Latin Business Chronicle: Mexico’s Shadow Pharma Market

Mexico’s counterfeiting, theft and illegal sales of samples cost drug-makers nearly $2 billion USD a year.

An article written by Guillaume Corpart, Manuela D’Andrea and Enrique Orellana for Kroll’s company newsletter, Tendicias and republished in the January 11 edition of the Latin Business Chronicle, details the size and scope of the illicit side of Mexico’s underground pharmaceutical market.

This excellent piece contains many examples and specific statistics relative to counterfeiting, fraud and adulteration of medications within Mexico. Here are some outstanding excerpts:

Mexico’s pharmaceutical industry faces unique challenges. The $15.5 billion USD market is plagued by counterfeit goods, theft on a massive scale and irregular sales practices. Illicit activity in Mexico’s pharmaceutical industry is estimated at $1.9 billion USD per year – 12 percent of the formal market.

Counterfeiting is the primary problem, accounting for 80 percent of the illicit market. Theft -- including assaults on pharmacies and warehouses, cargo robbery, and pilferage inside health institutions -- represents an additional 12 percent, while the illegal sale of drug samples accounts for 5 percent.

Sales of counterfeit drugs in Mexico in 2008 are estimated at $1.5 billion USD. Counterfeit medications are the product of a sophisticated and lucrative shadow industry, with global reach. Well organized counterfeiting rings slip fake medications into Mexico’s legitimate drug supply. The operations of the legitimate industry are replicated by shadow players who engage in importing, manufacturing, packaging and distributing of their false merchandise.

Two types of counterfeiting practices are rampant in the Mexican market:
- Partial or total product substitution: It is common practice for counterfeit medication to include the original active ingredient but in smaller dosage, thus creating a sub-potent drug. Although the active ingredient is present, the medications may be laced with potentially hazardous material. In one case, counterfeit medication for erectile dysfunction was found to have traces of LSD, a psychedelic drug.
- Counterfeiting of expired drugs: Organized crime rings acquire expired medicines in order to repackage and reinsert them into the distribution channels. The absence of a formal waste management system for expired drugs encourages the “recycling” of drugs back into the formal distribution system.

Pharmaceutical companies operating in Mexico realize that this illicit activity erode their market position and long-term competitiveness. It is no longer possible to rationalize that these risks represent sunken costs that companies have to live with. The profitability of pharmaceutical manufacturers and distributors in the long run requires the implementation of preventive measures, anti-counterfeiting technologies in the form of monitoring systems, as well as product authentification methods.

To learn more about pharmaceutical anti-counterfeiting technologies, visit:
www. xstreamsystems.net.

Read the entire Latin Business Chronicle article at: http://www.latinbusinesschronicle.com/app/article.aspx?id=3905

FDA Sets Up Shop in Mexico

The US Food and Drug Administration (FDA) has continued its expansion outside of the United States with the opening of an office in Mexico. This is now the third FDA office in Latin America after Costa Rica and Chile.

The move is the latest in an effort by the FDA to influence foreign markets, and in particular in areas which serve as important importation partners into the US supply chains including pharmaceuticals, medical devices and food.

The new office which is based in the capital, Mexico City, "represents an important step as we re-design our product safety strategy," commented FDA Commissioner Margaret Hamburg.

Mexico is the largest pharmaceutical market in Central America, with 2009 sales estimated to reach around $9bn and expected to grow to nearly $15bn over the next five years, according to Business Monitor International. It is the second-largest pharmaceutical market in Latin America as a whole.

XStream Systems encourages the continued expansion of the FDA into countries that are important trading partners but also suggest that regulatory bodies and supply chains, internationally and domestically, utilize technologies like EDXRD to protect itself from fraudulent, adulterated and counterfeit materials.

To learn more about supply chain protection technologies, visit: www.xstreamsystems.net.