Diabetes and heart conditions are two of the diseases that most attack Mexicans, and with the growth of the aging population in the country, serving these patients opens up opportunities for the pharmaceutical market. Fernando Cruz, president of Novartis Mexico, wants to take advantage of them to drive aggressive growth with a strategy that is already advancing along three routes.
The ultimate goal is ambitious. The manager plans to close 2022 with a growth in sales of between 9 and 10%, with the same aggressive pace as last year, which was close to 7.5%. In 2020, the year of the pandemic, the advance was just 1%, according to company data.
The first axis of the pharmaceutical company’s strategy is innovation. Novartis plans to become the company with the largest number of new products in the Mexican market and is already working hand in hand with the Federal Commission for the Protection against Sanitary Risks (Cofepris) to reduce the time for sanitary authorizations from four years to one.
The company projects that 10 new medicines will arrive in Mexico to treat the diseases that most afflict the population, such as dyslipidemia, hypercholesterolemia, cardiovascular problems and mental health conditions, whose financial burden is more than 100,000 million pesos a year for the public health system, which is financed by the federal government.
“In Mexico there are enormous opportunities to continue bringing disruptive innovation that helps us address issues such as diabetes or cardiovascular diseases, which is the number one cause of death in the country. Mexico has incredible potential to continue positioning itself as a priority market for the organization”, declares the manager.
The new drugs are part of the 200 investigations that the company has worldwide in one of the three stages of development and clinical evaluation, and that will seek approvals before authorities such as the United States Food and Drug Administration (FDA, for its acronym). in English). The company spends $9 billion a year on research and development.
For Cruz, innovation also goes into the business model. Now, the company receives payment per unit or per box for its different treatments, but the goal is to migrate towards a model in which the treatment is not paid for until the patient has results, which, from their perspective, will provide financial sustainability to the health system.
“A treatment for metastatic breast cancer, which has a survival rate of five to 10 years, will give results over that time and the system can defer payments, and that is when it becomes sustainable. This is a totally different business model,” he explains.
In favor of the company is the change in the demographic bonus. The Mexican population is aging, while birth rates are declining. And once the young population reaches adulthood, they will require the services of the health system. At the same time, an increase in chronic-degenerative diseases is expected, which represents a financial burden of 70% for the public system.
With these plans, the forecast is that Mexico will remain among the 20 most important markets for the company, out of the 155 countries where it has a presence.
To achieve the changes that are required to have efficient medical coverage, it is necessary to work together with the authorities, says Iván Vázquez, an independent business strategist. Only in this way will the business be profitable and, at the same time, serve the most vulnerable populations.
“It is complex with pharmaceutical companies because their business is not only about selling, some also embrace the social side, and it is necessary to have relationships with all the actors, especially in the public sector. And this is where there are some pending issues that lead to a lack of medication,” he says.
Teamwork
Novartis Mexico has a balanced business, highlights the manager, with 50% of its attention to the public health system and the rest, to the private one. And although 90% of the population depends on some public institution and 10% on private ones, more than half of the population purchases medicines as an out-of-pocket expense, which also provides potential for the development of sale to the private sector, that is, pharmacy chains.
On the side of access to medicines through State institutions, the president of Novartis, who took office on an interim basis in November 2019 to assume permanently in October 2020, has worked hand in hand with the authorities, what has served to avoid the shortage of its medicines and that in the country cover about two million patients.
The company kept communication channels open with the United Nations Office for Projects and Services (UNOPS), which is now in charge of purchasing medicines for public clinics and hospitals. And it has also done so with authorities from the Ministry of Finance and Public Credit. This allowed it to transition to the new purchasing model without causing a gap in drug distribution.
“It was challenging, but we managed to build a relationship of great trust with the authority and that has allowed us to deliver very positive results in the public consolidated purchase, while implementing a very aggressive strategy for the development of the private channel, in addition to the collaborative strategy with the authority. regulation to speed up the periods of access and that the population has access to treatments”, says Cruz.
