Industry Trend Analysis - Diabetes Epidemic Will Boost Commercial Opportunities For Drugmakers And Device Companies - AUG 2017


BMI View: Mexico ' s diabetes epidemic will continue to provide revenue-earning opportunities for multinational pharmaceutical and device manufacturers. Rooted in continued unhealthy behaviour, the escalating diabetes-related health expenditure will drive the enforcement of preventative measures and the use of treatments in both the private and public sectors. Further government action, motivated by the positive outcomes of the tax on sugary drinks, will help attenuate the prevalence of the disease in Mexico.

Mexico will continue to present lucrative opportunities for pharmaceutical and healthcare companies focussed on the production of antidiabetic medicines and devices for managing the disease. Despite continued government intervention in the form of public awareness campaigns and taxes, Mexico remains plagued by a rising prevalence of obesity and diabetes. Mexico has the largest prevalence of diabetes as a percentage of the total population in the Latin America region.

Mexico Remains Regional Leader
Prevalence Of Diabetes, %
Source: International Diabetes Federation, BMI

Widespread Effects Behind Cost Escalation

Socioeconomic conditions found within Mexico - such as sedentary lifestyle and unhealthy diets - directly contribute to the country's growing burden of diabetes, along with other critical chronic diseases. The prevalence of the disease spans different segments of Mexican society, regardless of age, gender or socioeconomic status. According to the International Diabetes Federation, Mexico ranked tenth globally for the number of children aged 0-14 years, and sixth for the number of adults aged 20-79 years, with Type I diabetes in 2015. The number of adults with the condition is expected to rise from 11.5mn in 2015 to 20.6mn in 2040.

While Mexico did not place in the top 10 for diabetes-related health expenditure in 2015, it is projected to rise to sixth globally, with spending expected to reach USD18mn by 2040. Over 90% of private healthcare expenditure in Mexico is out-of-pocket, making some chronic diseases financially catastrophic for many households. A major economic burden in Mexico is attributed to diabetes. The government has stated that the country's inability to control this single chronic disease could bankrupt the entire healthcare system. In 2012, the financial requirements for treating diabetes increased by a third. In order to curb the rising cost burden of chronic diseases, the state health insurer, Instituto Mexicano del Seguro Social (IMSS), shifted to a preventative model of care in May 2017. The IMSS aims to identify those at risk of developing chronic diseases at an early stage to avoid an escalation of the costs.

Worsening Epidemic Incites Government Action

According to the Pan American Health Organization, Mexico is the number one consumer of sugary drinks globally on a per capita basis. In 2014, the Mexican government took measures to counter this trend by implementing a sales tax on sugary drinks of MXN1 per litre. The government intended to use the proceeds from the tax to, among other programmes, place water fountains in schools and public spaces. A study by Mexico's National Institute of Public Health and the University of North Carolina showed that the tax triggered a reduction in the average consumption of sugary drinks by 6% as well as an increase in the consumption of still water of 4% in 2014 as compared to 2013.

The impact on the levels of obesity and diabetes remains to be seen and will be contingent upon an intensification of the government's efforts. In January 2017, the local government of Mexico City announced that it was reinforcing its preventative measures against diabetes and obesity by launching a new diabetes awareness campaign. This follows a series of other initiatives implemented by the local government of Mexico's capital city, such as the opening of urban gyms and specialised diabetes clinics ( see, ' Specialised Diabetes Clinics Will Increase Commercial Appeal ' , July 21 2015).

Opportunities For Diabetes Drug makers And Device-Makers Alike

Pharmaceutical and healthcare companies will benefit from growing consumption of diabetic treatments as well as Mexico's overall growing expenditure on healthcare. Between 2016 and 2026, medical spending in Mexico will rise from MXN1,201bn (USD64bn) to MXN2,198bn (USD133bn), resulting in a compound annual growth rate (CAGR) of 6.2% in local currency terms and 7.6% in US dollar terms. Over our 10-year forecast period, per capita health expenditure will grow from USD507 to USD956.

The market for diabetes and obesity treatments in Mexico is largely dominated by local players, Laboratorios PiSA being the market leader and companies such as Laboratorios Antibioticos, Laboratorios Cryopharma and Probiomed having a strong presence. Nonetheless, substantial revenue opportunities will persist for multinational pharmaceutical companies. In November 2015, Boehringer Ingelheim invested approximately MXN400mn (USD22mn) in a manufacturing plant designed specifically for the production of antidiabetic medicines. This highlights Mexico as a market opportunity in terms of both supply and demand, with multinational insulin manufacturers as Novo Nordisk, Sanofi and Eli Lilly also remaining active in the country. India-based manufacturers such as Wockhardt and Biocon have also entered the Mexican market via joint ventures and partnerships with local companies.

One of the main drivers of the diabetes-driven health expenditure in Mexico is the lack of effective glycaemic control on health of patients. Compliance with national diabetes control guidelines is low, with only 52.7% of diabetes patients obtaining a blood glucose test and 9.6% obtaining an HbA1c test at the time of a regular physician visit [1]. This will provide significant opportunities for the uptake of glucose monitoring devices, as well as associated solutions such as connected insulin delivery devices and support mechanisms in Mexico. Uhma Salud, a company that offers health and wellness programmes for businesses, has begun to use diagnostic algorithms to track indicators such as blood glucose and body composition in companies around Mexico. Providers of nascent solutions such as diabetes data management platforms can capitalise on the high penetration of 3G and 4G mobile phone in Mexico to drive the uptake for their products.

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