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Analysis

Mexico Potential API Manufacturer After COVID-19

By Miriam Bello | Mon, 07/13/2020 - 13:43

COVID-19 evidenced the industry’s high dependence on certain markets. One of the strongest logistic and supply chain disruptions was in API production, which mainly happens in Asia, specifically in India and China.

WHO describes Active Pharmaceutical Ingredients (API) as “any substance used in a finished pharmaceutical product, intended to furnish pharmacological activity, to otherwise have direct effect in the diagnosis, cure, mitigation, treatment or prevention of disease or to have direct effect in restoring, correcting or modifying physiological functions in human beings.”

According to MDTV Alliance, depending on the complexity of the molecule required, synthesis of APIs might need multi-step complex chemistry utilizing a range of processing technologies. API manufacturers are highly specialized and globally, Teva, with headquarters in Israel, and Dr.Reddy’s, located in India, are two of the largest API manufacturers.

Manufacturing APIs involves a regulated process that requires strict safety and quality standards. While these are determined by each country, the final API product is inspected and licensed by the regulatory entity of each country where it arrives, for example the FDA in the US and COFEPRIS in Mexico. However, MDTV Alliance warns that “regular inspection outside the country of use can prove difficult with counterfeiting and contamination being high on the list of various agencies’ concerns.”

During the COVID-19 pandemic, API distribution was disrupted when India and China limited logistic operations to secure internal supply. This caused global concerns and production delays but it also raised a question: could this be an opportunity for Mexico?

In an interview with MBN, President of the Mexican Pharmaceutical Council (CFM) Jaime López de Silanes explained China and India represent around 80 percent of the global API market. “Mexico needs strategic mechanisms between the government and the pharmaceutical industry to promote national API production and reduce this dependence,” says Silanes. This is an opportunity for the country, especially now with USMCA’s enforcement. “Even the US is actively promoting this route, which makes this an ideal time for Mexico, the US and Canada to promote medium and long-term commitments between companies and governments to create certainty for investments.”

Esteban Abad, Vice President and Head of Upper Latin America at Glenmark shared with MBN his views on the subject. “It has been said that Mexico could become an API producer but it is not that simple. While we might have manufacturing capabilities, there needs to be a specific demand to fully develop them as the infrastructure required for a single API is not cheap.” Abad also explained that for this to become real, Mexico would need global demand to ensure profitability. Without this, exporting the product from India would end up being the easiest and most profitable route.

KPMG expert Ignacio García-Tellez, Director of the Health Sector, foresees a different outcome for the country after COVID-19. “Mexico has a strong chemical industry, which can be configured to provide the pharmaceutical industry with APIs. USMCA enforcement will strengthen our position as a key player in North America, so there are very high expectations for the manufacturing sector to grow.” García-Tellez share Silanes’ opinion, saying USMCA could be an opportunity for the country to exploit professional Mexican talent and encourage education to create technology and innovation.

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Miriam Bello Miriam Bello Journalist and Industry Analyst