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9.

9.1.

The Pharmaceutical
Industry
Industry Overview

The Mexican pharmaceutical/drug product


market reached about US $9.6 billion in
2006, of which US $2.7 billion are imports
and the rest is produced locally.
Distribution of drug products grew 13% in
2006, while production value grew 8%.
Imports have grown at an important pace,
averaging 21% per year over the past three
years. The total drugs market continues
with strong growth.
The market is composed of patent drugs,
representing 20% of volume and 77% of
value, and generics, which continue
growing in importance in the market. The
key driver for this growth is purchases to
supply government-run health services,
which are interested in minimizing drugs
prices. Private sector purchases are
concentrated in patent drugs.
The market for generic drugs is estimated
at nearly US $2.3 billon, of which more than
$800 million are imported. The rest is
produced locally by 425 pharmaceutical
companies. There is a growing number of
imports of generic products, including the
strong market share development of the
Canadian company Apotex, which signed a
joint venture with Farmacias Benavides.
International pharmaceutical companies
manufacturing in Mexico supply 45% of the
generic market and control the production
of patent drugs.
Public and private health systems have
completely independent operations in
Mexico, and the population seeks public
services out of necessity, and not out of
choice.
The government provides health services
for most employees through the national
social security institute (IMSS) that is
funded by a mandatory payroll tax to all
employers and gives fees to employees.
Government workers receive similar
services through a parallel system called
ISSSTE. The rest of the population that
doesnt have private or public coverage can

receive medical services through the


ministry of health (Secretaria de Salud).
Private health providers offer world-class
services, while government services are
deficient. Shortages of supplies are
common and estimated at 30%. These
difficulties are even more evident in rural
areas, where only the most basic care is
offered. The government estimated that
health services coverage reached 90% of
the population and that quality of services
measures 70 from a scale of 100.
Some of the segments in the Mexican
pharmaceutical
market
that
have
experienced the highest growth during the
past five years are vitamins, herbal
products and nutritional supplements, which
are expected to continue growing at
average rates of 15% per year.
Competition in these segments is intense,
and new investment is expected for the
construction of additional manufacturing
facilities in Mexico to satisfy both growing
local demand and for exporting to other
Latin American countries.

9.2.

Company Ranking by
Size

After reviewing local regulations, it is clear


why the leading drug manufacturers are
mostly
international
pharmaceutical
companies manufacturing in Mexico. These
include: Abbot, Syntex, Roche, Aventis
Pharma, Glaxo Wellcome, Novartis, Wyeth,
Pfizer, Bohereinger Ingelheim, Bayer,
Janssen, AstraZeneca, Pharmacia Upjohn,
Merk Sharp and Dohme, Eli Lilly, SB
Pharma, BYK Gulden, Sanofi Synthelab,
Bristol, and Murk, among others.
There also are local pharmaceutical
companies that are active in the market of
manufacturing drugs, but it is uncommon
for a company without local manufacturing
facilities to be directly involved in this
business segment.

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9.3.

Key Players

Mexicos largest pharmaceutical companies include:


Top Pharmaceutical Companies Active in Mexico (Sales in Million US$)
Company
Origin
2006 Sales 2005 Sales
Bayer de Mxico / DF
GER
863.12
748.68
Pfizer / DF
USA
761.65
731.65
Novartis / DF
SUI
731.20
632.50
Roche / DF
SUI
641.68
688.16
Boehringer Ingelheim Promeco / DF
GER
636.44
544.25
GlaxoSmithKline / DF
GB
558.48
510.36
Bristol Myers Squibb / DF
USA
548.17
523.56
Schering Plough / DF
GAR/USA
424.07
547.98
Wyeth / Mx.
USA
377.77
323.25
Eli Lilly y Ca. de Mxico / DF
USA
340.81
291.87
AstraZeneca / Mx.
GB/SUE
296.77
241.81
Merck Sharp & Dome de Mxico / DF
USA
292.75
267.87
Merck / Mx.
GER
220.86
174.26
Ciba Especialidades Qumicas Mxico /
DF
SUI
160.57
144.23
Proquifin / DF
MX
62.04
50.83
Laboratorios Sophia / Jal.
MX
58.68
51.70
6,975.06
6,472.96

Growth
15%
4%
16%
-7%
17%
9%
5%
-23%
17%
17%
23%
9%
27%
11%
22%
13%

Source: Expansin Magazine, Top 500 Mexican companies.

Top Drug and OTC Distribution Companies (sales in million US$)


Company
Origin
2006 Sales 2005 Sales
Growth
Nacional de Drogas / DF
MX
2,222.22
2,037.04
9%
Grupo Casa Saba / DF
MX
2,185.34
2,025.35
8%
Fragua Corporativo / Jal.
MX
1,074.15
910.39
18%
Farmacias del Ahorro / DF
MX
793.52
663.06
20%
Farmacias Similares / DF
MX
689.63
605.56
14%
Farmacias Benavides / NL
CHILE
684.96
576.26
19%
Maypo / DF
MX
210.35
129.19
63%
7,860.18
6,946.83
Source: Expansin Magazine, Top 500 Mexican companies.

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8.4 Company Profiles

Astra Zeneca, S.A. de C.V.


Industry:
Sub Industry:
Location:
Size (sales):
Purchasing Potential:
Specific Business
Opportunities:

Pharmaceutical
Pharmaceutical and medical
products
Naucalpan, State of Mexico
US $290 million
US $220,000
Strapping machines

A) Company Description
Astra Zeneca is one of the leading global pharmaceutical companies manufacturing prescription
and over-the-counter (OTC) products.
The company has one manufacturing plant located in the area of Naucalpan, in the state of
Mexico, within greater Mexico City. It is considered to be state-of-the-art for the pharmaceutical
industry. The production from this plant is sold into the Mexican market and for export into
Central America. The companys operations in Mexico employ 1,100 people, from
manufacturing to its dedicated sales force.

B) Main Products Produced and How They Are Packed


The companys two main products are:
Product
Brand
Package
Nexium Astra Zeneca In blister, individual boxes and collective boxes
Crestor Astra Zeneca In blister, individual boxes and collective boxes
Most of the companys products are tablets, which are packed similarly as those indicated in the
previous table. The company also produces spray products that are packed in individual boxes
and in boxes for transporting the individual presentations to the points of sale.

C) Installed Packaging Machinery


Astra Zeneca uses a large number of packing machines acquired from various suppliers. The
following table shows some of the most relevant machines for its packing operations in Mexico.
Machinery Type
Individual cartoning machine
Individual cartoning machine
Individual cartoning machine
Strapping machine
Strapping machine
Collective cartoning machine
Plastic wrapping machine
Plastic wrapping machine
Plastic wrapping machine

Brand

Units

Origin

Markesini
Ulhman
Klockner
Multipack
Pester
3M
Markesini
Ulhman
Klockner

3
1
1
6
1
8
1
1
1

Italy
Germany
Germany
Italy
Germany
Italy
Italy
Germany
Germany

Average
Age
10
8
4
8
4
8
11
11
4

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D) Last Packaging Machinery Purchase


Over the last three years, the company has invested approximately US $2.75 million in the
purchase of packing machinery. These purchases resulted from the need to replace machinery,
and to improve the efficiency of the packing operation.
The most recent packing machinery purchase took place in 2007, when it acquired the
following:
Machinery
Cartoning machine

Brand
Country
Markesini
Italy

The purchase was made though the manufacturers distributor in Mexico.

E) Future Packaging Machinery Ordering Plans


Astra Zeneca develops its budget for the purchase of machinery based on the expected
demand growth for it products or new plans for the introduction of additional lines to the market.
The company is currently undergoing a production expansion phase and is evaluating the
purchase of packing machinery in the near future. One of the purchases that has already been
defined will consist of the following:
Machinery
Strapping machine

Brand

Units

Origin

Multipack

Italy

Motive of
purchase
Expansion

This purchase has an estimated budget of about US $210,000 at a 1.5 US dollar-to-euro


exchange rate.

F) Purchasing Policies and Financial Arrangements


The decision process for the purchase of packing machinery results from the combined input of
several departments within the company, including production, maintenance and management.
The decision also is reached after each of these areas has reviewed a minimum of three
alternative proposals that are normally requested from interested suppliers.
Once a decision is reached, the technical staff of the company travels to visit with the machinery
manufacturer and reviews that the machine meets the proposed specifications. The company
provides an initial payment when the purchase order is signed, and the balance once the
machine is in operation at the plant.

G) Factors That Influence Purchasing Decisions


The most important factors considered for a packing machinery purchase decision include:
1. Equipment quality and efficiency.
2. Price.
3. Technical support.

H) Comments on Preferred Brands and Existing Business Arrangements With


Packaging Equipment Suppliers
Astra Zeneca said that it has never used U.S. machinery, as the leading suppliers for the
pharmaceutical industry are European manufacturers. The company considers European
machines as being more efficient and having more advanced technology.
The company indicated a preference for two German machinery brands, specifically Ulhman
and Klockner.

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Astra Zeneca only provided comments about Italian and German suppliers, as those are the
only ones with which it has had experience.
Origin
Germany
Italy

Technology Flexibility
Very Good Very Good
Very Good Very Good

Service
Very Good
Good

Price
Good
Good

I) Strengths and Weaknesses of the Installed Machinery


Brand: Ulhman
Strengths:
Ease of use.
High speed.
Easy maintenance.
Simple technology.
Weaknesses:
Inadequate technical support in Mexico.
Brand: Klockner
Strengths:
High speed.
Fast to reconfigure production.
Easy maintenance.
Weaknesses:
Inadequate technical support in Mexico.
Technology too advanced for Mexican technicians.

J) Trade Show Attendance / Trade Publication Information


Technical staff and management from the company visit trade shows in Mexico, including
ExpoPack and Expo Farma.

K) Specific Interest
The company is interested in receiving information from suppliers with expertise in serving the
needs of the pharmaceutical industry.

L) Contact Information
Company Name:
Contact:
Position:
Address:
Telephone:
Fax:
Mail:
Web page:

Astra Zeneca
Mr. Javier Avila
Maintenance Manager
Super Avenida Lomas Verdes No. 67
53120, Naucalpan, Estado de Mexico
(52 55) 5374 9600
(52 55) 5374 9600
Javier.avila@astrazeneca.com
www.astrazeneca.com

176

Bayer, S.A. de C.V.


Industry:
Sub Industry:
Location:
Size (sales):
Purchasing Potential:
Specific Business
Opportunities:

Pharmaceutical
Pharmaceutical and OTC
medicines
Mexico City
US $847.4 million
US $4.5 million
Tablet filling and plastic
wrapping machines

A) Company Description
Bayer has been selling its products in Mexico for more than a century. It built its first
pharmaceutical plant in Mexico and began manufacturing in 1939. The company is currently
operating three manufacturing plants in Mexico. One plant is located in Mexico City and the
other two in the state of Mexico at close proximity to Mexico City.
The plant in Mexico City produces pharmaceutical and consumer care products. The plant in
Ecatepec (state of Mexico) manufactures for various product divisions, including material
science, crop science and health care, which include diagnostic kits. The Lerma plant (state of
Mexico) is the newest plant, inaugurated in 1997, producing consumer care products for the
Bayer healthcare division. Most of the products are OTC, which include leading local brands like
Aspirina (aspirin), Alka Seltzer and Tabcin (cold medicine).
This manufacturing facility is considered to be one of the most advanced plants operated by
Bayer worldwide.

B) Main Products Produced and How They Are Packed


The companys products are segmented into anti-fungal, stomach, and cold medicines and
vitamins. Some of the leading products include:

Product
Alka-Seltzer
Aspirin
Effervescent Aspirin
Antibiotics
Creams

Brand
Bayer
Bayer
Bayer
Bayer
Bayer

Package
Sealed plastic bag
Blister PVC aluminum
Sealed plastic bag
Blister
Tube

C) Installed Packaging Machinery


The company has a large number of diverse packaging machines in operation at its facilities.
The following table presents information about the most important examples of the machines
being used.
Machinery Type
Sealing Machines

Brand
Siebler

Units
5

Origin
Germany

Blister Machines
Blister Machines
Blister Machines
Carton Machines
Carton Machines

Bosch
Ulhman
CAM
IWKA
Bosch

1
4
1
3
1

Germany
Germany
Italy
Germany
Germany

Average Age
One: 2 years
Four: 16 years
16
3
16
4
16

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Carton Machines
Plastic wrapping machines
Pallet machines
Tablet filling machines
Tablet filling machines
Envelope sealing machines

CAM
Pester
MAB
Korsch
Fette
Siebler

1
3
1
3
1
5

Italy
Germany
Italy
Germany
Germany
Germany

21
3
16
7
2
Two: 6 years
Three: 15 years

The company noted that the machinery it has in operation is mostly developed to application
specifications presented by Bayer to its machinery suppliers.

D) Last Packaging Machinery Purchase


Over the 2006-2007 period, the company spent approximately US $5.25 million in the purchase
of packaging machinery.
The most recent purchase was during 2007, and included the machinery presented in the
following table:
Machinery
Blister machine
Cartoning machine

Brand
Ulhman
Ulhman

Country
Germany
Germany

E) Future Packaging Machinery Ordering Plans


Bayer has developed a purchasing budget spanning over the next seven years. This budget
requires the approval of both the top management of the Mexican operation, as well as the
world headquarters in Germany. The planned budget estimates expenditures in packaging
machinery of approximately US $2 million in 2008 and US $ 2.5 million in 2009.
Bayer purchases packaging machinery from suppliers specializing in the pharmaceutical
industry. The next packaging machinery purchase will include the following:
Machinery

Units

Origin

Tablet packaging machine


Plastic Wrapping machine

T.B.D.
T.B.D.

Germany
Germany

Motive of
purchase
Replacement
Replacement

F) Purchasing Policies and Financial Arrangements


Before proceeding with the supplier selection of packing machinery, the company develops a
detailed analysis of the specifications that must be met by the desired machine. Purchasing is
based upon the specific requirements of the company, and not on the adaptation of an existing
machine into their operation.
Once the company has developed the desired characteristics and specifications, it circulates
the information to various potential suppliers. These companies commonly use a basic machine
model, and develop a plan to retrofit the machine for offering a custom-specified machine that
meets the precise requirements outlined by Bayer.
Bayer commonly requests proposals from three to four qualified packing machinery suppliers.
The company usually agrees to a 50 to 60% down payment, with additional payments made
during the construction of the machine. The final payment of 10% is made once the machine is
in operation. The purchase contract has clear definitions of the specifications that must be met
by the machine; the supplier must commit to complying with the required performance.

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G) Factors that Influence Purchasing Decisions


The most important factors considered by the company when selecting new packing machinery
options include:
1. Machine specification.
2. Technology.
3. Supplier and brand reputation.

H) Comments on Preferred Brands and Existing Business Arrangements with


Packaging Equipment Suppliers
Bayer prefers European packing machinery, mentioning that German machines have always
met the technical requirements outlined by the company. It also mentioned that servicing for
German machines is good, though the wait-time for spare parts is longer. The company
believes that German suppliers are completely committed to servicing Bayers needs and will
take any action, even replacing a machine, to satisfy the client. The company believes that this
presents a sharp contrast with U.S. suppliers, though it did not mention any specific
experiences with U.S. suppliers.
The company prefers a list of German suppliers that includes Siebler, IWKA, Ulhman and
Pester. The company said that it is open to considering new suppliers, even if they are not
German.
Bayer indicated the following perception of suppliers:
Origin
United States
Germany
Italy

Technology
Average
Very Good
Very Good

Flexibility
Very Poor
Very Good
Very Good

Service
Average
Very Good
Good

Price
Poor
Good
Good

The company indicated that the exchange rate between the euro and the U.S. dollar is
increasing the cost of its machines in local currency terms. It will, however, continue purchasing
European machinery, for the company does not know of any alternatives that can offer the
same equipment quality and efficiency.

I) Strengths and Weaknesses of the Installed Machinery


Brand: Ulhman
Strengths:
Technology.
High output capacity.
Good customer and technical service.
Weaknesses:
Wait time to receive spare parts.
Brand: Korsch
Strengths:
Technology.
Solid construction.
High output capacity.
Weaknesses:
Waiting time to receive spare parts.
No upgrading kits.

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J) Comments Related to Asian Packaging Machinery


Bayer said that it had been approached by a packing machinery supplier from India that was
offering very competitive pricing. The company mentioned that as price is not a decision factor,
it doesnt have an interest in suppliers competing solely on price. The purchasing decision for
the company is based on technology, reliability and brand reputation.
The firm says that it knows for a fact that its suppliers are not shifting manufacturing to Asia.
Over the course of the production of its machines, the company visited the factory of its
suppliers in Europe between two and three times to check on the progress on the construction
of its machines.

K) Trade Show Attendance / Trade Publication Information


Bayer visits trade shows regularly, including packing and pharmaceutical shows in Germany, as
well as ExpoPack and Expo Farma in Mexico. The company does not attend trade shows in the
United States. The company also receives trade publications and information from current and
interested suppliers.

L) Specific Interest
The company is interested in receiving information from potential suppliers specializing in
servicing the pharmaceutical industry. It is specifically interested in blister and cartoning
machines.

M) Contact Information
Company Name:
Contact:
Position:
Address:
Telephone:
Fax:
Mail:
Web page:

Bayer de Mexico S.A. de C.V.


Mr. Alfredo Velez
Technical and Maintenance Director
Carretera Mexico-Toluca. Km 52.5
5200 Lerma, Estado de Mexico, Mexico
(52-55) 5728-3000 ext. 4985 or 4882
(52-55) 5728-3363
alfredo.velezcalderon.av@bayer.com.mx
www.bayer.com.mx

180

Laboratorios Columbia S.A. de C.V.


Industry:
Sub Industry:

Pharmaceutical
Trade mark drugs, natural
products, other medical
specialty products, OTCs and
veterinary products
Mexico City
US $80 million
N.A.
Everything for the
pharmaceutical industry

Location:
Size (sales):
Purchasing Potential:
Specific Business
Opportunities:

A) Company Description
Laboratorios Columbia began operations in 1951. The company was acquired by Mexican
businessmen in 1989, and currently has two plants in Mexico and five plants overseas.
The firm manufactures semi-solid products (rubs), pills, tablets, oral suspensions, perfumes,
injectable solutions and powders in more than 250 different presentations.
In addition to its Mexican plants, which are located in Mexico City and in the state of Quertaro,
the company has two production facilities in Spain, one in Denmark and one in Canada.

B) Main Products Produced and How They Are Packed


Due to the large variety of products produced by Laboratorios Columbia, it is difficult to describe
each of the packing processes. In general terms, the company packs tablets, capsules and pills
in blister pack and in flasks; rubs in aluminum tubes; oral suspensions in plastic flasks; and
injection solutions in bottles and ampoules. The company also packs some of its products in
pouches.

C) Installed Packaging Machinery


The following table includes some of the machinery in operation at Laboratorios Columbia:
Current Machinery Used
Blister Machine, 90 p/m
Pouch Machines 60 p/m
Pouch Machines 500 p/m
Coding Machinery 120 p/m
Press Sealing Machines 50 p/m
Powder Filling Machine 45 p/m
Pouch Filling Machine 90 p/m
Tablet Filling Machines 160 p/m
Hot gum Labeling Machine
Labeling Machine 150 p/m
Cartoning Machine 150 p/m
Cartoning Machine 200 p/m
Carton Erecting Machine 200 p/m
Tablet Counting Machine 40 p/m
Labeling Machine
Induction Sealing Machines 50
frasks

Brand

Units

Uhlman
Volpak
B-matic
Domino
Devechi
All-fill
Volpak
Volpak
Compac
Libra
BFB
Marcesini
Multipak
King
NJM
Enercon

1
1
1
2
1
1
1
1
1
1
1
1
1
1
3
1

Origin

Average
Age
Germany
24
Spain
14
USA
12
USA
19
USA
19
USA
14
Spain
14
Spain
14
USA
21
Italy
10
Italy
10
Italy
14
Italy
14
U.K.
13
USA
7
USA
8

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Liquid Filling Machine 180f/m


Tube Filling Machine 120t/m
Blister Line
Filling machine

IMA
Unipack
Marcesini
Manesty

1
1
1
1

Italy
Italy
Italy
England

9
14
5
1

D) Last Packaging Machinery Purchase


Its last packaging machinery parchase took place in late 2007, when the company acquired a
labeling machine from the Mexican manufacturer Unin.
Machinery
Labeling Machine

Brand
Union

Country
Mexico

E) Future Packaging Machinery Ordering Plans


Laboratorios Columbia said that it does not have packaging machinery purchasing plans in the
short term. It indicated that currently, it is developing new product presentations, and once
those are developed, it will analyze the type of machinery needed to produce these new
presentations. Laboratorios Columbia estimates that during the second half of 2008, it will have
defined the new requirements and will begin searching for suppliers in late 2008.

F) Purchasing Policies and Financial Arrangements


Columbias Engineering Department determines the types of equipment required, including the
characteristics, capacity and other relevant information. After the requirements are defined, the
company invites a minimum of three packaging equipment companies to provide quotes to its
Engineering Department,. After receiving bids from the potential suppliers, Columbia elaborates
a comparative chart and selects the one that provides the best economic conditions, times of
delivery and quality.
The company uses credit lines provided by the manufacturers, and grants the credits through
an insurance company hired by Columbia. In some cases, the company opts for leasing
contracts, which are contracted with banks or other financial agencies. In a few cases, the
company pays cash to obtain a discount and to avoid exchange rate fluctuation risks.

G) Factors That Influence Purchasing Decisions


1.
2.
3.
4.

Quality.
Technical support.
Price.
Delivery timing.

H) Comments on Preferred Brands and Existing Business Arrangements With


Packaging Equipment Suppliers
The company does not have any pre-existing commitments to suppliers, nor a definite
preference for suppliers from a particular country. It does tend to favor Italian and German
machinery, however, because it believes that these machines have state-of-the-art technology.
The company believes that U.S. equipment suppliers have very little to offer to the
pharmaceutical industry, and only mentioned that the United States is superior for its coding
machinery.

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Equipment is serviced by the companys own technicians, who are trained by the equipment
suppliers. The company purchases spare parts from the manufacturers because there is limited
availability in the country.
Columbias evaluation of packaging machinery by country of origin is as follows:
Technology
Good
Very Good
Very Good
Very Good
Very Good

Origin
United States
Germany
Italy
Spain
France

Flexibility
Good
Very Good
Very Good
Very Good
Very Good

Service
Average
Very Good
Very Good
Good
Good

Price
Good
Average
Average
Average
Average

I) Strengths and Weaknesses of the Installed Machinery


Brand: IMA
Strengths:
Good technical support.
Good quality and reliability.
Weaknesses:
Price: it is usually more expensive than other alternatives.
Brand: Ulhman
Strengths:
Very good technology.
Good quality and reliability.
Long lasting.
Weaknesses:
Spare parts are not always available and take long to get to Mexico.
More expensive than similar machines.

J) Trade Show Attendance / Trade Publication Information


The firm uses ExpoPack in Mexico as its main source of information about new potential
suppliers. It also receives information on new machinery and new packaging options from
existing suppliers and from trade magazines for the pharmaceutical industrly.

K) Specific Interest
Laboratorios Columbia would like to receive information about potentail suppliers for blister
machinery, as well as tablet packaging machinery. In general, it is interested in new packaging
machinery suppliers that have high-quality equipment and competitive prices.

L) Contact Information
Company Name:
Contact:
Position:
Address:
Telephone:
Fax:
E-mail:
Internet:

Laboratorios Columbia, S.A. de C.V.


Arq. Rafael Parada / Ing. Roberto Villena
Director of Project Development / Manager of Project Development
Calz. Del Hueso No. 160
C.P. 04850, Mxico, D.F.
(52) 5726-5555 ext. 5569
(52) 5684-7613
RParada@gcolumbia.com
www.gcolumbia.com.mx

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RussekLoeffler, S.A. de C.V.


Industry:
Sub Industry:
Location:
Size (sales):
Purchasing Potential:
Specific Business
Opportunities:

Pharmaceutical
Generic medicines
Mexico City
US $24 million
US $ 300,000 to 800,000 for 2008
Liquid filling line, case filling machines.

A) Company Description
RussekLoeffler is a private Mexican company resulting from the merger of a series of
laboratories in 1999. These include Loeffer, Agroqumico S.A de C.V, and Carter Wallace. ,
Operations of the group date back to 1978 with the purchase of the Mexican Biochemistry
Institute (Instituto Bioquimico de Mxico), which belonged to Rohm and Hass. The company
produces pharmaceutical products for human and veterinarian use.
The company currently supplies 63 products to both markets. Demand is growing at rates of
100% per year and is remaining steady at those growth levels. This can be seen by the
production of generics sold under itsr own brands and through private labels for third parties.

B) Main Products Produced and How They Are Packed


Russek-Loeffler produces a wide variety of pharmaceuticals. Most products are packed in
blister or glass bottles. The most representative products include:

Product
Capsules
Ovules
Tablets
Suppositories

Injections
Capsules
Gel
Capsules, tablets and liquid
Liquids

Brand
Itraconazol
Nitrofural
Pravastatina
Glicerina
Piremol
Dolcoplaz
Benzoilo
Flamozil
Metronidazol

Package
Blister
Blister
Blister
Blister
Vial
Blister
Glass Container
Bottle and Blister
Bottle

C) Installed Packaging Machinery


Close to 80% of the machinery used at these labs is of European origin. Of that machinery,
nearly half was purchased used from other laboratories to minimize the price. The company has
an in-house shop and staff to repair and modify used equipment, which it believes provides the
best return on its investment.
Some of the machines it has purchased and adapted into its line include the following:
Current Machinery Used
Liquid filling machine
Ampoule filling machine
Case filling machine
Case filling machine
Carton machine

Brand

Units

Origin

Marzochi
Cozzolli
Tiele
Jones
CAM

1
1
1
1
1

Italy
Italy
USA
USA
Italy

Average
Age
3
20
10
13
3

184

Liquid filling machine


Blister machines
Cream filling machine
Syringe filling machine
Powder filling machine
Ovule and suppositories filling
machine

N.A.
Bosch
N.A.
N.A.
N.A.
Saron

1
1
1
1
1
1

USA
Germany
USA
Germany
USA
Italy

25
20
23
10
20
30

D) Last Packaging Machinery Purchase


The last packing machinery purchase was made in March 2007, when the firm purchased a
case filling machine from U.S. supplier Tiele.
Machinery
Case filling machine

Brand
Tiele

Country
USA

E) Future Packing Machinery Ordering Plans, 2004-2005


RussekLoeffler plans to acquire a filling machine from Bosch and two case filling machines to
increase productivity. It also is planning to eliminate several old machines, however the budget
for these investments is still pending.
Machinery
Liquid filling machine

Units
1

Case filling machine

Origin
Germany
or UK
N.A.

Motive of Purchase
Productivity

Estimate Budget
US $300,000

Expansion in
production line

US $200,000

F) Purchasing Policies and Financial Arrangements


The company has been able to maintain production and packing using a significant portion of
used equipment. Because of this experience, the company always considers whether used
equipment could meet its needs for additional machines. Because of the significant demand on
certain lines, the company is beginning to realize that new machines might be the only option in
offering the volumes and flexibility that the company requires in certain processes.
The company prefers to receive financing for equipment purchases. It has obtained financing
from banks and would value financing from suppliers. All final purchasing decisions need the
approval of the companys chairman.

G) Factors That Influence Purchasing Decisions


1.
2.
3.
4.
5.

Price and payment terms .


Availability in the market.
Brand reputation in the Mexican market.
Spare parts availability.
Service and technical assistance from the supplier.

H) Comments on Preferred Brands and Existing Business Arrangements With


Packing Equipment Suppliers.\
The company believes that European machines have a stronger penetration in the
pharmaceutical industry in Mexico. It considers those machines, in general, to be superior to
other alternatives. Unfortunately, under current exchange rate conditions, these machines are
very expensive. However, local distributors are working to offer alternatives, such as equipment
rental and service packages, to try to spread the price impact over time.
The companys perception about packing machinery by origin is as follows:

185

Origin
United States
Germany
Italy
France
China

Technology
Good
Very Good
Very Good
Very Good
Average

Flexibility
Good
Good
Good
Very Good
Average

Service
Good
Very Good
Good
Very Good
Poor

Price
Good
Average
Average
Average
Very Good

The company believes that U.S. equipment is not the top choice for the pharmaceutical
industry. The preferred choice is European equipment, but it is very expensive and spare parts
are not readily available. The company said that it has had so much trouble with spare parts
that it has developed an in-house shop to try to produce the spare parts needed more often.

I) Strengths and Weaknesses of the Installed Machinery


Brand: Sarog
Strengths:
Robust machinery.
Long-lasting machines.
Trustable machines.
Precise.
Weaknesses:
The price of the machine and maintenance costs are very high.
Very high costs for spare parts.
Brand: Tiele
Strengths:
Efficient machines.
Easy to work with.
High productivity.
Low waste of ingredients.
Weaknesses:
High contract costs.

J) Comments Related to Asian Packaging Machinery


The company said that it has been approached by several Asian suppliers, especially from
China, which have proposed very attractively priced and flexible equipment. In addition to low
prices, through the Chinese embassy in Mexico the machinery suppliers are offering financing
from the Chinese Commerce Department and from the Bank of China. Even as these proposals
are very attractive, the company considers that the quality of the proposed machines is not
good, especially because of the low quality of the metals used, which might not withstand high
temperatures and might reach metal fatigue in a short period.

K) Trade Show Attendance / Trade Publication Information


The company reviews trade publications regularly and visits packing machinery trade shows in
Mexico, the United States and Germany. The company is also abreast of the equipment used
by its competitors and of the new technologies being incorporated into machinery used in the
pharmaceutical industry.

L) Specific Interest

186

The company is facing a very significant growth in demand and is interested in learning about
cost-effective alternatives to increase productivity and production capacity at its facilities.

M) Contact Information
Company Name:
Contact:
Position:
Address:

Telephone:
Fax:
e-mail:
Web page:

Russek-Loeffler
Ing. Herbert Scholz Ojeda
Planning and Purchasing Director
Prolongacion Ing Militares # 76
Col.San Lorenzo Tlatenango
11210, Mexico City
(5255) 2626 7503

www.loeffler.com.mx

187

Sanofi Aventis, S.A. de C.V.


Industry:
Sub Industry:
Location:
Size (sales):
Purchasing Potential:
Specific Business
Opportunities:

Pharmaceutical
Pharmaceuticals, patent and
over the counter drugs
Ocoyoacac, state of Mexico
N/A
US $750,000 (est.)
Complete blister and
packaging line for capsules
and tablets; mixing machines,
blister and liquid filling line.

A) Company Description
Sanofi Aventis resulted from the acquisition of Aventis by Sanofi in 2004, and represents one of
the leading pharmaceutical companies in the world.
The company manages one of the widest pharmaceutical product lines, with nearly 500 product
presentations. It mantaines significat market share in Mexico, estimated at more than 7%.

B) Main Products Produced and How They Are Packed


The companys leading products are presented in the following table. Presentations for retail
include tablets and capsules in glass bottles, and blister packs in carton boxes. The company
also handles syrups that are bottled in glass or PET bottles. The leading product bands include:
Products
Aprovel
Arava
Co-aprovel
Profenid
Lasix
Solian
Oroxadin
Stilnox
Tritace
Victan
Clexane
Anandron
Plavix
Anzemet
Allegra
Eloxatin
Enterogermina Taxotere
Neomelubrina
Amaryl
Pulmonarom
Daonil
Tavanic
Met-Amaryl
Xatral OD
Lantus
Actonel

C) Installed Packaging Machinery


The following table lists the most important machines comprising its packing infrastructure
installed in Mexico. Most of the equipment is of European origin and has been in operation at its
plant for more than 15 years.
Machinery Type/ Brand
Filling Machine
Tray Sealing Machine
Blister Machine
Tray Sealing Machine
Blister and Closing Machine

Brand Units
CAM/ 3M
2
CAM/ HF
2
Ullman
2
CAM
1
IMA 94
1

Origin
Italy
Italy
Germany
Italy
Italy

188

Blister and Cartoning line


IMA C90
Blister and Tray Sealing Line IMA C62
Blister Machine
CAM

1
2
2

Italy
Italy
Italy

Most of the equipment used at the plant is reaching obsolescence, and all of the machines will
need to be replaced over the following 10 years. An important problem with the machines is that
they are operated with computer systems and hardware that are basically obsolete and
expensive to replace. This points to the need to purchase new equipment, as retrofitting existing
machines is not considered a cost-effective alternative.
With future equipment selection, the company will seek equipment that is less dependant upon
other systems and machines that are easier to program.

D) Last Packaging Machinery Purchase


The most recent purchase of packing machinery was in 2007, when the company invested more
than US $3 million on the purchase of the following equipment:
Machinery
Weight verifier machine
Labeling machine

Brand
Mettler
IMA or Neri

Country
Italy
Italy

Cost
N.A.
N.A.

E) Future Packaging Machinery Ordering Plans.


The company has a budget of more than US $4.5 million for the purchase of packing machinery
during 2008, and a similar amount for the same purpose in 2009. The next purchases will follow
the order indicated in the table:
Machinery
Blister and packaging line for
capsules and tablets
Mixers
Blister line
Ampoules filling line

Units
1

Origin
T.B.D

Estimated Budget
US $1.8 million

T.B.D
T.B.D
T.B.D

T.B.D
T.B.D
T.B.D

T.B.D
T.B.D
T.B.D

F) Purchasing Policies and Financial Arrangements


The selection of new machinery will begin with the technical phase, during which the company
will define equipment options and arrange for visits to evaluate the proposed machinery in
operation. Once equipment options are defined, a final decision is made by the management of
the company.

G) Factors That Influence Purchasing Decisions


1.
2.
3.
4.

Developed specifically for the desired application.


Ease of operation.
Production speed and versatility.
Efficiency.

H) Comments on Preferred Brands and Existing Business Arrangements With


Packaging Equipment Suppliers
The company prefers European machinery. However, the appreciation of the euro is making
that equipment very expensive when compared to other options. The firm mentioned that the
total cost of ownership between European and North American machines might be the same
over the long run, considering that the service of European machines is very expensive and
some times difficult to arrange.

189

The company mentioned that pharmaceutical patent holders are the most important clients for
packing machinery manufacturers, as producers of generic drug products use very simple and
inexpensive machinery.
The company made the following evaluation on their perception of suppliers based on country
of origin:
Technology
Average
Good
Regular
Poor
Average
Very Good

Origin
United States
Germany
Italy
Spain
France
Japan

Flexibility
Very Good
Good
Good
Poor
Average
Good

Service
Very Good
Good
Good
Poor
Poor
Good

Price
Good
Very Poor
Average
Poor
Average
Poor

The company noted that German machinery is extremely expensive, and not only because of
the current exchange rate of the euro. Machinery from that country has traditionally been priced
very expensively.

I) New Origin of Suppliers from Asia


Sanofi-Aventis said that it has been contacted by suppliers from Asia, including equipment
manufacturers from China, India and Korea. The company also said that it is aware that some
of its traditional suppliers, including Fette, IMA and Ullman, are assembling their machines in
Asia.

J) Specific Interest
The company is interested in reviewing information about packing machinery suppliers
specializing in the pharmaceutical and cosmetics markets.

K) Contact Information
Company Name:
Contact:
Position:
Address:
Telephone:
Fax:
Mail:
Web page:

Sanofi-Aventis
Mr. Ignacio Dapic / Jorge Arrieta Ponce
Maintenance Manager / Maintenance Leader PPU Solids
Acueducto del Alto Lerma No. 2
Ocoyoacac, Edo de Mxico, 52740
(52) 5484 4400 ext. 4708 / ext. 4760 or (728) 282 8760
(52 728) 282 8720
ignacio.dapic@sanofi-aventis.com
jorge.arrieta@sanofi-aventis.com
www.sanofi-aventis.com.mx

190