Complement, Copy, Create: How Health Startups are Making It in Mexico
When you’re a health startup in Mexico, it’s tough to be the little guy.
The healthcare industry in Mexico has long been dominated by big companies — Farmacias Similares, Hospital Ángeles, Pfizer. In the past few years, new health startups are popping up like never before.
These startups are often better positioned to innovate around the country’s major health challenges (little to no health education, weak infrastructure, and limited financing options). They are willing and able to take risks and experiment with new ways of addressing the high demand for health services. They are dynamic enough to really think about solutions for local needs. And they’re creative enough to figure out new models to lower costs and, hopefully, maintain a competitive edge.
For all these reasons, larger health companies should be eager to partner with, and even to acquire, these younger ventures. But being small also comes with its own challenges — challenges that cause many health startups in Mexico to fail before they can grow.
Challenges to getting off the ground
First, competition in the health sector is all about margins. Pharmacies, clinics, and labs are so abundant in Mexico that their scale allows them to drop prices dramatically, creating stiff competition for any new player entering the market.
Secondly, complex cultural challenges make it hard for companies of any size to change consumers’ habits and behavior. The average Mexican takes in over 3000 calories a day, and there’s little culture of visiting the doctor. Health and nutrition education are not integrated into the school system, and only 45% of the population has internet access, further limiting access to accurate information.
Finally, startup founders need to brave the waters of the nebulous regulatory pathways. Without the right connections and lobbying power that the big players have, it can take years for a health startup to figure out how to navigate the regulatory market. Even though the Mexican government is making an effort to encourage innovation (for example, in 2015, COFEPRIS passed a regulation exempting hundreds of devices from regulation requirements), the regulatory burdens are still intense.
So what are health startups doing to make it in the Mexican market even when they face heavy competition, complex healthcare culture challenges, and tricky regulatory pathways?
Through our work with Autodesk Foundation on Village Capital’s inaugural program for Mexican health startups, we’ve seen a few paths to making it alongside the big guys: complementing, copying and creating.
Startups are Complementing instead of competing.
One path to success is to complement the work of the major institutions, with a goal of partnering, rather than “disrupting.”
For example, it really got to the founders of ByPrice that something as simple as a box of Aspirin could cost 55% less if you cross the street to the next pharmacy, and that price variations can go as high as 70%! So instead of going into the pharma industry, they created the largest medication price comparison platform in the country. The platform provides savings for users and market insights for large retail chains and pharmaceutical companies.
Similarly, ViperMed offers an education product so that pharmacies, clinics, and corporations can help their patients better understand their conditions and take care of themselves.
Startups are Copying foreign business models in a local context
Another path is to replicate foreign business models — something Mexican health startups are doing faster than the big health companies. This creates an opportunity for big companies to grow their businesses by acquiring or partnering with these startups.
Electronic health records (EHRs or EMRs) are nothing new. However, Huli created an EHR that meets the needs of Mexican physicians with a user friendly platform that also includes an online calendar and marketing tools to reach more patients. They built a network of over 400,000 patients and understand how those patients seek medical attention. So beyond publishing Huli’s providers on just some list, they actually help doctors set up Facebook pages to attract clients and build their businesses.
At face value, you may see InstaFit, and think just another Freeletics or Daily Burn copy cat. But there’s nothing wrong with working off a great idea from abroad when there’s a clear market opportunity and you adapt your product for that market. Not only does InstaFit provide fitness content in Spanish, but they adapt to the local context. They engage their users with Whatsapp support groups and have a diet recipe books with recipes for diet pozole soup and tamales!
If you can’t complement and can’t copy, then it’s time to really Create.
Finally, a health startup can create something brand new.
Two of the ventures we’re working with, Metix and COUP have created new devices never seen before. Metix recognized that most accident and emergency vital sign monitors are only designed to be used inside hospitals. They’re expensive, heavy, and huge. So, Metix created a single inter-connected device that was affordable and light-weight enough for remote clinics and medical military corps.
On the other hand, COUP recognized that diabetes mellitus (DM) type 1 patients had to take blood samples up to 6 times a day with painful, invasive needles; so, they invented a non-invasive device to assess glucose levels.
These aren’t the only ways to innovate and find a niche in the market. We’re supporting an entire cohort of ventures that have found their way into the Mexican health market:
- Develop Link: Develop Link offers a referral platform to doctors that connects healthcare workers to improve the efficacy of their practice and help them treat patients more effectively, while providing institutions ranging from governments to insurers to pharmaceuticals with critical data on healthcare trends.
- Immer Medical: Immer Medical facilitates communication between doctors and patients through their multi-platform app, resulting in closer and safer medical attention.
- Salud Cercana: Salud Cercana is a digital health platform that integrates primary care services and accompanies middle and middle-low income patients with chronic diseases offering low-cost Coordinated Health Programs (CHP).
- Sonrident: Sonrident provides quality and comprehensive dental care to Mexican families.
- Uhma: Uhma Salud offers corporate wellness programs to companies of all sizes, addressing the increased prevalence of chronic illnesses in employee workforces, which negatively affects productivity and profitability. By helping in the early detection for symptoms that may cause chronic illnesses, Uhma’s wellness programs can generate a significant ROI for its customers.
In Mexico, health challenges are abundant. But so are solutions. No doubt, it’s hard to compete with existing players, but there is plenty of room for innovation to meet the population’s needs. And local startups are the best positioned to meet those needs.
Interested in learning more about the health innovators mentioned in this article? We’re always seeking to meet individuals interested in mentoring, investing in, or otherwise collaborating with the ventures we support. Reach out to the health program lead, Yanira for more information at yanira.martinez@vilcap.com.
Village Capital finds, trains and invests in entrepreneurs solving real-world problems. Learn more on our website, and read our insights on Medium.
