Gema Moreno Vega
Leader of Life Sciences and Healthcare Industry
Deloitte
Jorge Cueto
Jorge Cueto
Partner
Deloitte
/
View from the Top

Connecting the Dots

Wed, 09/09/2015 - 12:50

Q: Deloitte has seen double-digit annual growth - how important is the health and life sciences area?

GM: Healthcare is one of Deloitte’s priority areas worldwide and in Mexico. The country is the second-largest health market in Latin America after Brazil, and the eleventh worldwide, so we are interested in creating integral solutions for this sector. Deloitte has released several studies and global analyses on life sciences and healthcare including on adapting to an era of transformation, where competing priorities exist alongside common goals. We have also tried to make predictions on the healthcare and life sciences sector ahead of 2020. Through such studies we are able to gather enough information on global and regional trends to offer consulting services that would keep our clients at the forefront of the market.

Q: The Mexican healthcare market has been subject to budget reductions and reforms which will integrate public health institutions. How have they affected the industry as a whole?

GM: Public health institutions are not aiming for consolidation but rather towards portability and integration of services, allowing patients to choose hospitals according to their particular medical or geographical needs. There is, however, an interest in consolidating acquisition models. Where public institutions are concerned – IMSS, ISSSTE, Seguro Popular, and the different Secretariats of Health – unifying acquisition power means a stronger negotiating position when buying drugs, medical supplies, and medical devices. Both goals were proposed by President Enrique Peña Nieto’s administration to improve access to health services, and they will have a notable impact on the industry’s demand model. We will have to adapt to new acquisition models, as well as create new commercialization and delivery strategies based on value. Price controls will increase accessibility and preserve value, since manufacturers will have to prove the effectiveness of their medicines.

Q: What are the main changes you have seen in the Mexican market?

GM: As the middle class grows and acquires more medications, purchasing habits are beginning to change. Unfortunately, increase of fast food consumption has contributed to an obesity crisis in Mexico’s middle classes. Stress, neurological, cardiovascular problems, and cancer are altering Mexico’s epidemiological profile from an infectious to a chronic degenerative disease pyramid. Both the government and private health institutions are working to confront these diseases, with a special focus on prevention. Apps to monitor weight and promote exercise for the general population and others focused on specific diseases such as diabetes have been released. Our Deloitte Digital division is, in fact, developing wearables for patients to simplify treatment and provide immediate access to doctors and specialists. On a separate issue, the delivery chain has become less effective in recent years, forcing companies to develop new strategies. Certain distributors are creating their own pharmacy chains and laboratories are acquiring their own clinics and hospitals, increasing accessibility and portability while prices are being contained, and forcing organizations to manage resources and adapt to regulations. We are also helping companies to manage risk and prioritize their resources to efficiently handle critical problems and regulations.

JC: The current situation has also created a great opportunity area for regulations. Healthcare patterns, patients, pharmacies, technologies, and commercial models have changed, an enormous challenge to regulatory authorities in every nation, Mexico included. The country is also at a disadvantage as it has a fragmented healthcare system, making the implementation of general public policies much more difficult for each institution. While the government’s goal is to provide integrated services, not all hospitals are equally able to follow them. At this point, the government is looking for a system that can be followed by all organizations. Every country has a different model. For example, traditional models are payby-event in nature, and every single doctor visit is paid for by the patient. This system leads to increased hospital visits and stays. Insurance companies have imposed a percapita payment fees model through health plans, imposing the cappedamount to be paid for a range of services. Our government should find a balance between those two models to benefit patients such as Value Based Care modes to provide better outcomes.

Q: Do you provide services to the public sector?

JC: We provide services to the public sector applying our experience of regulatory matters in different countries and try to find ways where we can leverage that experience to help our customers in Mexico. We have helped many companies, the government, and even pharmacies to adhere to public policy, with several industry experts including lawyers and economists providing us with insight into the healthcare sector.

GM: We provide integral solutions, and, at this point, we are the only consulting company to have its own health center in Washington, composed by former members of the US Department of Health and Human Services. This center handles global matters and travels to several countries to discuss regulatory matters.

Q: How would you define the strength of Mexico’s regulatory body?

GM: Mexico has robust regulations and regulatory authorities. The current commissioner of COFEPRIS, Mikel Arriola, has started implementing risk-based management and simplified many processes to address risks posed by medications and medical devices. He decided to simplify the process and established priorities. After a thorough study on the population’s needs, which took into account shrinking health budgets, he decided to push vaccination schemes, medical devices, and generics for some molecules that tackle the main health problems faced by Mexicans. Arriola also modified the approval and renovation process for drugs and medical devices. COFEPRIS is harmonizing its regulations with international ones in Central and South America, allowing companies to sell a product in those areas as soon as it is approved in Mexico. Bringing regulations into line with FDA requirements has been achieved, with the implementation of that association’s Good Manufacturing Practices (GMP) program. This reflects the strength of our exports Finally, Mexico has a firmer base than many Latin American countries, which means significant progress in preventing counterfeit drugs and bioequivalent medicines.

JC: These regulatory changes present a great opportunity for Mexico as a manufacturing country. We are expecting further regulatory changes in the first quarter of 2016, which will attract foreign investment by simplifying the incorporation of Mexican products into US and European markets.

Q: Which areas are growing in Mexico?

JC: Mexican authorities previously required foreign companies to have a manufacture plant in Mexico in order to import their products, a requirement that was eliminated in 2008. COFEPRIS is also planning regulatory changes to manufacturing practices, which we hope will give companies the incentive to set up operations in Mexico. The goal is to become a platform for the industry both for R&D and manufacture.

GM: We are see an increasing interest from foreign organizations in Mexican manufacturing plants that implement GMPs. Manufacturing in Mexico is relatively cheap, so we expect to improve the country’s export balance. Since COFEPRIS has simplified its processes, the savings and increased efficiency are both very attractive to new investors.

Q: How much is the health sector growing both in Mexico and Deloitte?

JC: We expect the sector to keep growing in the years to come, especially for diseases such as diabetes and hypertension, given the high leves of obesity. Devices used to help patients manage these diseases are becoming increasingly popular. We are beginning to see technology developments for healthcare in this area. This industry, featuring new products that we ingest, implant, or wear is expected to grow ten fold in the next five years. Patients have begun to behave like consumers. Increased use of the Internet and social media allow patients to perform their own research on diseases and medications. As patients become more informed, they are starting to demand more data and information.

GM: One area we have developed is data analytics for comparative effectiveness research, which aggregates real data to measure the performance of a drug once it is in the market. This data is used to monitor patients’ wellbeing, measure adverse effects from their treatment, and decide whether a recall of the drug is necessary. We are supporting several companies to perform this analysis.

Q: How have the new players such as pharmacy chains and supermarkets affected the sector?

GM: Pharmacy chains are increasing points of sale, which is of great beneficial to the sector, but they also represent competition, as several have developed their own brands. In theory, this increases accessibility to medications, but we are also seeing increased interest from pharmaceutical companies in selling directly to pharmacies. These trends are ultimately beneficial for the end consumer, as they simplify the distribution chain can lead to lower prices. Another important change is the introduction of doctors at the point of sale. If these doctors are properly regulated, they could be hugely beneficial to the health sector, as they relieve the pressure on individual institutions.