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The Health & Life Sciences Sector - Mexico

Current situation

Mexico´s health care sector is growing and facing complex and challenging health care needs

The Mexican healthcare market was valued at 79 BUSD in 2014

([1]) and offers a wide range of opportunities for Swedish companies. It is driven by an ageing population, economic growth and improved access to healthcare. Parallel to this, chronic diseases and other health issues are increasing care volume. The government is introducing policies and programs that promote innovative research, where the objective is to support the development of new medicines that combat chronic diseases[2]. The epidemiological focus has gone from transmittable diseases to chronic degenerative diseases, which forces the nation’s health care model to change from react and response to act and prevent.

Mexico is a sizeable market for all types of medical devices. Imports of equipment, instruments, disposable and dental products reached 4 BUSD in 2014. The US Department of Commerce estimates that imports account for 80% of the local demand for medical equipment and instruments and about 40% of demand for medical disposables. Baja California is the location for Mexico's main medical devices cluster, where this region accounts for around 33% of the country's total exports in the sector and where over 80 companies that export medical devices are active[3]. Foreign Direct Investment (FDI) between the years 2005-2014 exceeded 3 BUSD, with mainly European and US investors.[4] Further, Mexico is the world’s second largest market for medical tourism, only behind Thailand, with a market valued at 3 BUSD per year, where Mexican agencies reckon that this number could triple or quadruple within the next 7-8 years ([5]), rife with opportunities for foreign investment.

Although the population is relatively young, with approximately nine people of working age to every adult over 65, the country faces complex and challenging needs ahead according to OECD’s review of the Mexican healthcare system. Whilst life expectancy over the globe increased by three years on average, rising from 77.1 to 80.4 years between 2000 and 2013, it only increased by 1.3 years in Mexico, from 73.3 to 74.6 years. This means a widening of the gap in longevity between Mexico and other countries from around four to six years. This development has made the Mexican government strive to provide better care for the elderly[6]. ), and Swedish companies offer a wide range of elderly care products and best practices that can be applied to Mexican health institutions.

Obesity has become a serious problem for the Mexican population, with a significant impact on overall health standards. Over the past 30 years, Mexico has become one of the countries in the world most heavily affected by the global epidemic of obesity. The country is now second only to the United States in overall obesity, its prevalence increasing from 69.5% to 71.3% of the adult population in the short period between 2006 and 2012 (OECD 2016). At this rate, this nation is now one of the countries with the highest child obesity prevalence in the world with one in three children being overweight or obese. As a result, diabetes, the chronic disease most directly linked with obesity, is spreading rapidly in Mexico, affecting 16% of the adult population (OECD 2016).

A snapshot of the health system in Mexico

Dependent on your occupation and if you are part of to the formal or informal labor market there are different systems that provide healthcare services.

Salaried or formal-sector workers are usually either covered by the Mexican Social Security Institute (IMSS, with approx. 60 million insured) or Institute of Social Services and Security for Civil Servants (ISSTE, with approx. 12 million insured). Although citizens that participate in the formal economy are covered through IMSS and similar systems, they often seek treatment from private healthcare providers, where the service is perceived as better. Non-formal sector workers are covered by Seguro Popular that, unlike the other systems, does not cover treatment of chronic diseases and therefore people who have low incomes often have to pay for these services themselves. This is particularly problematic with the harsh impact of diabetes among the population.

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The cues for receiving treatment at publicly administered hospitals often are so long that it forces dialysis patients that need regular treatments to seek more efficient options, mostly through private healthcare providers. As a consequence, out-of-pocket spending accounts for close to half of overall health expenditures. In general, there is a high demand for better provisioning of health-related services, creating a necessary growth of the health care sector as whole that is under development.

As mentioned, this is a significant figure in Mexico: in 2014 total health expenditure equalled 6.8% of national GDP. This fact, along with strong market growth in recent and coming years, makes the market more attractive to potential new Swedish entrants.

As a proportion of total spending, 52% of Mexico´s expenditure comes from public institutions, while countries such as Chile (46%) and the United States (48%) show lower public expenditure.

Out-of-pocket spending accounts for 48% of this spend, with countries such as Chile (54%) and South Korea (43%), having a similar rate to Mexico. The fact that 52% of out-of-pocket spending is concentrated in the three highest income deciles suggests that much of this spending may be more related to choice than to access, benefiting the private sector (OECD 2016).

What does the future hold? - Exceptional market growth potential and openings for innovative solutions within chronical disease care 

Expenditures on health within the Mexican market are indeed significant and the expected yearly growth rate in the healthcare market is about 5 percent for the coming years. The estimates from the Mexican government are even higher, forecasting more than 6 percent annual growth, and the figure to reach US$101 billion in 2019.[7] The Mexican market for medical devices ranks as the 11th fastest growing market in the world, and it is mainly supplied by foreign manufacturers[8]. Meanwhile, Mexico is the ninth largest exporter of medical devices worldwide and holds the number one position in Latin America[9].  

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As a result of the increasing obesity in the country, diabetes, which is the chronic disease most directly linked with obesity, is spreading rapidly in Mexico and is now affecting 16% of the adult population[10]. In addition, even more people suffer from diseases connected to the circulatory system, which can also be linked to obesity. This has caused the government to work towards creating national programs promoting physical activity as well as legislations to address the national obesity problem. Taxes on food and non-alcoholic beverages are being introduced to improve public health and to lower the rate of obesity and reduce the prevalence of diabetes in the country. 

Although public healthcare has become increasingly accessible for almost the entire population many problems persist where services cannot be provided by the public healthcare systems. Therefore, the Mexican government has reinforced its commitment to unify existing public health care sub-systems into a universal social service in the coming years. This should improve the efficiency and provide better protection for the most vulnerable. 

BuSiness sweden interpretation of the situation

Opportunities in private healthcare system and elderly care

Given the nature of the healthcare system in Mexico, Swedish companies could enter and grow their market by initially addressing the private healthcare system. It offers greater resources and reduced timeframes for product registration and policy creation. This would allow companies to create revenue while reaching for opportunities in the public sector, where the largest healthcare provider in Latin America IMSS is particularly important. Companies should consider a mid- to long-term perspective when conducting sales towards these public institutions given the time needed for national and institutional sanitary registration.

As the Mexican government has increased the focus on elderly care there will be plentiful of opportunities in this sector, for both products as well as best practices that can be utilized by the Mexican health institutions. The same is true for products or services that can help remedy the national epidemic that is obesity and the diseases that come with it, both in terms of prevention and treatment.

As for market entry, Swedish medical devices and equipment can be imported duty free with a certificate of origin. Imports are subject to a 16 percent VAT. All medical and health care products that touch or affect the human body must be registered prior to sale or use in Mexico. Obtaining sanitary registrations and market approval of medical devices is often technical and time consuming in Mexico, but products that have been previously approved in USA and Japan can apply for a fast submittal process in Mexico[11].



[1] September 2015, Marketline Industry Profile Healthcare Providers in Mexico, www.marketline.com

Författare: Yazmin Maya, Project Manager
Uppdaterad: 14 nov 2017
14 November 2017