Investing Now to Reap Future BeneftsWed, 09/05/2018 - 12:38
Regulations in Mexico are holding back international companies like India’s Micro Labs that have thrived at home and globally but which have run into roadblocks in Mexico, says Manish Mutha, Vice President of Micro Pharmaceuticals Mexico. “There are several market restrictions that prevent Indian products from participating in government tenders. One problem is that Mexico does not have free trade agreements with India, which hurts patients, who cannot access the necessary medicines.”
Founded in 1973, Micro Pharmaceuticals manufactures active principal ingredients and generic pharmaceuticals. It focuses on developed as well as emerging markets and has presence in 30 countries, including the US, UK, Germany, Russia, Ukraine, Vietnam, Sri Lanka, Dominican Republic, Uganda, Nigeria and Kenya. To compete fully in the Mexican market, companies must adapt, says Mutha. To that end, Micro Pharmaceuticals is developing a long-term strategy that Mutha hopes will lead to the construction of its own manufacturing facility in the country.
Micro Pharmaceuticals Mexico only sells to the private sector, so its market volume in Mexico is still small. "We believe that we must continue this line of work in order to enter the public sector in the long term. We are building our company’s image and positioning our brand,” says Mutha. “We want our clients to associate Micro Pharmaceuticals with quality products.”
Despite the restrictive conditions, Micro Pharmaceuticals is growing in Mexico. Its sales in 2017 increased 30 percent, a rate that Mutha says was a consequence of the great number of patients who are using their medicines. “Micro Pharmaceuticals is now the only distributor in Mexico of a number of products in generic space. This places us in an advantageous position in the market.” Its positive results are also leading Micro Pharmaceuticals to introduce more one-of-a-kind medicines into the country. “While our business is supported by regular-use products that are sold in high volumes, such as amoxicillin, our goal is to bring to the Mexican market molecules including high-technology products and drug combinations.” The company, however, faces a complex situation in the country. “The devaluation of the Mexican peso is complicating the sale of high-quality products as they become increasingly expensive to import and on the other hand due to price erosion, which in our case has ranged between 10 and 12 percent,” Mutha says. “We are also dealing with high-dollar costs and we had to stop selling some products in Mexico because they became too expensive to import.” Mutha points to Losartan as a medicine that became unfeasible for sale in Mexico as the cost of manufacturing and transporting it rose above its market price.
Micro Pharmaceuticals has 19 registered products in Mexico but it plans to launch a new ophthalmology line in 2018. “In the Mexican market there are few specialty producers that have FDA certification, which we do. There are also very few companies in the country that manufacture ophthalmological products.”
Looking ahead, the company believes that it will eventually require manufacturing capabilities in the country to eliminate the high transportation costs that significantly reduce margins. Mutha says that the plant would manufacture in Mexico and take advantage of the country’s ideal location to export 55 percent of its production to the US. However, external factors are complicating the company’s agenda. “This plan is on hold until we increase the number of products registered in the country and the renegotiation of NAFTA is completed.” The uncertain terrain has led Micro Pharmaceuticals to begin considering the possibility of manufacturing in the US, although Mutha remains optimistic for a successful NAFTA outcome. “Ideally the market between the two countries will remain as open to commerce as it is now, allowing us to manufacture in one country and sell to the other.”
With the plant on hold, the company will focus on consolidating its new ophthalmology line, which will serve as a learning curve for Micro Pharmaceuticals’ eventual entry into cardiology, psychiatry and diabetes, says Mutha. “We are confident that 2018 will be an excellent year, since during the first three months we had already met our goals. Micro Pharmaceuticals has operated in Mexico since 2005 and we are committed to staying for a long time.”