Becoming a Global Mexican Company
Q: How has PROBIOMED evolved with the implementation of corporate governance and what has the company achieved in this respect?
A: At this point, we have well-defined processes through which our company objectives are set. We have set and implemented the right policies, procedures, levels of authority, delegation of responsibilities and the organization we need based on our mission, vision and values. This goes hand in hand with balancing the interests of key stakeholders, such as the shareholders, financers, customers, internal management and the government We have put together a holistic approach to achieve solid corporate governance. This is a step we needed to take before moving forward in our search of a partner, raising capital or even considering a future IPO. Finding a strategic ally rather than just investors is crucial for the future of the company. Corporate governance strengthens the internal capabilities of PROBIOMED to build partnerships and transforms the organization’s cultural mindset as we must ensure all 1,400 employees keep up. We are working toward obtaining the Great Place to Work (GPW) certification, which will only strengthen our market position. We are determined to become a global Mexican company and we have already opened a few international markets but continuing with our corporate governance build-up plans, complying with the new regulation standards in Mexico and growing our sales base are our three most important priorities today.
Q: How will the right partner impact your competitive position in today’s biotechnology environment?
A: We are interested in creating partnerships locally or internationally but attracting capital is not as important as choosing the right partner. This aligns with our vision and our goals as well as with the current business environment. In the past, mainly Chinese and Indian companies participated in the biosimilar market but today major pharmaceutical firms are entering. PROBIOMED has a business model whereby it invests 20 percent of its sales in R&D, the same level of investment as Big Pharma companies. Our vertical integration in the biotechnology arena represents a competitive advantage in Mexico that no other company has. Having the right partner would help us accelerate time to market and thereby hold a stronger position among actual and future incumbents. For years we have relied on one team fully dedicated to developing new biosimilar products with no real pressure on time to market as competition was scarce. This has changed significantly, making it difficult to stay on top of the game unless we further invest in R&D and develop several biosimilars in parallel.
Q: Apart from time to market, what other features are essential for a biotech company to remain competitive?
A: PROBIOMED’s competitive advantage relies on our 18-year experience in biosimilars. No other company in Mexico has this, and Big Pharma innovative companies have just recently tapped into this field. The biotechnology innovators business model is very different from that of biosimilar manufacturers and this will be a challenge for them as they will have to adapt to achieve low-cost biosimilars, which is very different from selling high cost innovator medicines. Being vertically integrated, controlling costs, ensuring high quality and delivering a better value proposition is easier at PROBIOMED. Today, all biotechnology companies, both national and multinational in Mexico, either import API or finished product, making cost control more complex as they are subject to import and cost variations from abroad. On the contrary, PROBIOMED produces biosimilar drugs from gene to final product all in Mexican territory and our value proposition will continue to be provisioning high quality at a low cost. All institutions and patients globally are searching for this.
Q: To what extent has biosimilar characterization progressed in Mexico in terms of infrastructure capabilities?
A: The development of infrastructure for biosimilar development, including characterization studies, has not advanced in Mexico at the same speed as regulation. This is understandable as the biosimilar market is just starting to be developed. The new regulation just came into effect in February 2016. PROBIOMED has developed state-of-the- art orthogonal analytical techniques given the embryonic infrastructure available in Mexico across the R&D chain of biosimilar development. Most analyses were conducted in-house with proprietary methods, which are in line and are validated to comply with NOM 257 standards and requirements. Characterization has been performed in collaboration with Mexican universities and academia, as well as with world renowned scientists and institutions that are endorsed by COFEPRIS. PROBIOMED has 16 biosimilars that were registered as generics under the previous regulation and that are undergoing renovation process, and we have five more products in the pipeline.
Q: How advanced is PROBIOMED in grasping the biosimilar opportunity in Mexico and becoming a global company?
A: Mexico is facing crucial challenges regarding the demographic and epidemiological shift as the population is aging and chronic degenerative diseases are increasing. As the number of patients with comorbidities increase, the number of taxpayers decrease along with public budget and cost containment strategies. Therefore, we visualize several opportunities to provide efficient solutions including research that can turn into treatments for Mexican patients, biosimilar development to ensure access to added value products at affordable costs and savings at healthcare institutions, and becoming an active player shaping the Mexican biopharmaceutical industry. An example of this in Mexico can be attested with erythropoietin, a drug for the treatment of anemia in patients undergoing chemotherapy or dialysis. Before undergoing patent expiration, the innovative drug was only available to treat 3,500 patients given its high cost; upon expiration in 2001, biosimilars entered the market and dropped the price 90 percent making it accessible for 80,000 patients at a lower cost. Savings add up MX$7.5 billion (US$400 million) so far, which equates to 10 regional hospitals with 250 beds each, 10,000 ambulances or 122 clinics with 10 consultation offices each. Those savings could be invested in infrastructure or in innovative medicines.
The biosimilar industry is facing very rapid development, maturation and harmonization. As the certainty to enter markets evolves with a harmonized regulatory framework the penetration of biosimilars and PROBIOMED’s products will follow. PROBIOMED is dedicated to the development and commercialization of biosimilars that can offer value through unquestionable quality and access to affordable medicines. To accomplish this, we have to be extremely responsible in the way we invest and demonstrate the quality of our products. Regulators still need to define the depth and breadth of clinical studies that are scientifically or regulatory sound for a biosimilar that has a very solid characterization. As the industry matures so will the requirements throughout the world to demonstrate the manufactured biosimilar products are high quality, safe and effective, placing more emphasis on the chemical and physical composition of the medicinal product and less on redundant and expensive clinical trials. We will continue prioritizing emerging markets, which are the most in need as they have the biggest patient populations and the lowest budgets. We are focusing on serious chronic-degenerative diseases that have the highest social and economic impact. We are already operational in 14 countries in four continents, albeit with an incomplete product portfolio, but we will makesureallofourproductsarelaunchedthereassoon as we renew their marketing approval in Mexico. The better we comply with the regulation the faster we can enter other markets, Latin America being our natural and main entry point.
Q: How does fragmentation of Mexico’s healthcare system prevent patients from benefiting from high specialty drugs?
A: There are no clear or harmonized processes and policies for budget and resource allocation across public institutions. For instance, the budget that Seguro Popular receives per state depends on the size of the population covered and not on disease incidence, prevalence or healthcare needs. Also the budgets allocated to each state are not subject to supervision.
States have the discretionary decision where to invest, and often funds are devoted to other administrative areas or other activities rather than healthcare or medicines. Again, there is no real accountability, tracking or resource control. The intent today is to centralize the resources of Seguro Popular and manage this process to guarantee transparency. Mexico should have just one healthcare system. This proposal has been discussed for many years with an abundance of political will but no real progress.
Q: What impact do you expect the Trans Pacific Partnership to have on Mexico’s biosimilar industry?
A: We are convinced the agreement will provide the pharmaceutical industry with great impulse, and this will certainly benefit patients and healthcare institutions in the country. We recognize Commissioner Mikel Arriola’s work in having positioned COFEPRIS as a leader and a benchmark for regulatory agencies from countries participating in the TPP. As well as their prominent role in the negotiations of this agreement that will, without a doubt, promote economic growth and pharmaceutical innovation in Mexico. It will also impact positively in terms of the capacity to treat a larger number of patients in our country and become crucial for the health sector in the region.