Focus: Health

Manufacturing Life

Manufacturing Life

Jul. 17, 2013

This increase in expenditure is also reflected in per capita total expenditure on health, which has been slowly rising from $584.2 in 2002 to $940.1 in 2011, with the government contributing $256.1 in 2002 and $464.9 in 2011. Even though government expenditure has increased, the percentage of total government expenditure has decreased from 15.7% in 2002 to 12% in 2011. However, as a percentage of GDP, healthcare expenditure has risen from 5.6% in 2002 to 6.2% in 2011.


In many countries, the healthcare sector is about more than just healing the sick. There can often be a huge industry of manufacturers, R&D, biotechnology, and pharmaceutical companies supporting the national service. In 2011, ProMéxico estimated that the medical device industry was worth $8.56 billion, and it is predicted to increase to $14.91 billion by 2020, with an annual average growth rate of 6.4%. These products are not just for the domestic market either, as Mexico looks to become a leading supplier to the region and beyond. The country is already Latin America's leading exporter of gloves, gauze, and bandages; the third largest exporter of tubular metal and suture needles; the fifth largest exporter of medical, surgical, and dental instruments; and the sixth largest exporter of mechanotherapy, massage, and psychotechnical equipment. In 2011, exports of Mexican medical devices were valued at $6.07 billion, placing it 11th worldwide. Also, there were 2,321 medical device companies operating in Mexico, of which 744 were exporting their own products. One of the reasons companies are coming to Mexico to produce medical devices is because of its human capital and education system related to biotechnology. There are 16 universities that offer biotechnology and biomedical engineering degrees, and nine of these universities also offer post-graduate courses as well. Labor costs in Mexico are more competitive than in the past, so much so that in 2013, wages are on average 19.6% lower than in China, compared to 188% higher in 2003.


Another important segment of the health sector is the pharmaceutical industry. Mexico is in a prime position to become a leading player, mainly due to the size of its market, the large number of pharmaceutical manufacturers in the country, and the huge amount of money invested in R&D. “The pharmaceutical industry is growing by 3% annually… The reason for this explosive growth is the heavy investment in R&D, coupled with the discovery of the human genome, which are leading investigations toward very targeted therapies," Sandra Sánchez, General Director of Amgen Mexico, told TBY. One of the growing segments of pharmaceuticals is in generics. This is partly due to the fact that consumers now have more confidence in generics after reforms increased the quality level of the drugs. “The majority of the volume of our business now is in generics," Adrían G. Ruiz Parra, General Manager of Hetero explained to TBY. Physicians are now more willing to prescribe generics since the healthcare reforms, and people are more willing to buy them since they are much more affordable. As the fixed costs of manufacturing do not vary wildly, companies are producing much higher volumes, bringing the cost and the price down considerably.

The Mexican government has been active in standardizing its pharmaceutical sector. It has been able to gain certification from the Pan American Health Organization (PAHO), as well as five other international agencies, including the Food and Drug Administration (FDA), the European Medicines Agency (EMA), and the Japanese Pharmaceuticals and Medical Devices Agency (PDMA). The regulators have also cut the patenting time for products to reach market, which in the past could get bogged down in bureaucracy. At the moment, it can take two to three years to get approval on a new drug; however, if the drug has been approved in the EU or the US, then the patent can be expedited in as little as 90 days. This will be hugely beneficial to the industry and support innovation and development. This is supported by the fact that companies such as GlaxoSmithKline (GSK) have 17 ongoing R&D projects in Mexico. “We are investing Ps137 million a year into R&D, both in vaccines and on the pharmaceutical side," José Alberto Peña, Vice-President & General Manager of Pharmaceuticals at GSK. It is fourth the largest company in the world with a total $45 billion in worldwide sales. In 2012, it launched three new products from its Mexican research centers and plans to launch at least three more over 2013.