Bernardo Martinez Negrete
Galicia Abogados
Lisandro Herrera
Galicia Abogados
View from the Top

Supporting Pharmaceutical Companies in an Uncertain Climate

Wed, 11/07/2018 - 13:20

Q: How ready are the market and regulators for the potential legalization of cannabis products for medical and industrial applications?
BM: The proposed regulatory changes concerning marijuana remain in the initial stages but we believe its legalization, both for recreational and medical uses, will move forward because the party that backed the initiative has a majority in Congress. Many foreign companies from countries where marijuana is legal are already showing interest in this market and looking for ways to enter Mexico to eventually commercialize their products. The challenge is to establish public policy concerning marijuana use because its legalization will require the creation of awareness programs related to risks and addiction.
LH: Its legalization will lead to a larger offer of pharmaceutical products containing cannabis, which will create direct competition with current pharmaceuticals. Their entrance into the market will mean more options for patients. Cannabis products now fall into the psychotropics and narcotics categories in the General Law of Health.
Q: The new USMCA proposes increasing the timeline of intellectual protection for biotechnological products. What ramifications will this have if implemented?
LH: The current text of NAFTA 1994 states at least five years of protection for clinical data, including biological products; the text of USMCA increases this time to 10 years. This is a benefit for the original manufacturer to compensate for the great investment made to develop a new medicine. The scope of protection is not new, it has been there since 1994, therefore there should be no relevant impact on the local industry, since companies will have to continue generating their own clinical data.
Q: With the current sociopolitical challenges, what concerns do pharmaceutical companies have and how is Galicia Abogados supporting them?
BM: The main concern is legal certainty. Every company that works with the public sector requests legal agreements to be honored, especially for long-term contracts. The government is a key player in the acquisition of healthcare products.  Given this new government’s tendency to revisit or re-open long-term contracts, we are assisting clients in understanding their legal alternatives and protections in case of changes in laws or early termination of such contracts.
LH: The new administration says that strengthening local manufacturing is a goal but it is unclear how it plans to do that. The industry does not want to return to the days when international companies had to establish a manufacturing facility in the country. This is problematic for international companies because the supply system has changed and international companies manufacture a product in one or two facilities for the rest of the world.
Q: Considering the uncertain climate permeating Mexican industries, how do you expect the health market to behave in the short term?
LH: The industry will continue growing in line with the demand for medication related to epidemiological trends, such as the diabetes and obesity epidemics. As a result, government programs that address these issues must continue, although we are uncertain of what shape these programs will take.
BM: We do not expect changes in pharmaceutical sales to the private sector as it is diverse with a broad range of consumers. This sector will continue along its current path as long as regulations concerning pricing, sanitary registration and import regulations do not change. In fact, the private market might continue growing as the population gets older because more medical services are required as people age. However, the uncertain climate is causing Mexican sovereign debt to become more expensive, which may eventually create a shortage in the federal expenditures budget and, therefore, an impact in sales to the public sector.