Branded Drugs in Mexico Experience 6.7% Decrease in Volume Growth During January

Branded drugs in Mexico have experienced a 6.7% decrease in volume growth and a 0.3% reduction in value for January, bringing increasing concerns for the industry, stated Dagoberto Cortes, president of the National Association of Drug Producers (Anafarm). The reduction in branded drug consumption in Mexico emerges within a broader trend in the country, where a shift in spending activities is seen towards less costly services and products, thereby affecting sales of branded drugs. As such, prescriptions for  branded (innovative) drugs have  reduced by as much as 50% in some cases, while a preference for cheaper generic versions has been on the rise. For instance, the generic market has experienced a constant growth of 25% in recent years, reported El Financiero.

While January 2009 figures represent an alarming trend for the innovative drugs industry, they do not come as a surprise, given the increasingly negative performance of this sector during the past years. Comparing 2006 and 2008's branded drug performance in the market, it can be inferred that there has been an ongoing declining trend in the sector, with clear signs of intensification. The generic trade association Amegi reported that, from January to December 2006, branded drugs’ volume growth increased by 13% and value growth decreased by 0.5%. For 2008, the market for branded medications decreased by 5% in volume growth and only expanded by 1% in value. Taking into consideration these numbers, projections for the expansion of the branded sector in the country seem dull.

Why are Generics Excelling?

There have been specific factors influencing the downturn of branded drugs in the market, and the resulting improving performance of generics. One of them has been the increasing usage of generic drugs in public institutions, which are important suppliers and consumers of generic drugs in the country. For instance the Mexican Institute of Social Security (IMSS) has registered a 15% growth in demand since October. The three main reasons for the increasing uptake of generic drugs with respect to government involvement are growing expansion of the government sponsored "Popular Insurance"; the increasing investment in the provision of medicines and medical products by the government; and the government's intention to include generics in 90% of total public drug expenditure by 2010 (see Mexico: 8 December 2008: Generic Medicines Could Represent Up to 90% of All Public Drug Purchasing by 2010, says Mexican Health Secretary).

Other factors influencing the decreasing participation of branded drugs in the market have been the difference in prices between branded and cheaper generic versions and the amount of savings that generics signify for the government and the public. This has influenced a switch from branded medications to generic versions, particularly among chronic patients, decreasing their spending on drugs.

Also, the commercial success of retail chains such as Wal-mart and Farmacia del Ahorro, where cost-saving offers and a growing selection of generic products resulting from the introduction of their own generics brands, have spurred consumption of generics in the country. For instance Medi-mart, Wal-mart's generic brand, now offers 460 different drugs from 23 different therapeutic groups (see Mexico: 1 August 2008: Wal-Mart Increases Generics Portfolio in Mexico by 300%, Cuts Prices by 50%). 

Projections for 2009 

Miguel Granados, executive President of Mexican laboratory Landsteiner Scientific, suggests that for 2009 the generics market will experience a 40-50% annual growth in Mexico. Conversely, Cortes, states that in an optimistic climate, branded drugs in the country could experience an 8-9% reduction in volume growth and remain with the same value size.

Outlook and Implications

Changes within the consumption of generics and branded drugs in Mexico are expected to continue in the following years. The economic crisis and the government's priority to provide accessible and affordable medications, as well as reduce its healthcare budget, will influence the dynamics of this market. Not only will the price of branded medications be affected by governmental initiatives, such as the introduction of the price reference list, but also the quantity of branded medications offered to the public may differ due to the trimming of drugs from the basic medicine reference list (see Mexico: 22 December 2009: Reference Price List Finally Set by Mexican Health Ministry). In addition to these factors, the improvement of the commercial image of generics pertaining to their quality and safety, mainly reinforced through the processes of drug re-registration and compulsory bioequivalence tests, will also benefit this sector.