From the August 2012 issue of HealthCare Business News magazine

The dynamism of the Mexican market has made it an ideal location for corporate expansion. Nevertheless,
Mexico still offers far more investment opportunities in the productive side of the business chain. Foreign companies, especially American ones, have heavily developed their productive capacities in the country, thus benefiting from the relatively cheap labor costs, the advantageous cost competitiveness ratio and generally from the maquiladoras’ system - a series of free-trade areas usually located along the Mexican-American border where factories import material and equipment in a duty-free basis.

Mexico’s proximity to the U.S. and the NAFTA agreement are considered simultaneously a blessing and a curse for its medical devices industry. On one hand, it has fed the development of the Mexican industrial infrastructure. On the other hand, it has hindered the development of strong international companies in the sector. “The close proximity of Mexico to the U.S. has made it easier and cheaper for Mexico to buy equipment from U.S. firms rather than to develop its own equipment here,” says Juan Pablo Dovarganes, general manager of Arroba Ingeniera, a Mexican developer and producer of equipment for newborns.
In the case of Mexican distribution companies, suppliers are predominantly located in the U.S., as it is easier for them to do business with their northern neighbor given both the geographic proximity and the different trade and equivalence agreements between both nations. Nevertheless, Mexican distributors’ general dependency on U.S. suppliers has a consequence. “One delicate factor related to Mexican dependence to U.S. suppliers is that our business performance and our competitiveness is very sensitive to the fluctuation of the U.S. dollar,” says Mario Rey, commercial director of Alrich Medical, a Mexican distributor of medical equipment. “As a matter of fact, last year was harder than usual given the revaluation of the dollar compared to the Mexican peso, and this has had an impact not only on medical device distributors but also on the health care sector as a whole.”

The Mexican Health Sector
In Mexico, the public health sector is complex and fragmented into diverse institutions. The Instituto Mexicano de Seguridad Social (IMSS) provides for the registered employees from the private sector, while the Instituto de Seguridad y Servicios Sociales de los Trabajadores del Estado (ISSSTE) does its part with the Mexican civil servants. Meanwhile, the Defense Secretariat as well as the national oil company, PEMEX, have their own health systems. Finally, every Mexican without access to any of the prior-mentioned institutions has the right to the Seguro Popular (Popular Insurance), a recently created plan providing health assistance to underserved Mexicans. Ramiro Gago, General Manager of Casa Plarre, the main Mexican manufacturer of anesthesia machines, underlines the importance of the introduction of the Seguro Popular: “the Seguro Popular is a reaffirmation of the fourth article of our Constitution, granting all people protection to their health. With this plan, the scope of the protected population has greatly increased, bringing the Mexican health system closer to a universal coverage.”

August 2012 Magazine

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