Local Manufacturing Confidence Here to StaySat, 09/05/2015 - 12:10
Q: Where is the Mexican Boehringer Ingelheim office positioned in relation to the global office?
A: From our Mexico City office we run seven companies throughout Central America, and our presence makes us the tenth-biggest office within the company internationally. Whenever Boehringer Ingelheim wants to develop a new product, the corporate headquarters tends to consult the top ten offices, so it is vital for Mexico to belong to this group. Not only do we expect to mantain our position, but by 2020, we expect to have grown due to the 3.5% market share we enjoy in Mexico. The average for our branches worldwide stands at 1%, which means we are outperforming our own company’s benchmark. At this point, 75% of our income comes from prescription medicine, between 12-15% from OTC products, and the rest from animal care. Driven by research, discovery, and the development of new molecules, we are the only privately owned multinational in Mexico. Unlike public companies, which respond to market trends, our stability gives us the advantage of being able to make long-term plans. After all, our stocks will not fall if one of our products fails, so we are free to decide the direction our company takes.
Q: What do you identify as the main drivers for the Mexican pharmaceutical market, and how are company strategies changing to adapt to the evolving dynamics?
A: Mexico’s situation is rather unusual since it is a developing country that behaves like a mature market. In contrast to double-digit growth seen in other emerging markets like Russia and China, that of Mexico has not exceeded 3% in recent years. Our growth patterns are more similar to mature markets like the US. Mexico’s pharmacy spending in the healthcare sector tends to be out of pocket, but this is the country’s only typical “emerging market” behavior. This dynamic means that few people are actually sustaining the sector’s growth, resulting in an imbalance from society’s perspective.
Ideally, all demographics should have equal access to quality medical care. The pharmaceutical landscape is changing as a whole, forcing many companies, including Boehringer Ingelheim, to develop new business models.
While the marketing strategy will change over the next few years, doctors will mantain the right to choose patient medication. The shift may occur over the next 15 years, meaning we must make several enhancements to the pharmaceutical industry to ensure the most innovative medicine is available for all patients. Mexico can improve its healthcare system, it just needs a push in the right direction.
Q: What is Boehringer Ingelheim doing to improve access to its range of innovative products?
A: Access is a challenge for all country directors in pharmaceutical companies. Our products add a lot of value to standards of care, and that ultimately creates added value for money. For example, the most used anticoagulant in Mexico is 60 years old, despite many new innovative medications. Boehringer Ingelheim challenged this product with a new anticoagulant effective on intracranial bleedings. We also produce a drug for diabetes, which is an improvement on the traditional treatment. Innovation is our aim, and so far COFEPRIS has been quick to approve our products, given the quality of clinical and monitoring data behind us. Once an innovative drug has been approved, it can often only be accessed through the private market. This means that 80% of patients that could benefit from these drugs are unable to access them. Although COFEPRIS has made progress there is still work to be done by the General Health Council (CSG), ISSSTE, and IMSS. We are trying to convince the public institutions to opt for innovation, but it will take time to see good results and support from authorities.
Q: Do the restrictions on sales to the private sector affect the overall profitability of the market in Mexico for innovative companies like Boehringer Ingelheim?
A: The current situation does not have an impact on our sales, but patients are affected by reduced access to innovative medicines. Boehringer Ingelheim’s forecasts are not based on money but on an index called the “Patient Capture Benefit Rate.” This is calculated in terms of the number of patients who will potentially benefit from our products.
Patients come first for us, then doctors. This strategy has made us the second-fastest growing company every year for the past five years. Mexico is, at this point, a hub for clinical research, we also have a center for molecular animal research in Guadalajara. While many companies are moving plants from Mexico to other countries, Boehringer Ingelheim’s stability means we can take long-term decisions to mantain our core therapeutic areas in Mexico.
Our core areas consist of diabetes care, respiratory and cardiovascular care (including anticoagulants), as well as oncology. We also plan to move into anti-infectives and central nervous system products. Narrowing our research into the areas where we believe we can contribute the most increases our impact. While we have an acute disease research area, we have put more emphasis on chronic disease treatments, having invested millions of euros in our manufacturing facilities, reflecting the confidence we have in their growth potential. Of all the pharmaceutical manufacturing plants operating in Mexico, only ours are approved by the FDA to export prescription medicine, consumer health care (OTC) and animal health products into the US. While the US is one of our main markets, we also sell to Canada, Asia, Africa, and Europe.
Q: What are the advantages of manufacturing in Mexico?
A: Mexico is proving to be more competitive in the manufacture of pharmaceuticals than China. Our operations here can be flexible, and our services customized to benefit patients and the social security system alike. Our costs are also very competitive. We have even closed factories in other countries in order to move production to Mexico. There have been doubts about Mexico’s capacity to supply to the 300 million- strong US market, but Mexico has proven its capability for quality and capacity. Soon, 80% of our diabetes products will be produced in Mexico.
Q: How important are community initiatives to Boehringer Ingelheim?
A: Our manufacturing operations provide many jobs and we are proud of our plant in Xochimilco, which has supported the community for almost 50 years. Social sustainability is close to the heart of Boehringer Ingelheim. We are engaged in supporting entrepreneurs, education, and healthcare. Annually, 1,800 of our employees serve the community in our “Value Through Innovation Day,” with activities ranging from teaching in impoverished communities to painting schools. This year, we are running a reforestation day.
Q: Do you plan to incorporate generics into your portfolio of products or are you planning to divest certain areas to focus on others?
A: We are not a generics company, but we have sold generics since the 1970s. Our portfolio includes several generics, with an anti-hypertension drug among our strongest performers. We carry out third-party manufacturing, but this is only a very small portion of our work. We try to accelerate the life cycle of our products to benefit patients, so to that end we are increasing our research division and our capacity for biosimilars. Unlike many other international pharmaceutical companies, we do not plan to divest our OTC area. On the contrary, we are interested in acquiring companies with strong OTC divisions. To reach new customer bases, our consumer healthcare product division will work with a new set of products from the end of this year or the beginning of 2016. This division adds value to Boehringer Ingelheim. Most of our OTC products – such as Lonol, Pharmaton, Bisolvon, and Buscapina – enjoy top positions in the market, and bring in a sizeable portion of our income. The sector remains attractive in spite of its growing complexity.
Q: Are biotechnological products important for your work the Mexican market?
A: Although we are the number one manufacturer for biotechnology products worldwide, we do not commercialize all our products, since we also carry out third-party manufacturing. For four years, Boehringer Ingelheim and Eli Lilly have worked together on diabetes research. One of the diabetes care drugs we plan to launch is a biotechnology product, but we do not yet carry out biotechnology production in Mexico. Nevertheless, we do plan to launch some biosimilars, as these benefit both Mexican patients and local governments, with an aim of entering the market within the next three to five years. Currently we sell two innovative products which are well-established in the market, one for cancer and the other for strokes.
Q: What are your expansion plans within Mexico?
A: We are set to move the manufacture of 80% of our diabetes care products to Mexico, bringing worldwide export opportunities to the country. Among our pipeline products over the next five years are several innovative compounds with significant potential in several therapeutic areas. To realize this potential, we must expand our factories and reach more doctors. To this end we are tripling our access team as this is the team that explains the value of our products to the authorities and helps facilitate the regulatory approval process.