Dr. Dagoberto Cortés Cervantes
Former President of CANIFARMA, CEO
View from the Top

The Rise of Generica in a Changing Marketplace

Sat, 09/05/2015 - 13:06

Q: How is the increasing presence of generics changing the marketplace?

A: The use of generics represents significant savings in public expenditure. The government now spends 80% of its budget on innovative medicines, which in terms of units only represents 20% of its purchases. Conversely, generics represent 80% of total purchases and yet only comprise 20% of the budget. A good example of this is Atorvastatin, which treats high cholesterol. It was first developed by Pfizer and branded as Lipitor. Lipitor has been a worldwide success and was the number one selling pharmaceutical in Mexico. Once the patent expired, it only took two months for five generic versions to enter the market, which resulted in a price drop of 66%. Immediately after the price drop, the social security system that used to buy Lipitor increased its purchases by 200%, driven by a huge increase in the number of patients who could access the treatment. The increasing use of generics is also important considering Mexico’s changing demographics. Years ago, the product portfolio of a Mexican pharmaceutical company would have 70% of drugs targeted to fight infectious diseases. Today chronic diseases, mental diseases, and degenerative diseases are the top killers. Medicines for cancer, hypertension, diabetes, and high cholesterol have now become the top priorities. Pharmaceutical companies are constantly studying the market in order to be ready to bring a generic version of an innovative product as soon as the patent expires. This begins three or four years before the patent expires in order to have the generic version ready and waiting. The increasing presence of generics is beneficial for big pharma as well as the generics market, since it opens up the sector to new innovative products.

Q: How can pharmaceutical producers innovate in this competitive market?

A: Mexican pharmaceuticals are looking to offer fixed combinations of medicines by identifying ways to integrate the active ingredients of two medicines into one pill. This will reduce side effects and the number of pills in a dose, while increasing general comfort, which is especially helpful for elderly people, who may to take five to six pills per day. This is another way of adding value to a generic product. Approximately 20% of the sanitary registries granted by COFEPRIS consist of these fixed combination products. These products represent an interesting opportunity since it is challenging to produce fixed-combination products. They require a lot of research, laboratory testing, and highly specialized chemists. However these products do sell for higher prices than regular generics.

Q: What are the main misconceptions about Mexico’s health sector that need to be corrected?

A: Twenty five years ago, Mexico imported only 10% of raw materials needed to produce a pharmaceutical product, but today we import 95%. Mexico’s numerous free trade agreements have made our sector very dependent on foreign countries, especially on India and China, and 65% of the ingredients we import come from these countries. This can cause serious problems for pharmaceuticals as once a drug is approved, ingredient suppliers cannot be changed as the pharmaceutical company can only use ingredients from the supplier listed in the sanitary registry. If a registered foreign supplier has a problem with the delivery or prices go up this presents a big problem. As a consequence, the social security system that used to buy that drug finds itself in difficulty too. We have highlighted this problem to the current adminstration .

Q: What role should R&D play in transforming Mexico into a key exporter?

A: We have to discontine our culture of manufacturing commodities and look to become a manufacturer of high- technology and high-quality generic products. R&D is undoubtedly the right way forward. If Mexico is able to understand the needs of foreign countries in terms of top mortality causes, healthcare systems, and purchasing behaviors, millions of new potential consumers can be reached. Mexico is lagging behind the OECD standard, in terms of R&D investment, but plans to increase this spending by 1% by the end of 2015 have been announced. Efforts should focus on biotechnology as these are the products of the future. A group of Mexican pharmaceutical representatives recently travelled to South Korea to look for business opportunities in the biotech field through technology transfer initiatives. The aim of this trip was to reduce the time it will take Mexico to become a manufacturer of biotech products.