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Giovanny Mesa Escobar

COLOMBIA - Health & Education

The Right Pill

General Manager, Audifarma S.A.

Bio

Giovanny Mesa Escobar studied Medicine at the Universidad Tecnológica of Pereira. He has previously worked at the Pedro Sáenz Hospital and in CONSALUD. Upon finishing the latter in 1996 he decided to create Audifarma S.A., a company specialized in medicine supply and the efficient and rational use of it. He has also created the Libardo Escobar González Foundation, which helps students with low resources, and the Centre for Early Childhood Assistance.

"We pursue a clear strategy of differentiating ourselves from the competition through added value."

After more than 18 years in the market, what factors have led to Audifarma’s leadership in the pharmaceutical sector?

We pursue a clear strategy of differentiating ourselves from the competition through added value. We are not a simple distributor, and have always had a clear vision of what we wanted to achieve and what market segment we were targeting. One of our key priorities has been to support clients by following their business activities and providing consultancy services to foster lasting relationships. We do not sell medicines directly to users; however, we fully support health suppliers in the responsible administration and supply of medicines and quality health devices at a reasonable price. We have been able to adapt ourselves to changes in the health system and meet its demands. In a way, we had a conservative vision of our clients and of where we wanted to be that has been part of our success. We started with a strong dependency on the client and gradually learned to diversify our client portfolio. In fact, our selective and conservative stance toward growth has enabled us to remain financially solid. The fact that the financial sector recognizes us is one of our main assets.

How does the government’s new Price Regulation Plan impact company activities?

In 2006, the recovery of medication outside of benefit plans cost around $1.6 million. With the implementation of regulation T770, we opened the door to the prescription of these medicaments; therefore, it rose from $838,000 to $1.6 million in 2010. Our business strategy also included partnerships with universities to better understand the reality of the sector in which we operate. Moreover, we aim to render our knowledge more available and public through the universities. Around 10 years ago we set up a research group to identify trends in the consumption of medication in the country. To date, we have published over 50 articles both nationally and internationally. One of the studies from this group, back in 2010, was aimed at raising government awareness of the possibility of regulating prices, and the article was one of the bases of the first regulation implemented by the government. We are convinced that the regulation of prices is a legitimate and useful tool for the government to better regulate the currently abundant supply in the market, and the prevailing medicament-price ratio. In this context, we have posted double-digit growth on average each year, and only in 2014 have we seen a single-digit print. The main reason for this is the new price regulation. Despite making the entire market scenario more complex, price regulation is necessary for the future development of the sector.

“We pursue a clear strategy of differentiating ourselves from the competition through added value.”

What are some of the highlights of the ongoing studies Audifarma carries out?

One of the most important studies has to do with the usage pattern of medicine—the use of more prescribed doses and medicaments, how these are combined, and to what extent international standards are followed. The results should show a difference between Colombian and international patterns. We have also carried out studies on the effectiveness of different medicines. We have ongoing studies into pain management to raise awareness among various industry players. At the moment we are working with seven hospitals to implement this study. Another ongoing study concerns active medicament monitoring, such as reports on reactions and other elements. One successful study we recently published covers the misuse of medicines after operations and surgical interventions. We have identified that there is insufficient control of pain for between 40% and 70% of Colombian patients post-surgery. This is a problem associated with prescriptions and the administration of lower doses, or inappropriate medicine.

In which different segments does Audifarma operate?

We entered the hospital segment four or five years after our incorporation. We basically manage the pharmaceutical services of clinics and hospitals, finance the purchase of medicine, and oversee inventories. Over the years, we have also come to offer other types of more complex and technical services, too. We have created synergies between all the business lines of our company, including the public service, retail supply, and hospitals. Colombia has a mature market for pharmacies. The profit margin of each of these segments varies considerably, and our objective is to create further synergies among them all.

What are the main lines of your future strategy?

We would like to expand activities abroad, and have already carried out research in neighboring markets, with a strong focus on the Andean region, in Peru, Chile, and Ecuador. We feel ready to take this step based on the level of experience and knowledge we have acquired in Colombia over the past 18 years.

What actions has the company implemented to bring pharmaceutical services and products to remote areas of the country?

We cover the main urban cities as well as certain rural areas of Colombia. In this context, we have small pharmacies in these remotes villages and areas of the country. Our goal is to ensure that our clients see that we provide the same level of quality in our services both in urban and rural areas.

How would you assess the importance of public-private partnerships (PPPs) for the sector?

PPPs are extremely important and useful for the sector. We believe their success is based on good communications between the parties involved. We have already developed several successful PPPs and our goal is to deepen our take in this business model, despite the difficulties of the system and the work ahead. We all need to work toward thinking that the target in the health system must be to put to an end to contractual relationships between parties, as only then will we usher in the beginning of a new era in which we will enjoy better relations among them.

What’s your outlook for the development of the sector and the role of Audifarma over the coming five years?

I am optimistic, and we feel that we are generating added value in what we do. We believe that we will maintain, and hopefully increase, our current market share of 17%. We have great growth potential in the subsidized regime segment. The economic situation will continue to improve and regulations adopted by the government will only contribute to making the sector stronger and guarantee its future development. All in all, we are working toward a more integrated network in the sector and the system.

© The Business Year – January 2015

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