The State of Hidalgo proves attractive to pharmaceutical and chemical firms

Compared to three other sectors selected as strategic by Hidalgo’s state government, the chemical-pharmaceuticals sector has additional room to grow in terms of the aggregate amount of investment that has arrived during the tenure of this administration.

According to figures from Hidalgo’s Secretariat of Economic Development (Secretaría de Desarrollo Económico, SEDECO), the sector has seen MXN452m ($23.4m) of investment between September 2016 and May 2019, compared to MXN5.4bn ($279.2m) in sustainable transport, MXN11.82bn ($611.2m) in energy and MXN16.14bn ($834.8m) in agro-industry. However, a string of relatively small investments in chemicals and pharmaceuticals have been numerous enough to build momentum for the sector. SEDECO’s hope is that investment will spawn the arrival of further companies, creating a pharmaceutical cluster in Hidalgo.

Pisa Industrial Pharmaceutics has been manufacturing veterinary products in Atitalaquía since before the incumbent state government was elected in June 2016, and subsequently, five chemical or pharmaceutical companies followed in the first year of governor Omar Fayad Meneses’ administration.

Chemical Reaction 

Several chemical companies have arrived. Mexican company Sifatec settled at the Tula industrial park in 2010 to produce agro-chemical and chemical products, as well as laboratory equipment. In May 2017 the firm announced a MXN80m ($4.1m) expansion to their facility in the state. French group SNF Floerger, the largest manufacturer of polyacrylamide in the world, has brought the largest chemicals investment while developing a MXN200m ($10.3m) project in Atitalaquía. Criogas, a chemical gas producer, is already operating its facility at the Platah industrial park after a MXN35m ($1.8m) investment that SEDECO says should create 96 indirect jobs in addition to the 39 direct positions. Fellow chemical firm Cinética Química, which operates in water treatment, paper and cosmetics, has invested MXN50m ($2.6m) to establish itself in Platah.

Pharma Growth

On the pharmaceutical side, Quimpharma, the Mexican laboratory, is investing MXN102m ($5.3m) in a new facility to produce pharmaceutical products and dietary supplements in Tepeji del Río.

“The pharmaceutical sector can use as a leverage the existing pharmaceutical companies that have established themselves in the state’s industrial parks,” the OECD said in its May 2019 review of the sector. One important milestone in this process came in February 2019 when Mexico’s third-largest pharmacy chain Farmacias Guadalajara, owned by Corporativo Fragua, said that it would be building one of its largest distribution centres in Hidalgo. The facility – which will require an investment of MXN1.8bn ($93.1m), and in the process provide 1700 jobs – will cover 1600 branches across 14 states. Speaking to the state government, Javier Arroyo Navarro, director-general of Farmacias Guadalajara, said that the group needed a distribution centre to cover both the central regions of the country but also to “strengthen growth in the south”.

Guadalajara’s reasons for choosing Hidalgo showcases one of the latter’s main attractions for chemical and pharmaceutical companies, that of advantages related to logistics. SEDECO categorises the pharmacy’s investment within the state in the logistics sector, rather than pharmaceuticals.

“We carried out an extensive exercise contemplating several variables to find a place that not only the zone we needed, but also had the road network that allowed us to efficiently make trips to the centre and south,” Arroyo Navarro told OBG. The company was searching for a location that had the required “quantity and quality” of human capital, he added.

Although the federal government cancelled the special economic zone programme in April 2019, one that Hidalgo was expecting to utilise in order to build a pharmaceutical cluster, Guadalajara’s investment could act as a further incentive for providers eyeing an opportunity to be close to one of their major distributors.

Share

You have reached the limit of premium articles you can view for free. 

Choose from the options below to purchase print or digital editions of our Reports. You can also purchase a website subscription giving you unlimited access to all of our Reports online for 12 months.

If you have already purchased this Report or have a website subscription, please login to continue.

The Report: Mexico 2019

Hidalgo chapter from The Report: Mexico 2019

Cover of The Report: Mexico 2019

The Report

This article is from the Hidalgo chapter of The Report: Mexico 2019. Explore other chapters from this report.

Covid-19 Economic Impact Assessments

Stay updated on how some of the world’s most promising markets are being affected by the Covid-19 pandemic, and what actions governments and private businesses are taking to mitigate challenges and ensure their long-term growth story continues.

Register now and also receive a complimentary 2-month licence to the OBG Research Terminal.

Register Here×

Product successfully added to shopping cart