9. The Pharmaceutical Industry - PMMI

9. The Pharmaceutical
Industry
9.1. 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
doesn’t 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
Mexico’s largest pharmaceutical companies include:
Top Pharmaceutical Companies Active in Mexico (Sales in Million US$)
Company Origin 2006 Sales 2005 Sales Growth
Bayer de México / DF GER 863.12 748.68 15%
Pfizer / DF USA 761.65 731.65 4%
Novartis / DF SUI 731.20 632.50 16%
Roche / DF SUI 641.68 688.16 -7%
Boehringer Ingelheim Promeco / DF GER 636.44 544.25 17%
GlaxoSmithKline / DF GB 558.48 510.36 9%
Bristol Myers Squibb / DF USA 548.17 523.56 5%
Schering Plough / DF GAR/USA 424.07 547.98 -23%
Wyeth / Méx. USA 377.77 323.25 17%
Eli Lilly y Cía. de México / DF USA 340.81 291.87 17%
AstraZeneca / Méx. GB/SUE 296.77 241.81 23%
Merck Sharp & Dome de México / DF USA 292.75 267.87 9%
Merck / Méx. GER 220.86 174.26 27%
Ciba Especialidades Químicas México /
DF SUI 160.57 144.23 11%
Proquifin / DF MX 62.04 50.83 22%
Laboratorios Sophia / Jal. MX 58.68 51.70 13%
6,975.06 6,472.96
Source: Expansión 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: Expansión Magazine, Top 500 Mexican companies.
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8.4 Company Profiles
A) Company Description
Astra Zeneca, S.A. de C.V.
Industry: Pharmaceutical
Sub Industry: Pharmaceutical and medical
products
Location: Naucalpan, State of Mexico
Size (sales): US $290 million
Purchasing Potential: US $220,000
Specific Business
Opportunities:
Strapping machines
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 company’s operations in Mexico employ 1,100 people, from
manufacturing to its dedicated sales force.
B) Main Products Produced and How They Are Packed
The company’s 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 company’s 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 Brand Units Origin Average
Age
Individual cartoning machine Markesini 3 Italy 10
Individual cartoning machine Ulhman 1 Germany 8
Individual cartoning machine Klockner 1 Germany 4
Strapping machine Multipack 6 Italy 8
Strapping machine Pester 1 Germany 4
Collective cartoning machine 3M 8 Italy 8
Plastic wrapping machine Markesini 1 Italy 11
Plastic wrapping machine Ulhman 1 Germany 11
Plastic wrapping machine Klockner 1 Germany 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 Brand Country
Cartoning machine Markesini Italy
The purchase was made though the manufacturer’s 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 Brand Units Origin Motive of
purchase
Strapping machine Multipack 2 Italy 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 Technology Flexibility Service Price
Germany Very Good Very Good Very Good Good
Italy Very Good Very Good 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: Astra Zeneca
Contact: Mr. Javier Avila
Position: Maintenance Manager
Address: Super Avenida Lomas Verdes No. 67
53120, Naucalpan, Estado de Mexico
Telephone: (52 55) 5374 9600
Fax: (52 55) 5374 9600
Mail: Javier.avila@astrazeneca.com
Web page: www.astrazeneca.com
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A) Company Description
Bayer, S.A. de C.V.
Industry: Pharmaceutical
Sub Industry: Pharmaceutical and OTC
medicines
Location: Mexico City
Size (sales): US $847.4 million
Purchasing Potential: US $4.5 million
Specific Business
Opportunities:
Tablet filling and plastic
wrapping machines
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 company’s products are segmented into anti-fungal, stomach, and cold medicines and
vitamins. Some of the leading products include:
C) Installed Packaging Machinery
Product Brand Package
Alka-Seltzer Bayer Sealed plastic bag
Aspirin Bayer Blister PVC aluminum
Effervescent Aspirin Bayer Sealed plastic bag
Antibiotics Bayer Blister
Creams Bayer Tube
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 Brand Units Origin Average Age
Sealing Machines Siebler 5 Germany One: 2 years
Four: 16 years
Blister Machines Bosch 1 Germany 16
Blister Machines Ulhman 4 Germany 3
Blister Machines CAM 1 Italy 16
Carton Machines IWKA 3 Germany 4
Carton Machines Bosch 1 Germany 16
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Carton Machines CAM 1 Italy 21
Plastic wrapping machines Pester 3 Germany 3
Pallet machines MAB 1 Italy 16
Tablet filling machines Korsch 3 Germany 7
Tablet filling machines Fette 1 Germany 2
Envelope sealing machines Siebler 5 Germany 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 Brand Country
Blister machine Ulhman Germany
Cartoning machine Ulhman 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 Motive of
purchase
Tablet packaging machine T.B.D. Germany Replacement
Plastic Wrapping machine T.B.D. Germany 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 Bayer’s 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 Technology Flexibility Service Price
United States Average Very Poor Average Poor
Germany Very Good Very Good Very Good Good
Italy Very Good Very Good 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 doesn’t 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: Bayer de Mexico S.A. de C.V.
Contact: Mr. Alfredo Velez
Position: Technical and Maintenance Director
Address: Carretera Mexico-Toluca. Km 52.5
5200 Lerma, Estado de Mexico, Mexico
Telephone: (52-55) 5728-3000 ext. 4985 or 4882
Fax: (52-55) 5728-3363
Mail: alfredo.velezcalderon.av@bayer.com.mx
Web page: www.bayer.com.mx
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A) Company Description
Laboratorios Columbia S.A. de C.V.
Industry: Pharmaceutical
Sub Industry: Trade mark drugs, natural
products, other medical
specialty products, OTCs and
veterinary products
Location: Mexico City
Size (sales): US $80 million
Purchasing Potential: N.A.
Specific Business
Opportunities:
Everything for the
pharmaceutical industry
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 Querétaro,
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 Brand Units Origin Average
Age
Blister Machine, 90 p/m Uhlman 1 Germany 24
Pouch Machines 60 p/m Volpak 1 Spain 14
Pouch Machines 500 p/m B-matic 1 USA 12
Coding Machinery 120 p/m Domino 2 USA 19
Press Sealing Machines 50 p/m Devechi 1 USA 19
Powder Filling Machine 45 p/m All-fill 1 USA 14
Pouch Filling Machine 90 p/m Volpak 1 Spain 14
Tablet Filling Machines 160 p/m Volpak 1 Spain 14
Hot gum Labeling Machine Compac 1 USA 21
Labeling Machine 150 p/m Libra 1 Italy 10
Cartoning Machine 150 p/m BFB 1 Italy 10
Cartoning Machine 200 p/m Marcesini 1 Italy 14
Carton Erecting Machine 200 p/m Multipak 1 Italy 14
Tablet Counting Machine 40 p/m King 1 U.K. 13
Labeling Machine NJM 3 USA 7
Induction Sealing Machines 50
frasks
Enercon 1 USA 8
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Liquid Filling Machine 180f/m IMA 1 Italy 9
Tube Filling Machine 120t/m Unipack 1 Italy 14
Blister Line Marcesini 1 Italy 5
Filling machine Manesty 1 England 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 Unión.
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
Columbia’s 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. Quality.
2. Technical support.
3. Price.
4. Delivery timing.
Machinery Brand Country
Labeling Machine Union Mexico
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 company’s 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.
Columbia’s evaluation of packaging machinery by country of origin is as follows:
Origin Technology Flexibility Service Price
United States Good Good Average Good
Germany Very Good Very Good Very Good Average
Italy Very Good Very Good Very Good Average
Spain Very Good Very Good Good Average
France Very Good Very Good Good 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: Laboratorios Columbia, S.A. de C.V.
Contact: Arq. Rafael Parada / Ing. Roberto Villena
Position: Director of Project Development / Manager of Project Development
Address: Calz. Del Hueso No. 160
C.P. 04850, México, D.F.
Telephone: (52) 5726-5555 ext. 5569
Fax: (52) 5684-7613
E-mail: RParada@gcolumbia.com
Internet: www.gcolumbia.com.mx
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A) Company Description
Russek–Loeffler, S.A. de C.V.
Industry: Pharmaceutical
Sub Industry: Generic medicines
Location: Mexico City
Size (sales): US $24 million
Purchasing Potential: US $ 300,000 to 800,000 for 2008
Specific Business
Opportunities:
Liquid filling line, case filling machines.
Russek–Loeffler is a private Mexican company resulting from the merger of a series of
laboratories in 1999. These include Loeffer, Agroquímico 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 México), 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 Brand Package
Capsules Itraconazol Blister
Ovules Nitrofural Blister
Tablets Pravastatina Blister
Suppositories Glicerina Blister
Injections Piremol Vial
Capsules Dolcoplaz Blister
Gel Benzoilo Glass Container
Capsules, tablets and liquid Flamozil Bottle and Blister
Liquids Metronidazol 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 Brand Units Origin Average
Age
Liquid filling machine Marzochi 1 Italy 3
Ampoule filling machine Cozzolli 1 Italy 20
Case filling machine Tiele 1 USA 10
Case filling machine Jones 1 USA 13
Carton machine CAM 1 Italy 3
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Liquid filling machine N.A. 1 USA 25
Blister machines Bosch 1 Germany 20
Cream filling machine N.A. 1 USA 23
Syringe filling machine N.A. 1 Germany 10
Powder filling machine N.A. 1 USA 20
Ovule and suppositories filling
machine
Saron 1 Italy 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 Brand Country
Case filling machine Tiele USA
E) Future Packing Machinery Ordering Plans, 2004-2005
Russek–Loeffler 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 Units Origin Motive of Purchase Estimate Budget
Liquid filling machine 1 Germany
or UK
Productivity US $300,000
Case filling machine 2 N.A. 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 company’s chairman.
G) Factors That Influence Purchasing Decisions
1. Price and payment terms .
2. Availability in the market.
3. Brand reputation in the Mexican market.
4. Spare parts availability.
5. 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 company’s perception about packing machinery by origin is as follows:
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Origin Technology Flexibility Service Price
United States Good Good Good Good
Germany Very Good Good Very Good Average
Italy Very Good Good Good Average
France Very Good Very Good Very Good Average
China Average Average Poor 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
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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: Russek-Loeffler
Contact: Ing. Herbert Scholz Ojeda
Position: Planning and Purchasing Director
Address: Prolongacion Ing Militares # 76
Col.San Lorenzo Tlatenango
11210, Mexico City
Telephone: (5255) 2626 7503
Fax:
e-mail:
Web page: www.loeffler.com.mx
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A) Company Description
Sanofi Aventis, S.A. de C.V.
Industry: Pharmaceutical
Sub Industry: Pharmaceuticals, patent and
over the counter drugs
Location: Ocoyoacac, state of Mexico
Size (sales): N/A
Purchasing Potential: US $750,000 (est.)
Specific Business
Opportunities:
Complete blister and
packaging line for capsules
and tablets; mixing machines,
blister and liquid filling line.
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 company’s 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:
C) Installed Packaging Machinery
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
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 Brand Units Origin
Filling Machine CAM/ 3M 2 Italy
Tray Sealing Machine CAM/ HF 2 Italy
Blister Machine Ullman 2 Germany
Tray Sealing Machine CAM 1 Italy
Blister and Closing Machine IMA 94 1 Italy
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Blister and Cartoning line IMA C90 1 Italy
Blister and Tray Sealing Line IMA C62 2 Italy
Blister Machine CAM 2 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 Brand Country Cost
Weight verifier machine Mettler Italy N.A.
Labeling machine IMA or Neri Italy 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 Units Origin Estimated Budget
Blister and packaging line for
capsules and tablets
1 T.B.D US $1.8 million
Mixers T.B.D T.B.D T.B.D
Blister line T.B.D T.B.D T.B.D
Ampoules filling line 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. Developed specifically for the desired application.
2. Ease of operation.
3. Production speed and versatility.
4. 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.
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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:
Origin Technology Flexibility Service Price
United States Average Very Good Very Good Good
Germany Good Good Good Very Poor
Italy Regular Good Good Average
Spain Poor Poor Poor Poor
France Average Average Poor Average
Japan Very Good Good Good 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: Sanofi-Aventis
Contact: Mr. Ignacio Dapic / Jorge Arrieta Ponce
Position: Maintenance Manager / Maintenance Leader PPU Solids
Address: Acueducto del Alto Lerma No. 2
Ocoyoacac, Edo de México, 52740
Telephone: (52) 5484 4400 ext. 4708 / ext. 4760 or (728) 282 8760
Fax: (52 728) 282 8720
Mail: ignacio.dapic@sanofi-aventis.com
jorge.arrieta@sanofi-aventis.com
Web page: www.sanofi-aventis.com.mx
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