Francisco Xavier Valdez
General Manager, Mexico & Central America
IMS Health
View from the Top

Breaking Down Market Complexities, Optimizing the Road to Growth

Sat, 09/05/2015 - 12:54

Q: How has IMS Health’s role as an advisor to the health industry been evolving?

A: IMS Health has several platforms globally, designed to address our client needs in terms of customer relations and marketing. We offer popular consulting services for portfolio segmentation, salesforce effectiveness, market access, and healthcare economics. The services we have traditionally provided are still in high demand, but the face of the market has changed considerably in the last few years. We want IMS Health to become more technology oriented, so we provide specific software for monitoring campaigns and we have new social media services to help our clients track their social networks. We are also branching out in order to provide more technology-oriented services, and now have a consulting group specialized in data warehousing. IMS Health aims to help clients build reports and manage scorecards, which will facilitate managers with decision-making processes. We decided to implement these services after observing that our clients are facing a more complex environment and need to make well-informed decisions. Many consulting companies provide a large amount of information but very few of them actually process this information to provide insights to clients. Our objective is to create strong tools to provide these insights, to become a data-based company, and have the right technology to support our services.

Q: What have been the most recent dynamics characterizing the health sector in Mexico?

A: The market in Mexico is very complex, and we have observed that the retail market is not growing as fast as expected. Last year the market for medications grew just 0.4% in terms of value and decreased in terms of units. The main problem is the current competition between generics, branded generics, and branded medications. There is also competition between the different distribution channels, with independent pharmacies competing with chain pharmacies and supermarkets. Conversely, the public health sector has grown 10.8% in terms of value. There are interesting opportunities for growth in the public sector with the inclusion of new chemical entities as well as new biological products, but the public sector is slow in acquiring these products and not every governmental institution is including these new pharmaceuticals in their portfolios. While COFEPRIS has considerably improved the speed of regulatory processes in medicine registration, there are still some slow stages. Adding new medications to the portfolio of governmental institutions is a slow process since, to be approved, a drug has to be accepted by the General Health Council and has to be integrated into IMSS’ National Formulary. Analyzing all these steps, IMS Health has determined that incorporating medicines into the public sector generally takes about 4.2 years.

Q: What are the recommendations that IMS Health is making in terms of the streamlining of these processes?

A: Some of these approval procedures are repetitive and unnecessary. If a drug is available in another country and is already approved in Mexico by COFEPRIS, it should be ready to be incorporated into the public health sector. If COFEPRIS has decided that a drug complies with all regulations, it should not be necessary to repeat the approval process with a second organization. However, there are always budgetary considerations for each individual institution. COFEPRIS is making new products available but some institutions are reluctant to introduce them to the public, as they prefer to save money by buying generics and biosimilars. In my opinion, the money saved by introducing generics should be used to purchase innovative medicines, but in reality this is not always a possibility. The government must make important decisions between improving its services and increasing coverage to more patients. It is not easy to determine the most appropriate way to utilize this money, as IMSS also has to tackle other economic challenges such as pensions.

Q: What is the market potential for biosimilars in Mexico?

A: In comparison to the US or Europe, Mexico has more availability for biosimilars. This is a very positive development for manufacturers, as they are creating new and innovative ways to make biosimilars. The production of biosimilars will also allow these companies to grow by acquiring the necessary technology. The increased popularity of biosimilars is beneficial to institutions, as they now have more available products at a reduced cost. Increased competition also means it is good for the market. The only problem manufacturers of biosimilars are facing is the recent legislation change. Some biosimilars were erroneously labeled as generics and these products must now comply with additional tests in order be properly reclassified. Mexican biosimilars are subject to trials in order to preserve their license and continue to be commercially available. While this presents a challenge, Mexico has several compliant companies that will easily be able to meet the requirements of the new regulatory framework.

Q: In which direction is the pharmacy market developing in Mexico?

A: IMS Health has seen a large growth in Mexican pharmacy chains while their competition has slowly declined. Last year, we saw a decrease in sales of drugs at supermarkets and, while sales for independent pharmacies have increased, competition driven by the large portfolio held by larger pharmacies have forced many independent sellers to close. Equally, patients prefer chains, as they usually go to the closest pharmacy available, thus chains benefit from their economies of scale. Chains also have loyalty programs that reward habitual purchases, something that is only possible if the company is large enough to negotiate with suppliers.

Q: What is your opinion on the increase of physicians at the point of sale in Mexico?

A: There are around 15,000 physicians in pharmacies, which is beneficial for the patient as it provides accessibility, and is also convenient for the pharmacy chains as it enables them to capture more sales. There are not enough doctors to meet patient needs, so doctors within pharmacies can help to alleviate the pressure on primary care physicians, subsequently benefitting the saturated public health sector by saving money. Some people may believe there is a conflict of interest, as physicians at the point of sale would be motivated to sell products from the pharmacy where they work. We do not believe this is a problem, as doctors are not obligated to prescribe a specific brand and pharmacies must ultimately respect the brand prescribed by the physician.

Q: There is a proposed reform to the General Law of Health that plans to integrate IMSS, ISSSTE, and Seguro Popular. What would be the benefits of this integration?

A: The subject of integration is a complex topic. The idea of integrating these institutions was created during the government of President Vicente Fox, but implementation has been difficult as these institutions are very different in terms of services, capacity, cost, platforms, types of hospitals, and logistics. Homogenizing all these services is difficult as there is no consensus on how to provide them or how to charge for them. However, there is some consensus in terms of acquisitions, and drug purchases are being consolidated by the main public institutions. As the leading institution, IMSS is setting purchasing trends by buying drugs for several institutions, including ISSSTE. Making centralized decisions is more strategic for public health institutions, as it places them in a better position to negotiate prices and conditions with sellers. In the past, prices for the same medications varied depending on which public institution acquired them, but now the pricing is homogenized. The only problem to overcome is determining which institution will make the primary decisions concerning the medication and service needs of each institution as the services provided and treatment guidelines can vary greatly between institutions.

Q: Why should investment in the development of the health industry be a priority for the government?

A: Health directly impacts productivity, so investment should be a priority for the government. The government may not be investing enough to satisfy the health needs of the Mexican population but it is currently facing budget constraints in every area, not just healthcare, so the authorities may not be able to address all current needs. The healthcare budget was recently reduced by US$663 million as a direct result of the decrease in oil prices. Now, with analysts predicting that oil barrel prices will not rise above US$50-60 in 2016, the government is taking preventive measures to mitigate the impact on the economy and adjusting the budget to prepare for next year’s predicted losses.

Q: What priorities are top of the list for IMS Health in 2015?

A: We want to provide more services and technology tools for our clients so they can focus on the market rather than wasting their time on market analysis and cross-referencing data. We have several new services for our clients and, as a result of our recent acquisition of Cegedim, this year we are planning to launch a prescription business, specializing in customer services management solutions and physician information. I believe we will have a positive year financially and will be providing more services and products.