Opening the Door to Foreign Devices

Access is a two-way street and consultants such as Medisi see a multitude of opportunities for international companies interested in expanding their markets and for Mexico to further open its doors to fresh innovations.

“The country is hungry for new possibilities,” says Luisa Gutiérrez, Director General of Medisi, a consultancy specialized in the medical devices segment. “Medisi is focused on opening access channels to and from Mexico.” She says Mexico is an excellent logistics point and its stability provides confidence to the international companies doing business here.

According to a Clear Water International Report on the medical devices industry, Europe recorded the highest M&A in medical devices in 2015 after the US. Chinese companies are also interested in reaching out to Mexico but they have quality issues to overcome, says Gutiérrez. “Mexico is a logistics hub. We have great human capital, a strategic location and many medical devices companies prefer to print ‘Made in Mexico’ on their products instead of other Asian countries,” she says.

Medisi’s goal is to attract companies that provide the best quality at an affordable price. These are often from Israel and Germany, countries where the industry is dominated by SMEs offering innovation for good value. Companies are watching currency exchange rates, she explains, so purchasing decisions are mostly made on price. Gutiérrez adds that Mexico’s purchasing trends are mostly driven by commodity products instead of innovative ones. “Private hospitals could benefit from high technology but they need to consider prices,” she says.

Despite the opportunities, international companies encounter many challenges when trying to access Mexico. According to Gutiérrez, local factors like the lack of English speakers are barriers to doing business here. She says that incoming companies expect a reimbursement system, which does not exist in Mexico because only 7 percent of the population has private insurance. “Out of pocket expenditure is about 50 percent and that is how healthcare works here. If someone has the flu, it is easier to go to a pharmacy and get something prescribed than to go to IMSS or ISSSTE and waste a whole day waiting for an appointment.”

Gutiérrez explains that this same backlog causes regulatory problems. The certification processes for medical devices challenges international companies. According to Gutierrez, in 2015 the system suffered severe setbacks in the wake of changes to COFEPRIS’ direction. “It is too soon to tell if the new people in charge are delivering results but I believe the people in power have a strong impact on the process. Once they change, we once again will have to go through new criteria with different requirements for evaluations.” Gutiérrez contends that “it is good to be more demanding but not when demanding standards based on new manufacturing criteria that have higher requirements than those in Europe and the US.”

Despite the challenges, many companies see the market opportunities that Mexico offers. “I always tell my clients there is no bad business here because even if their market share drops, it will still be a stronger market share than in most of the other countries they sell in.”

Foreign companies can also benefit from the manufacturing possibilities in Mexico. According to INEGI, there are 2,000 units of production equipment and 400 exporters, most of which are focused on manufacturing. The country’s sound reputation has helped attract medical devices companies and about 60 manufacturing sites to Baja California, according to ProMéxico, which has created one of the most important clusters for US companies.

“American companies know Mexico. It is close and manageable for them, so they see it as something tangible, while Europe still looks at Mexico as something yet to be understood.” For European companies, she adds, manufacturing in Mexico is not a priority. Medisi is working on attracting Europe based SMEs whose development possibilities and trend-setting capacity are appealing for the Mexican market.