This is a best prospect industry sector for this country.  Includes a market overview and trade data.
Last Published: 10/12/2018
The healthcare sector offers some outstanding prospects for U.S. exporters in Mexico despite some specific challenges.

Overview

Mexico’s healthcare sector consists of three very different sub-sectors: medical devices, healthcare services, and pharmaceutical/bio-pharma. In 2018, medical devices remain a top-prospect sub-sector, but there may be niches of opportunity in the other sub-sectors that CS Mexico could help interested companies explore.
 

Mexico’s Healthcare System and Trends

Mexico operates a universal healthcare system that evolved through Federal Government actions in the mid-2000s and was fully enacted in 2012. The system is split between an extensive government-run healthcare network and private sector providers and insurers. The government network covers both the provision of care and pharmaceuticals and is further split between a network for government employees covering some 13 million people and a network for the rest of the population covering roughly 60 million. Individual Mexican states also provide independent healthcare services. Mexico dedicates 4.2 percent of its GDP to the health care sector.

In all, public healthcare institutions account for 70–80 percent of all medical services provided nationwide, while private healthcare institutions serve approximately 25–30 percent of the Mexican population, including the 32 million people with private medical and accident insurance. In 2014 (most recent data available), Mexico had 22,831 public health care units, including 1,386 hospitals, of which 194 were highly specialized medical centers, and 2,960 accredited private hospitals. Only about 100 private hospitals had more than 50 beds and the capacity to offer highly specialized services. Major health provider groups include Grupo Empresarial Angeles, Star Medica, Hospital San Jose, Centro Medico ABC, Hospital Español, Amerimed Hospitales, Hospitales San Angel Inn, Grupo Christus Muguerza, and Medica Sur.

Mexico’s epidemiological profile has changed dramatically over the past 20 years. In the 1990s the main causes of premature death were communicable diseases such as diarrhea and respiratory infections or birth complications. However, in 2016, obesity and diabetes were declared epidemics, the first noncontagious diseases to be considered as such. Deaths associated to these diseases caused 17.4 % of deaths in 2014, according to the Mexican National Institute of Statistics and Geography, INEGI. However, a quarter of deaths stem from a range of cardio-pulmonary diseases including ischemic and hypertensive heart disease, stroke, and chronic obstructive pulmonary disease. Obesity is the major risk factor for all the above, affecting seven in ten Mexicans. Interpersonal violence is also a relatively high killer, accounting for 5.4 percent of deaths, or 32.7 deaths per thousand. Cirrhosis of the liver, kidney disease, and road injury round out the top ten lists of killers, at 4.1 percent, 2.5 percent, and 2.3 percent of deaths, respectively. Both the Organization for Economic Cooperation and Development (OECD) and WHO (World Health Organization) maintain a wide range of health indicators for Mexico and other countries that may be useful for U.S. companies assessing this sector.

The growth of medical tourism is also significant in Mexico. While estimates vary, Patients Beyond Borders estimates that 200,000 to 1.1 million patients travel to Mexico yearly. Most are Hispanics living in the United States, but others are U.S. citizens seeking lower-cost healthcare options, and a smaller group of individuals from Canada and the United Kingdom seeking fast treatment options combined with a tourism destination.

Healthcare partnerships also drive cross-border healthcare, including hospital affiliations with educational institutions, partnerships for specialized care, and franchise or network activity.

 

Market Access for Healthcare Products

Mexican public healthcare does not use a reimbursement system as in the United States. Public healthcare institutions purchase the products for their services and do not charge to the patients per product or event. Patients receive all the products included in their attention with no charge. Reimbursement only exits for patients with private insurance coverage. Patients pay for care and are later reimbursed. There is not a general reimbursement policy for all insurance companies. Each company determines prices and reimbursement according to its own policies.

There are some challenges of note for U.S. suppliers in the healthcare sector. First, the size of the public-sector healthcare system means that sales into the system must go through a government tender process that has lowest-price-provider guidelines and, for medications, must be on the official government approved supply list called the Cuadro Básico (Primary Table) and Catálogo de Medicamentos (Catalog of Medications).

Second, both the government low-price guidelines and general price sensitivity in the market can cause pricing challenges for U.S. companies, particularly at the current value of the peso. This has increasingly driven purchases to lower-cost and often lower-quality producers from Asia and elsewhere.

 

Third, to get around low-price supplier concerns, government purchasing preferences generally place incentives on suppliers from countries with which Mexico has a free trade agreement. While this benefits U.S. suppliers under NAFTA, it also benefits European and other suppliers, and it can also disadvantage products which do not qualify for FTA treatment due to content from a mix of countries or non-FTA countries. For future developments and information on eventual agreements related to the NAFTA renegotiation, check the Fact Sheets and NAFTA pages at the Office of United States Trade Representative (www.ustr.gov).

In terms of regulatory approvals and market access, Mexico remains sovereign as to setting and maintaining its regulations. For anything applied to or entering the body—whether a device, instrument, or pharmaceutical—a sanitary registration is mandatory. The Mexican regulatory framework for the medical and pharmaceutical sectors includes norms and registration requirements:

 

  • Mexican Official Standards. Compliance with Mexican Official Standards (Normas Oficiales Mexicanas, or NOMs) is mandatory for all products sold in the Mexican territory.
  • Sanitary Registration. In addition to Official Standards, medical devices as well as pharmaceutical products such as active ingredients, finished medicines in bulk, and finished medicines in retail packages, must be registered with the Federal Commission for the Protection Against Sanitary Risks (COFEPRIS). Intellectual property protection is a separate process with a different government agency. COFEPRIS has been driving a process of unilateral recognition of market authorizations to streamline product approvals for devices and pharmaceuticals containing active ingredients that have not been commercialized before in Mexico and that are already approved by the U.S. Food and Drug Administration and the European Medicines Agency, among others. This process has already made the process of importation faster and easier, and it should continue to benefit U.S. exporters and Mexican consumers of U.S. healthcare products. CS Mexico and U.S. industry representatives have provided ongoing input to COFEPRIS. FDA approval may speed-up the Mexican approval process, but it does not exempt a product from Mexican sanitary registration requirements. Products not yet approved by FDA or other recognized agencies will undergo the standard process. For the registration of generic drugs, it is important to note that drugs are not covered by this streamlined process, and that there is a requirement to conduct the corresponding bioequivalence studies in Mexico. Only in some cases, such as personal use or research, are products exempted from being registered.
  • Import Permit. Once the product has obtained a sanitary registration code, the importer must file an import permit application with COFEPRIS to have access to the Mexican territory. This process also applies to import of products for personal use or research exempted from sanitary registration.
  • Certificate of Origin. Products qualifying as North American under NAFTA must use the NAFTA Certificate of Origin to receive NAFTA beneficial treatment. This certificate may be issued by the exporter or freight forwarder and does not have to be validated or formalized. Only North American products, as defined by the rules of origin, are eligible for preferential tariff treatment. In general, 51 percent or more NAFTA content by value is required to get a NAFTA Certificate of Origin. For future developments and information on eventual agreements related to the NAFTA renegotiation, check the Fact Sheets and NAFTA pages at the Office of United States Trade Representative (www.ustr.gov).

Some companies have experienced significant delays in receiving registration/marketing approvals from COFEPRIS. In addition, foreign medical device manufacturers require a legally appointed distributor or representative in Mexico, responsible for the product and its registration process. It is highly recommended that U.S. companies ensure that they carefully submit all documents the first time and exactly as requested to COFEPRIS, as small errors or omissions have resulted in long delays in some cases.
 

Leading Sub-Sectors

Leading sub-sectors are split between medical devices, pharmaceutical industry products, and healthcare services. While opportunities may exist across these sectors, only medical devices are considered to offer the growth and market entry potential to be a best prospect sector.
 

Medical Devices, Equipment, and Instruments

The following table provides the most recent statistics for medical devices in Mexico.

Medical Device and Equipment Market Size in Mexico
(Figures in USD billions)

 
 2015201620172018 (Estimated)
Total Local Production9.4513.7114.815.5
Total Exports7.5611.4311.612.5
Total Imports8.436.885.46.9
Imports from the U.S.
 
2.555.423.64.8
Total Market Size*10.329.168.69.9
Exchange Rates15.8918.6818.9119.09

*Total market size = (total local production + imports) - exports
Source: Secretariat of Economy’s Tariff Information System via Internet (SIAVI) & ProMexico

Mexico’s market for medical equipment, instruments, disposable, and dental products has fluctuated significantly in recent years in the mix of local production, exports, and imports. Imports of these products totaled nearly USD 5.4 billion in 2016 after dropping to USD 2.6 billion in 2015 due to a large spike of third-country imports. This number dropped again to USD 3.6 billion in 2017, though it matched an overall drop in imports that year and U.S. share remained about two-thirds of the import total. These spikes may be due not only to one-time purchases by the government healthcare system but also to construction of hospitals in both the public and private healthcare networks. U.S. suppliers sell a wide range of categories from dental instruments, hemodialysis, and electrocardiogram equipment to miscellaneous surgical and treatment items such as sutures, catheters, and syringes. The main third country suppliers of medical devices are: Brazil, Canada, China, France, Germany, Israel, Italy, Japan, the Netherlands, South Korea, and the United Kingdom. A growing competitive problem for U.S. suppliers is low-cost and frequently lower-quality supply from Asian sources, particularly China.

Medical products from the U.S. are highly regarded in Mexico due to high quality, after-sales service, and pricing, compared to competing products of similar quality. Consequently, U.S. medical equipment and instruments have a competitive advantage and are in high demand in Mexico.

Large public and private hospitals regularly seek out the most modern and highly-specialized medical devices. Some medium and small private hospitals with limited budgets buy used or refurbished equipment. By law, public hospitals cannot buy used or refurbished products.

To reduce medical device costs, public health care institutions can consolidate purchases for several institutions in one public tender. This forces suppliers to reduce prices to be more competitive. See also the Healthcare Services section immediately below.

The 103 medical schools located nationwide represent an additional market. The most important are housed at the National University of Mexico (UNAM), Universidad La Salle, the Popular University of Puebla, the National Polytechnics Institute (IPN), the University of Guadalajara, and the schools of the Army and the Navy.

 

Healthcare Services

In a drive to reduce costs and improve healthcare outcomes, there has been a trend towards outsourcing specialized procedures and care. For instance, most dialysis services in Mexico are provided by private sector companies under contract to public healthcare agencies. We have also seen increasing agreements with U.S. healthcare providers to deliver cardiac care, cancer treatment, and other specialized care either in Mexican facilities or for patients to travel to the United States. Many public and private hospitals are outsourcing surgical procedures to companies that offer integral surgery services or surgery centers. These services are delivered as “pay-per-event” and include all the necessary equipment and personnel required to perform a surgery. Thus, hospitals can avoid big capital investments in plant and equipment, materials, pharmaceuticals, and instruments, while gaining access to some of the most modern specialized surgical products.

 

Pharmaceuticals

Mexico is the eleventh largest market for pharmaceuticals in the world and the second in Latin America after Brazil. The pharmaceutical market in Mexico is divided into patented medicines, which represent 51 percent of the market by value, generics with 35 percent, and OTC products with the remaining 14 percent. According to the Federal Commission for the Protection Against Sanitary Risks (COFEPRIS), the country’s regulatory authority for the sector, generics represent more than 80 percent of the market in terms of volume.

According to BMI Research, the value of Mexico's pharmaceutical market reached MXN 189.68 billion (USD 10.03 billion) in 2017 and will grow to MXN 345.00 billion (USD 18.22 billion) by 2027. Pharmaceutical spending made up 0.88 percent of GDP and per capita spending was USD 78 in 2017. Through 2027, analysts expect pharmaceutical sales to grow at a compound annual growth rate of 6.2 percent, mostly driven by Mexico’s aging population and the increasing incidence of chronic diseases.

The United States is the largest foreign supplier of pharmaceutical products to the Mexican market. In 2017, the United States exported USD 973 million to Mexico, accounting for 22 percent share of the total import market. Imports from the United States grew 7.6 percent compared to 2016.

Pharmaceutical Products Market in Mexico
(Figures in USD billions)

 

 201520162017 (Estimated)2018 (Estimated)
Pharmaceuticals Sales* 9.3739.67510.02510.404
Total Exports1.9581.5871.358N/A
Total Imports4.8044.1434.242N/A
Imports from the US
 
1.083.904.973N/A
Total Market Size*N/AN/AN/AN/A
Exchange Rates15.8918.6818.91 19.09

*Note that the total market size cannot be calculated, as a local production figure is not available. The pharmaceutical sales figures come from the local industry sources below, they are calculated at constant 2017 exchange rates, and the figures approximate the total market size.
Source: Global Trade Atlas, CANIFARMA, AFAMELA, AESGP, BMI

Approximately 400 laboratories manufacture pharmaceuticals in Mexico and they are concentrated in the Mexico City metropolitan area, and the states of Jalisco, México, Puebla and Morelos. The Mexican pharmaceutical industry stands out because of the presence of 20 out of the 25 largest companies worldwide.

The pharmaceutical industry in Mexico is one of the most developed in Latin America, with significant local production of active ingredients and finished products. Earlier Mexican health regulations only allowed manufacturers to register to sell in Mexico if they produced the medication locally. When local and international manufacturers established themselves to sell products in Mexico, they made decisions about whether to source from their own Mexico-based manufacturing facility or to import. Over time, and particularly after the passage of NAFTA, local pharmaceutical production expanded dramatically even though importation became easier. (For future developments and information on eventual agreements related to the NAFTA renegotiation, check the Fact Sheets and NAFTA pages at the Office of United States Trade Representative at www.ustr.gov.)

Mexico is also one of the most biodiverse countries in the world, with an extensive tradition of research in biological applications and life sciences. There are about 180 firms that develop and/or use modern biotechnology in Mexico. Many of these firms are international corporations that have biotechnology-related activities with important applications in the following sectors: human healthcare, agriculture, marine resources, energy production and other areas. The sector benefits from government and private sector modernization and research and development programs involving research institutions and private industry.

There are four strategic life science regions identified in Mexico: Guanajuato, Jalisco, Morelos, and Nuevo Leon. Each boasts strong clinical research clusters, along with other clusters driven by foreign investment specifically oriented to pharmaceutical manufacturing. More recently, Baja California has developed industrial and academic potential in biotechnology. For instance, the city of Ensenada has cultivated R&D centers focusing in areas such as marine science and marine biotechnology, optics, applied physics, and agricultural biotechnology.

Mexico's pharmaceutical market growth will be driven in part by growth in biosimilars, for which sales are expected to surge in the coming years. Since June 2012, when Mexico published new guidelines for bio comparable medicines, local R&D and production in the biosimilars subsector have significantly improved, and several multinational companies have announced investment and product launches.

 

Opportunities

The U.S. Commercial Service Mexico is happy to assist you in exploring healthcare market opportunities. Below are some highlights.
 

Devices and Equipment

Best prospects in the healthcare sector devices, equipment, and instruments include the following:

  • Anesthesia equipment

  • Defibrillators

  • Electrocardiographs

  • Electroencephalographs

  • Electro surgery equipment

  • Gamma ray equipment

  • Incubators

  • Surgical lasers

  • MRI equipment

  • Patient monitors

  • Respiratory therapy equipment

  • Suction pumps

  • Ultrasound equipment

  • X-ray equipment

There may also be niche opportunities for pharmaceutical production, testing, and quality assurance equipment and supplies. The establishment of research clusters in Mexico can generate demand for equipment and technology to support the increasing research and development of new pharmaceuticals and biotechnology products.

To successfully compete across the device and equipment space, key factors include quality, after-sales service, warranty, and price.

Pharmaceutical Industry and Healthcare Services
The best sales prospects for pharmaceutical industry products and healthcare services are more variable than for medical devices. Export of U.S. pharmaceuticals to Mexico is not a best prospect area due to the growth of domestic manufacturing in Mexico and the trends for biosimilars, even though the United States remains a major supplier.

However, pharma sector opportunities include products and services for the large and growing pharmaceutical production industry. This may extend to management of clinical trials for pharmaceuticals and biopharmaceuticals specially designed for the Latin and specifically the Mexican population.

In healthcare services, the trends we outlined above in epidemiology, cost/quality initiatives, and medical tourism are generating demand for new treatment products and services, including niche opportunities for specialized medical service companies. Some opportunities may also exist for remote medicine, healthcare IT, and other technology-related offerings.

Web Resources

Public Institutions

Secretariat of Healthwww.salud.gob.mx
Federal Commission for the Protection Against Sanitary Risks (COFEPRIS)www.cofepris.gob.mx
Mexican Institute of Social Security (IMSS)www.imss.gob.mx
Institute of Social Security and Services
for Public Employees (ISSSTE)
www.issste.gob.mx
National Center for Health Technology Excellencewww.cenetec.salud.gob.mx

Private hospital chains

Hospital San Angel Innwww.hospitalsanangelinn.mx
Centro Medico ABC www.abchospital.com
Medica Sur www.medicasur.com.mx/
Grupo Angeles www.gass.com.mx/
Hospitales Star Medicawww.starmedica.com/
Christus Muguerza www.christusmuguerza.com.mx/
Beneficencia Españolawww.beneficenciaespanola.com.mx/
Amerimed Hospitals www.amerimedcancun.com/

Private Institutions

Mexican Association of Medical Device Innovation Industrieshttp://amid.org.mx
National Chamber of the Pharmaceutical Industrywww.canifarma.org.mx
Mexican Association of Pharmaceutical Research Industrieswww.amiif.org.mx  
National Association of Drug Manufacturerswww.anafam.org.mx/
Mexican Pharmaceutical Associationhttp://afmac.org.mx

Events

Contacts

For more information on the healthcare sector in Mexico, please contact:

Alicia Herrera

Commercial Specialist (Healthcare Overall)

U.S. Commercial Service – Mexico City

Tel.: +52 55 5080 2000 ext. 5215

Alicia.Herrera@trade.gov

 

Juan Carlos Ruíz

Commercial Assistant (Pharmaceutical, Nutraceuticals, and Bio-Pharma/Bio-Med)

U.S. Commercial Service – Mexico City

Tel.: +52 55 5080 2000 ext. 5223

JuanCarlos.Ruiz@trade.gov





 
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