Valued at USD 7.28 billion, the Mexican pharma market stands out within Latin America, ranking second only to Brazil, and registering a solid compound annual growth rate of six percent according to a 2023 CANIFARMA and INEGI study. That makes it, on paper, appear a highly attractive sector for investment, especially when considering the country’s more than 130-million strong population, burgeoning middle class, and escalating public health needs.
Despite this, originator drug developers sometimes experience it less easy to bring their innovations to market than they might have expected. “Over the past decade, Mexico’s market access landscape has undergone considerable reform and fragmentation, introducing a certain level of uncertainty and opacity into government decision-making processes,” observes Monica Palomanes, general manager at Roche Pharma.
“With multiple institutions involved, each possessing their own individual processes, the pathway to market has become increasingly complex and nowadays entails navigating numerous hurdles and engaging in extensive discussions across a wide range of stakeholders,” she reveals.
For a start, the country’s claim to universal healthcare coverage remains deeply contested thanks to a mishmash of overlapping and sometimes ineffectual public healthcare schemes. “In recent years, each incoming Mexican president has proclaimed universal healthcare, only to discover significant gaps in coverage upon closer examination,” recalls Hector Valle, CEO of FUNSALUD, a leading Mexican think tank focused on improving public health through research, advocacy, and promoting public-private partnerships.
“Our studies indicate that a substantial portion of the population remains underserved, and that confusion persists among citizens about their healthcare system affiliations and actual coverage status, reflecting six years of consecutive, often incomplete, reform initiatives,” he elaborates.
True to type, the freshly installed administration of President Claudia Sheinbaum is championing what she calls the República Sana (Healthy Republic), which aims to prioritize the most vulnerable individuals and ensure that, from cradle to grave, every citizen enjoys free-at-the-point-of-delivery access to vaccines, preventive care, surgeries, lab tests, and basic medications.
Building upon the existing IMSS-Bienestar (National Mexican Institute of Social Security and Wellbeing) program, she aims to consolidate it as the country’s lead healthcare system, incorporating all those who don’t qualify for enrolment in the Mexican Institute of Social Security (IMSS) or the State Workers’ Social Security Institute (ISSTE) or the other smaller patchwork of similar schemes dedicated to employees of state institutions like the military, and the national oil company, Pemex.
Questions marks remain, however, about how such ambitions can realistically be financed, given the country’s chronic underinvestment in public health. “Unfortunately, Mexico allocates only 2.5 percent of its GDP towards healthcare, one of the lowest figures globally and well below not only the average of OECD member states, but also Latin American nations such as Argentina, Brazil, or Chile which has an inhibiting effect on the ability to purchase innovative medicine,” notes Oswaldo Bernal, general manager at BMS.
“It’s a longstanding and systemic problem that goes back decades with the healthcare budget historically underfunded by about three percentage points for the past thirty years and which has had a manifest impact upon the overall availability of quality healthcare personnel, pharmaceuticals, and medical devices provided by the state sector,” explains Valle.
He attributes this partly to the Mexican state’s comparatively weak revenue raising capacity. “High-income earners in Mexico pay a maximum of 32-35 percent of their income in taxes, compared to over 50 percent in many European countries. This lower tax collection rate limits the funds available for essential public services, including healthcare,” he thinks.
Whatever the underlying drivers, innovative drug developers are adamant that the government needs to move quickly to address this undercapitalization of the public health sector. “The situation calls for a radical shift in mindset: viewing healthcare spending not as an expenditure, but as a necessary and critical investment,” declares Jorge Luis Caridad, managing director of Johnson & Johnson Innovative Medicine.
“A healthy society is a productive one and investing in health is essential for national progress. To fully leverage innovation, it is crucial to transition from a short-term focus on costs to a more strategic, sustainable investment approach,” he argues. “After all, investing in innovation today not only helps solve existing health challenges, but also mitigates future, potentially more costly issues so should generate savings to the public purse over the long run.”
Julio Conejero, president and managing director for the LAMEX cluster at women’s health specialist Organon concurs. “Mexico’s payers need to understand that they are not just purchasing a product. They are investing in better outcomes, which ultimately saves money. The argument is clear: if they don’t invest now, the financial and health-related costs will surely be much higher later,” he warns.
“Now is the time to shift the focus from solely looking at the cost of innovation to understanding its broader impact,” counsels Karla Alcazar, Senior Vice President and President for LatAm at Lilly. “The bottom line is that innovative treatments improve quality of life, reduce hospitalizations, prevent complications, and boost workplace efficiency. These factors drive economic growth and reduce long-term healthcare costs. Therefore, we must continue to agitate for policies and systems that prioritize health as a fundamental driver of economic and societal progress,” she believes.
“Ultimately it boils down to the value that policy makers and state actors place on breakthrough advancements in medical science,” affirms Caridad. “We often draw parallels with consumer behaviour towards innovation. Just as people recognize the value and would opt for a modern smartphone over an outdated one despite the former coming in at a higher price-point, the same logic should apply to healthcare innovations,” he insists.
Accelerated Approvals
What then, does Mexico’s market access process look like? Securing a speedy initial market authorization from the Federal Commission for Protection against Health Risks (COFEPRIS), has sometimes proved challenging for originator biopharma due to capacity limitations. “With an allocated annual budget of only around USD 39 million the agency faces significant resource constraints – such as insufficient numbers of staff and training – that can hinder its ability to make decisions swiftly,” explains Larry Rubin, Executive Director of the Mexican Association of Pharmaceutical Research Industries (AMIIF).
Indeed, many innovative drugmakers report encountering delays with their dossiers. “It’s fairly common to get held up in the regulatory backlog for obtaining registrations, and that’s not to mention additional lag times with respect to the other requirements necessary to keep our operation running, such as import permits and GMPs,” bemoans José Miguel Fonken Quiroga, general director at Adium Pharma, a Uruguayan-headquartered outfit with a high-quality portfolio of therapies straddling areas such as immunology, and gastroenterology and rare diseases.
Even when an evident unmet health need exists, the process can take time, as exemplified by the experience of navigating approvals for Takeda’s breakthrough dengue vaccine. “Mexico is currently experiencing an alarming a fivefold increase in case rate compared to the equivalent period the previous year, and though the vaccine has already been successfully approved in over 20 countries, including EU member states, Argentina, Brazil, Colombia, and several Central American nations through PAHO procurement, it is still under evaluation with COFEPRIS,” recounts Hernán Porcile, the Japanese company’s general manager.
That said, tangible steps are being taken to accelerate COFEPRIS’s reaction speeds, notably the launch of a new digital portal to streamline and partially automate the market authorization process. “This is an encouraging sign because the agency used to be heavily reliant on manual processes. Transitioning to digital systems should accelerate these workflows and make a meaningful difference,” reckons Lilly’s Karla Alcazar.
“Our members regard this development as a major improvement,” agrees Rubin. “Not only should this enhance the overall efficiency of the regulator, but we hope it will also have the effect of standardizing procedures and rendering the regulatory more transparent and systematic thus reducing the scope for inconsistency in interpretation of the dossiers,” he thinks.
Reimbursement Complications
Once market authorization is granted, the next challenge is often to secure reimbursement. Historically, once a drug has been approved by COFEPRIS and registered in the local market, companies would apply for inclusion on the ‘Cuadro Básico Interinstitucional,’ a formulary that enabled each institution to purchase the drug. However, as a consequence of recent reforms, IMSS-bienestar has gained influence over what is included on the Cuadro Básico and many local formularies are disappearing. The Secretaría de Hacienda has meanwhile taken over the tendering in an attempt to consolidate under a single tender the supply of all institutions.
“Frankly, in recent times, the reimbursement landscape has been evolving almost continuously, leaving little clarity in how innovation is to be adequately included within national formularies and government tenders. Uncertainty abounds and one is subject to annual changes so it’s important to keep up to date and one’s eye fimly on the ball,” recalls Conejero.
Owing to this rather cumbersome, non-transparent, and unpredictable reimbursement process, AMIIF estimates that it can regularly take more than 1,500 days for Mexican patients being treated by the public sector to actually access innovative medicines.
“For many patients, especially those reliant on schemes such as IMSS and IMSS-Bienestar, the affordability and inclusion of high-cost treatments on the reimbursement list is essential so any delays with this part of the process can have a detrimental impact on end health outcomes,” points out Arturo de la Rosa, general manager at Gilead Sciences.
Moreover, originator biopharma and innovative medtech often find that tender conditions can be aggressive and unfavourable to manufacturers, often allowing limited time to prepare the paperwork and deliver supply, with hefty penalties for manufacturers who fail to meet their stringent conditions.
“The secret to success in the negotiations is to demonstrate the value of therapies not only in terms of clinical outcomes but also in how they contribute to the overall sustainability of the healthcare system. This means providing a clear value proposition that justifies the cost while improving patient outcomes and system efficiency,” confides de la Rosa.
“Our strategy has been to always demonstrate that value goes beyond the price of our product, offering additional benefits or value-added solutions,” agrees Organon’s Conejero. “We’ve even been trying to shift the conversation by promoting the idea of managed entry agreements such as outcome-based models, that would connect the cost of an intervention to measurable health outcomes,” he reveals.
“Typically, what you’ll find is that companies introducing innovative therapies to Mexico will first launch on the private market, and then subsequently work towards getting their product included in government and health maintenance organization formularies,” he observes.
The same can be said for cutting-edge medtech. “Going down the private route first is a no-brainer, because, as soon as you receive authorization from COFEPRIS you can immediately start selling to private clinics and hospitals, whereas you might be waiting years from the public tenders to kick into effect and realize a return on your investment,” explains Ana Riquelme Francistain, executive director of the medtech trade group Asociación Mexicana de Industrias Innovadoras de Dispositivos Médicos (AMID).
Tailored Launch Strategies
When it comes to companies’ go-to-market strategies, several trends are becoming apparent. Many stakeholders mention that success hinges upon being able to formulate a bespoke approach to the Mexican marketplace and emphasize the need for agility and preparedness.
“I deeply believe in the concept of ‘one-size-doesn’t-fit-all’ and that trying to replicate a copy and paste launch strategy in this particular market would be counterproductive,” warns Rogerio Peso, Head of Mexico, the Caribbean, Central America and Spanish speaking South America at Viatris.
He gives the example of how his company continues to invest heavily in maintaining a large and robust on-the-ground sales force. “While we share best practices across regions, we have customized how we operate locally to take into account the idiosyncrasies and preferences of Mexican society and culture,” he divulges. “While some of our competitors might be scaling back on sales reps and substituting them with remote interactions, as is increasingly common in certain geographies, we understand the enduring desire of our Mexican customers and stakeholders for face-to-face engagement and its continued importance to being able secure and sustain market traction.”
Such sentiments are echoed by Vicenzo D’Elia, General Director at Italian specialty biomedical player, Alfasigma. “While digital promotion and virtual representatives are increasingly popular worldwide, we determined through extensive market research that Mexico was not yet ready for a complete transition from face-to-face human interactions and that a significant portion of our market still very much prefers traditional methods,” he acknowledges.
Roche, for its part, has leveraged this feature of the local market to introduce an entirely new position: that of Patient Journey Partners (PJPs). “Conscious of the rather complicated regulatory landscape and sheer number of actors that we need to engage with to get our therapies into the hands of patients, we decided that this called for an entirely new style of partner beyond conventional sale reps,” recounts Monica Palomanes.
“Consequently, our PJPs interact closely with all stakeholders directly touching the patient journey in a given therapeutic area and gaining a deep understanding of their needs in order to connect Roche’s capabilities to co-create meaningful solutions. So far, this has proved remarkably successful,” she adds.
According to Peso, this kind of deep interaction with the marketplace combined with pre-launch preparedness is essential. “Over time, Viatris has made significant changes to how we approach a launch within Mexico,” he admits. “Previously, we would begin our preparations maybe 12 months before the actual launch. Now, we are starting much earlier to set the groundwork and put in place favourable enabling conditions.”
“This is especially important because many of our upcoming launches are for first-in-class or best-in-class drugs, which often require us to create new markets entirely,” he expounds. “Take Alzheimer’s as an example. Before we even think about treatment, we need to build an ecosystem that fosters diagnostics and raises awareness about the disease itself.”
Well thought-out portfolio selection also seems to be a hallmark of making a success out of the Mexican market. “As part of our ‘Play to Win’ strategy we have been deliberately reshaping our go-to-market model and now emphasize a more targeted approach,” says Emily Morris, Head of Latin America, and Country Pharma Lead for Mexico at Sanofi.
“The idea is to prioritize best-in-class, first-to-market medicines, and this requires careful evaluation of when and how we launch, as well as being rather more selective and discerning about which therapies to introduce. This is particularly appropriate to the Mexican marketplace and the prevailing market access conditions there, where it pays to focus your energies in the areas where you can have the greatest impact and stand most chance of success,” she claims.
