A Year of Deep Changes and Opportunities

Mexico’s health sector is evolving into a hub of innovation and quality, driven by a cost-conscious private and public sector demanding better and more efficient services and the determination of the country’s regulatory agencies to change laws and guidelines. Standardized - and easier - compliance requirements have opened the door to controlling skyrocketing costs and reducing medical backlogs, a win-win for the country’s population.

Geographical advantages have also come into play, especially for medical services entrepreneurs, as the country’s proximity to the US and Canada has turned medical tourism into a booming business. In the north, Monterrey and Tijuana have solidified their position as nearby destinations for travelers in need of complex medical procedures at a lower price than at home but with the same quality, while the southern paradises of Cancun and Merida on the fabled Riviera Maya are attracting more and more foreign patients with the promise of convalescence by a Caribbean beach.

PRESENT AND FUTURE BUSINESS APPEAL

But as the number of companies on the outside looking in increases, so do the ranks of those already in the country setting up shop with an eye to turning Mexico into a base of operations for endeavors such as clinical research facilities producing tomorrow’s treatments, large-scale manufacturing both of patented and generic medication and cutting-edge manufacturing facilities for prostheses that will help people around the world stay active to a more advanced age.

BMI Research, part of the Fitch Group, says in a report on Mexico’s health industry that the Latin American nation is the sixth most attractive pharmaceutical market in the Americas, with projected medication sales of over US$10 billion in 2016 and US$11.2 billion for next year, hovering around 0.9 percent of GDP. Mexico’s investment promotion agency, ProMéxico, forecasts the production of medicines in the country will grow 5.2 percent between 2015 and 2020. The medical devices industry shows even better potential. BMI Research sees a 2014 to 2019 compound annual growth rate (CAGR) of 6.3 percent for the sector. Sales could amount to US$4.3 billion in 2016. “Market competition will drive prices down and increase access to the latest medical devices,” the firm says. The Federal Commission for the Prevention of Sanitary Risks (COFEPRIS), it added, will help the industry through efforts to improve third-party review processes and reduce registration times this year.

Össur, a medical devices firm headquartered in Iceland, is one of those betting on Mexico’s technological savvy and closeness to large export markets. In an interview with Mexico Health Review, Össur’s Site Director Eduardo Salcedo says that aside from Mexican workers’ expertise, labor competitiveness against manufacturers in Europe and the US are a significant factor helping to keep product prices down.

A LARGE AND DEMANDING POPULATION

Mexico’s approximately 128 million inhabitants pose a business challenge and an opportunity at the same time. The vast country presents a complex proposition for logistics companies to come up with new ideas to transport medicines and supplies at low costs and on time, while a growing middle class is increasing demand for medical treatments as rates of chronic conditions such as diabetes and hypertension climb. The desire for better health has also led to a rise in demand for access to facilities for physical exercise, such as health clubs, and a strong focus on prevention by both the public and private sectors.

Around 70 million Mexicans are under the care of the massive Mexican Social Security Institute (IMSS), a behemoth operating over 6,000 medical facilities and also responsible for the livelihood of millions of pensioners. Mikel Arriola, who for last year’s edition of this book was interviewed as the head of COFEPRIS, has taken the helm at IMSS with a firm focus on reducing costs. An overweight population of close to 70 percent of adults has prompted a culture shift at IMSS to emphasize prevention, with campaigns targeting changes in eating habits and promoting more active lifestyles. “We can no longer spend 80 percent of our budget on 20 percent of the population that failed to prevent their health conditions,” Arriola says. “If we do nothing, by 2050 we will go from spending MX$80 billion (US$4.2 billion) treating chronic disease to spending MX$350 billion (US$18.5 billion), which is unsustainable.”

Global organizations such as UNICEF have taken an active role in helping Mexico deal with nutritional habits and also to address the need to help the most vulnerable sectors of society integrate and develop according to their potential, looking after children and mothers and working together with the authorities to accomplish internationally agreed objectives.

And while private hospitals take a large chunk of Mexico’s out-of-pocket medical expenditures, which represent around 44 percent of the country’s total health expenses, they are also working hard to increase their service offerings in the face of better-informed and more demanding patients who are taking full advantage of the Internet information age.

PREVENTION ON SIGHT

The growing population coupled with the increase of chronic diseases has also made Mexican institutions focus on preventive strategies to stop the spread of maladies in their tracks. Institutions like the National Institute of Cancerology (INCan) and the National Institute for Public Health (INSP) are taking a hard look at cancer, the third cause of death in the country, with policies like the creation of the National Tumor Bank to provide more research tools for doctors, while companies are looking into more effective testing methods. One of the oldest methods of prevention, vaccination, is successfully implemented in Mexico as some child vaccination rates rank above those of developed countries like France, with around 98 percent of children inoculated against measles.

AESTHETICS AND BARIATRICS BOOM

Mexico is the 10th most populous country in the world but it is the third most important center for aesthetic surgery, trailing only the US and Brazil, according to the International Society of Aesthetic Plastic Surgery (ISAPS). Mexican doctors performed over 4.8 percent of all surgical aesthetical procedures in the world last year. A relevant portion of these come paired with weight-loss related procedures such as bariatrics surgery, a specialty in growing demand by medical tourists. “When a patient turns to plastic surgery it is because they have already reached a point where they have lost 30, 40, 100 kilograms

and are ready for aesthetic surgery,” says Fernando García, Director General of Tijuana Bariatrics, referring to patients at his specialty clinic just south of the border across from San Diego, California. The beauty market has also bloomed. According to the umbrella organization for the cosmetic industry CANIPEC, the country has attracted over US$300 million in foreign direct investment annually during the last decade.

SERVICES AT THE READY

In a fast-moving environment, doctors and hospitals cannot hope to handle things alone. After the regulatory changes that created more pathways for development of medical advances, consultants, law firms and certification specialists have taken the lead to guide scientists, medical practitioners and entrepreneurs through the legal system and toward a faster deployment of modern treatments.

Medical and technology clusters are increasingly becoming the vehicle of choice for hospitals, manufacturers and others to organize and promote regional specialties and helping to come up with unified processes and accreditations that ease concerns for both patients and industry newcomers. State governments are seizing the opportunity to bring jobs and income to Mexico’s regions by actively promoting the formation of these aggregates of knowledge and innovation.

Mexico is not without challenges. Hypertension, cancer and underage pregnancies are at high levels despite the best efforts of many and the push toward a universal healthcare system. But the sector is increasingly turning into an example of how discipline, collaboration and ingenuity can help guide patients, businesspeople and scientists toward more efficient and modern practices.