The life sciences sector in Mexico

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Executive summary

Mexico’s health sector has been facing challenges derived from unstable economic, political, and social environments due to COVID-19, and unpredictable policies of the current administration. Austerity measures have translated into budget cuts in the public healthcare sector and the government has implemented changes to the procurement process of medical supplies.

Despite all this hardship, the market expects some growth, fueled by an expanding middle class with higher out-of-pocket spending, widespread chronic diseases, better access to health care services, and an aging population. Mexico has one of the highest rates of obesity in the world, which is associated to a high prevalence of chronic degenerative diseases, such as diabetes, cardiovascular diseases and cancer. Obesity-related diseases cost around 80% of all healthcare expenses in Mexico.

According to the National Institute of Statistics and Geography (INEGI) and the “Mexico Health Review”, Mexico is Latin America’s second-largest market for pharmaceuticals and medical devices (after Brazil). Large pharmaceutical companies are located in Mexico, which has positioned the country as one of the main manufacturing centers worldwide. Currently, 20 of the 25 largest pharmaceutical companies in the world have operations in Mexico. The market for generics has been growing exponentially in Mexico due to their affordable prices and the expiration of a number of drug patents. Around 8 of every 10 medications sold in Mexico are generics. Approximately 80% of pharmaceutical sales in Mexico are produced domestically and the remaining 20% are imported. Pharmaceutical manufacturers operating in Mexico have a strong dependency on imports of:

• active pharmaceutical ingredients (APIs)
• excipients
• intermediates
• medicine coatings

Mexico is also a leading importer of medical devices in Latin America, with imports representing nearly 80% of the medical devices sold in Mexico. Canada is still a small supplier of pharmaceuticals and medical devices to Mexico (less than 5%), showing that there is huge room for growth.

Relevant trends in the Mexican health sector include:

• a shift to a 4P medicine model (preventive, participatory, personalized and predictive)
• digital health
• upcoming regulation of cannabis for medical use
• higher demand for diagnostic technologies and less invasive procedures
• the growth of medical tourism

The life sciences market in Mexico is one that represents important opportunities for Canadian firms, however, it is not a market in which one can navigate easily. In addition, the link between opportunities and Canada’s expertise and capabilities can be difficult to pursue due to the specificity and irregularity of the opportunities. Canada also lacks branding in the life science sector in Mexico, which makes it mandatory for Canadian firms to have a physical and constant presence.

Canada is particularly strong in the natural and nutraceutical products and the Mexican market is expanding in this sector. Investment opportunities may also exist in the pharmaceutical sector.

The COVID-19 crisis has created a six-fold increase in demand of several medical supplies required for facing the pandemic which could represent opportunities for Canadian suppliers. These include:

• personal protection equipment (face masks, gowns, gloves, etc.)
• medical devices (ventilators, monitors, oximeters, thermometers, etc.)
• hygiene and sanitization products
• diagnostic tests
• pain/fever relievers
• certain medications

Despite the challenging economic scenario, the Mexican market for pharmaceuticals and medical devices shows promise, especially for products that can help with the treatment of prevalent chronic diseases such as diabetes, cardiovascular diseases and cancer.

Local distributors can be key business partners for the introduction of pharmaceuticals and medical devices in Mexico. They can assist with the registration, customs clearance, import, storage, distribution and sale of medical supplies. Visiting the market and participating in Mexican trade shows related to the medical sector are useful market entry strategies to obtain insight about the market and develop business connections.

For a full copy of the market study, please contact mexico.commerce@international.gc.ca