Staying Ahead in a Competitive LandscapeWed, 09/09/2015 - 12:33
Q: What is the story behind Liomont’s 75-year presence in the Mexican pharmaceuticals industry?
A: Liomont was founded in 1938 by a German chemist who developed his own products. The company decided to focus on the private sector early, at a time when many locally based companies were involved solely in the public sector. Only a handful of companies in Mexico have developed as we have: the majority remain focused on the public sector. In fact, today, 40% of our units are distributed to the public sector. This represents only 7% of our sales, however, since associated prices are so low. Our commitment to ethics and quality, embodied in our slogan, “pharmaceutical ethics since 1938,” is another pillar to our success. What this involves in practice is a commitment to promises made, as well as to the best in product quality and business practice. Our mission is to be a synonym for quality and trust.
Q: What role should private companies like Liomont play in improving access to healthcare amongst the general public in Mexico?
A: Central to this topic is the guarantee of fair access to products when patents expire. Today, in many countries, governments struggle to fulfil their responsibility to provide national healthcare, putting a huge stress on public finances. Private companies play an important role in increasing accessibility, particularly those which can provide generic alternatives to expired patents. We all know patented products are much higher in terms of cost, so, as local companies, we can provide important access to cheaper products. At the same time, government is responsible for immediate accessibility, so they must be able to avoid the financial pressure of relying on expensive imports.
Q: In what areas does the company have the largest impact potential?
A: We have an extensive product line, which mostly addresses age-related chronic disease, cardiovascular issues, and high-specialty drugs. When a patent for a major drug expires, 30 different registrations of its active ingredient appear immediately, eroding the market. Presence in major markets is important, but so too is a range of high-specialization products which can address age and obesity-related diseases.
Q: With competition increasing and M&A growing in the pharmaceutical sector, how much of a challenge will it be for Liomont to maintain its top-ten market position in the coming years?
A: Defining our current overall ranking is difficult. While we are positioned eighth in terms of volume, we are number 16 in terms of value. This is because we position our products at more accessible prices. For many years, we were the fastest growing company in the pharmaceutical industry in Mexico. Lately this has slowed down due to competition. Mexico carries a weight of expectation as an emerging market open to global investment. Of the developing countries in our region, Mexico has shown particular promise in terms of stability and opportunity, which has attracted foreign companies to the country. The resulting competition has forced us to adapt our strategies. At the same time, this is also a sector whose low growth runs contrary to expectations. So far in 2014 the pharmaceutical market in Mexico has not actually grown in value at all. In terms of volume the growth has been negative. The contrast between expectations and reality is hard to understand. I believe that alternative markets are growing, but under the statistical radar. Mexico’s increasingly stringent regulatory climate means that established practices are no longer viable in terms of cost and speed issues. Staying ahead of the game is therefore becoming crucial. For companies to grow they must look to the global landscape for inspiration. Partnership with foreign companies in specific areas is a promising approach, as is expansion through exportation.
Q: What measures is Liomont taking to expand its capabilities?
A: Purchasing small innovative companies is one interesting option and we are actively searching for opportunities. We also wish to ensure that we have a strong technological platform. Our manufacturing site’s technology is EMAapproved. We now export to European countries including Spain, Italy, and Portugal. After an FDA audit, we are now selling products in the US, with further products awaiting authorization. A global mindset is vital for any company aiming for longevity in the industry. Liomont has stayed one step of new regulatory requirements in Mexico, while other companies find themselves impacted by such rapid changes. By matching international standards throughout our history, we have been able to anticipate changes in the local market.
Q: What are the deepest challenges facing pharmaceutical companies?
A: Incremental innovation is the fundamental concept for how companies from other countries have achieved growth. This happens in countries like Japan, Korea, and China, where companies continually strive for incremental innovation. Ultimately, this means the private sector collaborates with universities on joint research initiatives. To duplicate this, Mexico must overcome some basic problems in the way that researchers work. Researchers are paid a bonus for publishing results, which cannot then be patented – to the detriment of the industry. Without product protection, it is difficult to launch a project. Additionally, researchers distrust industry. As a country we must work to bridge communication between private and academic sectors so that our joint aims are clearly understood and we can collaborate effectively.
Q: What is the timeline for bringing an innovative drug to market for Liomont? Do you see more Mexican companies becoming innovators?
A: An innovative drug can take ten years to advance from the laboratory to the market. We are currently working on one innovative drug with an academic institution and, while the success of a particular project cannot be foreseen, a sustained effort is vital for the industry. Today, there are perhaps ten companies in Mexico which could compete with Liomont. To combat this, South Korea offers one possible model. Before South Korea could establish long-term strategies to foster innovation, a complete overhaul of regulatory practices and incentive schemes was carried out.
Q: How do you see the market in Mexico evolving over the coming years both generally and for Liomont itself?
A: Currently, generics and branded generics make up around 70% of the industry. The two are difficult to separate since some off-patent innovative drugs continue to be marketed by innovative companies. Branded pharmaceuticals comprise 75% of the market’s value. In that sense the balance is very asymmetrical. In future, generics may increase to around 80% of market volume. In other countries, niche markets are important for determining what products may succeed in the long term. We live in an age of excess production, thanks to a plethora of global producers. If the effect of the major reforms currently taking place meets expectations, then the country should be able to reach new heights in pharmaceuticals.