Market Consolidation Brings Opportunity for Smart DistributorsWed, 09/09/2015 - 12:19
Q: What led you to undertake the role of Managing Director of CDM Labs and what is your perspective on the dermatologic market?
A: I have been in the pharmaceutical business for almost 30 years, the last 18 years as managing director for a French/ Swiss dermatology company in charge of Mexico and Central America. As result I have a deep knowledge and experience of dermatology and its market. I previously collaborated with Dr. Jorge Ocampo Candiani, a Key Opinion Leader in this field and one of the most accomplished dermatologists in Mexico and worldwide. Dr. Ocampo is President of the Ibero-Latin American Dermatology College (CILAD), Head of Dermatology at the Autonomous University of Nuevo Leon (UANL), and founder of CDM Labs. He asked me to join the company in June 2014 and from that point onwards, we have been developing the company to be more professional to enable us to become strong players in the dermatology sector. We are a small company but we want to become one of the main dermatology companies in Mexico. The current landscape of the dermatology market is complex as there have been several mergers and acquisitions that have completely changed the market. In the last few years, a number of large pharmaceutical companies have acquired dermatology companies, completely modifying the prescribing habits and market conditions, changing priorities and focus, but also creating new business opportunities. Many companies are taking advantage of the situation, some of them with their own dermatology divisions, and they are developing innovative products to attack the opportunities.
Q: CDM Labs was stablished in 1991 as a family company. How has the company evolved and how do you want to see it evolve further?
A: At CDM Labs we are currently distributors, not yet manufacturers. From 1991 we have worked with Genové Dermatologics and since 2015 we have been collaborating with Laboratoire Dermatologique ACM, a French company. We have several current goals and the largest is to professionalize all of our processes, policies, and personnel. We want to further the education of our employees and to hire more experts in the field of dermatology. In the meantime we will focus on introducing more products to our portfolio. As distributors is critical to protect ourselves by having a wide variety of products. At this point we are only working within the cosmetics arena, but our objective is to cover other dermatological segments such as therapeutic, aesthetic, and corrective products. Some of these segments are growing exceedingly fast and have nearly doubled in the past year.
Q: How do you identify the different products that you include in your portfolio?
A: We have to map the dermatological market, a process that has two phases. In the first we analyze all the segments of the markets to identify which are strongest and which are growing fastest. We also investigate what our competitors are doing. In the second phase, we analyze the price and the profile of the product. We carry out this process for all segments of the market to identify which areas to focus on. The most important segment for dermatologists is always acne, which represents the majority of dermatological consultations. With the recent mergers and acquisitions in the dermatological market many products have been withdrawn and this is a large area of opportunity for us.
Q: In what direction are you planning to develop the company’s acne line and what challenges have you been facing?
A: While there is no magic pill for acne, there are effective treatments such as oral isotretinoin, which covers all the four physiological effects of acne, although it must be administered carefully. Some products containing oral isotretinoin from important companies have been withdrawn from the market, leaving a gap. At this point there are only two branded generic medications for it. Commercializing pharmaceuticals is not easy however and COFEPRIS has strengthened their requirements for new additions. We identified some potential foreign partners but their products could not meet all the necessary requirements, and we were forced to abandon those. For cosmetics, it is easier as there is no strict registration process in Mexico. The only requirements are that an official advice form is submitted, and packaging recommendations and guidelines are followed, therefore commercialization is less time-consuming, which is perhaps why the market is saturated with cosmetics. The council is more concerned with pharmaceuticals, medical devices, and biological products at the moment, but I believe this will change in the near future. These potential changes will be beneficial for companies with proper infrastructure and internal regulations that can comply with all the necessary requirements. On the other hand, companies that do not have their regulations in order will find themselves in trouble. This change will be a filter that will lead to the withdrawal of low quality products from the market.
Q: When do you believe these new regulations will be implemented?
A: It is likely that in the coming years COFEPRIS will implement a more strict registration process for cosmetics, requiring documentation of the product and of its manufacturing process. In the Americas, only the US and Mexico do not have strict regulation processes. Brazil, Argentina, Central America, among many other countries in Latin America have such regulations. While these processes are not as complex as one for a medication, it does regulate the market. COFEPRIS is closing clinics that do not comply with regulations and withdrawing unregulated products from sale. Miracle products and certain procedures can be dangerous, especially if they are not properly regulated. Many devices can also be dangerous if used improperly by inexperienced individuals who may not take safety measures.
Q: What is your strategy to compete with the inexpensive, low quality products that are filling the market?
A: The main thing that differentiates us is that we work closely with doctors who endorse our products. Our main strategy is to direct our promotional efforts to doctors who prescribe our products to their patients. Dermatologists normally prefer to prescribe recognized and patented brands and products, so promotion that comes from ethical and serious companies with clinical and technical support are welcome. These doctors prescribe mostly patented medicines and sometimes branded generics, even though in Mexico these products are safe since they now require bioequivalence tests, in the case of oral medications. For that reason we have to focus on branding our products and ensuring that our brand is renowned and respected. In dermatology, there are no large price differences between patented medicines and branded generics. Previously our commercial distribution plan would focus on three different schemes. One is the traditional way, which is distributing to the sector through wholesales. The second is to work with Pharmacy Chains, like Farmacias San Pablo, Farmacias Paris, or Farmacias Dermatologicas, among others. The third is to work with specialized distributors who sell directly to small clients and doctors pharmacies. This strategy is highly efficient and key for our company as they already have a complete infrastructure and regional coverage many patients for our products. We have an exclusive line of products for Doctors under the brand DermoBase, with specific promotional initiatives. We provide doctors with their own brand and the opportunity to offer something different to their patients. This is a growing trend, since other companies are realizing that promoting to doctors is an efficient way of generating more business. This strategy is becoming more popular, not just in dermatology. Distributors are also specializing in other areas and favoring those that require special conditions in storage and quick distribution. Companies are putting more and more focus on service to doctors but also to patients, since this last audience is becoming more informed and prepared due to internet and social media campaigns.
Q: What is your opinion of the incorporation of plant extracts and other natural ingredients to medications?
A: The trend of adding phytochemicals to products is growing and such lines are seeing success especially in Europe, and there is a great opportunity in countries like Mexico. In the second half of 2015 we will launch two products that include phytopharmaceuticals, one to treat Rosacea and another that is similar to a corticosteroid and will treat several skin conditions. These products are comparable to medicines since they have proven therapeutic effects derived from plants. There is a large area of opportunity in Mexico for phytopharmaceuticals. The general population is unaware of these products and doctors only trust branded pharmaceuticals which have clinical studies to support them. We have clinical studies for the products we will launch this year and we have studies that prove our products will have a comparable effect to other medications. The companies we are working alongside have clinical support and medical endorsement so they will focus on targeting consumers, as there are many consumers who never visit dermatologists and only use self-medication. Over the counter products are significant opportunity areas for us and, while we are already present in many pharmacies, we are working to further increase our visibility. We are working on two different fronts for promotion: through physicians and through pharmacists to properly inform our final consumer.
Q: What are your top priorities for 2015?
A: We are focusing on growth in many areas of the company and adopting a 360° approach. To increase the number of products we distribute, the number of employees, and rising productivity in our operations. Our main goal is to tackle the outcomes of the market mapping we performed to detect opportunities, to optimize our spending and resources, and focus on demand.