Read the Conversation
EF: How do you see 2023 as a challenge or an opportunity?
MM: From my perspective and in line with our company's strategic approach, this year presents a significant opportunity for us. By looking at the data, it is clear that there are only a few North American API companies. Therefore, we have a clear advantage as there are many companies actively seeking to bring API sourcing from Asia back to North America.
We have the potential to capitalize on this due to our available capacity and the presence of highly skilled individuals capable of developing small molecule APIs. Our team comprises accomplished scientists, including chemistry PhDs, who possess the expertise to create APIs from scratch. We not only offer manufacturing capabilities but also possess the flexibility to meet our customer's specific requirements, whether it involves contract manufacturing or developing a product from scratch.
However, we must acknowledge that this year also presents challenges. Like our customers, we rely on importing 60% of our raw materials from Asia, and the disruptions in the global supply chain during the pandemic have created ongoing issues. Furthermore, prices for raw materials have remained persistently high as suppliers took advantage of the supply chain disruptions to increase prices. These costs have yet to return to pre-pandemic levels.
Additionally, we embrace the challenge of meeting the increasingly stringent demands of our customers. Our multi-relationship contracts with various major pharmaceutical companies provide us with valuable insights. Still, they also require us to continuously raise the bar regarding quality, compliance, and environmental health and safety (EHS) standards. EHS considerations encompass the impact on the environment and the well-being of our operators and colleagues. Ensuring economic sustainability and maintaining safety standards presents an ongoing challenge. Nevertheless, we have devised a plan and are executing our strategy to address these challenges effectively.
Furthermore, our balanced portfolio, which includes partnerships with large customers, mid-sized biotech companies, and generic companies, provides us with a competitive advantage. Our flexibility is one of our key strengths, allowing us to manufacture large quantities, ranging from tons to hundreds of tons, for one customer while also supporting smaller-scale production of as little as 110 kilos for various other customers.
Lastly, we must recognize the fragmented nature of the market in which we operate. Many big pharmaceutical companies have established their own API manufacturing capabilities. However, we are witnessing a growing trend in Western countries, including North America and Europe, where there is a shift towards procuring dual sources for APIs. This trend presents an opportunity for us to leverage our specialized technical expertise and technical know-how in this domain.
EF: During the turbulent and challenging times since you started working at UQUIFA, especially considering the period leading up to and during the pandemic, what are the most significant lessons you have learned from your experience with the company?
MM: Firstly, I want to highlight the dedication of our Mexican team. Despite the challenging circumstances, we never ceased our operations as an API sourcing company. In Mexico, the government recognized the importance of the pharmaceutical industry, including API manufacturing, and allowed us to continue our work. However, ensuring the safety and well-being of our employees was challenging. Many of them relied on public transportation, and we took several measures to minimize the risks associated with their daily commute. Internally, we implemented new safety procedures, and we even had a company doctor who constantly adapted to the evolving challenges posed by the pandemic. Throughout this period, our team provided exceptional support.
One of the key lessons I learned was the importance of placing our team and personnel at the center of our decision-making process. By prioritizing their well-being, we were able to organize and adapt our strategies effectively.
The second significant challenge we faced was related to the supply chain, as various vendors around the world experienced delays. Understanding the concerns of our customers, especially the larger ones, who increased their safety stock and inventory levels to prevent disruptions in their final product supply, was crucial. Meeting the volume requirements of our customers while also catering to the needs of smaller customers without stock proved to be a balancing act. Our goal was to provide excellent service to all our customers, regardless of their size, as each one holds equal importance to us.
Lastly, I must mention the impact on our financial results. The erosion of cash flow due to increased expenses and the reluctance of some customers to accept price increases became apparent. Managing cash flow became a significant learning curve and a challenge for us. Despite the difficulties, I believe we have emerged from this challenging period with knowledge and insights. The lessons we learned during the pandemic have positioned us to reap the benefits and continue our growth.
EF: To what extent are you using this to export to other countries in the region? What makes Mexico the ideal place for an API manufacturing hub?
MM: First and foremost, I want to highlight the advantages associated with our location. Mexico's proximity to the US border allows for seamless transportation within a 24-hour trucking distance, providing us with a significant edge. Additionally, we have access to ports that facilitate trade with the Asian continent, as well as a port in Veracruz for shipments to Europe and Africa.
Secondly, the talent pool available in Mexico is excellent. The local universities, particularly the public ones, have fostered a strong connection with the industry. These institutions have produced exceptional graduates, particularly in the field of chemistry. It is worth noting that approximately 80% of my colleagues have studied at these esteemed local universities. This availability of talent allows us to contribute back to society while ensuring that our employees are duly compensated. This aspect holds great significance for our company.
Moreover, when considering our customer base, Mexico's population of over 120 million individuals offers immense potential. While not all pharmaceutical companies in Mexico engage in manufacturing, their commitment to importing pharmaceutical products reflects the industry's dedication to caring for the population.
Furthermore, Mexico possesses a distinct advantage in terms of environmental stewardship, quality compliance, and meeting EHS (Environmental, Health, and Safety) requirements. As a testament to this, 93% of our total volume is exported to over fifty countries worldwide, including recent expansions to South Africa, Bangladesh, Europe, and various regions of the Americas. The trust our customers place in us, coupled with long-term contracts, has solidified Mexico's position as a prime destination for local manufacturing. It is worth noting that our expertise spans not only manufacturing but also API development and innovation, bolstered by our 50 years of experience in the field.
EF: Do you think this is the moment to shape policies, noting the importance of the local industry in developing pharma or healthcare?
MM: That is a matter that requires a thorough discussion as we have observed a significant decline in positions within the Indian Mexico Chamber. It is evident that, as a country, we are missing out on a valuable opportunity. This trend can be observed across various industries, such as automotive and others. In our case, we boast a robust and stringent regulatory framework under the Ministry of Health. I have no intention of altering this framework; instead, I aim to capitalize on its strength.
What I propose is to leverage the high standards set by our Ministry of Health and encourage other regulatory bodies within the country to align themselves accordingly. By doing so, we can instill trust in the local COFEPRIS and facilitate the approval process for international counterparts, such as the Spanish Ministry of Health. Given that our current manufacturing and sales requirements already meet the same level as esteemed regulatory bodies like the US FDA, ANVISA in Brazil, and the EDQM in Europe, the regulatory aspect is well-established. Now is the ideal time to shift our focus toward effective marketing strategies rather than simply claiming our commitment to quality and compliance. We must instill trust in COFEPRIS and the local companies operating within our borders.
EF: Do you think that Mexico has the potential to become an innovation hub on the Latin America level?
MM: Primarily, our strength lies in the expertise we possess. The scientific minds and chemists within our organization constantly strive for innovation. It is remarkable how quickly our R&D department can tackle new challenges or developments. They efficiently generate solutions, conduct trials, and collaborate with our customers. In fact, we have shared API samples with our customers for their approval. Once these APIs pass the necessary clinical and stability assessments, they are submitted to COFEPRIS. However, it is important to note that some submissions have been pending approval for 2-3 years due to the substantial workload faced by regulatory authorities. Although we understand the magnitude of their responsibilities, we appreciate their efforts to expedite review processes while maintaining thoroughness. This commitment to expediency aligns with our country's current needs.
EF: How do you attract and retain the very best talent that is offered in Mexico?
MM: Primarily, we have a robust internal referral program that allows our colleagues to recommend individuals for open positions. This program encourages suggestions and CV submissions from anyone who might be suitable for the role. We value these internal recommendations as they have proven to be instrumental in our recruitment process.
Once the selection process is complete, our focus shifts to retention and onboarding. Our onboarding program is meticulously designed to ensure new hires understand our business operations. It spans a period of two to three weeks, during which they familiarize themselves with different departments, operations, and how we collaborate. This comprehensive onboarding approach is crucial in aligning everyone's understanding of our objectives and goals.
Performance evaluation is another vital aspect. We recognize that while achieving results is essential, collaboration, idea-sharing, and proposing solutions are equally important. Our colleagues are encouraged to contribute to future-oriented projects, fostering engagement and retention among the team.
Considering that we operate alongside other API companies, attracting and retaining talent becomes a challenge. However, our focus remains on placing our colleagues at the center of decision-making, ensuring their satisfaction and growth within the organization.
Additionally, we have implemented a recognition program that goes beyond traditional measures such as monitoring arrival and departure times. We promote a flexible work environment, allowing employees to manage their time and handle personal responsibilities, such as attending to their sick children. Trust is an integral part of our approach, and we believe in our colleagues' ability to fulfill their responsibilities and make arrangements when necessary.
Moreover, we regularly create various recognition programs to acknowledge our employees' achievements. Recently, we held an annual recognition event where we prominently displayed the names of recognized teams and individuals on the walls of our main entrance. This serves as a constant reminder of their accomplishments throughout the year, boosting their morale and overall job satisfaction. It is inspiring to witness the joy and motivation that this recognition instills in our workforce, with others aspiring to see their own names on the building's walls in the future.
EF: Your company recently celebrated 50 years. When giving your speech to celebrate this accomplishment, what did you include as part of your speech?
MM: I emphasized the importance of our team, consisting of different generations of employees. Many individuals have been with us since the start of our business in Civac, which is now an industrial park. Uquifa was among the first companies to establish itself here when it was just an empty plot of land. Each member of our team has contributed to the growth and success we have achieved over the years, leaving behind a significant legacy.
One of our flagship products has been in manufacturing and supply for over 40 years. We continue to sell and serve customers in 40 to 43 countries worldwide. I shared with my team that it was time to trust the next generation to carry this company forward into the future. I firmly believe that the next generation of leaders will ensure that this company thrives in Mexico for at least another 50 years.
I consistently remind our team of the importance of collaboration, communication, flexibility, and offering solutions to one another. It is through these qualities that we can navigate the challenges of the ever-changing world and secure the company's future for the next five decades. This was a key aspect of my speech.
During the event, I felt really happy and emotional. Additionally, my boss, who is from India, delivered a speech in Spanish despite being in the process of learning the language. He had shared his speech with me a day prior, and it was truly remarkable. Saurabh delivered an impactful address focusing on the significance of the company within the larger group, its past accomplishments, and its future outlook. Therefore, I decided to emphasize the personal aspect, specifically the individuals who comprise our team, as I concluded my speech.
EF: Do you have a final message to share?
MM: We are committed to delivering comprehensive services to our customers, encompassing support and expertise throughout the entire process, starting from proof of concept to commercial manufacturing. Our aim is to continue offering this holistic approach to meet the needs of our valued customers.
