High-Impact Investment in Mexico's HealthcareWed, 09/05/2018 - 10:05
Q: What are IFC’s priorities in Mexico?
A: IFC’s twin goals are ending extreme poverty by 2030 and ensuring shared prosperity in a sustainable manner. To achieve these goals, IFC supports companies in the private sector by providing financial and nonfinancial solutions. On the investment side, we provide long-term competitive financing in the form of corporate loans, long-term project finance, mezzanine instruments and equity investments. IFC’s goal is to become a long-term valuable partner by sharing global knowledge through our industry specialists and global relationships with key business players.
Q: In which sectors is IFC operating and where does the health industry fit in your portfolio?
A: Our key sectors in Mexico are health and education, infrastructure, financial markets, manufacturing, telecommunications, renewable energy, agribusiness and water. In the healthcare space, IFC has a global portfolio of US$2 billion, of which 40 percent relates to investments in the pharma sector. There are many Mexican companies looking to expand operations to other markets and we believe we can support them in that regard by sharing knowledge on potential partners in new markets given IFC’s global network, our healthcare expertise in emerging markets and our local presence in almost every country in Latin America. We look for projects that are financially sustainable with high-development impact.
We have different metrics for every sector and we monitor them closely to ensure that the investment achieves its development goals.
Q: What would be a recent success case for IFC in Mexico?
A: salauno. It is a company founded by two entrepreneurs in 2011 who adapted a model that was created in India to provide affordable and quality ophthalmology services to the base of the pyramid. We have been partners since 2014 and have supported the company to achieve its growth plan.
Q: What are the main concerns of investors in Mexico and how do you help them?
A: IFC helps investors by reducing political risk through government relationships, preferred creditor status and by playing neutral broker role. Given IFC’s local presence in more than 100 regional offices, IFC can provide certainty to other investors when they are entering a new country. Within the World Bank, the Multilateral Investment and Guarantee Agency (MIGA), IFC provides political risk insurance guarantees for projects in a broad range of sectors in developing member countries.
Q: What are the key areas for investment in the Mexican healthcare sector?
A: We have seen several investment opportunities across different subsectors within the healthcare space. For instance, the hospital and labs industry is very fragmented. There are opportunities for consolidation as the private sector accounts for two-thirds of the hospitals in Mexico but only one-third of all beds (just 6 percent of private hospitals have more than 25 beds). Private healthcare expenditure in Mexico will continue growing given Mexico’s demographic trend. Mexico’s population is aging and chronic diseases are growing while the country has a deficit of medical infrastructure: only 1.6 beds per 1,000 population, which is the lowest among OECD countries, 2.2 doctors per 1,000 people and the lowest public health expenditure at 5.8 percent of GDP versus the OECD average of 9 percent.
There are also significant opportunities to increase penetration of medical insurance solutions to the middle-low income segment. Insurance penetration is quite low. Through a valuebased approach to healthcare delivery, with time-driven activity-based costing and all-inclusive bundled packages, companies can provide more transparency to the healthcare system, thus enabling the major insurers in Mexico to offer affordable products to the middle-low income segment that now lacks access to a quality medical insurance plan.