents

and 16,000 scientific journals, Elsevier’s Reaxys solution is

designed to support the full range of chemistry research,

including safety and toxicity analysis and method of

analysis as well.

Q: What are the main research trends you have recognized

in the pharmaceutical industry?

A: Big Pharma companies have demonstrated their interest

in the available patient pool, which offers a substantial

opportunity to accelerate their research. This has been

considered a key factor for bringing clinical research to the

country, although there is a concern from regulatory agencies

and policymakers regarding the safety of patients. While both

Big Pharma corporations and policymakers here in Mexico are

still figuring out the most adequate formula of success, we see

many clinical trial opportunities lost to other countries in the

region. The challenge is not just the bureaucracy of policy but

it is even at the infrastructure, personnel and information level.

There are so many generic molecules approved globally,

but only handfuls make it into Mexican markets. Although

already established as generic molecules globally, these

advanced molecules are often considered “New Molecules”

for registration purposes in Mexico. Also, we have seen bigger

national companies take the lead in other areas of research,

especially in identifying key generics for local manufacturing.

The growing cost of APIs has always been a concern for local

national pharmaceutical companies and on the other side the

limited research output in terms of publications and patents

is a concern for academic universities.

From an intellectual property standpoint of research,

there are not many patents emerging, especially from the

pharmaceutical sector. According to IMPI, local Mexican

companies, government and academic institutes own an

estimated 600 patents. This is approximately 2.5 times

fewer than Brazil and approximately 100 times fewer than

South Korea.

Q: How can Elsevier’s tools help boost productivity within

Mexico’s healthcare services?

A: For any country in the current macroeconomic context

there are three fundamental performance indicators for

innovation and productivity: quality research output,

intellectual property and application and socio-economic

output. Elsevier has designed services and tools to improve

and impact all three areas.

We have the privilege of working closely with almost 100

percent of international big corporations in the industry that

clearly have adapted to the shift in the industry with respect to

qualified information and analytics for their decision-making

process from research to the commercial end. We also have

witnessed how access to information has enabled global

generics companies to evaluate and rationalize their portfolio

and to strategically move away from their overdependence

on top cash-cow molecules over of period of time. This

shift is happening slowly but surely at top local Mexican

pharmaceuticals. We are working closely with them to

introduce and educate them on the current reliable resources

through different programs and customized workshops.

PROVIDING RESOURCES TO IMPROVE MEXICO’S SCIENTIFIC PRODUCTIONFRANCISCO CORPILatin North Regional Director of Elsevier

VIEW FROM THE TOP

353

INSIGHT

works here. If someone has the flu, it is easier to go to

a pharmacy and get something prescribed than to go

to IMSS or ISSSTE and waste a whole day waiting for an

appointment.”

Gutiérrez explains that this same backlog causes regulatory

problems. The certification processes for medical devices

challenges international companies. According to Gutierrez,

in 2015 the system suffered severe setbacks in the wake

of changes to COFEPRIS’ direction. “It is too soon to tell

if the new people in charge are delivering results but I

believe the people in power have a strong impact on the

process. Once they change, we once again will have to

go through new criteria with different requirements for

evaluations.” Gutiérrez contends that “it is good to be more

demanding but not when demanding standards based on

new manufacturing criteria that have higher requirements

than those in Europe and the US.”

Despite the challenges, many companies see the market

opportunities that Mexico offers. “I always tell my clients

there is no bad business here because even if their market

share drops, it will still be a stronger market share than in

most of the other countries they sell in.”

Foreign companies can also benefit from the manufacturing

possibilities in Mexico. According to INEGI, there are 2,000

units of production equipment and 400 exporters, most of

which are focused on manufacturing. The country’s sound

reputation has helped attract medical devices companies

and about 60 manufacturing sites to Baja California,

according to ProMéxico, which has created one of the most

important clusters for US companies.

“American companies know Mexico. It is close and

manageable for them, so they see it as something

tangible, while Europe still looks at Mexico as something

yet to be understood.” For European companies, she adds,

manufacturing in Mexico is not a priority. Medisi is working

on attracting Europe based SMEs whose development

possibilities and trend-setting capacity are appealing for

the Mexican market.

Access is a two-way street and consultants such as Medisi

see a multitude of opportunities for international companies

interested in expanding their markets and for Mexico to

further open its doors to fresh innovations.

“The country is hungry for new possibilities,” says Luisa

Gutiérrez, Director General of Medisi, a consultancy

specialized in the medical devices segment. “Medisi

is focused on opening access channels to and from

Mexico.” She says Mexico is an excellent logistics point

and its stability provides confidence to the international

companies doing business here.

According to a Clear Water International Report on the

medical devices industry, Europe recorded the highest M&A

in medical devices in 2015 after the US. Chinese companies

are also interested in reaching out to Mexico but they have

quality issues to overcome, says Gutiérrez. “Mexico is a

logistics hub. We have great human capital, a strategic

location and many medical devices companies prefer to

print ‘Made in Mexico’ on their products instead of other

Asian countries,” she says.

Medisi’s goal is to attract companies that provide the best

quality at an affordable price. These are often from Israel

and Germany, countries where the industry is dominated

by SMEs offering innovation for good value. Companies

are watching currency exchange rates, she explains, so

purchasing decisions are mostly made on price. Gutiérrez

adds that Mexico’s purchasing trends are mostly driven by

commodity products instead of innovative ones. “Private

hospitals could benefit from high technology but they need

to consider prices,” she says.

Despite the opportunities, international companies

encounter many challenges when trying to access Mexico.

According to Gutiérrez, local factors like the lack of English

speakers are barriers to doing business here. She says that

incoming companies expect a reimbursement system,

which does not exist in Mexico because only 7 percent

of the population has private insurance. “Out of pocket

expenditure is about 50 percent and that is how healthcare

OPENING THE DOOR TO FOREIGN DEVICES

LUISA GUTIÉRREZDirector General of Medisi

353

354

Q: How is Grupo Saned innovating the channels of

communication in the pharmaceutical industry?

A: We are approaching the industry with different

marketing opportunities. One of the tools we are proposing

is storytelling. We have done more than 35 movies for

pharma companies in Spain and Mexico is interested in

adopting this tool. We also create motivational teasers for

patients to raise awareness about certain diseases and we

produce scientific dialogues wherein we put the spotlight

on an expert to create documentary material. Another of

our business lines is virtual reality, through which we can

create more empathy in the receptor.

Q: What should be the role of the pharmaceutical sales

representative in a technology-based marketing scheme?

A: More than 129 laboratories have been using sales

representatives for more than 70 years. We are innovative

in doing marketing focused on doing things differently but

that is inclusive of the resources that the company already

has. Grupo Saned is convinced there is no successful on-line

without a successful off-line. We have a partnership with

Grupo Nichos, which is specialized in human resources for

pharmaceutical sales forces.

Q: What is Grupo Saned’s main differentiator?

A: An advertising or marketing agency works for many

industries and when pharmaceutical clients request a

campaign, they cannot guarantee full compliance with

the pharmaceutical advertising regulations. We are the

only provider who belongs to CETIFARMA. We are also

CANIFARMA-authorized suppliers and we are certified

as an ethical and reliable company that provides services

according to industry criteria. Finally, we provide our clients

ROI information and we host satisfaction surveys.

Q: What are Grupo Saned’s plans for the future?

A: We have a research line currently only available in Spain.

This business demands focus so we are hoping to bring

it to Mexico. We want to extend our business model to

Colombia. Coming to Latin America and starting in Mexico

was a big step and we know that this will bring us new

opportunities in the rest of the region.

Q: What attracted Grupo Saned to Mexico for its first

subsidiary?

A: We arrived almost two years ago. We were attracted

by the size of the market and we wanted to diversify our

experience. I believe we probably came late but, despite the

delay, we know that no one else offers our value proposition.

We develop customized strategies for each client to reach

their objectives. We are bringing solutions that have

succeeded in Europe and that have been approved by the

strict compliance departments of companies such as GSK,

Pfizer, Bristol Myers Squibb and Eli Lilly.

Q: What educational opportunities is Grupo Saned

providing to the pharmaceutical industry?

A: Our educational offer is one of our most requested

solutions by the Mexican pharmaceutical market.

Traditional education is unilateral and there is no debate

between the receptor and the educator. The education

model is changing. We introduced 3.0: simple and

innovative educating actions in which the teacher gives

the students the main role in their education and learning.

This model is what we call Teach to Learn. We designed

our programs according to Dale’s Learning Cone, which

says that 90 percent of what we learn can be retained

when we teach it. We also looked at Maslow’s Pyramid,

which shows that recognition is a main human need. We

realize that people are looking for a cooperative learning

environment that can be delivered virtually and for

recognition of the content they produce. We also have

a program for educating patients because we believe

they will be more engaged with their treatment if they

understand the information provided by laboratories. We

also train doctors in affective and effective doctor-patient

communication and have a health sciences agreement

with Anáhuac University in which we develop content for

programs, which the university subsequently certifies.

INNOVATIVE MARKETING FOR THE PHARMA INDUSTRYNEIVI ORTIZDirector General of Grupo Saned Latin America

VIEW FROM THE TOP

Grupo Saned is a Spanish company with 37 years of

experience in pharmaceutical marketing through medical and

pharmaceutical publications, research, e-business, human

capital training, market access, advertising and information

355

HOW OPEN ARE MEXICO’S PUBLIC AND PRIVATE HEALTH SECTORS TO INNOVATION?

GUILLERMO FERRARI General Manager of Eseotres

ROGELIO DE LOS SANTOS Director General of Dalus Capital

IRMA EGOAVIL Director General of Ferring Pharmaceuticals Mexico

ROUNDTABLE

The first challenge is to achieve a cultural acceptance of change and to break the

barrier of resistance to install solutions whose end product is digital and not tangible.

Our clients have been working 15 to 20 years in the same way, so it is not easy to make

them embrace change. Working with public institutions presents other challenges.

Budgets need to be reassigned to adjust to service contracts. Tenders often do not

have a proper budget to contract the needed digitalization services. This is why we

received with great expectation the IMSS Innovation Olympics, an event that IMSS

launched in March 2017 for the first time. We see this competition as a key aspect

that was missing in order for IMSS to properly adopt innovation; a space where public

and private sector can transparently team up to develop innovative solutions that

are tailor made to fit the reality and needs of the institution.

The Global Entrepreneurship Monitor (GEM) study shows the leading drivers of

entrepreneurship in a country. The most important variable is education and a

mindset of scarcity and globalizing a project, as ideas must be relevant to other

countries. Often, people fall in love with their solution and not with the problem.

However, there are an increasing number of people with disruptive ideas finding

niches to capture value. Companies with experience and capital are increasingly

considering these types of opportunities. They are opening to the idea of innovation,

having venture capital areas or accelerators, inviting companies to solve problems

relevant to them. They are interested in opening up to working with others, including

competitors, because if companies do not find solutions, others will. Mexican groups

need to wake up and recognize innovation to be relevant in their markets and outside.

The way technological innovations can help patients varies according to therapeutic

areas. For example, we have an app for patients with inflammatory bowel disease that

provides information on the different stages of the disease and the reasons behind

its progression. The main issue for these patients is that even though the disease

may be controlled, there could be a specific event that pushes it to another stage.

We provide support and teach them to identify symptoms. Another program helps

patients with prostatic cancer track the disease properly, providing them with access

to prostatic antigen testing. Ferring also runs a program called BB en casa (Baby

at home) that helps patients with a fertility need who do not have the purchasing

power to access treatment.

In March 2017, during the third edition of the Innovation

Week organized by AMIIF, the assembled leaders discussed

the impact of innovation on the health sector and how

education could detonate economic development and

productivity in the country. Innovation has set trends in

health management, changing the way healthcare providers

make decisions, distribute budgets, collect and analyze

data, publish results and perform procedures. Mexico Health

Review asked industry players how innovations are received

in the Mexican health sector .

ACRONYMS

Acronym Full Name Translation (if applicable)

AIDS Acquired Immune Deficiency Syndrome

AMIIFAsociación Mexicana de Industrias de Investigación Farmacéutica

Mexican Association of Pharmaceutical Research Industries

AMIS Asociación Mexicana de Institutos de Seguros Mexican Association of Insurance Institutes

ANAISAAsociación Nacional de la Industria de Suplementos Alimenticos

National Association of the Nutritional Supplements Industry

API Active Pharmaceutical Ingredient

ART Anti-Retroviral Therapy

ARV Anti-Retro Virals

B2B Business to Business

B2C Business to Customer

CANIFARMA Cámara Nacional de la Industria FarmacéuticaNational Chamber of the Pharmaceutical Industry

CDMX Ciudad de México Mexico City

CENSIDACentro Nacional para la Prevención y el Control del VIH/SIDA

National Center for the Prevention and Control of HIV/AIDS

CEO Chief Executive Officer

CNS Central Nervous System

COFECE Comisión Federal de Competencia Económica Federal Commission for Economic Competition

COFEPRISComisión Federal para la Protección Contra Riesgos Sanitarios

Federal Commission for the Protection against Sanitary Risks

CONACYT Consejo Nacional de Ciencia y Tecnología National Council of Science and Technology

CRO Contract Research Organization

CSG Consejo de Salubridad General General Health Council

EMA European Medicines Agency

ENARMExamen Nacional de Aspirantes a Residencias Médicas

National Exam for Medical Residency Candidates

ENSANUT Encuesta Nacional de Salud y Nutrición National Survey of Health and Nutrition

FDA Food & Drug Administration

FPGCFondo de Protección contra Gastos Catastróficos

Fund for Prevention of Catastrophic Expenses

FTA Free-Trade Agreement

GD Gestational Diabetes

GMP Good Manufacturing Practices

GPS Global Positioning System

HIV Human Immunodeficiency Virus

IMSS Instituto Mexicano del Seguro Social Mexican Institute of Social Security

INEGI Instituto Nacional de Estadística y Geografía National Institute for Statistics and Geography

Acronym Full Name Translation (if applicable)

IoT Internet of Things

ISSSTEInstituto de Seguridad y Servicios Sociales de los Trabajadores del Estado

Institute of Safety and Social Services for Federal Workers

JCI Joint Commission International

LATAM Latin America

M2M Machine to Machine

M&A Merger & Acquisition

MTCT Mother to Child Transmission

NAFTA North American Free Trade Agreement

NCD Non-Communicable Disease

NOM Normas Oficiales Mexicanas Mexican Official Norms

NSF National Safety in Food

OECDOrganization for Economic Co-operation and Development

OTC Over the Counter

PAHO Pan-American Health Organization

PEMEX Petróleos Mexicanos

PPP Public-Private Partnership

R&D Research and Development

Rx Prescription Drugs

SAGARPA Secretaría de Agricultura, Ganadería, Desarrollo Rural, Pesca y Alimentación

Ministry of Agriculture, Livestock, Rural Development, Fishing and Alimentation

SALUD Secretaría de Salud Ministry of Health

SEDENA Secretaría de la Defensa Nacional Ministry of National Defense

SEMAR Secretaría de Marina-Armada de México Ministry of the Navy

SINGREMSistema Nacional de Gestión de Residuos de Envases y Medicamentos

National System of Medicines and Bottle Residue Management

T1D Type 1 Diabetes

T2D Type 2 Diabetes

TPP Trans-Pacific Partnership

UNAIDS Joint United Nations Programme on HIV/AIDS

UNAM Universidad Nacional Autónoma de México National Autonomous University of Mexico

UNICEF United Nations Children’s Fund

VAT Value Added Tax

WHO World Health Organization

INDEX

1DOC3 152

3M Healthcare 111, 119, 306, 328

A3R 333, 340

ABC Medical Center 46, 47, 181, 192, 253, 276, 330

Accelerium 159, 161, 165, 177

Accord Farma 85, 102

ACROM 162, 163

Aeroméxico Cargo 225, 226, 229, 249

Agave Spa 205, 207, 214, 221

Alcon Labs 253, 279

Alfa Wassermann 80

Alliancesfa 344

Amerimed 35, 50

AMID 7, 20, 21, 112, 113, 127

AMIIF 7, 18, 19, 64, 65, 66, 70, 75, 160, 161, 177, 346, 355,

356

AMIS 285, 288, 289, 295, 300, 301, 356

AMSA 85, 97

ANADIM 225, 239

ANAFARMEX 225, 227, 247

Analitek 159, 175

ANCE 159, 172

Apotex 85, 94, 95

Arthrex 111, 122, 329

AsMed 55

Aspen Labs 9, 63, 64, 69, 105, 205, 210

Astrum Salud 135, 144, 145, 329

Bacher Zoppi 309, 318

Baker McKenzie 345

B.Braun 120, 128, 129, 326

Beckman Coulter 253, 265

Becton Dickinson 117

BioEden 200

Biofarma 205, 220

BioMarin 63, 67, 81

Biostem Technologies 181, 189, 199

Borgatta 253, 268

Bupa Global 36, 285, 287, 295

CANIFARMA 7, 16, 17, 90, 112, 121, 160, 161, 177, 354, 356

Cecyc Pharma 159, 170, 171, 176

CENSIDA 7, 24, 25, 92, 98, 152, 356

Centro de Oftalmología Monterrey 269

Check-Up Center 253, 264

Christus Muguerza 49

CINVESTAV 312, 313

COFEPRIS 7, 11, 14, 15, 16, 17, 18, 19, 20, 21, 22, 25, 26, 36,

51, 64, 65, 66, 67, 76, 79, 80, 81, 86, 87, 90, 91, 93, 94, 97,

99, 101, 104, 106, 113, 121, 129, 138, 139, 147, 154, 157, 160,

161, 162, 163, 166, 167, 168, 169, 170, 171, 172, 173, 174, 175,

176, 177, 182, 184, 186, 187, 194, 195, 196, 198, 199, 200, 201,

203, 206, 213, 215, 216, 220, 234, 235, 238, 239, 241, 247,

256, 261, 278, 280, 292, 331, 335, 336, 339, 341, 343, 345,

346, 347, 348, 351, 353, 356

COMOP 253, 275

CONACYT 310, 311

Consorcio Mexicano de Hospitales 285, 289, 302

Continuous Medical Education Institute 317, 324, 325

Dalus Capital 262, 333, 349, 355

Deloitte 87, 103, 131, 135, 136, 137, 155, 254, 255, 333, 337

Diphsa 120, 225, 242, 243

Distribuidora Alpilo 236

Dräger 10, 23, 32, 108, 111, 112, 120

DSM 181, 197

DVA 225, 241

Elsevier 160, 333, 352

Emcure 85, 103

Epic CRO 159, 161, 167

Eseotres 140, 141

Expanscience 205, 216

Farmapiel 205, 215, 221

Ferring 72, 216, 253, 258, 259, 355

Fitbit 135, 151

Fligoo 35, 58, 59

Fujifilm 111, 116

FUNSALUD 7, 12, 22, 23, 183

Grupo Diagnóstico Aries 263

GE Healthcare 127, 135, 136, 148

Global Health Intelligence 109, 113, 142

GNK Logística 234, 235

Grupo Accses 309, 320

Grupo Bruluart 91

Grupo Franklin 181, 189, 198, 225, 243

Grupo Marzam 11, 225, 226, 230, 231, 248

Grupo Neolpharma 85, 88, 89, 328

Grupo PLM 10, 135, 139

Grupo PTM 111, 130

Grupo RFP 225, 227, 246

Grupo Saned 328, 333, 354

Grupo Unipharm 85, 87, 107

Grupo Vitalmex 35, 56

Hays 309, 319

Healthlinks 11, 176, 333, 334, 335, 341

Heidrick & Struggles 309, 321

Hetero 98

Higia Technologies 9, 135, 137, 154

Hogan Lovells 196, 201, 333, 347

Hospitales San Ángel Inn 45

Hospital Sedna 35, 46, 51

ICON 159, 169, 177

IIIFAC 143

IM Natural 213

Industrias Sintoquim 205, 218, 221

Inframedica 225, 245

Infinite Clinical Research 162, 163

INMEGEN 43, 181, 182, 188, 194

Instituto Ingenes 181, 190, 193, 245

ISSSTE 9, 11, 14, 17, 18, 35, 44, 45, 50, 53, 66, 70, 80, 81,

96, 116, 122, 130, 143, 146, 160, 163, 164, 177, 213, 247, 265,

312, 315, 317, 319, 342, 351, 353, 357

Janssen 9, 63, 65, 71, 73, 334

Jones Day 329, 333, 334, 348

KPMG 10, 52, 53, 64, 65, 77, 160, 333, 336

Kronos 309, 327

La Latino Seguros 292

Laboratorios Collins 10, 85, 86, 93, 201, 253, 278

Landsteiner Scientific 181, 183, 194

Laureate International Universities 323

Levic 225, 227, 228, 249

Linet Group SE 114, 115

Liomont 85, 90

Lundbeck 30, 63, 65, 78, 79, 254

Majicarga 225, 238, 249

McKinsey & Company 57, 285, 287, 294

Médica Sur 48

Medisi 353

Mediprint 131

Medistik 225, 231, 232

Medix 255, 267

Medtronic 111, 125, 127, 255

Merck 63, 66, 67, 75, 334

Merz 205, 211

Mexican Cardiology Society 260

Federal Ministry of Health 12, 13, 22, 24, 28, 30, 40, 42, 43,

44, 50, 53, 64, 68, 76, 139, 154, 160, 161, 198, 238, 239, 243,

247, 263, 265, 276, 286, 311, 312, 315, 335, 339, 347, 350

Ministry of Health of Mexico City 38, 39

Monterrey Ciudad de la Salud 350

Murguía Consultores 304

Nestlé 205, 209

Northcube 135, 149

Novartis 63, 64, 65, 76, 255, 279, 318, 329, 334

Novo Nordisk 9, 19, 156, 250, 253, 256, 257

NYCE 159, 160, 173, 176, 186, 335

Olivares 333, 346

Oriundo 87, 206, 333, 342, 343

Ottobock 178, 181, 183, 184, 185

PartnerRe 285, 286, 290, 291

PEMEX 35, 42, 43, 45, 52, 81, 122, 146, 182, 185, 188, 286,

319, 329, 351, 357

Perrigo 10, 85, 87, 105, 343

Pfizer 63, 65, 67, 70, 173, 334, 338, 354

Pierre Fabre 63, 64, 72, 73, 75

PPD 159, 161, 166

PRA Health Sciences 159, 164

Probionics 181, 183, 186, 187

Pro Pharma Research 351

PwC 77, 130, 226, 227, 333, 338, 339, 346

QuintilesIMS 138

RM Pharma 159, 168

RMA Mexico 191

Salud Cercana 135, 137, 146, 147, 262

Sanofi 38, 63, 68, 161, 181, 182, 195, 280

SCOR Global Life SE 285, 287, 303

Seguro Popular 9, 18, 33, 35, 36, 37, 40, 41, 46, 47, 51, 53,

66, 67, 81, 101, 124, 245, 265, 283, 286, 337, 342

Seguros Atlas 285, 287, 289, 302

Seguros GNP 287, 298, 299

Sesderma 205, 212

Sicamsa 225, 236, 249

Siemens Healthineers 111, 112, 121, 265

Signufarma 225, 240

SINGREM 225, 233, 357

SiSNova 285, 293

Smith & Nephew 111, 113, 124

Sports World 202, 205, 207, 217, 219

Swiss Hospital 35, 54

Swiss Tropical and Public Health Institute 253, 272, 273

Synthon 253, 261

Tecnológico de Monterrey 314, 322

Teva 8, 77, 80, 85, 96, 97

T-Systems 135, 153

UDIBI 159, 161, 174

Uhma Salud 135, 150, 262

UNAM 314, 315

UNICEF 7, 28, 29, 277, 357

UN Women 7, 27, 316

UPS 225, 226, 237, 238, 248

Vanquish 85, 92

VECO 225, 244

Willis Towers Watson 305

Wockhardt 85, 86, 87, 100, 101

Zydus Pharmaceuticals 99

INDEX

Inner Front Cover Novo Nordisk

4 Mexico Tourism Board: Photo -

Ricardo Espinosa - reo

12 Ministry of Health

14 MBP

16 MBP

18 MBP

19 Novo Nordisk

20 AMID

22 FUNSALUD

23 Dräger

24 MBP, MBP

27 UN Women

28 UNICEF

32 Dräger

38 MBP

40 Seguro Popular

41 Dräger

42 MBP

44 MBP

45 MBP

47 ABC Medical Center

48 Médica Sur

49 Christus Muguerza

50 Amerimed

51 Hospital Sedna

54 Swiss Hospital

55 MBP

56 MBP

57 McKinsey & Company

58 MBP

60 Medix

66 MBP

68 Sanofi

69 MBP

70 Pfizer

71 MBP

72 MBP

75 MBP, Alfa Wassermann, MBP

76 Novartis

78 MBP

80 Alfa Wasserman

81 MBP

82 Hetero

88 Grupo Neolpharma

90 MBP

91 MBP

92 MBP

93 MBP

94 Apotex

95 Apotex

96 MBP

97 AMSA

98 MBP

99 Zydus Pharmaceuticals

100 MBP

102 MBP

103 Accord Pharma

104 Aspen Labs

105 Perrigo

107 MBP

108 Dräger

114 MBP

116 Fujifilm

117 MBP

119 3M

120 MBP

121 MBP

122 Arthrex

124 Smith & Nephew

125 MBP

128 B.Braun

PHOTO CREDITS

INFOGRAPHICS

26 COFEPRIS Breaks Down Barriers

37 Mexico's Healthcare System

52-53 National Health System Under the Spotlight

126-127 The Medical Devices Segment in Mexico

6 Grupo Bruluart

21 Pierre Fabre

29 NYCE

34 Arthrex

39 Linet Group SE

43 Amerimed

62 Aspen Labs

74 Anfitriones

79 Olivares

84 Apotex

88-89 Grupo Neolpharma

92 DVA

101 Hetero

110 Becton Dickinson

118 Convatec

129 Siemens Healthineers

134 APE Editorial

141 QuintilesIMS

157 Mexico Business Events

171 RM Pharma

180 Medistik

204 Sports World

208 Nestlé

212 IM Natural

224 Levic

252 Sanofi

259 Hospital Sedna

284 Mexico Business Publishing

291 SiSNova

308 Mexico Health Summit

313 CINVESTAV

332 UDIBI

ADVERTISING INDEX

266 Obesity: A Growing Problem

296-297 The Main Causes of Death in Mexico

300-301 Challenges Ahead for Health Insurance

130 MBP

131 MediPrint

132 Médica Sur

138 MBP

139 Grupo PLM

140 MBP

142 Global Health Intelligence

143 MBP, MBP

144 MBP

146 MBP

148 MBP

149 Northcube

150 MBP, MBP

151 Fitbit

152 1DOC3

153 T-Systems

154 Higia Technologies

155 Deloitte, Deloitte

156 Novo Nordisk

162 MBP

164 MBP

165 Accelerium

166 MBP, MBP

167 Epic CRO

168 RM Pharma

169 MBP

170 Cecyc Pharma, MBP, MBP

172 ANCE, ANCE

173 MBP

174 MBP

175 MBP

177 Accelerium, MBP, MBP

178 Ottobock

184 Ottobock

185 Ottobock

186 Probionics

188 INMEGEN

189 MBP, MBP, MBP

190 Instituto Ingenes

191 MBP

192 CINVESTAV,

ABC Medical Center

193 Instituto Ingenes

194 MBP

195 Sanofi

197 DSM

198 MBP

199 MBP

200 MBP

202 Sports World

209 Nestlé

210 MBP

211 MBP

212 Sesderma

213 MBP

214 MBP

215 MBP

216 MBP

217 MBP

218 MBP

219 Sports World

220 Biofarma

221 MBP, MBP, MBP

222 Grupo Neolpharma

228 MBP

229 MBP

230 MBP

231 Medistik

232 MBP

233 MBP

234 MBP

236 Sicamsa

237 UPS

238 MBP

239 MBP

240 MBP

241 MBP

242 Diphsa

243 MBP

244 MBP

245 MBP

245 Instituto Ingenes

246 MBP

247 MBP

248 MBP, UPS, MBP

249 MBP, MBP, Sicamsa, MBP

250 Novo Nordisk

256 MBP

257 Médica Sur

258 MBP

260 MBP

261 MBP

262 Grupo Diagnóstico Aries

264 MBP

265 MBP

267 Medix

268 MBP

269 Centro de Oftalmologia

de Monterrey

272 Myriam Lingg

275 MBP

276 ABC Medical Center,

ABC Medical Center

278 MBP

279 Alcon Labs

282 La Latino Seguros

288 AMIS

289 MBP

290 PartnerRe

292 MBP

293 SiSNova

294 McKinsey & Company

295 MBP

298 Seguros GNP

302 Consorcio Mexicano

de Hospitales

303 MBP

304 Murgía Consultores

305 Willis Towers Watson,

Willis Towers Watson

306 3M

310 CONACYT

312 MBP

314 Technológico de Monterrey

315 MBP

317 Continuous Medical Education

Institute

318 Bacher Zoppi

319 Hays

320 MBP

321 MBP

322 Technológico de Monterrey

323 Laureate International

Universities

324 Continuous Medical Education

Institute

326 B. Braun

327 Kronos

328 Grupo Neolpharma, 3M,

Grupo Saned

329 Arthrex, Jones Day, Novartis,

MBP

330 ABC Medical Center

336 KPMG

337 Deloitte, Deloitte

338 PwC

340 MBP

341 Healthlinks

342 MBP

344 MBP

345 Baker & McKenzie

346 MBP

347 MBP, MBP

348 Jones Day

349 Dalus Capital

350 MBP

351 Pro Pharma Research

352 MBP

353 Medistik

354 Grupo Saned

355 MBP, Dalus Capital, MBP

Inner Back Cover Ottobock

CREDITS

JOURNALIST & INDUSTRY ANALYST: Sophie Murten

JUNIOR JOURNALIST & INDUSTRY ANALYST: Camila Del Villar

EDITORIAL MANAGER: Daniel González

EDITORIAL MANAGER: Tomás Sarmiento

EDITOR: Ricardo Guzmán

MANAGING EDITOR: Mario Di Simine

PUBLICATION COORDINATOR: Marta Aguilar

JUNIOR PUBLICATION COORDINATOR: Blanca San Martín

COMMERCIAL DIRECTOR: Jack Miller

GRAPHIC DESIGNER: Ailette Córdova

JUNIOR DESIGNER: Mónica López

DESIGN DIRECTOR: Marcos González

WEB DEVELOPMENT: Omar Sánchez

COLLABORATOR: Sara Warden

COLLABORATOR: Nadine Heir

COLLABORATOR: Gaby Mastache

COLLABORATOR: Alicia Arizpe

COLLABORATOR: Luis Pesce

CIRCULATION MANAGER: Elizabeth Solís

DIRECTOR GENERAL: Jeroen Posma

Foli, Negra Modelo # 4 Bodega A Fracc. Cervecería Modelo, Naucalpan Estado de México T:. 9159 2100

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