Innovating with High-Quality Generics

Q: What does innovation entail for a company focused on generics?

A: For us, innovation has to do with effectively developing high-quality and affordable generic versions of drugs whose patent has or will expire. To achieve this, we must develop the products our customers require, file for approval from local health authorities and do our best to be first to market. Another source of innovation comes from our business model, as we develop strategic partnerships with our customers to launch their private labels. Retailers do not have manufacturing and we are manufacturers without stores.

Q: Perrigo now owns NiQuitin. How popular are these tobacco-replacement products in Mexico?

A: NiQuitin is a great brand and a very effective treatment. Unfortunately, we found that NiQuitin had been somewhat neglected in the Mexican market and there were many out-of-stocks resulting in many consumers not being able to continue their treatment. However, we are correcting those supply issues and customers are now able to stock the products. There is a global trend to stop smoking and Mexico is not the exception. Recent legislation is making it harder to be a smoker and there is a growing trend toward wellness that has made people more likely to drop the habit.

Q: How are your products distributed between the public and the private sectors?

A: The public sector represents around 15 percent of our sales and we sell only through distributors and only specific products. In the private sector, we are partners with large and small retailers in Mexico in the development of their store brands. Some laboratories focus more on their own brands and others sell almost exclusively to the government. We operate opposite to that because most of our business, capacity and efforts are focused on manufacturing for our retail customers.

Q: How does Perrigo develop its strategy for each retailer?

A: Each retailer is different, with distinct formats and specific strategies. Our job is to work with them in developing products and brands that best fit each of their strategies. Even smaller pharmacies have varying strategies. Some sell from behind a counter like traditional pharmacies, whereas others are more like mini-supermarkets where you could even buy groceries and other convenience items. This is a model more often seen in the US but it is a growing trend in Mexico.

Q: How much more receptive are Mexican consumers and authorities to products from a US-based company than from other countries?

A: Perrigo has a significant footprint in Mexico with four state-of-the-art manufacturing sites. The vast majority of our products are manufactured locally and all have marketing authorizations from COFEPRIS. I am not sure that consumers make any distinction between local and imported products but both retailers and consumers have confidence in our quality and service. The big change in recent years has come from the growing confidence in generics by Mexican consumers. Every day, more and more people prefer to buy generics vs brands, with full confidence that the quality and therapeutic effect will be the same but at a much more affordable price.

Q: How important is Mexico for Perrigo globally?

A: Our business in Mexico is extremely important to Perrigo's global operations. Not only do we share a very similar business model with the US branch of Perrigo, but we service many of the same strategic customers that have presence on both sides of the border. We have identified Mexico as the country in Latin America with the greatest potential for growth as the economic and demographic conditions are very promising for our industry. We believe that each day there will be more opportunities to develop significant supply chain partnerships between our countries due to NAFTA.