Farmacias Similares: Disrupting the Mexican Healthcare System by Targeting the Bottom of the Pyramid

Case Code: BSTR700 Case Length: 16 Pages Period: 1950-2024 Pub Date: 2025 Teaching Note: Available

Price: Rs.400 Organization : Farmacias de Similares SA de CV Industry : Pharmaceuticals & Biotech Countries : Mexico Themes: Blue Ocean Strategy, Business Models Channel Strategy & Development,Disruption

Abstract Case Intro 1 Case Intro 2 Excerpts

Excerpts

An Opportunity Arises For Best

In 1994, the Mexican Peso was devalued, leading to an economic crisis (Mexican Peso Crisis) . Between 1994 and 1997, drug prices in Mexico increased annually by 141%. As of 1997, Mexico was in a pharmaceutical and health crisis, with a steep rise in medicine costs and a severe shortage of drugs. It was found that the IMSS regularly ran short of at least 100 of the 500 medicines in its cuadro basico, with the stocks of more than 150 drugs often running very low. In those circumstances, all Mexicans, including the very poor, were left with no option but to approach private pharmacies and purchase the brand-name drugs available there at a very high price. The dire situation faced by the people prompted the Mexican government, health activists, and certain companies to push for specific regulatory changes to address the crisis..

Best Forms A Distribution Channel – Farmacias Similares

In the late 1990s, Mexico was Latin America’s most significant and fastest-growing pharmaceutical market. The Mexican government’s new policy opened up the country’s generic drug market and raised the possibility that the general public would become more receptive to using generic drugs. Those developments meant that generic drug companies such as Best, which had hitherto been a part of only the social security/public health system, could gain access to and better serve the needs of the Mexican public, especially the people at the Bottom of the Pyramid (BoP) – who would be willing to use generic drugs due to their lower prices..

Farmacias Similares’ Pharmacy-Doctor Business Model

Torres was categorical in stating that he was against multinational pharma companies that he thought did not have the best interests of the Mexican people or the national economy in mind before they started their anti-generic medicines campaign. He wanted to show that a nationalistic Mexican enterprise such as FS could manufacture quality medicines at affordable prices for the general public. He adopted the populist nationalistic statement – “Mexican Products to Help Those Who Have the Least.” He further stated that he sought to make FS an engine for promoting Mexican national interest and self-sufficiency..

Dr. Simi – the mascot that pushed up fs’s popularity

At the time FS was established, the Mexican public had no awareness of “generic drugs.” They only knew of two classes of drugs – ‘brand-name drugs available at private pharmacies’ and ‘the cheap drugs that IMSS gave.’ It fell to FS to create public awareness of generic drugs and dispel the misconceptions about them planted among the Mexican public by international pharma companies, doctors, and private pharmacies..

FS’s Disruption And Capture Of The Mexican Healthcare System

During the two decades of its existence, FS became one of the most renowned companies in the Mexican pharma industry, backed by a unique business model and strong advertising strategy. Some analysts also thought that Torres’s nationalistic motivations and the drive to attain pharmaceutical sovereignty for Mexico helped him gather public support and played a role in its success. Cori Hayden, author of The Spectacular Generic, said, “Gonzalez has departed from the traditional generics model and has invested a lot in advertising and public relations. It’s radically different from other generics companies, which generally keep a low profile.”

What about the rising challenges?

Though FS was credited with disrupting the Mexican healthcare system, industry observers agreed that there were still large areas in the healthcare space which it could not serve. They held that FS was good for treating customers’ small and trivial illnesses, but was incapable of providing proper care for chronic conditions such as diabetes – quite common in Mexico – that required a complex treatment regimen..

The Road Ahead For Farmacias Similares

Surveys revealed that even as of the 2020s, the Mexican government remained ill-equipped to cater to the healthcare needs of almost a quarter of its population. In 2020, the Mexican government replaced Seguro Popular with a new program called the Institute of Health for Welfare (INSABI)..

Exhibits

Exhibit I: Overview of the Mexican Healthcare System
Exhibit II:Information on Leading Multinational Pharma Companies in Mexico
Exhibit III: Growth of FS through the Years
Exhibit IV: Information on Key Mexican Pharmacies
Exhibit V: Information on Key Mexican Supermarket Chains

Buy this case study (Please select any one of the payment options)

Price: Rs.400 Instant Download

Price: Rs.400 Express Checkout

PayPal (9 USD)