Patrick Troop, Director General, Pharma Tycsa • Interview
Pharma Tycsa started out as a pharmaceutical distributor for the government but has over the years invested in drug compounding centers to become a key player in Mexico’s healthcare industry.
What is your perspective of the current health industry given the changes taking place in the country?
Change always presents opportunities, especially now given the developments in Mexico’s healthcare environment, particularly in the public segment, which is Pharma Tycsa’s main area of concern. This change promises to be positive, as the president has acknowledged that dominant players were controlling the market, thereby curbing competition, making for high prices and lax quality. The only downside at the moment is uncertainty as to where the industry is going. Sales have declined, and payments from the public sector have been delayed. For example, the Institute for Social Security and Services for State Workers (ISSSTE) has not paid a single invoice for the whole year thus far. We are not getting any answers from the government on this, although I have faith in its determination to address the situation.
What strategies is Pharma Tycsa using to diversify its portfolio to mitigate these risks?
Pharma Tycsa is pursuing private markets, especially through its newest division—oncology and nutrition. Pharma Tycsa started out as a pharmaceutical distributor for the government, and three years ago we launched this new division and invested in open drug compounding centers. There are three areas where we process drugs through compounding centers: nutrition, for example, compounded food for premature babies to be fed by tube; oncology; and antibiotics. At our compounding center, we prepare chemotherapy treatments. It involves opening drugs, mixing, preparing, and then repackaging them for patients to receive chemotherapy by catheter. We built the laboratory and it is regulated by COFEPRIS. We do not manufacture the drugs; they are sourced from various pharmaceutical companies.
What other investment opportunities has Pharma Tycsa identified?
Even though compounding practices are regulated by COFEPRIS, there was a monopoly of one company in Mexico that operated 90% of compounding laboratories. We started investing three years ago, and it took us two years to become licensed. The opening up of the industry will ultimately be positive for players and patients alike. Since the new administration came in, most of the monopoly-owned drug compounding centers have been shut down for not complying with regulations, presenting us with a prime opportunity. Today, there are only around five private companies doing this work, including Pharma Tycsa. Over the past three years, we invested around USD3 million and built four drug compounding centers for public and private healthcare providers alike. We want to invest a further USD5 million over the next two years and open seven or eight additional centers. That will depend on the government’s plans for the sector.
Are there any other main projects that Pharma Tycsa is working on?
The company celebrated its 10th anniversary in October. Another group objective in healthcare is kidney dialysis, where we currently have five centers serving over 300 patients. Again, with the new regulations and the government’s willingness to expand the market, we are also willing to invest in the renal area. We have a business plan to invest around USD3 million in additional dialysis centers over the next two years.
We are planning to open a chemotherapy center in Peru. Tycsa Medical, our sister company, already has two centers in Lima with laboratory imaging and kidney dialysis. We own the building there and plan to open a chemotherapy practice there in 2020.
About 60% of our business is distribution and 40% drug compounding. My priority is to invest more in the compounding area. We have the infrastructure to support our commercial partners, namely the laboratories, and will continue to help them move their products nationwide. Depending on where the market is headed, we are willing to invest in new services and programs that are in line with the government’s quality healthcare goals. ✖
Invested around million in compounding centers in last 3 years
Celebrated anniversary in 2019
What role does Mexico play in Pierre Fabre’s international strategy?
For many years now, Mexico has been one of the development pillars for Pierre Fabre. Our Mexican operations will certainly continue to grow in the group’s internal rankings, especially with the introduction of a new oncology portfolio in Mexico and Latin America. The company has two core businesses: dermo-cosmetics and pharmaceuticals. The dermatology division is separate but it has strong synergies with our pharmaceutical division. Notably, we are working on an internal transformation plan that will boost our joint capabilities further. The plan includes digitalization, IT, logistics, R&D, and stronger financial discipline. All this will further help us in building a solid future. Once this transformation plan has been executed, we will shift more of our focus to patients and consumers.
How important is oncology for the company?
Oncology remains paramount in the company’s mid- and long-term strategy. We are committed to being a key player in this market, bringing novel treatments that will offer enhanced therapeutic alternatives for patients. Our goal is to not only improve their quality of life but increase life expectancy with lesser side effects. At Pierre Fabre, our core philosophy is that every time we take care of a person, we contribute to build a better world.
What is your perception of the legal framework for healthcare in Mexico?
The situation of the healthcare system in Mexico still remains somehow unpredictable and undefined. The new government brought in a great deal of disruption, so I am optimistic and hope that this first year of disruption will be the starting point for new and improved structures, organizations, and processes. We remain on hold and expect to see if the government will be able to consolidate the national healthcare system, improve the regulatory and access capabilities, and consider innovation as one of the key development poles. The question remains on how they will untangle and finance all the issues in order to avoid a shortage of products.
We distribute our pharmaceuticals through large wholesalers. In the retail segment, more and more regional mid-sized distributors will gain share and robust pharmacy chains will grow and expand further. As a result, independent pharmacies will suffer. Our strategy is to continue with our current distribution partnership model, but as the entire setting will surely evolve in the next five years, we will follow new trends and remain strongly committed to our distribution partners and grow with them, especially in the e-commerce arena. The challenge overall, and our core responsibility, is to make sure that patients and consumers can easily access our products at the best price.
What main trends in the healthcare industry are you keeping track of?
Governments and pharmaceutical companies should work together to prevent tropical diseases that can be avoided or minimized. In that light, a prevention system should be classified as a national priority. Moreover, Mexico and other regional countries have an aging population, so we must continue to invest in R&D, technology, genomics, and robotics.
Our priorities remain Mexico, Brazil, and Argentina. We are planning to work with our strategic partners to expand into Colombia, Chile, Peru, and Ecuador.
In Latin America, one of our main goals is to roll out our new portfolio for oncology, especially in Brazil, Argentina, and Mexico. 2020 will also be the year of consolidation with strong partnerships in Colombia, Ecuador, Peru, and Chile. At the same time, we will continue to invest, build, and grow with our current portfolios across Central America. The next few years in Latin America will be challenging, as unpredictability and volatility will be the main drivers of the market. In light of that, it is crucial that we remain financial and ethically disciplined. ✖