Paul Doulton
Founder and Managing Partner

Critical Success Factors for Entering the Mexican Market

Wed, 09/05/2018 - 10:01

The first step for designing a market entry is to understand the important difference and the essentials of the Mexican Market dynamic. Mexico is a US$12.5 billion market and the second-largest in Latin America. Its constant growth was driven by better access, global standard generics, obesity and diabetes, an aging population and new patient-centered business models.

The global production standards and processes are transforming Mexico into an increasingly important sourcing hub for the region in both South and North America. Inwards, the investment continues to nurture efficiently pharma plants and midsize companies in Mexico show greater growth than the big boys and global players.

There has been an astonishing improvement in patient access via the doc-in-a-box model. This means around 100 million consultations every year. This model is the establishment of a doctor’s office next to pharmacies as the result of the failed social security model. Now, patients through this model save time, get a proper diagnosis and global standard generics and can go back to work sooner. Also, the changes reflect great savings for IMSS and other social security clinics.

In the regulatory sphere, COFEPRIS, the maximum regulatory agency became recognized by EMA, FDA and others. The regulatory agency has raised standards of generics to global quality, enforcing compliance, and has speeded up marketing authorization for new drugs from a two-year approval process down to three months.

Overall, the decades-long stifling monopsony of wholesalers has been broken through the fast-rising power of the pharmacy, supermarket chains and specialist distributors as most of the doc-in-a-box offices are located next to the chain pharmacies, so private label generics are the fastest growing category. The less good bits are that healthcare situates too low on the political agenda, the move toward a single payer has not happened and the public spending on health has dropped from 6.2 to 5.8 percent of the country’s GDP. The minor problem is the registration of drugs. Also, the tender process for drugs requires more specialized knowledge to avoid forced price reductions.

The questions that we need to address in developing the right market entry strategy, are: 1) how is your own company different in technology, business model, success in other markets? This is your starting point to see how your focus might fit into the opportunities and differences of the Mexican market. 2) What do you want to achieve? Are you averse to risk? Are you open to find different ways of doing things? Can you identify synergies with other Latin American markets, how will you source and what level of control is right? The answers to these questions will ensure that the strategy design will prosper when seeking approval from your board. 3) How to get the strategy right? Talk to the right people, there are good, reliable sources of local support such as AMIIF, CANIFARMA, Healthlinks, Oriundo, IQVIA and others that will put you on the scope. 4) Which markets should I go for? Define who are your real audience and what is the real decision locus for your company to define whether to enter the public, private or both sectors. 5) How fast do you want your market entry, and where does Mexico fit on the global priority list? This will have a bearing on our choice of route, whether this is through (the right) marketing partners, licensors, acquisition, outsourcing to hit the deck running or go it alone. So, of course, this needs the right kind of person to drive the business to success.

Getting it right the first time is what this is all about. Do not try to force a driven model from markets where the market dynamics are so different. Folks who have run market entry strategies here on the ground have taken all the knocks. So why not talk to them? And remember, Latin America has over 20 markets, all with differing market dynamics, so the right strategy for Brazil or Colombia may not be the right one for Mexico, albeit there are powerful regional synergies that can be built.