Demand for Nutraceuticals, Food Supplements Increases

Q: How does gaining the EXCiPACT certification bolster DVA Mexicana’s market competitiveness?

A: We planned for this certification when we started constructing our plant in Hidalgo. We first obtained COFEPRIS’s health license and later the ISO 9001 certification, as having both would allow us to request the EXCiPACT certification. This new certification validates our compliance with Good Manufacturing Practices (GMP) and Good Distribution Practices (GDP), granting us access to every highly regulated market. With this certification, we plan to start entering more highly regulated markets.

Q: What products does DVA manufacture at its facilities in Hidalgo?

A: The facilities in Hidalgo produce products for different industry segments. Our manufacturing plant which is certified FSSC 2200 (Food Safety System Certification 22000) produces stabilizers, batter & breader systems and protein systems for beverages, among other products. The pharmaceutical plant focuses on the manufacturing of pharmaceutical film coatings. Our site has R&D laboratories for the pharmaceutical, food, and personal care industries. This complex also hosts our distribution center. With this complex, we pursue participation in new markets like the US and Brazil.

Q: How relevant is Mexico to the group’s global operations?

A: DVA has three business lines globally: agrochemicals, plastics and health and nutrition (H&N). The latter business line focuses on Latin American markets, with offices in Mexico, Peru, Colombia and Argentina. Our H&N business is very strategic for our groups and continues to contribute to the overall group growth. We are evaluating whether we can expand to Brazil, where we have a large Agro business, as well as exploring the Chilean and Bolivian markets.

DVA has operated in Mexico for over 20 years. In 2014, we recognized that to grow in the country, we needed a plant that had the regulatory certifications requested by the strictest countries. Thus, we decided to build a plant in Hidalgo, which was completed in 2017 and began operations in 2018. The plant has helped us to reduce delivery times, making us much faster than those companies that do not have a manufacturing plant in Mexico. In addition, our business model requires a great deal of flexibility because we seek to produce tailored products to meet the needs of our clients.

Thanks to our people focus and assets strategy, we have been growing at a double-digit rate during the last few years. At present, our focus on R&D has helped us to provide customers with products that improve productivity by increasing solid content, as well as developing technology capable of protecting coated pellets in oily media which creates opportunities for our customers to develop new pharmaceutical forms, save energy through the modification of temperature ranges, among others benefits. This type of solution is actually under patent development.

Q: Has the demand for active pharmaceutical ingredients (API) remained high after the COVID-19 pandemic and how has the market changed?

A: During the peak of the pandemic, some countries had a high demand for some active ingredients, such as azithromycin or paracetamol. There was also a very high demand for products that were used for patient intubation like rocuronium bromide. This year, demand for these products has returned to pre-pandemic levels. The products that are now in higher demand are nutraceuticals and food supplements as preventive medicine. The previous effect has contributed to a higher capsule demand creating a complex environment due to the shortage of raw materials.

Q: What are the main challenges that you are facing?

A: Our plant helps us to add value for our clients through our design and formulation processes. When a client decides to work with us, we like to open our doors to work hand in hand with their R&D teams, sharing best practices concerning training, and application of coatings, among many other areas.

This year, many challenges have arisen in terms of logistics. Freight has been extremely expensive and there has been limited availability, so supply demand generally speaking has been very unstable. Inflation has also affected us because many products have become considerably more expensive to produce and with limited availability while customers continue to focus to develop less expensive alternatives. The biggest challenge next year will be managing the stability of supply and demand. In 2023, we will continue working on the development of supplements, which have gained relevance. However, the scarcity of raw materials is jeopardizing this market and the supply chain will continue to be a challenge.

Q: How have your procurement strategies transformed?

A: We import from South America, North America, the EU and Asia. To improve supply, we have focused to improve our planning processes. Before we planned for up to three months, our vision now is for at least six months, while some suppliers have even asked us to plan for up to 12 months.

The market has many ups and downs. The big challenge is to plan for when the markets are wildly erratic. In addition, all these products have expiration dates and we must learn to manage those dates, given tight supply chains.

Q: What goals do you expect to achieve by the end of 2023?

A: We will continue to focus on innovation and solutions. We represent several multinational companies in Mexico and Latin America besides our manufacturing business. We seek to generate synergy between distribution and manufacturing to provide more added value to customers and to become a strategic partner. We aim to maintain our pace of growth.

DVA Mexicana is a German raw material supplier for the pharmaceutical, food, industrial chemicals and crop protection industries. The company has around 150 employees in Mexico.