Louise Batchelder
Synelog Mexico
View from the Top

Healthcare Requires Public Sector Push

Wed, 09/07/2016 - 15:50

Q: How are the recent tax reforms impacting the healthcare industry?

A: Tax reforms affect every economic sector including healthcare. Under the new regime not only are taxes higher but foreign investment will have to adjust to it. International companies used to be able to deduct certain payments from their local offices but the new reforms make them liable for more taxes, which is a disincentive for new and continuous investment. Fiscal reforms affect everyone including people who buy medicines and more specifically people from the middle class. They drive the demand for brand products. Therefore, a hit on their economy slows down demand for brands and innovative medicines and increases generics being sold.

Q: How is the government fostering the sector?

A: The government has developed national programs for every sector and they are available online for all to read. But considering the effort made during the Energy Reform, I would say healthcare is not a priority right now. Public officials have to prioritize according to budget availability and there have been significant cuts in the sector. Big Pharma in Mexico has stated the government does not perceive healthcare as a priority, much less innovation. Innovative medicines that are being brought into the country are the most significant challenge for subsidiaries. The healthcare system has suffered budget constraints and a failure to implement an effective healthcare policy, which has resulted in poor performance impacting the pharmaceutical industry and R&D in Mexico.

Q: What can Mexico learn from other countries regarding Public Private Partnerships (PPPs)?

A: Recently, the Minister of Health said in the administration’s first three years, PPPs have not been used to their utmost potential. The UK, a world leader in these type of partnerships, advised the Mexican government on how to use this tool and to this day Curry & Brown are still the government’s tactical advisers. During the current tenure only one PPP hospital has been built and the procurement was led by ISSSTE Mexico City and not the Ministry of Health. This has paralyzed the health sector’s national program, which aimed to have the private sector finance new public hospitals. After a revision of PPP law other hospitals may still be built in the second half of this administration.

Q: What new entry strategies are pharmaceutical companies implementing?

A: Eighteen months ago CANIFARMA and AMIIF generated and implemented a new strategy called Shared Risk, which meant pharmaceutical companies would provide innovative drugs to the public sector at no cost so that patients could receive a trial period for their treatment. If the patient got a positive outcome the government would then be obliged to pay the price in full for the drugs.

Though pharmaceuticals are not thrilled to be giving away free medication these types of strategies prove the willingness of the sector to overcome barriers.

Q: Has R&D in Mexico progressed?

A: The link between research and commercialization has not changed significantly for the past 10 years. Back in 2005, I was involved in a life sciences study and at that time we had many hopes that have not materialized due to financing problems. Angel financing does not exist in Mexico. NAFIN and Bancomext are not prepared to take risks, which is paradoxical as the purpose of a development bank is to support the commercial banking system in handling risks. Other industrial activities may enjoy tax breaks for undertakings such as building new plants or job generation. But given the limited risk the government is willing to accept for research there is a blockage between R&D and commercialization.

Q: What specific activities is SYNELOG MEXICO doing to promote innovation?

A: SYNELOG provides consulting in healthcare, education, social development, science and technology, innovation and competitiveness. At this point, I am interested in the lack of patenting offices in most Mexican universities. I am researching what structures could be set up so that any university can set up their own in-house patenting office.