BMI's Executive Summary

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Mexico's market continues to grow robustly in value terms, but volume growth appears to be lagging. BMI estimates 2007 market growth at 8.7% year-on-year (y-o-y), reaching a value of US$13.3bn. The new five-year forecast for the period 2007 to 2012 sees average annual growth in dollar terms of 5.4% and in local currency terms of 7.4%. According to IMS Health, the market grew 7.5% in value terms y-oy over the first seven months of 2007, whilst the number of units sold edged up only 0.7%. Local market sources indicate that volumes remain nearly static, despite record spending by the state sector.

One interpretation of this data is that Mexicans continue to pay too much for medicines, a perennial source of controversy. This is attributed, to over-concentration in distribution, corruption and inefficiency in the state sector and generally weak market oversight. Still, with the legitimate generics market thriving – to the long-term detriment of copy drugs or similares – and multinationals carrying out new launches, there is also some evidence that more effective medicines are being used in smaller volumes than older drugs. The one certainty is that with a growing population, more pensioners and a surge in the number of obese and those diagnosed with diabetes, Mexico's drugs bill will continue to rise.

With just over 50% of the population having some form of healthcare insurance – mainly through state schemes and private-sector policies – President Felipe Calderón warned in October 2007 that comprehensive universal coverage would not be achieved until 2030. At the same time, more money is going into the system – the government claims total health spending will jump 38% if it remains the same as in draft 2008 budget. One crucial pillar in coverage is the long indebted ISSSTE social security provider. In a step forward, state-run pension fund provider Afore Pensionissste. will manage wage contributions from federal workers from 2008 under legislation aimed at keeping the system solvent.

How much state funding goes to medicines will depend on the ability of the authorities to efficiently manage purchasing. The development of the market will also depend on continued improvements of the intellectual property (IP) environment. In BMI's new Business Environment Rankings for the Americas, Mexico scores third after the US and Canada, reflecting its relatively strong IP protections and continued growth potential. The opening of a new oncology medicines plant by Swiss drugmaker Roche in Toluca, representing a US$60mn investment underlines the attractiveness of the market.

But there is still room for improvement. In October, trade body La Asociación Mexicana de Industrias de Investigación Farmacéutica (AMIFA) called for stronger data protection under Mexico's North American Free-Trade Agreement (NAFTA) commitments. One reason for deficiencies is the lack of research and development (R&D) work by both the local private sector and state institutions, driving dependence on copy drugs and generics. Some 98% of patents are of foreign origin, a dismal rate by even emerging market standards. Arguably, the lack of an industrial policy for the sector – such as the twin generics and R&D strategies pursued in Brazil – will leave local players fighting a constant rearguard action against tighter rules and, crucially, better enforcement.

Contents

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Chapter 1 - Executive Summary

Mexico Pharmaceuticals & Healthcare Industry SWOT

Mexico Political SWOT

Mexico Economic SWOT

Mexico Business Environment SWOT

Chapter 2 - Mexico: Business Environment Ranking

Table: Latin America: Business Environment Ranking

Business Environment Ranking

Economics - Long-Term Risk

Politics - Long-Term Risk

Regulatory Barriers

Domestic Sector Threat

Market Growth Potential

Market Size Ranking

Chapter 3 - Mexico: Market Summary

Chapter 4 - Regulatory Regime

Intellectual Property Environment

Table: Mexican marketing applications in alleged violation of patent rights

Pricing & Reimbursement Issues

Other Regulatory Developments

Chapter 5 - Industry Developments

Pharmaceutical Market Trends

Healthcare Sector

Table: Private Health Insurance In Mexico

Pharmaceutical Sector

Generics Sector

Multinational Sector Activity

R&D Sector

Table: Clinical Research In Mexico, 2003-2004

Table: Clinical Studies In Mexico By Therapeutic Area, 2004

Chapter 6 - Industry Forecast Scenario

Overall Market Forecast

Table: Drug market trends

Key Growth Factors - Industry

Table: Health expenditure indicators

Key Growth Factors - Macroeconomic

Table: Economic Activity Indicators

Prescription Market Forecast

Table: Prescription market forecasts

OTC Market Forecast

Table: Mexico: OTC Categories

Table : OTC market forecast

Generics Market Forecast

Table: Generic Market Forecast

Table: Branded Market Forecast

Export/Import Forecasts

Table: Sectoral trade indicators

Table: Healthcare Sector Data & Forecasts

Key Risks To BMI's Forecast Scenario

Chapter 7 - Company Monitor

Profiles: Leading Foreign Companies

Pfizer

GlaxoSmithKline

Sanofi-Aventis

Eli Lilly

Bristol-Myers Squibb

Novartis Farmaceutica

Bayer

Boehringer-Ingelheim Promeco

Merck KGaA

Roche

Indigenous Manufacturer Profile

Liomont

Chapter 8 - Latin America: Regional Market Overview

BMI Forecast Modelling

How We Generate Our Industry Forecasts

Technical Process

Pharmaceutical Industry

Sources

Chapter 9 - Appendix: Regional Demographic Data

Wages (ave per annum), US$

Population

Household Spending Per Capita, US$

Private Consumption Per Capita, US$ PPP

Market Size, GDP, US$bn

Chapter 10 - Country Snapshot: Mexico Demographic Data

Section 1: Population

Table: Demographic Indicators (2005)

Table: Rural/Urban Breakdown

Section 2: Education & Healthcare

Table: Education

Table: Healthcare: Vital Statistics

Table: Healthcare: Expenditure

Section 3: Labour Market And Spending Power

Table: Employment Indicators

Table: Consumption and Stratification

Table: Wages per year

Competitive Landscape for Latin America Pharmaceuticals and Healthcare: Sample of Companies Ranked

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Cross-border analysis of regulatory systems comparing the patenting environment, summarising regional pricing and reimbursement factors and monitoring the growth of the Pharmaceuticals sector across the region. Company SWOTs cover leading multinational and national drug companies operating in each market.

Network of Latin American Pharmaceuticals & Healthcare Sources

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BMI's Latin American Pharmaceuticals & Healthcare Reports are based on an extensive network of multilateral organisations, government departments, pharmaceuticals industry associations, chambers of commerce and company reports. Information sources include: