Life Sciences Outlook
Mexico . 2012
Driving scientific innovation
Mexico
A growing global pharmaceutical manufacturing market,
bolstered by its geographic proximity to the United States
Mexico
Global trends
The aftereffects of the recession, coupled with the European sovereign debt crisis, continue to
plague business operations in the mature market clusters of North America and Western Europe,
including those of life sciences companies of all sizes and maturity levels. Although most life
sciences companies continue to enjoy higher profit margins than those of other industry segments,
it has become markedly clear that the product development formula of the past no longer applies.
As a result, greater emphasis is being placed on the next wave of drugs and treatments – those
stemming from biological organisms. Additionally, companies are increasingly diversifying their
portfolios to mitigate risk and help fund the lofty costs of innovation, adding generic brands, crop
and animal science and even consumer products through mergers and acquisitions.
New product developments have become ever more costly and difficult to achieve. Drug makers
are attempting to achieve greater breakthroughs with less funds than in years past. The need to
increase a company’s likelihood of developing a new treatment continues to steer conversations
around location strategy. Although many companies maintain R&D in mature markets rich with
people capital and renowned research universities, others are turning to emerging global clusters
due to dedicated private and public funding.
Mexico market overview
The life sciences industry is currently estimated at MXN1.3 billion ($96.0 million),¹ or 2.4 percent of
GDP, according to the Mexican Association of Pharmaceutical Research Industries (AMIIF).
According to PricewaterhouseCoopers, the industry market value is estimated to reach MXN 17.3
billion ($1.3 billion)¹ by 2020. With growth projected upward of 12.0 percent, greater attention is
being paid to regulation, safety and enhancements to the overall R&D and patent development
processes. Mexico’s geographic proximity to the United States is a major factor in its anticipated
growth. Several multinational companies have already moved certain operations to the county and
additional investments are expected.
Currently, about 200 companies have operations in Mexico, with the domestic production of drugs
concentrated in Mexico City, State of Mexico, Puebla, Morelos and Jalisco states. According to
KPMG's report on the local pharmaceutical industry, 85.0 percent of drug production occurs through
the subsidiaries of multinational firms, and even though local companies have made efforts to
improve on R&D and innovation, many still lack the ability to produce their own medicines and
therefore rely on the experience of large multinationals. As such, life sciences companies in
Mexico are largely responsible for the manufacturing, distribution and exportation aspects of the
value chain. Given the large manufacturing presence in the country, improvements to healthcare
programs to increase public access to drugs and enhancements to IP protection and regulatory
framework are top of mind to support both consumer and business growth in the coming years.
Outlook
One of the greatest threats to Mexico’s growing life sciences industry is its rampant illegal market,
currently estimated at MXN 1.3 billion ($100.0 million)¹ annually by the Pharmaceutical Industry
National Chamber (Canifarma). Canifarma continues to emphasize the need to combat smuggling,
piracy and the gaps in IP protection, realizing progress on all factors are needed to maintain and
encourage further investment by foreign companies.
1 Six-month
Industry statistics
Mexico is a leading country in the Americas
with regard to life sciences product production
and consumption, and ranks ninth worldwide.
Jones Lang LaSalle • Mexico • 2012
average conversion rate of 13.31 Mexican Pesos (MXN) per U.S. dollar, as of October 2012.
1.0
Researchers in science, per thousand
total employment
Graduate students in science, engineering
manufacturing & construction, as a % of
total graduate students
0.4%
25.6%
Gross expenditure on R&D, as
percent of GDP
Total patent applications,
residents only
Sources: UNISCO Institute for Statistics, the World Bank
951
About Jones Lang LaSalle
Jones Lang LaSalle (NYSE:JLL) is a financial and professional services firm specializing in real estate. The firm offers integrated services delivered by expert teams worldwide to clients seeking increased
value by owning, occupying or investing in real estate. With 2011 global revenue of $3.6 billion, Jones Lang LaSalle serves clients in 70 countries from more than 1,000 locations worldwide, including 200
corporate offices. The firm is an industry leader in property and corporate facility management services, with a portfolio of approximately 2.1 billion square feet worldwide. LaSalle Investment Management,
the company’s investment management business, is one of the world’s largest and most diverse in real estate with $47 billion of assets under management. For further information, please visit
www.joneslanglasalle.com.
Jones Lang LaSalle Research
Jones Lang LaSalle’s research team delivers intelligence, analysis, and insight through market-leading reports and services that illuminate today’s commercial real estate dynamics and identify tomorrow’s
challenges and opportunities. Our 300 professional researchers track and analyze economic and property trends and forecast future conditions in over 60 countries, producing unrivalled local and global
perspectives. Our research and expertise, fueled by real-time information and innovative thinking around the world, creates a competitive advantage for our clients and drives successful strategies and
optimal real estate decisions.
Jones Lang LaSalle
Monte Pelvoux 111, 5th Floor
Lomas de Chapultepec
México, DF 11000
Calzada del Valle 112 Ote, 1st Floor
Colonia del Valle
San Pedro Garza García, NL, 66220
Blvd. Agua Caliente 10611, Suite 506
Edificio Centura
Tijuana, B.C., Mexico
www.joneslanglasalle.com.mx
©2012 Jones Lang LaSalle IP, Inc. All rights reserved. No part of this publication may be reproduced by any means, whether graphically, electronically, mechanically or otherwise howsoever, including without limitation photocopying and recording on magnetic tape, or included in any
information store and/or retrieval system without prior written permission of Jones Lang LaSalle. The information contained in this document has been compiled from sources believed to be reliable. Jones Lang LaSalle or any of their affiliates accept no liability or responsibility for the
accuracy or completeness of the information contained herein and no reliance should be placed on the information contained in this document.