Mexico’s Growing Presence in the Pharmaceutical Industry

One of the key takeaways from Ti’s recent report, Latin America Transport and Logistics report is the increasing influence of Mexico across the region. While automobile manufacturing is Mexico’s largest industry, the pharmacuetical industry comes in at second. There are well over 400 pharmaceutical companies in the country and combined, manufacture over 80% of the nation’s pharmaceuticals.

In addition, thanks to government regulatory changes, Mexico is the 12th largest pharmaceutical market in the world and the second largest in Latin America after Brazil accounting for almost 40% of all pharmaceutical sales in Latin America.

In terms of trade, Mexico leads the region in pharmaceutical exports with most destined to the US followed by such South American countries as Brazil, Colombia and Venezuela.

Similar to exports, most imported pharmaceutical goods are from the US with Germany, France, Switzerland and Puerto Rico also major import trade partners.

So, it’s no surprise there is great opportunity in Mexico. According to IHS Global Insight, Mexico’s pharmaceutical industry is expected to grow 10.2% 2013-2020 CAGR and as a result, logistics companies are expanding services into this important industry.

Examples include Marken, a global clinical supply chain solutions provider, which in 2013 expanded its pharmaceutical depot in Mexico City. The facility is located closer to the Mexico City airport and has a total of 1300 square meters of GMP-compliant space for temperature controlled storage and distribution of clinical trial supplies.

In 2014, UPS opened a multi-client facility located in Cuautitlan Izcalli, state of Mexico for the medical device and pharmacuetical consumption market in the region. The facility includes nearly 78,000 sq. ft. of healthcare-dedicated space.

DHL Supply Chain has also made big investments in Mexico. In 2010, it expanded its Macrocenter facility in Mexico City to include healthcare-specific services. Its Pharmashare solution allows it to provide specialized warehousing and distribution services for multiple goods including medical devices and biotechnology products as well as non-prescription, generic and patented drugs. The facility provides DHL Supply Chain’s capacity to store goods in a temperature-controlled environment to more than 13,500 square meters. [inlinead] In addition, DHL Express’ Worldwide Medical Express delivers temperature-sensitive vaccines and medications and also collects blood samples at doctors’ offices and ships them to testing points under temperature-controlled conditions. According to The Miami Herald, after introducing this overnight delivery service in Mexico, the delivery rate of blood samples from newborn infants to laboratories improved significantly, allowing labs to detect more than 2,000 cases of hyperthyroid conditions because the samples were fresh.

There are many more logistics providers investing in Mexico’s pharmaceutical industry and perhaps even more as pharmaceutical manufacturers potentially move operations from Puerto Rico elsewhere due to government tax breaks not being renewed. Other manufacturers are taking advantage of favorable trade terms that NAFTA offers. Among the multinational pharmaceutical companies with facilities in Mexico include Pfizer, Novartis Merck, Sanofi and Sun Pharma. More than 50% of pharmaceutical companies are located in Mexico City (Distrito Federal), followed by about 10% in Estado de Mêxico and 12% in Jalisco.

Not only is the Mexican pharmaceutical industry a great opportunity it is also one of caution. While current data is not available, it was estimated in 2011 that 25% of medications available in Mexico are counterfeits. According to one report, total sales of counterfeit drugs in 2008 cost companies more than $1.5bn. Mexico is not alone in this problem. Countries across the world are facing counterfeit problems. In fact security has remained a concern in all seven of UPS’ annual "Pain in the Supply Chain" Surveys. In the latest survey, 46% of executives cite this as a top supply chain concern.

So, despite security concerns, Mexico is becoming a leading country in the pharmaceutical industry within the Latin American region as well as a nearsourcing location for the US market. Logistics providers are expanding their services to address industry needs whether domestic or international or to meet NAFTA requirements.