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EF: From your perspective, how do you see 2023 as a challenge or an opportunity?
AR: During the pandemic, our niche business faced some challenges. Elective procedures did not demand immediate attention, and many patients avoided visiting hospitals during these uncertain times. However, with the conclusion of the pandemic in 2022 and 2023, our company witnessed a rapid upsurge in popularity. In just two years, our sales nearly doubled, showcasing remarkable growth this year.
2023 has presented a golden opportunity for us, as numerous enterprises could not bear the financial burden imposed by the pandemic. The substantial costs associated with operations, including salaries, infrastructure, and operational expenses, proved formidable obstacles. Procuring essential equipment, instruments, and skilled technicians for surgical assistance entails considerable financial investment. Therefore, we prioritized the welfare of our employees, recognizing the time-consuming nature of training replacements. While enduring hardships for a year, we ultimately capitalized on the market gap created during a pandemic, which helped to increase our market share resulting in a positive outcome for us.
Across the medical device sector, and likely within other technological and industrial domains in Mexico, we face the challenge of backorders. At the same time, we were fortunate enough to experience this issue only recently.
The shifting landscape of public business management has posed its own challenges, particularly in tender processes. The format of integral services and low prices adds complexity to these processes.
While this year has presented an opportunity for us to expand our market share, it has also brought significant challenges, as indicated by such factors.
EF: Could you elaborate on Arthrex’s footprint in Mexico and how you have tailored your operations to meet the needs of the Mexican population effectively?
AR: Market dynamics could differ across the region; nevertheless, in Mexico, two key factors contribute to the market landscape. Firstly, the long approval times to register new products that are a significant challenge for the industry and affect access to new technologies and products for the Mexican population. Secondly, affordability in terms of purchasing power emerges as a significant consideration. With approximately 60% of the population classified as economically disadvantaged and only 12% possessing private medical insurance coverage, most individuals seeking arthroscopy procedures must finance their own medical expenses. This translates to roughly 55% of the population relying on personal funds to access healthcare, and this market, most of the time, has no access to the latest technology because of the price; however, they are looking for good products and healthcare services of quality at an affordable price.
The challenge of adapting our portfolio and making it more accessible extends beyond Mexico to encompass the entirety of Latin America. The arriving products from countries like India and China, or even the black market, add complexity and impact the healthcare industry and broader business sectors. Multinational companies are mindful of the diverse needs of Latin America, and it is common to see it as a unified entity. Similarly, comparable trends and market behaviors can be observed in regions such as the Middle East and select parts of Asia. The evolution of technology is continuous, which means we are leading transitions to the latest generation of products steadily. Nevertheless, just a small part of Latin American users has the possibility to be early adopters of new products and technologies and embrace this evolution; the majority remain at the current level because these transitions are linked to higher prices that only are accessible to a small part of the population without that deviating us from the path of being committed to meeting the market's ever-changing needs.
The black market poses a significant challenge in the pricing dynamics as well as those copycat products that apparently offer the same features and benefits. Addressing this challenge, we are developing a strategy for those markets where the price is the key decision factor. Through this approach, we aim to provide solutions that cater to public markets as well as private hospitals operating at non-premium levels.
All over the country, we identify different levels of private hospitals, mainly related to their facilities, the complexity of procedures and specialties they attend, and also the target of patients they are focused on. Recently and during the last years, the growth of hospital groups and new hospitals represents a great opportunity; they have pointed their strategy to markets that are seeking quality products and services backed by a hospital brand but accessible in terms of price.
The behavioral patterns within our market emphasize the significance of price and prioritize service. Hospitals increasingly opt for loan arrangements rather than purchasing medical equipment, seeking to minimize investments. They often prefer event-based services and bundles by type of surgical procedure, including OR technician support. This cost-saving approach allows hospitals to maintain a desired level of service for patients and insurers.
EF: How do you see the industry’s future regarding AI and technology? And how is Arthrex incorporating the latest technology?
AR: Two prominent directions can be observed within the industry. Hand in hand with AI, one primarily is focused on more accurate diagnoses and minimally invasive surgical procedures. Over the past 10 to 20 years, the medical devices industry has dedicated substantial efforts toward advancing tools of diagnosis and reducing the invasiveness of surgical procedures. On the other hand, there is a notable emphasis within the industry on biologics. Manufacturers strive to expand their portfolios with an array of products that are more patient-biocompatible, leading to enhanced patient results. These development avenues, namely accurate diagnoses, less invasive procedures, and biocompatible products, represent important lines of progress.
EF: Can you elaborate on how Arthrex actively contributes to advancing orthopedic medical education in Mexico through its educational initiatives and initiatives in this field?
AR: Our medical activities encompass a range of diverse undertakings, with the primary objective of educating surgeons on the safe and effective utilization of our products. We aim to impart knowledge and techniques that are reproducible. To facilitate this, we employ various methods, including using models and synthetic bone structures alongside our instruments and equipment to demonstrate specific procedures and product usage. As a highly specialized field, Arthroscopy distinguishes itself from other medical specialties in that the products employed are intricately linked to the techniques employed. Therefore, implants and disposable products are inherently tied to each technique.
Education plays a pivotal role in the realm of Arthrex due to its importance. As a company, we pride ourselves on being one of Mexico's leading medical education providers. Our team comprises highly skilled surgeons and doctors with specialized expertise in their respective fields. Our comprehensive approach entails Dry Labs, Wet Labs, and a Mobile Lab equipped with stations housing instruments, equipment, and models, enabling us to travel nationwide and extend educational opportunities.
While our medical education activities cater to varying proficiency levels in México, furthermore, our headquarters in Naples hosts a wide and continuous calendar of events accessible to Latin America, including Mexico.
EF: Looking back at this part of your career in 10 years, how would you like to be remembered as a leader?
AR: I like to stay true to my principles and values: prioritizing being remembered as a professional. While my accomplishments as a leader within my profession are valuable, my greatest wish is to be recognized as a person of integrity and good principles and values. Above all, I aspire to be regarded as a person who dedicated time to listen truly, consistently practiced honesty, and engaged in open and respectful communication. These qualities are most important to me.
EF: From Arthrex’s visionary standpoint, what three pillars will be a roadmap to the future?
AR: Medical Education, Making People Better, and Innovative Products and business models.
EF: Do you have a final message for our readers?
AR: While doctors and surgeons often take center stage in the healthcare arena, it is crucial to recognize the invaluable contributions of the pharmaceutical and medical devices industries. These sectors undertake significant challenges to discover new medicines and advanced medical devices. Throughout history, the evolution of medicine and healthcare has been intimately linked to advancements in medical devices. The significance of medical devices extends beyond the large machines found in hospitals; everyday instruments such as thermometers and syringes are vital components of healthcare. A stethoscope, for instance, distinguishes a doctor from a nurse, emphasizing the indispensable role of medical devices. Unfortunately, the broader public and even sectors within the industry may not fully grasp the importance of this field.
The medical devices industry plays a pivotal role in our society. In Mexico, we proudly hold the position of leading medical device producer in Latin America.
