Considered the ninth largest worldwide, the Mexican pharmaceutical market is the leading Latin American market. Geographically, Mexico can serve the needs of well established pharmaceutical markets such as the USA and Canada, and also the emerging Latin American pharmaceutical markets.

Nearly 400 transnational and domestic producers compete in the Mexican pharma landscape. These firms, besides consolidating their base in this fast growing market and continue to increase exports towards Europe and the USA.

New pharmaceutical regulations were enforced in Mexico in the year 2005. By updating Article 376 of the General Health Law in January 2005, product registration is no longer unlimited. From now on, it will last for a five-year period. At the same time, bioequivalence standards are finally fully implemented. This means that copycat products are no longer exempt. Also, the drug classifications will be reduced to four categories.

With these changes, the market is expected to undergo a rapid transformation. Bioequivalent generics, which represented around 2.7% of the pharmacy sector in 2003, are expected to increase their share in 2006, taking over most of the sector left by copycats, which accounted for 10.3% in 2003. For research-based products, the only competitors will be bioequivalent generics.

Politically fostered, there is a new wave of generic producers looking for business opportunities in Mexico. In 2004, Teva acquired Sicor and Lemeri. Between January and February 2005, Ranbaxy and Wockhardt announced their Mexican joint-venture plans. Darby Overseas also acquired 53.3% of Laboratorios Kendrick, the second largest local generic producer. In September 2005, Dr. Reddy announced an agreement to acquire Roche's Mexican API business.

Further regulation is also expected regarding over-the-counter (OTC) switching and advertising. The growth of 'miracle products' has tarnished the OTC sector. However, OTC advertising was further regulated in 2005, which means that many 'miracle products' will be withdrawn from the market. Overall, the OTC sector should increase in 2006, fuelled by more consumer demand.

Distribution channels are becoming more competitive. Four leading distributors, Casa Marzam, Casa Saba, NADRO and Proveedora de Medicamentos, dominate the pharmacy sector. Casa Saba and NADRO alone account for 60%.