Salvador Berrios
Managing Director
Qually
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Testing the Quality of Alcohol Gels

By Jan Hogewoning | Fri, 10/02/2020 - 13:28

Q: How has COVID-19 affected the type of products you are testing?

A: Most of the projects right now are related to COVID-19. Alcohol gel is a major one. We are testing samples from clients to see whether the alcohol is contaminated with methanol or other volatile contaminants. The FDA released a new guide for alcohol gel. As a result, the agency is sending a lot of alcohol batches back that were sent from other countries to the US. This is why manufacturers in Mexico are asking us to test their products according to even stricter standards. The primary ingredient, alcohol, comes from different parts of the world. Brazil is a major supplier of ethanol made from sugarcane. Mexico simply does not have enough sugarcane to supply its manufacturers.

We have also emerged as somewhat of a consultant for the transport of alcohol. Manufacturers need to know if the alcohol was transported in clean barges under the right climate conditions. I think this new demand for alcohol gel will continue for a few years. People are establishing new sanitary routines in their lives. In the area of disinfectant substances, there are all kinds of products emerging, like natural sanitizers or even essential oils. Our clients are asking us if these things really have antimicrobial qualities before choosing to commercialize them.

Q: What other new products are emerging?

A: One new service we could start providing is testing cannabidiol (CBD). We have been waiting for two years for the legislative approval for legal production in Mexico. We have about 50 percent of the necessary technology already in place. Our total investment in tech for this is about MX$10 million (US$434,000). Our tests verify whether CBD oil has absolutely no trace or less than 0.5 percent of THC and therefore no psychoactive effect on the central nervous system. We are working with Canadian companies that have formed a cluster of high-level producers. A part of this cluster is dedicated to genetically modifying seeds to ensure the plant has no narcotic substance. The government is prioritizing the COVID-19 situation so the legislative process is a bit delayed. As a result, the international business potential has not materialized. For Mexico, the production potential of CBD is enormous. We are among of the largest global producers, which means the opportunity to transform this into a proper industry is big.

Another area in which we have been very active over the last two years is antiretrovirals. We are collaborating with Gilead Sciences on 12 different types of antiretrovirals. One is Remdisivir, for which we are facilitating the transfer of technology for the moment it arrives in Mexico. This will ensure the quality of the product in the Mexican market. Antiretroviral projects are not specifically linked to COVID-19 but to wider applications. Remdisivir, for example, is capable of reducing hospital stay by one day due to its beneficial effects. Gilead also sent us Sofosbuvir, Biktarvy, Ritonavir, Kaletra and Desferasirox molecules. There are also producers in Mexico developing antiretrovirals.

In the last year, we have also been testing a lot of OTC and consumer products. These are products you can buy at OXXO, like naproxeno or caffeine combined with aspirin. There are many producers in Mexico in this area that are improving their quality control.

Q: What is your perspective on the government’s current approach to medication purchases?

A: Normally, our primary market is generics, representing 50 percent of our operation. The different chambers representing pharmaceutical companies – CANIFARMA, ANAFAM, AMIIF and AMELAF – pleaded with the government to improve the current scheme. In a recent letter, they said, “If there is corruption, let us punish it. Let us create the basis for clean work and advance together.” What they do not want is for the government to ignore them and punish the whole Mexican industry by purchasing abroad. I also think that this is the worst decision for the country. We must fix the politics of purchases together. Look at Donald Trump. He got the main US pharmaceutical companies in the states together and said, “This is how we are going to do things now.” He aligned them with his view, instead of estranging them.

Right now, companies and associations are in negotiations with the government. Some are saying there will be an agreement but If there is none, the national industry could be badly affected. By opening public purchases to international suppliers, which is what the Mexican government is doing, you are displacing Mexican producers. If companies cannot sell their medications to the government, they have to depend wholly on the private market. In particular, companies that do not offer OTCs but just specialized products will suffer very reduced revenues. Lower revenues, in turn, mean less available resources for research and development. There can be no economy of scale without profits. If you are a company that has already invested in a biosimilar, for example, you are going to be in troubled waters. I think both the government and producers are to blame. If there is transparency, medication prices will favor the final patient.

The national industry will not be lost as a result of the government’s direction but it will certainly contract. The industry represents over 1 percent of GDP and over 600,000 direct jobs. It is an important sector for the country.

Q: What determines the cost of a medication?

A: What makes a medication expensive is all the different steps in the distribution chain, which can be as much as 50 percent of the final price. The problem in Mexico is that the producer is one party and the distributor another. Government purchasing volumes are enormous, which means that if it buys 50 million units of one product, these cannot be produced by just one lab. Distributors get the product from different laboratories to create a complete package. This means, however, that laboratories cannot sell directly to the government, which would reduce the middleman costs. Having said that, if everything was managed by direct purchasing through producers, the big players would squeeze out the smaller producers. The government has not created a new scheme to create a more economical distribution.

Q: What does the cost of logistics mean for purchases from abroad?

A: You can buy a medication for MX$10 (US$0.45) in India, but then you have to transport it to Mexico. The government has not done their math well when it comes to logistics. It happened with a lab here in Mexico, too; the government ditched it because the price was higher than the second producer. But when they asked the second producer to arrange distribution, they suddenly found the costs of the medication was much higher.

Q: What challenges are there in terms of quality control for medications from abroad?

A: In China, there are good, bad and very bad companies. The same can be said for India or for the US. There are many different degrees of quality. However, when something is cheap, there will always be a quality issue. Also, there is the issue of counterfeiting. The second challenge is maintaining quality throughout the entire transportation chain. Is there appropriate climate control throughout the process? Our company is an authorized third-party quality control of imported products. The government demands a quality certificate for every imported batch of medication. More than half of our Top 25 clients are importers. This includes Gilead Sciences, Zydus Laboratory, Aurovida Pharmaceutical, among others.

 

Qually performs laboratory tests for a wide range of substances, primarily for medications. It is one of the largest services providers of its kind in Mexico

Jan Hogewoning Jan Hogewoning Journalist and Industry Analyst

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