Read the Conversation
Meeting highlights:
- Nearly 30 Years of Collaboration: Parque Pharma provides real estate solutions for the pharmaceutical industry, specializing in the design and construction of production, manufacturing, and research facilities tailored to client needs.
- Value Proposition: The company focuses on reducing investment and operational costs while maintaining high-quality standards. Leveraging the "Medici Effect," the company fosters collaboration, knowledge-sharing, and best practices through a 4,000 sqm industrial park offering shared services.
- Combined Solutions to Reduce Time-to-Market: Parque Pharma operates through a dual model: a real estate platform and a consulting and services branch. This approach addresses supply chain challenges, market access, and development processes to significantly reduce time-to-market for clients.
- Mexico's Nearshoring Potential: Parque Pharma offers FDA- and EMA-approved facilities, capitalizing on Mexico's strengths, such as a skilled talent pool and geographic proximity, making it an attractive location for investment.
- Future Outlook: The pharmaceutical industry is evolving with the growing influence of biotech companies. Parque Pharma is adapting its infrastructure and services to support these changes, focusing on enabling innovation. Plans include forming strategic alliances and leveraging expertise to meet emerging industry demands.
EF: Can you provide some background on the company, the changes and evolution in Mexico since you began in 1996, and how your priorities and mission have shifted for the upcoming years?
EV: In 1996, our construction company decided to specialize in pharmaceutical facilities. COFEPRIS was being established at that time, and new regulations for healthcare companies were introduced, making upgrading pharmaceutical manufacturing facilities in Mexico crucial. Many major pharmaceutical companies operating in Mexico opted to enhance their facilities. We developed a strategic plan and entered the market. Shortly after that, we became leaders in developing pharmaceutical facilities in Mexico. This is how our journey began; we undertook projects for Boehringer Ingelheim Promeco, Bayer, AstraZeneca, Química Knoll, and other notable firms.
We became relevant by collaborating with organizations such as AMIIF and AFM (the Mexican Pharmaceutical Association), which consist of professionals working within the industry. We offered courses on the design and construction of pharmaceutical facilities. I attended several training events in the United States, where we learned about the design and construction of these facilities and gained insights into the main challenges faced by the industry. This knowledge ultimately led to the decision to create Grupo Inmobiliario Pharma, a real estate platform focused on the pharmaceutical, medical device, and life science sectors.
We observed that pharmaceutical companies were beginning to move away from their financial growth phase, with a reduction in their historically large profit margins. While sectors like aerospace and automobiles were adopting cost-cutting strategies, the health industry had not made significant changes. These companies operated massive facilities, competing to invest heavily in infrastructure. However, it was evident that a shift was necessary. In response, we developed a concept aimed at reducing both investment costs for new facilities and operational expenses.
We created an industrial real estate model for a multi-tenant building or park that could share infrastructure and services. This approach would provide pharmaceutical companies with options for streamlining drug manufacturing while ensuring the quality of facilities is maintained. We aimed to create a co-working concept focused on the pharmaceutical and biotech industries. To achieve this, we established Grupo Inmobiliario Pharma and its trademark, Parque Pharma.
Construction began in 2007 and was completed in 2008. We were fortunate to have support from ProMexico, a now-defunct government agency that promoted investment, which introduced us to an Italian company, the first company to sign a contract with us. The facility covers 4,000 square meters, and the Italian company acquired 800 square meters, one-fifth of the multi-tenant complex. One year later, we signed a nine-year lease contract with a large pharmaceutical company for a 400-square-meter facility, in which we invested in tenant improvements. We also sold another facility to a Mexican drug company.
In 2018, we negotiated with an Argentine company, Amstrong, which took over the vacated facility of the large pharmaceutical company and signed a fifteen-year lease. Currently, we have 2,000 square meters available for multi-tenant improvements. We tailor facilities to clients’ requirements based on signed letters of intent, designing them specifically to meet their needs.
Biotechnology, pharmaceutical production, and medical device manufacturing have distinct processes. However, all of them must adhere to fundamental regulations, including maintaining clean rooms, following established protocols, ensuring designated areas, and maintaining air quality standards.
We are a financial and real estate platform designed for the life sciences industry. Our goal is to simplify the process for both foreign and local companies looking to operate in Mexico. We strive to expedite their market entry, reducing the lengthy and challenging process of three to five years -from the initial decision to enter the market to the commercialization of their products.
We have two companies: one is a real estate company, and the other, run by Andres Valencia, is a service-oriented company for pharmaceutical companies. These services include regulatory support, product development, import-export, and logistics, which are areas we, as a real estate provider, prefer not to handle.
Our facility is in the Toluca 2000 Industrial Park (in Toluca), where about twenty-five pharmaceutical facilities operate. As the interest in nearshoring grows, we received recent visits from representatives from Asian companies interested in bringing technology, equipment, and expertise to build several life science facilities for manufacturing drugs and medical devices.
Due to the current geopolitical situation, companies from China and Europe are interested in bringing their operations to Mexico. This is a logical move, given Mexico's strategic location. Mexico has all the necessary components to become a hub for life sciences. While we do face challenges, we are actively addressing them. I am optimistic and believe we can capitalize on this opportunity and successfully navigate this significant wave of development.
EF: What are the most competitive advantages of manufacturing pharmaceuticals or MedTech devices in Mexico? Why is Parque Pharma the best investment option?
EV: In today's rapidly changing technological landscape, traditional pharmaceutical manufacturing, which relies on active pharmaceutical ingredients (APIs) with short molecules, will likely remain prevalent for the next ten to twenty years. However, biotechnology is making significant inroads into the life sciences industry. Biotech products, characterized by long molecules, are produced using living organisms and require specialized reactors. While upstream processes differ significantly from traditional manufacturing, downstream processes may sometimes resemble conventional pharmaceuticals, depending on whether the end products are injectables, tablets, or capsules.
Parque Pharma operates under a business model catering to traditional pharmaceutical and biotech companies and medical device manufacturers. Our facilities are designed with clean rooms and critical utilities, such as HVAC, distilled water and pure steam, which are critical for the health manufacturing industry. A key value proposition is our ability to shorten the time to market for clients, a crucial factor for improving financial performance. Our facilities can be delivered in time frames ranging from four to nine months. We pride ourselves on providing exceptional service, akin to a five-star concierge, by addressing needs and offering solutions as they arise for our life science partners.
We finance and lease facilities through long-term contracts with flexible terms. While longer leases offer better pricing, we also accommodate short- and medium-term leases. Leasing allows companies to avoid significant asset investments, mitigating risk. Additionally, we foster a cluster effect by enabling companies to interact within a multi-tenant environment, sharing best practices and knowledge. By sharing infrastructure and services, our tenants can achieve operational cost reductions of up to 20-25%.
We collaborate with the government of the State of Mexico, which is promoting foreign investment and aims to establish a biotech hub in the life sciences sector. Our initiative is viewed as a vital component of this developing ecosystem. We have engaged with biotech groups in Mexico and internationally, who express similar needs. Startups require Good Manufacturing Practices (GMP)-certified facilities, approved by the FDA, COFEPRIS, and other regulatory bodies, but often lack the funding to build them.
We are working with stakeholders to establish alliances for financing and expertise to operate these facilities. By collaborating, we aim to overcome challenges that hinder Mexico and other countries from cultivating a strong biotech industry.
EF: What achievement in the Mexican healthcare sector are you most proud of?
EV: We are proud to have developed a successful business model that we now need to scale and replicate. We must take advantage of our country’s current situation, as we have a new government that will implement new policies over the next six years, and we are ready for negotiations to move forward. We believe that things will align positively with the new U.S. administration in the coming months, which requires Mexico’s participation to fulfill many of the promises made to the American people. We still need to address security challenges within the country and tackle the global energy issues we face. Our country boasts strong demographics, produces many engineering graduates, and has a wealth of biotechnology talent that only requires short training to develop and manufacture outstanding products. Exciting times lie ahead.
