In what ways has Marzam diversified its business portfolio?
Our business is primarily focused on the private sector, where 96% of our sales come from. We have defined our business in different strategic pillars so we have a key component, namely independent pharmacies, as well as regional pharmacies, national pharmacy chains, supermarkets, private hospitals, and the public sector, which represents 4% of our business. Each pillar has its own unique strategy, and they are completely different businesses with unique functions and requirements. One of the key things we did in the last three years was to implement specific specialized teams for each of these businesses, and implementation has been excellent. In the past, Marzam was focused on pure prescription products, though today we have a unique portfolio of prescription, consumer, specialized, and controlled products and have diversified further into generics and specialized products, which have been our main growth areas in the last 12-18 months. We have 10 distribution centers in the country, and the product portfolios in each of those distribution centers can be extremely different. We have sought to adapt our offerings based on regional requirements.
What trends in the market are health product distributors focusing more on?
Marzam is heavily focused on prescription medication. We are experiencing significant growth in consumer products that do not require prescriptions and enormous growth in generics. Mexico is the number-one consumer of generics in the world; 83% of the volume consumed in Mexico is generic. Previously, distributors like Marzam did not focus on generics, though today they are a core part of our business whereby we are growing our presence, sales, and team in generics. The same goes for consumer products. We have a unique strategy for private hospitals. Typically, companies focus on top-tier hospitals, though there is a massive area of opportunity in the middle and lower segments, which are underserved. Another area that we have been growing our presence in the last 12-18 months is specialty products.
Can you tell us about your USD6-million investment in fleet and a distribution center?
From an investment perspective, we are always challenging ourselves on what we need to improve. The healthcare distribution sector has low margins, around low single digits. Our investment is heavily focused on building efficiencies for our business as top-line margin growth will not grow much more. In the last four years, we have renovated 100% of our distribution fleet. We have also invested a significant amount in technology and are currently experiencing a big transformational change around SAP. All this is a large upfront commitment in terms of investment, though we expect this to translate into efficiencies in our business and way of working going forward. Our goal is to ensure that we are making the right strategic choices for our business not only for today but the next five to 10 years.
What strategies has the company used to mitigate the security risks in Mexico?
It is definitely a challenge, and we continuously look at the different alternatives from a security perspective. We distribute to approximately 27,000 pharmacies in the country every two days, which is a significant commitment and requires a lot of infrastructure. Security is an issue; however, we have been able to overcome many of these challenges by implementing technology as well as having a greater level of interaction with the local, regional, and federal authorities.
What is your vision for the company?
Our intention is not to invest in pharmacies but to provide a better service to our customers. We are continuously adapting and ensuring that our infrastructure is one step ahead, and we adjust continuously based on our conversations with commercial partners, providers, and customers. Today, we are distributing to 15,800 independent pharmacies, which is 30% of our business, so this is the most important strategic pillar today. That does not limit our focus on national pharmacy chains or supermarkets, which are also an important part of our business.